Many Canadians have experienced the culture shock of finding out that we pay much more than other countries for certain goods. The question is, why? When it comes to industries like grocery retail and telecommunications, the answer is that Canadian businesses tend to form oligopolies.
An oligopoly occurs when a small number of firms account for a large percentage of the market share in a given industry. This lack of competition lessens the incentive for firms to innovate or lower their prices, resulting in more expensive products for consumers. Oligopolies are prone to forming in industries with high fixed costs, since this makes it harder for new companies to enter the market. In industries with inelastic demand–those whose products consumers must buy regardless of price, such as groceries and Internet access–oligopolies can be particularly harmful.
The telecommunications industry, where the “Big Three” (Bell, Rogers, and Telus) make up 90% of the market, is a notable example. For some consumers, such as those in rural areas, access is limited to one of the three providers, meaning that they have no choice but to accept that provider’s price. In June, a study of 52 OECD and EU countries found that Canadian mobile and broadband prices were the 8th most expensive in the group, and more than 50% higher than the study’s average.
The grocery retail industry tells a similar story, as five companies–Loblaws, Sobeys, Metro, Costco, and Walmart–make up about 80% of the market. Given the number of grocery chains visible in Canadian cities, some consumers may be surprised to learn how concentrated the market really is. For example, No Frills, Superstore, Shoppers Drug Mart (Pharmaprix), Provigo, Maxi, and T&T are all owned by Loblaws. These big players face limited competition from discount stores, since they own the available low-cost options, like Maxi, Super C, and others. This stands in contrast to E.U. grocery retailers, who face strong competition from discounters like Aldi and Lidl. The lack of competition in Canadian grocery retail has tangible effects on prices; Canada led the G7 in food inflation rates this past year, with prices increasing by 6.2% over the course of 2025.
Interestingly, oligopolistic effects are often mitigated in Quebec by the presence of a province-specific Quebecois option. For instance, in the telecommunications industry, the presence of Vidéotron increases the level of competition, lowering prices for Quebecois consumers. In fact, Quebec consistently has some of the lowest average mobile and broadband costs in the country, especially for higher-coverage plans. Increased regulation also plays a mitigating role in the province. For the grocery industry, more stringent consumer protection laws in Quebec–such as those requiring per unit pricing–lead to greater transparency, more competition, and generally lower grocery prices.
The issue of affordability–and therefore of competitiveness–is more politically important than ever, as cash-strapped Canadians struggle with volatile oil prices and inflation. The Canadian Government has already signalled its intention to prioritize competitiveness and affordability with its Whole-of-Government Competition Plan, which aims to coordinate areas and levels of the federal government towards the task. If successful, this initiative has the potential to transform the Canadian business landscape entirely, with profound implications for the affordability of daily life for Canadian consumers.
