On September 14, long-standing Canadian outdoor gear retailer Mountain Equipment Co-op (MEC) announced they’d made a deal to be acquired by an American private investment firm. The specifics of the deal weren’t disclosed, but the incoming CEO almost immediately indicated that as many as 25 per cent of the company’s workers may lose their jobs and several locations may permanently close.
For almost 50 years, MEC has operated as a consumer co-op, requiring every shopper to buy a $5 membership that gave them a share in the company’s ownership. More than five million of these shares have been given out over the years, entitling the co-op members to vote in an annual election to appoint a Board of Directors.
If the sale is allowed to go through, this modicum of democratic oversight will be obliterated, replaced with a more conventional model of corporate control.
Within hours of the press release announcing the sale going live, thousands of co-op members began to express their outrage at the rug being pulled out from under them in this manner. Many wondered how exactly this sale was possible without the existing owners — that is, the five-million-plus members who owned single shares — having any input.
A petition was launched, garnering more than 10,000 signatures in the first 24 hours and pushing past 100,000 days later. Zoom meetings were held, Facebook groups were started and eventually a “Save MEC” website was created, all with the intention of getting the membership involved in a fight to challenge MEC’s sale and retain its cooperative structure.
The sitting Board of Directors claim that the sale was necessary to save the company from financial hardship after posting a negative balance sheet in 2018, but many members have expressed skepticism about this motive. The dominant theory among those involved in the Save MEC campaign appears to be that the company’s situation is far from an accident, and that the current Board has been actively working to dispense with the co-op’s democratic structures for the better part of a decade now.
It’s not hard to see how they’ve come to this conclusion. A gradual change in the backgrounds of the Board members, from people with experience running co-ops to executives with a decidedly more corporate job history, has gradually played out over the last several years. The current Board chair, for example, is a York MBA with previous executive gigs at Starbucks and Krispy Kreme, and an apparent love for the policy prescriptions of the Fraser Institute, a notoriously deceptive right-wing think tank.
This transition was solidified in 2013, when a set of bylaw changes enabled the sitting Board to offer the membership “recommended” candidates in future elections. This has resulted in the very election ballots used by the membership to choose new Board members containing instructions from the sitting Board members as to who they should vote for, a subversion of democracy so flagrant it would have the United States military descending on whatever Latin American country they claimed employed such a method.
The members weighing in on the Save MEC discussion groups seem unanimous in their belief that the quality of the stores themselves has been on the decline since then, with cheap, simple outdoor gear being increasingly replaced with name brand products of dubious application and all manner of gimmicky gadgets.
Now, with the final nail in the coffin of MEC’s aspirations toward economic democracy hammered home, and fears abounding over the remaining stores being a ripe target for asset stripping, the battle begins over whether this is all entirely above board.
As of this writing, more than $105,000 has been raised by disgruntled co-op members to mount a legal battle against the sale. They’ve retained the services of Victory Square Law, a Vancouver-based firm with a track record of fighting for unions and victims of human rights violations. While their ambition is laudable, one wonders why it’s necessary in the first place.
MEC’s governance structure, while unusual for a retail business of its size, is far from unheard of in the broader business world. Credit unions operate under a very similar consumer co-op model, and worker- and producer-owned co-ops are also relatively common in Canada, particularly in the agricultural sector.
The regulatory framework for this sort of entity is centred around preserving internal democracy; one can imagine the immediate repercussions that would be visited upon an elected Board of a housing co-op deciding to sell the whole development to a real estate company and begin to charge the members market rents, for example.
Indeed, MEC itself acknowledges that it’s subject to the BC Co-operative Association Act. The provincial Act, as one would expect, contains all manner of rules intended to preserve the rights of shareholding members. Section 40, for instance, guarantees all members the right to vote, while section 70 stipulates that any removal of this right would itself require a vote of the entire membership. I’m by no means a lawyer, but the possibility that the sort of leadership coup currently underway at MEC is illegal seems fairly clear.
Why, then, is the burden for challenging this contravention of provincial regulation falling upon the largely-working-class membership? Is the purpose of these regulations not to allow the government to intervene directly in any behaviour that violates them? Is it not a bit ridiculous to expect co-op members to be able to mount a legal challenge against a private investment firm with nigh-unlimited resources on anything resembling an even footing?
Marxist readers will be shouting at their screens already. ‘Of course the bourgeois state will not intervene! Preventing the ruling class from eroding economic democracy in order to seize assets and continue concentrating wealth upward is the exact opposite of the purpose of such a state in the first place!’
I find it hard to disagree with this reading of the situation, given Canada’s track record on using regulatory enforcement to curtail corporate misbehaviour. From turning a blind eye to billions of dollars in real estate money laundering, to making taxpayers foot the bill for the cleanup of “orphan” wells left behind by oil and gas companies, our federal and provincial governments have shown no appetite for using their regulatory teeth in any manner that would materially impact the ruling class.
The burden for resolving these issues instead falls upon the people who find themselves negatively impacted by whatever corporate transgression is afoot. More often than not, this results in a David and Goliath situation wherein some working class sucker gets stuck taking on the full might of a large corporation’s legal department, with predictable results. The accumulative effect of this power imbalance is an increasing latitude for harmful behaviour on the part of sufficiently well-funded companies, as the government spectates from the sidelines.
It remains to be seen whether MEC will follow this timeworn trajectory. The sheer size of the membership and the degree to which they’ve already been mobilized presents a unique challenge for the corporate raiders on the other side of the conflict, as their opponents will have far more resources at their disposal than they’re used to going up against.
I’ll be rooting for the co-op members, but all the while I’ll be bitter about the fact that they’ve been forced into this fight in the first place. As tempting as it is to minimize the predicament of MEC’s membership as a scuffle over a clothing store for granola munchers, it should serve as a microcosmic reminder of how the deck is stacked against working people when their collective desire butts up against the rapacious will of capital.
While the loss of a consumer co-op full of backpacks and bicycle parts may not have too terrible an impact on the lives of most Canadians, the same cannot be said if we begin to lose other collectivized resources, such as the more than 90,000 units of co-op housing that currently provide shelter for about a quarter million working class Canadians.
I fear that the next time the baleful eye of the corporate raiders settles upon a cooperatively owned enterprise here in Canada, we’ll once again find our regulatory agencies asleep at the wheel.
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