Wherever Matthew Boswell goes for work, he carries around a folder affixed with a sticky note that is inscribed with a quotation: “Canada has been identified as a country that does not place sufficient importance on competition in the conduct of its affairs.”
It’s not exactly “live, laugh, love,” but we’re talking about a federal official here. The quotation comes from a 2008 report commissioned by the federal government called Compete to Win, and it serves as both motivation and a reminder of how little has changed. “That’s been the situation for decades,” Mr. Boswell says in an interview. “That’s why we see a very concentrated economy and we see multiple oligopolies that control our economy in different sectors.”
Mr. Boswell, head of the Competition Bureau since 2019, hardly needs the reminder. As he sees it, he’s been living with the flaws in the country’s approach every day for more than 11 years, when he first joined the bureau.
He’s loudly decried how federal legislation hobbles the bureau when it comes to maintaining and encouraging competition, and how that framework needs to change. He’s done so through speeches, wading into policy debates, and through actions such as taking his opposition to the $26-billion merger between Rogers Communications Inc. RCI-B-T and Shaw Communications Inc. SJR-B-T all the way to the Competition Tribunal this year in hopes of blocking the transaction.
“His impact has been quite substantial,” says Robin Shaban, co-founder of economic consulting firm Vivic Research. “He’s taking decisive action to modernize the bureau and bring it out of 1992.”
While Mr. Boswell is far from the only one pushing for reform, the agitation is paying off. Earlier this year, Innovation, Science and Industry Minister François-Philippe Champagne announced a review of the Competition Act. (The public consultation period closes at the end of February.) But the true test of whether Mr. Boswell’s needling has any affect will be in what, if any, reform emerges from the federal review process.
He didn’t always have such strong feelings about competition law. He grew up in Ottawa, and his father worked in the forest products industry while his mom had a variety of careers, including a brief stint at what was then called the Department of Indian Affairs. She left because she couldn’t handle bureaucracy. A question about whether Mr. Boswell has any tolerance for bureaucracy elicits from him what sounds to be a pained groan. “Did I say I had tolerance?” he says.
He studied law and joined a firm in Toronto before high-tailing out of Bay Street and into a courtroom for a position as a Crown prosecutor. “It was an amazing job,” he says. “Very difficult at times, though, dealing with the worst day of other people’s lives every day of your life.” He later joined the Ontario Securities Commission as litigation counsel before moving to the Competition Bureau on secondment. “The plan was to be there for two years,” he says. “Somewhere along the way, that plan went out the window.”
Once there, he experienced firsthand how Canada’s competition law falls short. In 2020, for example, the bureau reached a settlement with Facebook in which the company agreed not to make false or misleading representations about the disclosure of Canadians’ personal information. As part of the deal, Facebook agreed to pay a $9-million penalty, just shy of the maximum of $10-million. For similar conduct in the United States, the Federal Trade Commission imposed a penalty on Facebook of US$5-billion. “That’s the most glaring example of how our act isn’t fit for purpose for the modern economy,” Mr. Boswell says.
Market studies are another sore point. When it comes to investigating the state of competition in a particular industry, the bureau cannot compel companies to provide information. “It puts us at a real handicap compared to basically all of our G7 counterparts,” Mr. Boswell says. As such, the bureau seemed to be lowering expectations in October when it announced a study into the grocery sector, noting it has to rely in part on information provided “on a voluntary basis” and that it might not have enough to “draw firm conclusions.”
But the topic for which Mr. Boswell has arguably received the most attention is his broadside on the efficiencies exception, which allows mergers to proceed if private benefits, such as cost savings for the merging parties, outweigh harms to consumers through higher prices or less choice. Mr. Boswell took aim at the provision in a speech last year before the Canadian Bar Association, and the bureau has since proposed it be eliminated. Efficiencies should be considered as just one factor when evaluating a transaction, the bureau has argued, and not trump everything else.
Events, such as the Rogers-Shaw deal, have also helped Mr. Boswell in his quest for reform. “Matthew has a good ability to seize on the things that play in the public imagination. He’s been able to present his reforms in a way that catches the attention of people,” says Jennifer Quaid, an associate professor at the University of Ottawa’s Faculty of Law.
The Competition Tribunal, meanwhile, recently wrapped up four weeks of hearings into the Rogers-Shaw transaction. Mr. Boswell attended frequently early on, but commitments at the bureau eventually pulled him away. Still, the bureau’s lawyers did an “amazing” job, he says.
His unyielding desire to stop the transaction has no doubt rankled some (lawyers for the telecom companies called the bureau’s arguments “hyperbolic” and “troubling” in closing statements) and many analysts believe he has a weak case. Mx. Shaban says he wins no matter what. “If he takes the case and he wins, then he’s a hero,” they say. “If he loses the case, then he demonstrates how bad the law is and everyone’s outraged.”
