Terence Corcoran: Let’s clean up the Kleenex grocery myths
The prime minister and his cabinet have joined a production line of academic theorists about the nature of corporate competition in the grocery business. They want tougher competition legislation to give more powers to Ottawa’s competition enforcers to tackle and even break up the supermarket chains.
There was no better demonstration of the unsupportable nonsense behind the movement to blame grocery “corporate greed” for Canada’s inflation and supply chain problems than the flap that developed around the recent decision by Kimberly-Clark, the global tissue paper company, to stop selling Kleenex tissues in Canada.
As National Bank analyst Zachary Evershed and his team noted, the Kleenex decision was not news in an industry that has been struggling with shifting economic circumstances. But it was a big deal among academic theorists on competition who held that Kleenex, with 16.2 per cent market share, was driven out of Canada by the grocery chains. Using their market power, the grocery companies use aggressive strategies and lower-price store-brands such as President’s Choice to kill competition.
On the CBC Radio show The Cost of Living, Walid Hejazi, professor of International Business at the University of Toronto, said the loss of Kleenex demonstrates that “when you have more concentration in the retail sector, what ends up happening is you get less variety and you get higher prices.” He was followed by Vass Bednar, adjunct professor in public policy at McMaster University, who said foreign companies “get out of Canada altogether” because they can make more money somewhere else. “Kleenex doesn’t want to tough it out in Canada,” she said, because “it’s not worth, literally, the cost.”
Bednar supports Liberal plans to
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