Bill C-56

Affordable Housing and Groceries Act

An Act to amend the Excise Tax Act and the Competition Act

Part 1 amends the Excise Tax Act in order to implement a temporary enhancement to the GST New Residential Rental Property Rebate in respect of new purpose-built rental housing.
Part 2 amends the Competition Act to, among other things,
(a) establish a framework for an inquiry to be conducted into the state of competition in a market or industry;
(b) permit the Competition Tribunal to make certain orders even if none of the parties to an agreement or arrangement — a significant purpose of which is to prevent or lessen competition in any market — are competitors; and
(c) repeal the exceptions in sections 90.1 and 96 of the Act involving efficiency gains.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's very good, thank you.

I now turn to the representatives of the Competition Bureau Canada, namely Mr. Durocher, Mr. Boswell and Ms. Pratt.

The letter that the bureau sent to the committee on March 1 states that the amendments proposed in Bill C‑59, as well as the recent reforms made in bills C‑19 and C‑56, represent a generational upgrade to Canada's competition legal framework. All three bills mentioned are budget implementation bills.

Do you believe that reform of the Competition Act, through a bill dealing solely with it, would be beneficial so that parliamentarians can weigh every effect of the act and of any amendments made to such a bill?

[Matthew Boswell]

What I can say is that the amendments we saw to Bill C-19 and Bill C-56, and the amendments that are proposed to Bill C-59, are significant changes to Canada's competition laws. They are generational, in fact. They make positive changes in multiple different ways.

With them, Canada is catching up to the rest of the world. As I've said before this committee, we have been an international outlier on many fronts in terms of how we handle competition in Canada. What we've seen are positive changes to catch us up.

I would say it's not a question of putting a banner up that says, “Mission accomplished” on a ship in New York Harbor. This is constant work that we need to do. There are other things that other countries are doing that we have not yet tackled in Canada, including really talking about how to deal with digital platforms and the serious competition issues that they can present. Other countries are taking very definitive strides in that regard.

To go back to your point about the lack of business investment in Canada, about a month ago, StatsCan put out a report that analyzed a 15-year period that demonstrated quite clearly the decline in business investment across the country. It pointed to competition as a significant factor in the lack of that investment. When you're not afraid of somebody eating your lunch—I'm sorry to use the proverbial term—there isn't that drive to invest in order to get better, produce better products, be more efficient and all of those things. It's a big issue.

The amendments are certainly significant. As you heard in my opening comments, I don't think we could go further, even in Bill C-59, to further strengthen various aspects of the Competition Act in Canada.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to say a huge thank you for the excellent presentations.

I'll start off with our competition commissioner. I have been very worried for years about a lack of business investment by our businesses in Canada. Before the pandemic, we had probably over 10 years of historic low interest rates. Typically, the theory is that if you have low interest rates, companies are going to take the cheap capital and actually reinvest in their companies. We did not see that.

I've suspected that one of the key things is around competition. Our government has done a lot of consultations around competition and how we strengthen competition law. I think we've had three bills that have attempted to strengthen our competition law and update it: Bill C-19, Bill C-56 and now Bill C-59.

Just as a general first question, would you say that collectively the changes we've made to the competition law and the act have made it overall much better and that Canada will be more competitive?

[Ryan Williams, Conservative, Bay of Quinte, ON]

We saw that with Bill C-56, too, I think. You've mentioned in the past that it tinkers around the edges.

I really want to get into how we fix competition in Canada. You talked about probably looking more at a focused approach, looking at the Competition Act as a whole. The amendments to these bills fix some of the overlying problems that we've had for years. We know that we have, when we look at mergers that were approved by this government.... Let's start with mergers, perhaps.

We had the Rogers and Shaw merger that was approved. Even though the Competition Bureau said that this merger shouldn't have gone through, the tribunal that was in place said that it should go through. Then what was really surprising was that Rogers sued the Competition Bureau and got over $13 million from it because of the tribunal's reaction.

How do we fix mergers, and if that's one of the main aspects, is that the most important aspect we should be looking at? What are the one or two most important aspects that we should be looking at in the Competition Act to fix?

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for attending today on a very important act, specifically talking about competition.

Canadians know that we have a competition monopoly problem in Canada. Canadians are paying some of the highest fees and have an affordability problem for groceries, airlines, cellphones and banking. We've been very focused on looking at those changes, and the government has brought forth some of those changes and some of those bills.

Ms. Quaid, the first bill you mentioned, Bill C-56, was the Affordable Housing and Groceries Act. Of course, we're looking at Bill C-59 now with new changes.