It’s hard not to wonder if that’s the goal – knowingly waging a losing battle to prove a point. “I completely disagree,” Mr. Boswell says. “We can’t just go by a flight of fancy and file an application at the tribunal and say, ‘Well, you know, let’s just file and this will help us.’ ” Sure, the timing is fortuitous, but there’s no ulterior motive: “We base our cases on the evidence that actually shows what we’re alleging is going on.”
Whichever way the tribunal decides, there will inevitably be more transactions for Mr. Boswell to probe. Royal Bank of Canada, for example, struck a deal in November to acquire the Canadian division of HSBC Holdings for $13.5-billion. The bureau later tweeted it would review the deal – a rare public statement, given it tends to remain silent on which cases it’s looking into.
But Mr. Boswell wants the bureau to open up. “We’re trying to be more transparent to Canadians,” he says. That includes trying to ensure communications are written in plain language, and not in overly academic or lawyerly jargon that makes eyes glaze over.
If there’s one point he wants to emphasize, it’s that competition policy is not an abstract concept but something that affects every Canadian. The more attention, the better, as he sees it. “It puts more pressure on the bureau because we’re more in the public eye,” he says, “but that’s not a bad thing.”
The $16 Trillion European Union Economy – Visual Capitalist
The $16 Trillion European Union Economy
The European Union has the third-largest economy in the world, accounting for one-sixth of global trade. All together, 27 member countries make up one internal market allowing free movement of goods, services, capital and people.
But how did this sui generis (a class by itself) political entity come into being?
A Brief History of the EU
After the devastating aftermath of the World War II, Western Europe saw a concerted move towards regional peace and security by promoting democracy and protecting human rights.
Crucially, the Schuman Declaration was presented in 1950. The coal and steel industries of Western Europe were integrated under common management, preventing countries from turning on each other and creating weapons of war. Six countries signed on — the eventual founders of the EU.
Here’s a list of all 27 members of the EU and the year they joined.
|Country||Year of entry|
Greater economic and security cooperation followed over the next four decades, along with the addition of new members. These tighter relationships disincentivized conflict, and Western Europe—after centuries of constant war—has seen unprecedented peace for the last 80 years.
The modern version of the EU can trace its origin to 1993, with the adoption of the name, ‘the European Union,’ the birth of a single market, and the promise to use a single currency—the euro.
Since then the EU has become an economic and political force to reckon with. Its combined gross domestic product (GDP) stood at $16.6 trillion in 2022, after the U.S. ($26 trillion) and China ($19 trillion.)
Front Loading the EU Economy
For the impressive numbers it shows however, the European Union’s economic might is held up by three economic giants, per data from the International Monetary Fund. Put together, the GDPs of Germany ($4 trillion), France ($2.7 trillion) and Italy ($1.9 trillion) make up more than half of the EU’s entire economic output.
These three countries are also the most populous in the EU, and together with Spain and Poland, account for 66% of the total population of the EU.
Here’s a table of all 27 member states and the percentage they contribute to the EU’s gross domestic product.
|Rank||Country||GDP (Billion USD)||% of the EU Economy|
The top-heaviness continues. By adding Spain ($1.3 trillion) and the Netherlands ($990 billion), the top five make up nearly 70% of the EU’s GDP. That goes up to 85% when the top 10 countries are included.
That means less than half of the 27 member states make up $14 trillion of the $16 trillion EU economy.
Older Members, Larger Share
Aside from the most populous members having bigger economies, another pattern emerges, with the time the country has spent in the EU.
Five of the six founders of the EU—Germany, France, Italy, the Netherlands, Belgium—are in the top 10 biggest economies of the EU. Ireland and Denmark, the next entrants into the union (1973) are ranked 9th and 11th respectively. The bottom 10 countries all joined the EU post-2004.
The UK—which joined the bloc in 1973 and formally left in 2020—would have been the second-largest economy in the region at $3.4 trillion.
Sectoral Analysis of the EU
The EU has four primary sectors of economic output: services, industry, construction, and agriculture (including fishing and forestry.) Below is an analysis of some of these sectors and the countries which contribute the most to it. All figures are from Eurostat.
Services and Tourism
The EU economy relies heavily on the services sector, accounting for more than 70% of the value added to the economy in 2020. It also is the sector with the highest share of employment in the EU, at 73%.
In Luxembourg, which has a large financial services sector, 87% of the country’s gross domestic product came from the services sector.
Tourism economies like Malta and Cyprus also had an above 80% share of services in their GDP.
Meanwhile 20% of the EU’s gross domestic product came from industry, with Ireland’s economy having the most share (40%) in its GDP. Czechia, Slovenia and Poland also had a significant share of industry output.
