[Canada] Canadian Politics Redux

[crazy canuck]

Viper, while you are correct that Credit Unions are different from Banks in a number of respects, they are bound by the same regulatory requirements for capitalization as banks.

[Admiral Yi]

@Viper

I have not estimated the concentration of your market, either over or under.  I have either taken what you Canadians have said at face value or fact checked it in Wiki.

I don't understand the significance of your "one of the richest families" example.  I also can't tell if that refers to Desjardins or Wealthsimple.  Whichever,  some entity has 3 million customers and $10 billion in assets.  They have entered the market.  They have overcome the barriers to entry.

The Citibank, Walmart and Amazon cases seem to undercut rather than support Beeb's thesis of good old boys protecting their own to the detriment of Canadian consumers.  They were all allowed to compete in Canada.  And decided it wasn't worth it.

[Grey Fox]

Wealthsimple is the company with 3 million customers & is a product from one Canada's richest family. I'm a Wealthsimple and Desjardins customer. I love Desjardins mostly for its local acumen but it is archaic in everything. Wealthsimple is great & fast for investment.


Very few American retail companies have what it takes to endure long enough to thrive in Canada. Walmart, Amazon & Home Depot are exceptions and should be saluted for their longevity. Especially Walmart, it's first 10 years were very hard and the learning curve was quite steep.

One mistake many US companies make is to announced their entry into the Canadian marker long in advance. Giving time for our established companies to react and create more barriers to their profitable entry.

[PRC]

Wealthsimple is the company with 3 million customers & is a product from one Canada's richest family. I'm a Wealthsimple and Desjardins customer. I love Desjardins mostly for its local acumen but it is archaic in everything. Wealthsimple is great & fast for investment.


Very few American retail companies have what it takes to endure long enough to thrive in Canada. Walmart, Amazon & Home Depot are exceptions and should be saluted for their longevity. Especially Walmart, it's first 10 years were very hard and the learning curve was quite steep.

One mistake many US companies make is to announced their entry into the Canadian marker long in advance. Giving time for our established companies to react and create more barriers to their profitable entry.

Wealthsimple is a great app.

Target certainly ate shit with its mismanaged Canada launch.

[viper37]

@Viper

I have not estimated the concentration of your market, either over or under.  I have either taken what you Canadians have said at face value or fact checked it in Wiki.

I don't understand the significance of your "one of the richest families" example.  I also can't tell if that refers to Desjardins or Wealthsimple.  Whichever,  some entity has 3 million customers and $10 billion in assets.  They have entered the market.  They have overcome the barriers to entry.

The Citibank, Walmart and Amazon cases seem to undercut rather than support Beeb's thesis of good old boys protecting their own to the detriment of Canadian consumers.  They were all allowed to compete in Canada.  And decided it wasn't worth it.

Wealthsimple = Powercorporation = Desmarais.
https://en.wikipedia.org/wiki/Power_Corporation_of_Canada

The (now deceased) patriarch:
https://en.wikipedia.org/wiki/Paul_Desmarais

They're into fucking everything, even agriculture.  They own a bovine farm in Huntingdon that they visit in helicopter.

They had significant ownership in TotalEnergies at some point, now I think they divested from the company since their father died.

The Citibank, Walmart and Amazon cases seem to undercut rather than support Beeb's thesis of good old boys protecting their own to the detriment of Canadian consumers.  They were all allowed to compete in Canada.  And decided it wasn't worth it.

Well, of course they were allowed.  Just as you are "allowed" to sell drugs everywhere.  Until somebody pulls your teeth one by one or cut one of your ears to make an example of you.

There is no regulations that prevents a foreign grocery store from opening a new store here.  There are significant market barriers that were put in place by complacent regulations favouring the big players.  And if, say, Weston or another big Canadian grocery chain was really threatened and not merely annoyed, you can be certain the government would intervene one way or the other.

With chartered Federal banks, it's more difficult.  And as I provided in the example of Citibank, the chances of survival are slim.  CC gave you the laws & regulations they have to comply with, significantly more complex than in the US.
Provincial credit unions are allowed to be smaller and keep less reserves, but can't offer the same services, until they grow bigger and apply for some Federal guarantees for some of their activities, as is the case of Desjardins.  It's not the same branch operating in Ontario than in Quebec as it has to comply with different regulations.  And I don't think they offer services anymore in the US, but I could be wrong.  Also, they were caught red handed with a fiscal paradise problem some years ago and now offer limited services to their clients living abroad.

Transfering money between a Desjardins account in Quebec and a Desjardins account in Ontario is almost like transfering money between two different financial institutions altogether.  Where as transfering money between a National Bank account in Quebec and one in Ontario will be much easier.  Same bank, same chart, same regulations.