I have a short question first. Yes or no, does Bill C-59 fix our monopoly problem, our competition problem, in Canada?

[Dr. Jennifer Quaid, Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual]

Mr. Chair, Deputy Chairs, members of the House of Commons Standing Committee on Finance, good morning.

For those who don't know me, I'm an associate professor and vice-dean of research at the University of Ottawa's Civil Law Section. My areas of expertise are corporate criminal law, general criminal law, business law, corporate regulation and competition law.

I am very pleased to appear before you to share my thoughts on section 6 of Bill C‑59, namely competition-related measures.

Let me add that, although I have prepared this statement primarily in English, I will, of course, be happy to answer your questions in the official language of your choice.

This is the first time that I am appearing before FINA—I'm glad to be here—but it is not the first time that I have appeared before parliamentary committees over the past couple of years, as the government has undertaken a major reform of the Competition Act, the first since 2009. As you know, the reform has been split into three parts: Bill C-19, enacted in June 2022, then Bill C-56, enacted in December 2023, and now Bill C-59 before you.

In the interests of time and given the scope of the proposed reform to the Competition Act, I will make four general points rather than going into detail about the extensive changes proposed, but I am at your disposal to answer questions on any aspects of the reform, and I may very well submit a brief if I have time.

Let me start by saying that the reform has made a lot of changes to the Competition Act, but not enough. Given the amount of political and public attention being directed at the state of competition—or the lack thereof—expectations for positive change flowing from this reform are very high, but are they warranted? To me, this is the central question that cuts across all aspects of the reform. Will we have better and more effective enforcement against anti-competitive practices and will we also at the same time promote better market and business conditions to promote a dynamic and innovative economy?

In my opinion, whether these expectations can be met depends on whether we are prepared to do what is necessary to operationalize the reform in a way that respects the spirit of what is driving the changes. It is also essential that we adopt a mindset of competition law and policy as a dynamic process that adapts to an ever-evolving economy while remaining true to the underlying values that Canadians share.

While there have been many changes to the act, fundamentally, it's still a cumbersome, overly detailed legislative text. This in the past has led to the development of complex analytical frameworks requiring specialized expert evidence. Obtaining remedies to anti-competitive behaviour is difficult, expensive and uncertain.

Many of the changes in the act right now are designed to respond to long-standing criticisms and to enforcement challenges, but I worry, to be frank, that fixing these problems is only.... We're not really addressing the underlying structural problems of how the act is designed. The fact that we've got all of these little different ways of going about characterizing conduct is actually just going to generate new problems. We haven't really done the rethink we need.

I could give one example. There's been an attempt to standardize the way we approach different reviewable practices, but in doing so, the fundamental question is, do we need to do that or could we just have one recourse for anti-competitive practices? Why, all of a sudden, are we blurring the lines between all of these different recourses? To me, that's creating a legal ambiguity that's not going to help anyone. I have other examples, but I'll talk about that in the questions, because I see my time going.

The second thing we need is a mechanism by which the act can be updated on a regular basis. Even with a perfect reform right now, we can't just stop and rest on our laurels. I think it's prudent to think about that now. We've had 15 years between the last reform and now; that's too long. What that means is that we've had to take on a huge reform and split it over three bills, but we've done it in two years. Everyone is still catching their breath, it's been so fast.

Given the pace at which technological and societal changes are occurring, I think it would make sense to plan for periodic review at maybe a three- or five-year interval. That way, we could do things in manageable chunks and not have to use this sort of wholescale giant process and then put it in a budget bill. I think we have to get into that mindset.

The third thing I'm going to raise is that for this reform to work it needs to be supported by adequate resources and expertise. Bill C-56 and Bill C-59 especially add considerable components to the bureau's mandate, and I don't see any new resources coming here. The last ones were allocated in 2021, as far as I know.

I worry for things like understanding labour impacts in mergers and trying to determine whether the bureau can issue a certificate for expertise in environmental issues. Are those things that we should just leave to the existing resources? I think we need to ask ourselves that question: Do we have the resources to make this work?

Finally, this is not the end—and I will close quickly, Mr. Chair. At the beginning of this process a couple of years ago, there was a lot of energy and enthusiasm, and it seemed like there was more audacity and willingness to think outside the box. Then we kind of got into a more technocratic mindset, and what we have before us are a lot of changes, but they are mostly technical and legal.