Mining coal and lignite in the EU saw a brief rebound in output in 2021, though levels continued to be subdued.
|Rank||Sector||% of the EU Economy|
|4.||Agriculture, forestry and fishing||1.8%|
Less than 2% of the EU’s economy relies on agriculture, forestry and fishing. Romania, Latvia, and Greece feature as contributors to this sector, however the share in total output in each country is less than 5%. Bulgaria has the highest employment (16%) in this sector compared to other EU members.
The EU imports nearly 60% of its energy requirements. Until the end of 2021, Russia was the biggest exporter of petroleum and natural gas to the region. After the war in Ukraine that share has steadily decreased from nearly 25% to 15% for petroleum liquids and from nearly 40% to 15% for natural gas, per Eurostat.
Headwinds, High Seas
The IMF has a gloomy outlook for Europe heading into 2023. War in Ukraine, spiraling energy costs, high inflation, and stagnant wage growth means that EU leaders are facing “severe trade-offs and tough policy decisions.”
Reforms—to relieve supply constraints in the labor and energy markets—are key to increasing growth and relieving price pressures, according to the international body. The IMF projects that the EU will grow 0.7% in 2023.
UK to Be the Only G-7 Economy in Recession This Year, IMF Says – BNN Bloomberg
(Bloomberg) — Britain faces the bleakest two years of any major industrial nation with a recession in 2023 and the slowest growth of peers in 2024, the International Monetary Fund predicts.
The UK will be the only Group of Seven member whose economy will shrink this year, with a contraction of 0.6%, the IMF said. The Washington-based institution downgraded its outlook by a massive 0.9 percentage point from October, saying higher interest rates and taxes along with government spending restraint will exacerbate a cost-of-living crisis.
The forecast highlights the challenges Prime Minister Rishi Sunak’s government faces in the leadup to the next election. Chancellor of the Exchequer Jeremy Hunt suggested the economy is likely to perform better than the IMF expects.
“The governor of the Bank of England recently said that any UK recession this year is likely to be shallower than previously predicted,” Hunt said in a statement. “We are not immune to the pressures hitting nearly all advanced economies. Short-term challenges should not obscure our long-term prospects.”
In 2024, the economy will rebound only slowly, growing at 0.9% — matching Japan and Italy at the bottom of the G-7 league table for growth.
The forecast anticipates the first UK recession, excluding the pandemic, since the financial crisis in 2009. Across the two years leading up to the deadline for Prime Minister Rishi Sunak to call an election, the economy will effectively stagnate — expanding just 0.3%.
The IMF did not downgrade any other G-7 economy this year as it raised its global growth forecast from 2.7% to a still sluggish 2.9%. An escalation of the war in Ukraine or a health crisis in China as Covid spreads could set back the world economy, it said in its World Economic Outlook update. However, “adverse risks have moderated since October.”
The downgrade to UK growth is striking because the IMF’s October forecast was prepared before the £45 billion ($55.7 billion) unfunded tax giveaway in the September budget during the short-lived Liz Truss premiership. At the time, the fund said the fiscal splurge would have boosted growth.
Since then financial conditions have tightened, rising borrowing costs for businesses and households. The Bank of England has raised rates from 2.25% to 3.5%, and markets now expect rates to settle around 4.5%. The IMF said it’s downgrade also reflected “tighter fiscal” policy but, according to Treasury figures, fiscal policy is looser this year than at the last forecast.
In October, the IMF attacked the UK’s massive spending spree — arguing that fiscal and monetary policy should not be working at cross purposes and that the government needed to bring the public finances under control.
IMF Chief Economist Pierre-Olivier Gourinchas repeated the warning. In a blog post alongside the forecast, he said many countries are being too generous with their energy support, which is “costly and increasingly unsustainable.”
Instead, countries should “adopt targeted measures that conserve fiscal space, allow high energy prices to reduce demand for energy, and avoid overly stimulating the economy,” Gourinchas said.
He also urged central banks, like the Bank of England, to press on with rate rises even if it means inflicting more misery on cash-strapped households. The BOE is expected to raise rates a half point to 4% on Thursday.
“Where inflation pressures remain too elevated, central banks need to raise real policy rates above the neutral rate and keep them there until underlying inflation is on a decisive declining path,” Gourinchas said. “Easing too early risks undoing all the gains achieved so far.”
- UK Wage Inflation Points to Another Big Rate Hike This Week
–With assistance from Andrew Atkinson.
©2023 Bloomberg L.P.
In Egypt, economic heat of Russia's war in Ukraine is only getting worse – Al-Monitor
GIZA — With every passing day, the money in Hanan Hussein’s purse becomes more and more dwarfed by the items in this crowded vegetable market in Embaba — a densely populated neighborhood in the Giza province of Greater Cairo.
