Competition Bureau Concludes Examination into Canadian Cattle and Beef Pricing

OTTAWA, April 29, 2005 – Consumer demand for Canadian beef has kept prices stable even though cattle prices have dropped since the onset of bovine spongiform encephalopathy (BSE) in Canada, the Competition Bureau has concluded following a thorough examination.

The Bureau began its examination in February 2004 to determine if there were agreements among beef packers to lower prices paid to cattle producers or among grocers to raise or maintain retail prices for beef. The Bureau also examined whether pricing patterns were the result of one or more dominant firms engaging in a practice of anti-competitive acts that restricted competition.

“We found no evidence of collusion or abuse of dominance by beef packers or grocers,” said Richard Taylor, Deputy Commissioner of Competition. “The Bureau will continue to examine complaints of alleged anti-competitive activity in these industries, especially within the context of the U.S. border being closed to Canadian cattle.”

The Bureau found that: 

• beef prices are set on a North American basis because of the reopening of the U.S. border to boneless beef exports from cattle under 30 months of age;
• cattle prices dropped because farmers are limited to selling their cattle to Canadian slaughter houses, resulting in a massive oversupply of cattle that far exceeded Canadian slaughter capacity;
• cattle prices tend to be volatile since they are normally set in auction markets;
• lower cattle prices do not necessarily lead to lower consumer prices for beef; and
• the final consumer price of beef includes a number of fixed costs such as transportation and labour, in addition to the price of cattle.

As part of its review, the Bureau contacted and analysed information from farmers and their associations, beef packers, and other players in the beef and cattle industries. The Bureau also retained an industry expert to write a comprehensive report, and commissioned economic reports.

The Competition Bureau is an independent law enforcement agency that promotes and maintains fair competition so that all Canadians can benefit from competitive prices, product choice and quality service. It oversees the application of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

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