Archived columns and blog posts by Matt Elliott

It’s not city hall’s job to protect businesses from competition

By: Matt Elliott Metro, Metro Canada Published on Tue Apr 15 2014

It’s been a weird couple of weeks at city hall.

First, councillors — after years of reports and consultations — pushed through new regulations that continue to make it harder than it should be to buy food from a truck. Just look at all the places they still won't be able to operate. A group of councillors followed that up last week with a bizarre move to ban electronic dance music events from the grounds at Exhibition Place. It prompted a lot of comparisons to Footloose.

In both cases, councillors came up with a bunch of reasons justifying the regulations. They pointed to health and safety, noise complaints, neighbourhood impacts and other potential pitfalls. Ultimately, though, a major factor in both decisions seemed to be a belief that local politicians can and should intervene to protect established businesses from facing competition.

It’s a lousy precedent. I’m hardly a small-government libertarian, but protecting businesses from their rivals is a space where government doesn't really belong.

The move to ban electronic dance music — or EDM — events at Exhibition Place is the more illustrative of the two. In this case, the agenda item that led to the ban came with a letter from Zlatko Starkovski. Starkovski is president of Muzik, the night club that operates at the Exhibition. (Mayor Rob Ford is a fan.)

In his request for a ban on EDM events, Starovski makes some of the same think-of-the-children arguments that councillors brought up last week. However, he also brings up his concern that EDM events taking place at Exhibition Place venues will hurt his club’s business.

“Muzik and the Exhibition Place are a destination venue,” Starovski writes, and be warned that I’m not going to correct his spelling or grammar. “Our patrons come here one night a week specifically for our club, many from outside Toronto. If there is similar content and acts being hired on another or the same night, at the same location, we have will not be able to continue our successful programing.”

He’s left little room for ambiguity: Starovski worries that if other venues near his club have music events, his own music events won’t draw as many people. In other words, the existence of other businesses nearby could hurt his business.

That echoes some of the arguments heard in the food truck debate. There, restaurant owners and other stakeholders expressed concern that, should food trucks be allowed to sell food in more places, they’d hurt the brick-and-mortar restaurant industry.

As part of that debate, Dr. David Horner, Traffic Committee Chair at the Bloor-Yorkville BIA, submitted a letter laying out what he felt would happen if council gave food truck operators “carte blanche” to sell food wherever. In addition to noise and health issues, Horner said food trucks would result in “more vacant commercial spaces, which will have a significant economic impact to include job losses, and will ultimately impact the City’s bottom line, when fewer tax dollars are collected.”

The suggestion that mobile food trucks will cause restaurants to go out of business seems pretty far-fetched to me. I’m not sure there’s any evidence that’s happened in any of the cities that have adopted far more liberal mobile vending laws than Toronto. But even if there were, and food truck businesses did hurt the bottom line of the city’s restauranteurs, should the government really intervene?

Competition, after all, is the reality of business. Tastes change, new markets open, and businesses that once enjoyed high profits may find themselves squeezed by new entrants. But that’s not always a bad thing. For consumers, it can actually be a good thing, leading to lower prices, higher quality products and better service.

This is all really basic “glory of the free market stuff” which is why it’s weird that we’re seeing this kind of anti-competitive rhetoric taking hold at a city hall that is supposedly run by conservatives.

None of this is to say that governments shouldn’t help business. They absolutely should. But they should help broadly, with initiatives that benefit everyone. They can do things like lower commercial tax rates or support cultural events that stimulate economy activity.

But this notion that politicians should be beholden to established businesses and work to make it harder for new businesses to compete is nonsense. City Hall has no business doing anything of the sort.

This post was originally published at on 2014-04-15T00:00:00.000Z

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Matt Elliott

City Hall watcher, columnist and policy wonk in Toronto.
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