Hussein, a mother of two in her early 50s, looks at the price tags of food items placed on the carts or on the wooden tables jockeying for limited space on both sides of the market and shrugs her head, knowing that the few pounds she has can only buy a few of the items on display.
“Tomatoes selling for 10 pounds a kilo, potatoes for 12, zucchini for 15 and rice for 19,” she says to herself.
“What are these prices?” she asks herself as she moves toward the end of the market.
Hussein passes by the shops selling fish, meat and chicken but pays no attention to them.
When she reaches the end of the market, she turns back and starts a new journey through the vegetables and fruit on display, hoping to come across something she can buy.
“We can’t afford these high prices,” Hussein told Al-Monitor, pointing at the vegetables in front of her. “I am looking at all the items on my shopping list, but it looks like I can’t buy any.”
Tens of millions of Egyptians, especially the poor and the middle class, are affected by the economic repercussions of Russia’s war on Ukraine.
Al-Monitor/Premise poll released this month found 68% majority of the population in Egypt, Turkey, Yemen, Tunisia and Iraq worried about their ability to access food in the coming months.
Having initially deprived the Egyptian tourism sector of billions of dollars in revenues, with Russians and Ukrainians constituting a third of annual tourist arrivals, the war has caused food import-dependent Egypt to pay more for its imports, especially cereals such as wheat and maize, according to the World Economic Forum.
Disruptions caused by the war on the international supply chain are also translating into a higher price for industrial and agricultural production requirements in a country where dependence on imported production essentials is very high.
Egyptians are feeling the pinch, with price increases in shops and markets across the country.
Hussein has stopped buying fish, chicken, meat and table condiments, among other items.
So has Alaa Mamdouh, a civil servant in his mid-30s who has one child.
Like many Egyptians, Mamdouh has decided to take on a side job to supplement his income. However, with less than 4,000 Egyptian pounds (less than $133) from both jobs, he can’t manage.
“I don’t know what to do,” Mamdouh told Al-Monitor. “People like me can’t keep going with food prices assuming new heights every day.”
Other Egyptians are complaining about their income being dwarfed by growing commodity prices.
Deep beneath their suffering is an inflation rate that is hitting an all-time high, threatening a political and security backlash.
Fears from this backlash have prompted Egyptian President Abdel Fattah al-Sisi to assure the public that things are going to be alright.
“I know that some people are worried, and they have reasons to be concerned,” the Egyptian leader said Jan. 6 after entering a large church in the New Administrative Capital, a new megacity he is constructing in the desert, to congratulate his country’s Coptic Christians on Christmas. “But you have to be sure that God will not fail us,” he added.
Two days later, he asked Egyptians not to buy into the uninformed rhetoric of those who spread fear about national economic conditions.
“We did not enter wars or squander the wealth of our country,” Sisi said. “Egypt did not cause these conditions.”
As he spoke, the Egyptian pound continued to lose its value to the US dollar, the main import currency in this country — at the time of writing selling at 30 pounds per dollar.
Egypt has had to depreciate its national currency two times since February 2022, says Al-Arabiya News.
It scrapped its managed exchange rate regime a few days ago in light of an agreement with the International Monetary Fund and as part of other measures that will also include the elimination of energy subsidies and the withdrawal of the state from economic activities.
A cheaper pound weakens the purchasing power of people like Hussein and Mamdouh and stagnates the business of people like fishmonger Ahmed Hamdi, who sat outside his shop in the same market in Embaba where fish prices filled passersby with aversion.
“People come here only to ask about prices, but nobody buys anything,” he tells Al-Monitor.
Some fellow traders closed down their shops due to sales spiraling downward and losses spiraling upward, he says. “I may do the same if things get worse.”
To reduce the intensity of the downturn, the government has opened dozens of outlets where food is sold at a discount. It also increased food subsidies for tens of millions of people registered in the national food rationing system, according to Daily News Egypt.
Economists say, however, that these efforts will not pay off without proper market control.
“Traders use current conditions to amass huge wealth by increasing monopolies and raising prices,” director of think tank Capital Centre for Economic Studies Khaled al-Shafie told Al-Monitor. “This requires strong supervision over the market.”
The lack of this supervision caused a traditionally reticent parliament to grill the minister of supply a few days ago.
Parliament members criticized the minister for his failure to control runaway commodity prices.
“The minister does nothing to prevent traders from exploiting the poor,” parliament member Nafie Abdelhadi told Al-Monitor. “Commodity prices are rising dramatically, but the minister is only watching.”
This leaves people like Hussein in limbo. Every day, she faces the riddle of matching the little money in her purse with the needs of her family.
“It is a new, difficult test every day, but I am sure God won’t forget us,” she says.
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