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Project Hammer: reduce collusion in the Canadian grocery sector

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Re: Project Hammer: reduce collusion in the Canadian grocery sector

#81

Post by dfxm12 »

TeeMassive wrote: post #53
arcticbull wrote: post #14

Earlier quoted context omitted.

You know what actually works great for reducing the price of cell plans in Canada is a public option. There's one province where people pay roughly half the national average for all there telecom needs - and that's Saskatchewan. SaskTel's mere existence keeps all the majors in line. Manitobans should be absolutely up in arms over the privatization of Manitoba Telecom. Canada has a ton of land and just not that many p…

You know the collusion is bad when a government enterprise can be two times cheaper.

You seem to be implying that a public enterprise can't compete so well against private enterprise on price by definition. Why do you think this?

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#82

Post by magicalhippo »

acchow wrote: post #76
magicalhippo wrote: post #42

Top three grocery companies in Norway, which have almost the entire grocery market here between them, just got fined[1] for price collusion. They'd signal rising prices for a category by rising the price on certain products within that category, was one accusation. Extensive use of price scouts aided in this. Initially the fine was much larger, but ended up at about 450M USD total between the three. For comparison, t…

For how many years did this collusion last? What percentage of their annual profit could be attributed to price collusion? Norgesgruppen's 2005 annual report shows a profit margin of 2.2%. In 2021, that ballooned to 3.8%. That's almost a 75% growth in margin.

Good question. I worked for one of them around 2005, and my boss mentioned price scouts then. As I recall it he wasn't happy about them, equating it with cheating.

The allegations are that the price collusion really took off around 2010. We had had a few foreign companies trying to take hold, like ICA in 2003 and Lidl in 2004. Lidl faced a unified publicity attack by the big three, and didn't last long. ICA bought one of the then-larger chains, but couldn't make it work and gave up in 2015.

It wouldn't surprise me if the "big three" started working more closely together during the "Lidl invasion", and that that laid the foundations for further cooperation later.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#83

Post by dennis_jeeves2 »

webnrrd2k wrote: post #63
dennis_jeeves2 wrote: post #56

Earlier quoted context omitted.

People generally get the govts they deserve. Canadians are no different. i.e blame Canadians not their overlords.

Can't it be both?

Well yes, it can be both. But overlords are a)universally corrupt b) they are always a minority. The overlords have their way only because the majority allow it. You will see these dynamics even in tiny groups where the minority loud/obnoxious individuals rise to power.

Focusing on the overlords is almost always a distraction on the underlying issue - that of the the electorate being too stupid, or ignorant to realize that they are being taken advantage of.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#84

Post by a13n »

Love this project. I just moved from Toronto, and compared to the US was frustrated by how every major industry in Canada was basically an oligopoly.

In Canada if you look at telecoms, banks, insurance, grocers, airlines, etc – there are a few major competitors and that's about it. It's very difficult to start a competitor, often for regulatory reasons, and most smaller competitors end up getting bought out by the big guys.

As a result, they have crazy shitty experiences. Telecoms are frustratingly expensive for cable and mobile services. Banks are dreadful and charge fees left and right, for basic things that are free in the US. Customer support with any of these companies is terrible.

I'm not surprised that they are colluding on pricing. It's quite obvious in the telecom market at least.

It seems tricky from the gov's perspective because this oligopoly/collusion behavior likely fuels higher GDP and more tax revenue... but ultimately more competition and consumer protection would make for a better country to live in.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#85

Post by kreyenborgi »

gruez wrote: post #15
juujian wrote: post #2

I'm sure there is a theory of how this would reduce prices - what is it? Real estate markets became infinitely more transparent over the last couple of years, to the extent that the data is used to train data scientist. The result? Speculators entered the market at it's messed up.

