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November 21, 2009

Monopolies in Canada

CANADA - If you live in Canada chances are likely you eat, buy something or some service from a corporation so big its essentially a monopoly.

Take Tim Hortons for example. No, I am not dissing Tim Hortons, but I am pointing out what a huge company they are in contrast to other Canadian coffee/donut franchises.

Another prime example is Rogers, the cable / internet / phone conglomerate, which is so big and corrupt it phoned my 15 times in the last week trying to sell me a cable TV package. I am very tempted to cancel my internet from them, but I won't because they have a monopoly.

Well, technically they don't, but lets just say their competition is limited to Bell Canada, Shaw and the measly scraps left to small start up companies that always fail because their service is grossly inferior. I really don't have much choice in the matter... its either Rogers, Bell or Shaw and I already know from experience all three are corrupt corporations.

Part of the problem is that Canada is such a small market its relatively easy to make a monopoly. You start locally, build up a monopoly in Ontario (or wherever), expand to nearby provinces and eventually go coast-to-coast. The savvy companies do this by offering better services/prices than their competitors while cutting out the stress and nonsense.

The corrupt companies use telemarketing, sleazy annoying advertising campaigns and by lying to the customers about the speed, size, efficiency, reliability of their product.

Rogers internet service is "the best" from my experience. It only goes down about once a month, sometimes not for two or three months. (That sounds bad, doesn't it?) Bell Canada and Shaw are equally as bad for reliability, but a tad slower.

Now I could lodge a complaint against Rogers for phoning me 15 times in a single week, but I know I would only get "the run-around" until I get frustrated and give up. There is no sense of satisfaction in leaving a complaint via email or online form because you KNOW nobody actually reads it and they're certainly not going to do anything about it.

Frankly its not just Rogers at fault, its the whole corrupt corporation mentality and the monopolies (or near monopolies) that exist in Canada.

Lets talk about the Big Five Canadian Banks for a moment. There is:

The Bank of Montreal (BMO)
The Royal Bank of Canada (RBC)
Toronto-Dominion Bank/TD Canada Trust (TD)
Scotiabank
Canadian Imperial Bank of Commerce (CIBC)

There is also a few international banks that operate in Canada, ie. the Korean Exchange Bank (KEB), which don't really offer any competition.

Collectively the Big Five have a monopoly and they coordinate with each other to match prices and services. One may offer a better interest rate, but they hit you with more service charges. They're all the same.

However they've grown so big that these Canadian banks have expanded into the United States and over the past two decades have been buying up small American banks to the point that approx. 70 - 90% of the Canadian banking industry's profits is actually from the USA. (And they're making billions of profits each year.)

Due to international expansion Canadian banks are now the largest in the world. They buy up foreign banks, jack up the service charges over the long term, and cut costs by using a larger distribution network. In the USA its against American law to just buy a bank and change its name, so the individual smaller banks have kept their brand name but they've become subsidiaries of a Canadian banking conglomerate.

During the current American recession Canadian banks have redoubled their efforts in purchasing small banks in the USA, sensing they can get some sweet deals while they are ripe for the plucking.

Thus Americans may think they are banking with their local bank which has been in there town for over a hundred years, but in reality there is a very high chance their little bank was sold over a decade ago to a big Canadian bank. Or soon will be sold.

Eventually these corporations are going to forming global monopolies, wherein one or two companies control 90% of the market.

Ie. Coca-Cola and Pepsi-Cola.

Coca-Cola currently offers nearly 400 brands in over 200 countries or territories and serves 1.5 billion servings each day. Pepsi follows closely behind. There is essentially no competition beyond those two and its simply a fight over market share and which one is the biggest polluter / abuser of human rights (ie. the toxic pesticides incident in India).

It all makes you realize the importance of supporting small local companies.

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