But Desjardins has limited appeal to the Anglo-Sphere and they don't really push to market themselves toward this segment either.  Flying the Canadian flag full mast on Patriot's day notwithstanding

[HVC]

I'm good with the bank regs. Checks (but not stops) rampant greed and stupid risk.

[Admiral Yi]

There is no regulations that prevents a foreign grocery store from opening a new store here.  There are significant market barriers that were put in place by complacent regulations favouring the big players.  And if, say, Weston or another big Canadian grocery chain was really threatened and not merely annoyed, you can be certain the government would intervene one way or the other.

Can you give me an example of one of these complacent regulations?

How can I be certain they would intervene one way or another?

[viper37]

There is no regulations that prevents a foreign grocery store from opening a new store here.  There are significant market barriers that were put in place by complacent regulations favouring the big players.  And if, say, Weston or another big Canadian grocery chain was really threatened and not merely annoyed, you can be certain the government would intervene one way or the other.

Can you give me an example of one of these complacent regulations?

How can I be certain they would intervene one way or another?

An example is how they were allowed to gobble small time players one by one, disregarding provincial and federal laws about market concentration.  Mergers in a specific sector are to be examined by the relevant government office when they threaten to concentrate the industry in the hands of one player, or too few players.

With groceries and pharmacies, they were allowed to buy various small chains and concentrate their holdings all across Canada until they were in a position to fix the price.

Just for bread, Weston was fined 50M$.  It was the maximum allowed by law, a law revised by the Conservative government of Stephen Harper to avoid unfair sentencing of corporations.   Weston alone made billions in profits by participating in the cartel and when caught, agreed to cooperate with authorities to avoid a criminal sentence on its CEO.

https://en.wikipedia.org/wiki/Bread_price-fixing_in_Canada
https://www.cbc.ca/news/business/loblaw-bread-price-settlement-1.7274820

https://macleans.ca/economy/economicanalysis/14-years-of-loblaws-bread-price-fixing-may-have-cost-you-at-least-400/

How can I be certain they would intervene one way or another?

What did the US government do when Japan wanted to buy a big US steel company?
In the past, the Canadian government intervened to prevent a Quebec based company from buying a Canadian owned railroad.  The Canadian Federal government intervened to help Newfoundland found their very risky project of trans-atlantic cables and new hydro-electric plant just so Quebec could not buy New Brunswick Power and export electricity through Maine.  A NF project still not working.

Canada can be extremely protectionist for some of its jewels.

If one of these big firms was in trouble, Canada would flock to help them.

[Barrister]

Back to banking, CitiBank tried to conquer the Canadian market and they had to scale back their operations.  They sold their credit card operations to CIBC and they split & sold their consumer sub prime loans to Fairstone Ltd.

Wal Mart and Amazon were supposed to take over our grocery market with their respective grocer brands, yet Wal Mart shut down the few Sam stores they opened and Amazon never made a dent here for grocery.

You vastly underestimate the concentration of our market for many industries and the barrier to entry, regulatory or otherwise.

So there's a difference between banking, which is heavily regulated, and just regular retail.

There's a reason why banking is pretty much completely dominated by Canadian institutions, and more regular retail, which is not.

Banking - overwhelmingly dominated by the Big Five, which for Yi's benefit is Royal Bank, Toronto-Dominion, Bank of Montreal, Bank of Nova Scotia, and CIBC.  Foreign entrants have basically all failed, whether it's Citibank or HSBC.

Just regular retail isn't quite the same though.  Partly for historical reasons, there isn't quite the requirement to regulate where you buy groceries or clothing as compared to where you get your mortgage.

So I don't quite know where you're coming from on this Viper.  Walmart is actually quite successful in Canada.  They have their own model which combines grocery with other goods.  I'm just googling, but Walmart has 7.5% of the Canadian grocery market share.  Costco has 11%.  That's behind the Sobeys / Loblaws oligarchs, but still sizeable.

Target was brought up.  Target, indeed, was a colossal failure with it's Canadian expansion, apparently costing the US parent company billions of dollars.  But that was primarily a failure in locations (really - why would you take over a bunch of Zellers locations when they'd already gone bankrupt) plus a failure in supply chain (tons of news reports of Target Canada having empty shelves).

Amazon was brought up.  I'll also bring up Netflix.  They were just seen as fringe players and ignored by the existing players - until suddenly  they had taken over vast swaths of the marketplace.

[Neil]

I think that a failure to meet expectations was a bigger problem with Target than the locations that they inherited from Zellers.  Many of those stores were actually in pretty good locations.  The problem was that people were expecting big deals along the lines of what you see from Target in the US, and they didn't deliver on that.  A company known for being rabidly competitive in the US came into Canada with a much less aggressive stance. 