I think we still need to have that broader conversation about what competition law and policy in the 21st century look like, and we need to do that by consulting people and talking to Canadians about what they want and then maybe having a broader process of approaching it. There's a lot of energy. There are a lot of new voices to the conversation. There's a lot of enthusiasm. I really wish they would do that.

Thank you.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all the witnesses for their excellent testimony. I wish I had time for each one of you, but I do not.

I'm going to start off with you, Mr. Bester, for maybe a minute or so. I want to put onto the record that we did have our competition commissioner come before our committee on Bill C-59. He's also been before the Senate, and he was actually before the Senate when he made the following statement:

Fortunately, the changes proposed in C-59, together with the recent reforms made in Bills C-19 and C-56, represent a generational upgrade in our competition law framework. I applaud the Government, Parliamentarians and citizens from across the country for their efforts in shaping this modernization process. It is the product of years of public and expert dialogue and parliamentary debate. The changes deliver on a significant number of the Competition Bureau's recommendations, and will help bring our competition regime in line with international best practice.

I wanted to put that in.

I also want to thank you. You've made some excellent recommendations, and I really appreciated your exchange with Mr. Williams. I actually think there's a lot more we could be doing, but I think we have done a significant amount and I think it's very, very critical that we acknowledge that. I personally would love to see a review right across our whole government around what's stopping competition from happening. I think if we did a whole-of-government review, that would be another excellent step forward.

My next couple of questions are for the Canadian Chamber of Commerce. I'm a very big fan of the work the Canadian chamber does. You do very important work.

Mr. Detchou, you started off by saying the economic competitiveness in the last 12 quarters has significantly declined. I want to put on the record that in the last three years, from 2021 to 2023, we were coming out of a pandemic, so the whole world was dealing with the after-effects of an economic heart attack. I think, as you will see from a lot of what we've put into Bill C-59, that we are transitioning our economy from competitive, growth and productivity perspectives.

On that, I know the chamber was very supportive when we announced the investment tax credit, so thank you. There are some companies, such as Dow, that are already benefiting from the ITCs, and they are creating significant opportunities for workers. Can you maybe initially speak to how important these are in driving investment, innovation and economic competitiveness?

After that I will have a follow-up question.

[Ryan Williams, Conservative, Bay of Quinte, ON]

You can tell by my name tag that I'm not a permanent member, but I'm happy, Mr. Chair, to be here again. It's always nice to be at the finance committee.

Thank you to our witnesses for joining us today.

Mr. Bester, it's great to see you back again to talk about the changes to the Competition Act.

We've had a series of bills to amend the Competition Act in this Parliament. The first was my bill, Bill C-339, to eliminate the efficiencies defence. I had another private member's bill, but that was taken with the last government bill on open banking, which is always great. The government followed our lead with Bill C-56 and Bill C-59.

I know we've had a lot of input from your group into these bills, but I want to start with what's missing. What recommendations did not get included that are really important to this bill and to competition in Canada?

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Chair.

Thank you to the witnesses.

I want to start by correcting something that was said on inflation earlier by our colleague Mr. Morantz. The governor of the Bank of Canada said yesterday that he's not going to cut rates until he sees progress towards price stability for a much longer period. Removing the carbon pricing would not provide that type of sustained confidence, since it's a one-time decrease. This scapegoating of carbon pricing is not only inaccurate as the cause of inflation in interest rates but a shameful distraction. What's really behind the increase is the cost of fossil fuels in Canada.

In my province of B.C. and in metro Vancouver, the price of gas jumped 22¢ in the last month, but the carbon price added only about three cents. What's really behind this is that type of behaviour from oligopolies, global instability and a lack of refining capacity, which means that the fossil fuel industry ends up benefiting from that considerably, but of course we won't hear the Conservative Party talking about that.

I will ask a question to Madame Houle.

You mentioned in your opening remarks that the investments from the Government of Canada should be focused solely on non-market housing, but the reality in Canada is we have a challenge in getting the supply of all types of housing, including market housing, built overall.

Last year, in Bill C-56, we did announce a cut to the GST on all purpose-built rentals, including market purpose-built rentals. I hope you are able to comment on that and on whether you see a role for the federal government to ensure that more supply of housing overall gets built as well.

[Aaron Wudrick, Director, Domestic Policy Program, Macdonald-Laurier Institute]

Thank you very much, Mr. Chair.

Thank you very much to the committee for the invitation to appear today on behalf of the Macdonald-Laurier Institute.

We are a public policy think tank located right here in the nation's capital, and we're here to offer some comments on Bill C-59. I understand one of my colleagues, Philip Cross, has preceded me, but, fortuitously, I don't think we're going to be covering the same territory in the bill.

