Finance Committee on April 30th, 2024

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Davies.

I have Mr. Lawrence and then Mr. Turnbull.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you.

We believe that in an efficient and effective marketplace, you need to have players that are transparent. For that reason, we will support that.

I will say, half jokingly, that it would be nice if this applied to the government as well.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Mr. Turnbull.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you, Chair.

Let me just check on this. I have a few questions for officials. While I agree with the overall intent, I'm not sure whether this change is actually necessary.

I want to ask officials how the Competition Bureau is currently equipped to challenge companies that are using misleading price promotions.

[Samir Chhabra]

In clause 236, the government had proposed to make an adjustment to the English version of the act to ensure that representations about prices—particularly a discounted product—are presumed to be making the comparison to their own prices, rather than potentially to an unspecified market price or the prices of competitors. This enables the bureau to be much clearer and more targeted about going after any deceptive marketing in this space that takes advantage of a different selling price.

The bureau, of course, has its investigatory tools and the ability to compel information from organizations that are under investigation. Following the passage of Bill C-56, it also has the ability to seek orders to compel information in the course of a market study. There are a couple of different ways that the bureau can get access to this type of information.

My understanding of the change that's being proposed by NDP-7 is that it would introduce additional requirements that include demonstrating or establishing that a business has “sold a substantial volume of the product at that price or a higher price within a reasonable period of time before or after the making of the representation” and that “they have offered the product at that price or a higher price in good faith for a substantial period of time”.

Some considerations before the committee are about whether those time periods are testable, relatable and consistently applied across the board. It's about whether businesses would have the ability to understand what's expected of them in that circumstance and, frankly, what a “substantial period” might mean. Do any interim discounts that were offered for a short period of time in between, say, a Black Friday and then a Boxing Day, obviate the ability to demonstrate it as a discount, if they've done it within previous months?

Those are a few issues for the committee's consideration today.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

Just to be clear, the Competition Bureau right now has subpoena powers to compel price records from companies.

[Samir Chhabra]

That is correct.

[Ryan Turnbull, Liberal, Whitby, ON]

Given what you've talked about here, which is some potential interpretative vagueness that would be installed into the law around time periods and whether they're testable, relatable and consistently applied, would that cause an undue cost and compliance barrier on small to medium-sized enterprises or potentially contribute to that?

[Samir Chhabra]

I think it's reasonable to assume that businesses would have to take on some degree of compliance activity in order to demonstrate compliance with this. An example of that might be a smaller enterprise. A corner store might be a reasonable example.

Many businesses—90% of our enterprises—are small and medium enterprises. It would be challenging in some circumstances for them to be able to prove that they had documented appropriately their selling prices over a period of what constitutes a substantial period of time. That could, in fact, introduce some burden that may not be in keeping with the benefit that could be derived from introducing this provision in the first place.

[Ryan Turnbull, Liberal, Whitby, ON]

The last thing is that in NDP-7, paragraph (c) calls for the deletion of lines 31 and 32 on page 428.

Can you speak to the utility of that, whether that's advisable and what impact that might have?

[Samir Chhabra]

We did take note of the provision to delete lines 31 and 32 on page 428. It's not entirely clear to us as a department what effect this would have.

In our view, it may be a drafting error, in the sense that the purpose of that is to mirror a drip provision clause in subsection 74.01(1.1). The purpose of the lines 31 and 32 in this instance are to add an equivalent provision to section 74.011.

[Ryan Turnbull, Liberal, Whitby, ON]

My colleague might add to that.

[Martin Simard]

Yes.

As mentioned, these two lines are the instruction in Bill C-59. It says this section of the act is amended after the following, so we were all confused about drip pricing earlier. It's because there are four instances in the Competition Act where we have drip pricing. Bill C-59 was amending two of them. Then, collectively, you have now amended three of them.

I think the drafter was confused here and thought we were doing something twice. They deleted the instruction, thinking, “Oh, we've already dealt with drip pricing and this exact same wording,” so they added these things here. It's not necessarily to add a new thing. In fact, what it would do is defeat the purpose of what we're all trying to achieve, which is to make the change in four different places. It would leave one place unamended if we were to delete that instruction.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you for that clarification.

I've asked the officials questions to help make the argument for why I would oppose this amendment. It's not because I don't agree with the intent. I agree that the subpoena powers are already there and there are some potentially adverse or unintended consequences by way of the particular wording proposed in NDP-7.