>The result? Speculators entered the market at it's messed up. That seems like a stretch. What's the casual mechanism behind increased accessibility of data driving up prices? At least with something like stocks you could blame HFT firms piling into the market or whatever. It seems far more plausible that prices rose for other reasons (take your pick of: NIMBYism, immigration, foreign investors, etc.), and the increa…

Imagine we sell groceries. If I have real-time access to your prices, and you to mine, then I have no incentive to try to outbid you to my customers since you will see my cheap potato sale sooner than my customers will, and announce your own equivalent sale. Knowing you have access to my prices, I can also increase them safe in the knowledge that you will follow me very soon, since that means we both win. That is how sharing prices with no friction leads to less competition.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#86

Post by abdullahkhalids »

Reason077 wrote: post #78
cycomanic wrote: post #65

Earlier quoted context omitted.

Look at the data for Austria presented in the link in the article. Supermarkets raised and lowered prices on the same day to the exact same amount and lots of other pretty damning evidence.

Supermarkets often publish upcoming sale prices in advance, and matching your competitor’s prices is not collusion. On the contrary, it’s a sign of healthy competition! If supermarkets are getting together and forming handshake agreements like “we will not change prices between November and February”, like Canadian supermarkets apparently did, then that could constitute collusion.

Lowering prices together makes sense. But why would you raise your prices of a commodity product to match your competitor's? If they are going to raise, you hold and rake in the extra sales.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#87

Post by dennis_jeeves2 »

dennis_jeeves2 wrote: post #56
motohagiography wrote: post #50

canada's attitude toward competition is different than that of the US though. our agricultural products (dairy, wheat, maple syrup, and to a lesser extent retail beer and alcohols) are controlled by state monopolies who set prices. the reason food is so expensive is because of fuel costs from the last few years, which were further not-helped by both an increase in federal taxes on fuel and the semi-official policy of…

People generally get the govts they deserve. Canadians are no different. i.e blame Canadians not their overlords.

[flagged]

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#88

Post by hibikir »

cycomanic wrote: post #65
nickff wrote: post #8

Earlier quoted context omitted.

What would demonstrate collusion? Very similar prices could be a sign of close competition, and razor-thin margins. Varying prices could also be a sign of close competition, with grocers choosing loss-leaders to lure customers into the store.

Look at the data for Austria presented in the link in the article. Supermarkets raised and lowered prices on the same day to the exact same amount and lots of other pretty damning evidence.

It's pretty easy for things to not be actual collusion to end up looking like it, and having the very same negative effects" You don't need handshakes in backrooms.

This will be even more popular in situations like supermarkets, where a significant part of the stock has an expiration date that isn't so far from today. Turning your inventory too fast is just as bad as turning it too slowly, so there can be immediate reactions to make sure things are being consumed at just the right speed. And the more uniform the models of consumption the supermarkets are running, the more similar their decisions will be anyway.

So I wonder if we even need to focus on needing damning evidence, or on whether there is collusion, and instead aim for what we want: Dynamics that put negative pressures on prices. If we aren't seeing that, I don't care much about how much is collusion, and how much is models that have tacit agreements because, as market players optimize for what is best for them, there are solutions where high prices across the board makes all sellers win.

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#89

Post by adamomada »

ActionHank wrote: post #61
motohagiography wrote: post #50

canada's attitude toward competition is different than that of the US though. our agricultural products (dairy, wheat, maple syrup, and to a lesser extent retail beer and alcohols) are controlled by state monopolies who set prices. the reason food is so expensive is because of fuel costs from the last few years, which were further not-helped by both an increase in federal taxes on fuel and the semi-official policy of…

Wild that Costco can be orders of magnitude cheaper than the competition despite your defending of Galen's honour.

This is the most laughable part, it means Costco has to be in on it too. And I can show they’re not, easily: the prices at Costco are more than the grocery chains!

They are colluding... to keep prices low

Re: Project Hammer: reduce collusion in the Canadian grocery sector

#90

Post by FredPret »

a13n wrote: post #84

Love this project. I just moved from Toronto, and compared to the US was frustrated by how every major industry in Canada was basically an oligopoly. In Canada if you look at telecoms, banks, insurance, grocers, airlines, etc – there are a few major competitors and that's about it. It's very difficult to start a competitor, often for regulatory reasons, and most smaller competitors end up getting bought out by the bi…

From your description it sounds as if we're stuck in a local optimum. It's tough to break out of that, but there's a lot of technological change coming our way and that tends to disrupt the status quo.
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