[Barrister]

I think that a failure to meet expectations was a bigger problem with Target than the locations that they inherited from Zellers.  Many of those stores were actually in pretty good locations.  The problem was that people were expecting big deals along the lines of what you see from Target in the US, and they didn't deliver on that.  A company known for being rabidly competitive in the US came into Canada with a much less aggressive stance. 

So this is a perfect Languish discussion, given that it revolves around events from over a decade ago that few even remember.

Target had a fairly wide following in Canada.  Maybe not so much in Edmonton, given the distance to the border plus the lack of larger cities in Montana, but I remember growing up in Canada how my parents or aunts would look forward to doing cross-border shopping in the US - and in particular at Target (pronounced Tar-Jay in a faux French pronunciation for some reason).

Target though was seen as a reasonably priced, but it wasn't like Walmart that came in as a ruthless cost-cutter.  So I think the conventional reasoning is Target Canada's failure had way more to do with its supply issues.

And it's locations?  Ten years ago wasn't quite the retail apocalypse we're now living through, but high profile (and pricy) locations at big malls wasn't exactly prime real estate even back then for retail.

[viper37]

So I don't quite know where you're coming from on this Viper.  Walmart is actually quite successful in Canada.  They have their own model which combines grocery with other goods.  I'm just googling, but Walmart has 7.5% of the Canadian grocery market share.  Costco has 11%.  That's behind the Sobeys / Loblaws oligarchs, but still sizeable.

Walmart has no dedicated grocery store.  Thier numbers are for their entire retail operations.

They tried opening Sam's Club in Canada and they all shut down after a few years.

Wal Mart, as general retail stores that include various types of groceries (our own Wal Mart here does not include fresh groceries) are very successful.  Wal Mart as a specialized grocery store (Sam's club) were a failure.

Costco was built on top on Club Price which has a long existing model.  I don't know since how long they've been in Canada, but there was one in Quebec city in the mid 1980s.  Again, it's a general retail store selling everything, not just groceries or pharmaceutical products.

How do your rate the probabilities that an American or European grocery retailer could open new stores in Canada in the coming years?  A new pharmacy chain or a new grocery chain, not a new general retail store that includes everything.

And again, the probability that Amazon, Wal Mart or another US retailer could successfully buy out one our Canadian grocery (who also own the pharmacies) chain without the Canadian government reacting?

[Barrister]

Wal Mart, as general retail stores that include various types of groceries (our own Wal Mart here does not include fresh groceries) are very successful.  Wal Mart as a specialized grocery store (Sam's club) were a failure.

So if I go to a Walmart here in Edmonton I can definitely buy fresh groceries.  I take it you mean produce and the like?  They certainly carry it.  I could walk into a Walmart and buy everything I need for supper, for example.

It's a slightly different retail model as it's not a pure grocery store, but then again neither is your typical Superstore (owned by Loblaws).

I'd hardly call them a failure.  In fact Walmart is one of the more successful US retail expansions into Canada in my lifetime.  Unlike Target, which bought out Zellers then crashed and burned, Walmart bought out Woolco and then flourished.

[Grey Fox]

I remember that in the 2 years between when Target acquired the Zellers leases & the moment the 1st Canadian store opened their concurrents, especially Canadian Tire & Walmart, bought lots of parcels of land of what would have been considered prime retail spaces to stop from those areas becoming Targets.

Home Depot and Canadian Tire had done the same thing years earlier with Lowes.

[Admiral Yi]

An example is how they were allowed to gobble small time players one by one, disregarding provincial and federal laws about market concentration.  Mergers in a specific sector are to be examined by the relevant government office when they threaten to concentrate the industry in the hands of one player, or too few players.

I did some looking and ran across this link: https://foodpolicyforcanada.info.yorku.ca/backgrounder/problems/corporate-concentration/

"Several different measures have been devised and new ones are being debated in the field related to new kinds of powers exhibited by large firms and concentrated sectors (cf. Bonanno et al., 2017), the most commonly used being the concentration ratio, which is somewhat simpler to measure than many others.  It describes the percentage of market share controlled by a specified number of firms.  Typically a ratio of 40%, 4 firms controlling at least 40% of a market, is considered concentrated (CR4=40).  However, in Canada the Competition Bureau does not usually act unless the CR4 is greater than 65% (Gaucher-Holm et al., 2023).

Unfortunately, most segments of Canadian food supply chains exceed 40%."

This does not prove that the regulatory body did not ignore it's own guidelines, but it does suggest that the criticism is that the concentration ratio is set too high.  Do you have a link showing they ignored their own guideline?