I'd like to focus my remarks to relate to the competition provisions in Bill C-59.

First of all, I should applaud the government for being seized with the problem of competition. It is obviously a very serious, pressing, bread-and-butter issue for Canadians in this country. I fear, however, that the provisions of this bill, much like Bill C-56 before it, have the wrong focus and risk imposing some well-meaning solutions that will only end up creating other unintended consequences.

In particular, I refer to the changes in the bill that refer to the review of proposed mergers and the right of private action before the Competition Tribunal.

With respect to the merger review, in Canadian competition law, the purpose of the law is to maintain and promote competitive markets.

Why do we care about that? We care about it because we want consumers to benefit. The important thing is that Canadians are benefiting from more choice, more innovation and, most importantly these days, lower prices. That is the purpose of competition law.

The existing merger review process is designed to prevent anti-competitive behaviour, so the focus of the existing law is on bad behaviour. When companies break the law, they should be investigated and punished.

If passed, Bill C-59 would instead repeal sections of the Competition Act that prohibit the tribunal from concluding that a prospective merger is anti-competitive based solely on the size of the parties proposing the merger. This sounds appealing, because in a lot of cases, the size of the market share has an impact on whether or not they have the ability to act in anti-competitive ways. The problem is in treating this as definitive, since it is not the only factor in whether or not a company is acting anti-competitively. Taking this prohibition out and allowing the tribunal to make a finding solely based on market share would have the effect of empowering courts to develop a framework that includes what are known as structural presumptions. In other words, if you are of a certain size, automatically we will not allow a merger. It puts an onus on companies, then, to prove that a merger would not have anti-competitive effects.

In effect, this would shift the focus from behaviour to size. Rather than punishing you if we see you as a company doing something wrong, we're going to presume that you are guilty simply because you are large. I would suggest that this is a problem, for a couple of reasons.

First of all, if you're going to propose this guilty-until-proven-innocent onus, you're going to have to allow a mechanism for companies to prove that they are innocent. This is very difficult to do, because unlike the Competition Bureau, private companies do not have the power to compel information and they cannot compel witnesses. It's a very difficult hill for them to climb. I would suggest that the provisions in Bill C-59 create a structurally unfair asymmetry with respect to mergers.

The news is no better regarding right of private action. This is similar to the concept of a class action lawsuit, which allows private parties who suffer to hold businesses accountable. Again, there is a positive element to this. It allows individual citizens or a group of citizens who are negatively affected to utilize competition law to punish bad actors. That's good. The problem is that they don't have the same guardrails as they do around private class action lawsuits. Right now, if you want to launch a class action lawsuit against a company for bad behaviour, there are certain thresholds you have to meet. Those thresholds are not in place for these measures in Bill C-59. This could open it up to an abuse of process.

I should say, as a former litigation lawyer, that if I were still practising, I would be very happy about these changes because it would be payday for me. There would be a lot of lawsuits and a lot of work. From a consumer's standpoint, though, I suggest that it may end up diverting resources at the tribunal that could be better placed elsewhere. I would suggest that if you're going to keep the provisions around private right of action, there have to be guardrails that are similar to the ones for private class action lawsuits.

That's the thrust of my remarks. I'll leave it there, and I'm happy to take questions.

[Kate McNeece]

I think that's a great question.

As Mr. Weiler said, there are a number of changes largely expanding the rights of private access to many of the different provisions under the act. The way our act is set up is it's relatively codified, so there are specific provisions for different types of conduct that could be seen as contrary to competition, and previously, only certain of those provisions have been subject to private rights of action for private litigants. They've been solely the purview of the commissioner in a number of cases, and by and large, Bill C-56 and Bill C-59 together have expanded private rights of action to most of those areas.

As I said in my opening statement, I think private rights of action are an important complement to the commissioner of competition's work. I think, as you say, the bureau is a body of limited resources and there are ways that private litigants can help fill the gap for our competition enforcement, so I'm generally in favour of a lot of these changes.

It's important that the leave test was somewhat lowered in order to make this more accessible, because I think the previous test was very difficult to overcome since all of a business had to be substantially affected rather than part of the business, as it is now. I think that makes a great deal of sense because certain businesses have multiple business lines, and I don't think they should be barred from potentially addressing a harm to one business line if it isn't in all of their business.

I'm generally in favour of the leave test. We'll have to see how it's interpreted. I think the public interest branch of the leave test is a new concept for Canadian competition law. I'd be looking to the Competition Bureau to consider how they might be supporting assessments that certain actions taken by private litigants may be in the public interest, or maybe there's some guidance from the tribunal, through either litigated cases or otherwise, as to how that will be interpreted in light of existing jurisprudence in analogous areas.

I think we're all very curious to see how that's going to work, but overall, I think this will increase the number of means that potentially affected parties may have for addressing competition concerns and, subject to the leave test and appropriate pleading standards, plucking out vexatious litigants. We don't want that, but I do think an expansion of private access is warranted and is a positive aspect of Bill C-59.

[Mark Schaan]

I think the biggest pieces around competition changes that have impacts on the grocery and food sector were in Bill C-56, for the most part. One is the competitor collaboration piece. We know that one of the factors potentially reducing competition is access to retail space. There are restrictions between, for example, land owners and grocery stores that prohibit the entry of new players within the retail footprint of the broader developer. Two is the market study powers that allow the bureau to understand the particular dimensions. Sometimes that requires information you would normally have to compel, in order to ensure it's accurate.

Both of those are important provisions, but I wouldn't undercut even something like the killer acquisitions piece. There's been a ton of innovation in the food and grocery space, including around some of the direct-to-consumer aspects. Sometimes that's a function of buying up small companies that have some of those tools and widgets that become part and parcel. However, if that becomes an act of dominance by which a player potentially has the controls to further hoard their market share at the expense of competition in the marketplace....

I think those are other elements I would point to, in terms of things that may impact the price of food for your constituents.

[Mark Schaan]

Thank you, Mr. Chair, for the question.

The question is correct in that we've made a number of important changes to the Competition Act over a series of legislative efforts, the first being in the Budget Implementation Act of the last budget. There was a set of further measures in Bill C-56, the groceries and affordability act.

That first set of changes were essentially broad, consensus-based measures. The groceries and affordability part targeted a number of key pieces. One was competitor collaborations, or the degree to which the bureau would have the capacity to look at collaborations in the marketplace. Notably, it's not necessarily those among competitors. It's also those in the value chain. It ended the efficiencies defence—the reliance on the presumption of efficiencies as the basis for a uncompetitive merger, or a merger that is significantly less in competition—and introduced a market study power with the capacity to compel information on the part of the commissioner.

This proposition now adds to that in a number of ways.

One is that it allows the commissioner to better use some of those other tools in mergers. Killer acquisitions is one, which is the capacity to have a longer look-back period, in order to ensure there's time to look at transactions that might be very compelling, particularly in spaces such as digital or innovation companies. It might be the acquisition by a very large player of a very small player, one that normally wouldn't be a risk detection but that turns out to be very important for the structure of the business place.

Others include more mergers being notified and making a transaction irremediable, or essentially allowing for a transaction not to close until the merger has been considered by the bureau. A number of others include revamping the enforcement framework, or incentivizing private enforcement, which gives more players within the marketplace access to the tribunal to take on...and to competitive effects, noting that the bureau has only certain capacities. Sometimes a competitor might be best placed to understand the transaction and why it's significantly lessening competition.

We already talked about some of the greenwashing provisions and the ways in which there will be enhanced powers there. It's also clarifying that labour markets are relevant to a merger review, in terms of the degree to which a transaction is changing the skills basis, which might be impacting the worker composition. That is a factor that can be considered.

Then there are a few housekeeping changes.

In sum, I think you'll see that the measures between the first two legislative efforts and this last one build out a comprehensive framework that gives the commissioner not just the powers but also the scope to be able to look at the effects in the marketplace.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you, Mr. Chair.

First, I want to thank everyone here today. I think often it takes a room where you see a lot of people who've done a lot of hard work to know that there are a heck of a lot of people working in our government doing really important work, so I just want to say a huge thanks to all of you. I know all of you won't get a chance to speak today, but I thank you for being here. Thanks for your hard work.

Since our competition team is here, I might as well ask a question of them. I know that we've been working really hard as a government to try to improve our competition within Canada, and I know there have been elements in Bill C-56 in addition to Bill C-59 around modernizing our competition regime.

If you could, maybe talk to how the measures in Bill C-59 build on those measures that we've introduced in Bill C-56, which was, I believe, our budget. Thank you.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

That’s a possibility, but we also gave the Competition Bureau new powers through Bill C‑56. It now has the power to demand information. That’s why the first study was incomplete. People could say “thanks, but no thanks” when they were asked for information. Today, the bureau is better equipped. Furthermore, we’ve invested $90 million to make sure that the bureau has the means to uphold the Competition Act, which will change things.