Also, at the very least, I would ask Mr. Davies—even if committee members support this—that we consider taking out the deletion of lines 31 and 32.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Turnbull.

I have Mr. Davies, then Mr. Ste-Marie.

We have only two minutes. We said we would suspend at 15 minutes before the vote.

We'll suspend at this time. Members, we'll come back to this.

[The Chair, Liberal, Peter Fonseca]

Okay, guys, we're back. We're on NDP-7.

I can't recall exactly, but I think Mr. Turnbull had the floor. Mr. Davies was next, and then it would be Mr. Ste-Marie.

Mr. Turnbull.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

Perhaps I'll just go back to the officials. I just wanted to further clarify something on this particular amendment.

There are serious concerns I've already asked about and you've already talked about. You've talked about the interpretive vagueness this might create and the challenges in implementing it, the potential cost of compliance barriers this would create for small to medium-sized enterprises. Help me understand what this imposes upon small to medium-sized businesses.

My understanding is if you're a large company and you have to keep pricing information and data, you're probably already doing that on a regular basis. However, if you're a small to medium-sized enterprise, how much of a burden might there be to having a price list to the detail that this amendment would require? What would that look like for that small business? Can you unpack for us a little more the burden that might create?

[Samir Chhabra]

My response earlier pointed to some of the features within the formulation here that might be challenging for a small business to interpret. In addition to that, obviously they would have to then maintain records of all goods sold over a period of time, as well as the pricing information that went along with that. In that sense, particularly for a small business, it could be quite challenging. Again, I gave an example earlier of a corner store. It's not clear that they would have an inventory management system that would have the ability to drill down on each and every single type of item in inventory that's been sold and then have a price associated with each transaction that occurred.

Of course, as you pointed out, for larger businesses certainly we would expect to have the degree of sophistication to be able to track those kinds of things over time; and we expect, from our understanding, that it's done routinely. However, for a smaller business, more of a “mom-and-pop shop” style.... I can say my own parents had a family business for many years, and it was not the kind of thing that was routinely captured. Their accounting was line by line, item by item, what the pricing was.

[Ryan Turnbull, Liberal, Whitby, ON]

Would this open them up to being accused of misleading discount claims if they struggled to actually comply? That's what my worry is. It's one thing to say, okay, well, there's a cost to a compliance barrier, which sounds like, “Okay, well, boo hoo. You're a business and you should have to track that pricing information.” I get that. However, if it's actually not feasible for them to do so, given the size and scale of the business and that they may not have the resources to do so, potentially it could open them up to undue risks in terms of their not really deserving that level of risk, perhaps.

I don't know if you can say anything else about that. I'm just trying to get really practical about it. I'm thinking about those 600,000 small businesses, for example, that are getting the Canada carbon rebate for small businesses in the future, and how the risk would occur for them.

[Samir Chhabra]

It's a good question. There are probably two elements to how this might break down in practice.

One the one hand, you could think about the risk of an enforcement action. However, even before you get to the risk of enforcement action, I think there's also the potential for a chilling effect, where businesses hear about the rule set, maybe understand to some degree or partially the rule set that's being imposed and feel it's too burdensome to take on the risk of advertising a sale that could be challenged. It might in some ways be read or misinterpreted as a restriction against offering sales or discounts.

By making the process of offering a discount potentially more complex or contestable or challengeable, it could, in fact, make it harder for a small retailer to put on a sale. That extra burden might mean, in fact, they don't go ahead and offer the discount.

[Ryan Turnbull, Liberal, Whitby, ON]

Well, certainly we don't want to see that. That, obviously, would be an unintended consequence that would not be desirable, given the fact that we all want to see prices for Canadians come down. If they were exposed to risk based on offering a discount, that may deter them from doing so. I get your point. I just wanted to go a little more in depth on that, so thank you very much.

I don't know if I've convinced my colleagues. Mr. Davies doesn't look convinced. Maybe I'll leave it there.

Thanks.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Turnbull.

I have Mr. Davies, Mr. Ste-Marie and then Mr. Lawrence.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

I'm going to do an equivalent dive.

First of all, how many mom-and-pop operations are the subject of Competition Tribunal investigations on fake prices?

[Samir Chhabra]

I would think it's unlikely to capture the Competition Bureau's attention at the national level, thinking about mom-and-pop shops—

[Don Davies, NDP, Vancouver Kingsway, BC]

What about in the last year?