Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Report on Business

Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.


Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ROB INSIGHT section.


All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.


Learn more about Globe Unlimited and how to subscribe.

A shopper visits a Toronto Rona store in this file photo from February. (Chris Young For The Globe and Mail)
A shopper visits a Toronto Rona store in this file photo from February. (Chris Young For The Globe and Mail)

Why Quebec should stay out of Lowe’s bid for Rona Add to ...

In a breathtaking example of sticking his nose where it does not belong, Quebec Finance Minister Raymond Bachand says a potential purchase of hardware retailer Rona by Lowe’s is not in Canada or Quebec’s interest. Furthermore he is floating the idea of creating some form of investment fund to block this merger and to “protect Quebec’s interests.”

More Related to this Story

Investors around Canada must be asking themselves: “What possible justification can the finance minister of Quebec have in opposing this transaction?”

The two most common objections Canadians have to mergers are loss of control over natural resources and national security concerns. How does a deal possibly harm either of these? Are we worried about depleting our national hammer reserve? Do we lose sleep at night worrying that the Russians might get their hands on top-secret Garden Weasel technology?

As an economist, my concern with any merger or acquisition is that the combined firm would have excess market power which it would use to monopolize the market. That hardly seems a concern in the retail hardware business with Home Depot, Lowe’s, Home Hardware and Canadian Tire all competing for the same consumer dollars. And if there is any lesson to be learned from the supply management debate, it is that consumer welfare is of secondary importance to governments.

Canadian governments need to stop treating shareholders as mindless rubes who get fleeced in every transaction. There is absolutely no justification for the Quebec government to be involved in this transaction; Mr. Bachand should focus his attention on reducing Quebec’s alarming debt-to-GDP ratio.

 

Mike Moffattis an Assistant Professor in the Business, Economics and Public Policy (BEPP) group at the Richard Ivey School of Business – Western University

 

Follow Economy Lab on Twitter

 
  • LOW-N
  • RON-T
  • HD-N
Live Discussion of LOW on StockTwits
More Discussion on LOW-N
Live Discussion of RON on StockTwits
More Discussion on RON-T
Live Discussion of HD on StockTwits
More Discussion on HD-N

More Related to this Story

Topics:

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories