Industry Committee on July 20th, 2010

[Yvon Godin, NDP, Acadie—Bathurst, NB]

I see.

As I understand it, the refinery is already in the process of being shut down. You are well aware of that. If you are not aware of it, you missed the boat today.

[Richard Bilodeau]

We are aware of it.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

So, we are all aware of Shell's intention, which is to shut down the refinery. We practically know that the company is not interested in selling, unless it can prove the contrary in the coming days.

The Department of Natural Resources—this is not me talking, because I have the Department's deck in front of me—makes reference to competition, lower capital and labour costs and less regulation. Less regulation, imagine! There will be more damage caused, just like in the Gulf of Mexico. As far as they are concerned, less regulation is not a problem, because it means lower costs for them.

In terms of increased production in non-OECD countries and economies of scale, by getting their oil from somewhere else, they will save money. Competition will mean that markets will be hard-hit. If a company were to lodge a complaint, you would have the power to investigate under the Act.

[Richard Bilodeau]

We don't need to receive a complaint in order to investigate. We can lay charges if we become aware of a situation that raises a problem--

[Yvon Godin, NDP, Acadie—Bathurst, NB]

And in your opinion, does the current situation meet that test?

[Richard Bilodeau]

Well, as I said a little earlier, Shell's unilateral decision to close its refinery raises no concerns with respect to competition, as far as the Competition Bureau is concerned.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Shell officials appeared this morning and said they can get oil anywhere. I may have misunderstood, but according to what they were saying, it's a lot cheaper to buy it somewhere else and ship it here. Refineries are shutting down all over the place and no new ones are being built. Do you not think you now have enough information to conclude that Shell is only interested in making more money?

[Richard Bilodeau]

It's important to remember that, as far as the Competition Bureau is concerned, what happens somewhere else or under different regulations are not matters the Bureau reviews or examines in any great depth, unless there is a requirement to do so because a specific issue has been referred to us.

You talked about making money. As long as a company's actions and the unilateral decision to shut down a refinery or convert it to a terminal—as has been announced—do not contravene the Act, as regards the provisions dealing with abuse of dominant position, or collusion with competitors, it raises no concerns at our end.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

There is no law against making money.

[The Chair, Conservative, Michael Chong]

Mr. Godin, that's it for you.

We move now to Mr. Rota.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you very much, Mr. Chairman.

Good afternoon, and thank you.

We had Shell in earlier--we had a number of players in this morning--and as a corporation, Shell's goal is to maximize profits. Whether it's in the terminal or in refining, it doesn't really matter. It doesn't matter to us either, and we shouldn't be judging it. They're looking for results for their shareholders--good results. That's business. There's nothing wrong with that. That's part of a healthy business.

As elected officials, on the other hand, it's our responsibility to ensure that capacity, or supply, is there for the country. We want to make sure that there is that supply there. Right now we're talking about 13% of our eastern refining disappearing. It's gone. It's not being shifted somewhere else. Well, it's being shifted somewhere else; we're relying on another country to supply it.

Now, when we look at production in the United States, it's somewhat stalled. They have an economic downturn. We're okay right now--we can get it from them--but it's going to turn around at some point. They're going to use up the supply. That causes me concern. When the economy picks up, demand for U.S. oil and products that are byproducts of oil are going to be sucked up somewhere, and we're going to have a problem. Supply is not guaranteed for Canadians. If it's supplied on the ground here, we have some control of it.

I know that people say that the free market will take of everything, and supply and demand will drive up the price, but when you can't get the product....

I come from northern Ontario. Heating oil is very essential. When you're in northern Canada, heating oil is an essential service, something that we should be protecting nationally. I'm not hearing that right now.

Maybe we're talking to the wrong people. I'm really not sure whether we're dealing with the right people. I would think that the Competition Bureau would be the group that would look at that.

So the question is very simple: are we speaking to the right people? We're seeing competition, but it's more on a macro level. Are you the right ones we should be speaking to?

[Richard Bilodeau]

I can't answer the question of whether you're speaking to the right people. What I can tell you, however, is that--not to repeat myself--we have an act, the Competition Act, that tells us what our mandate is, and we operate within that mandate.

Again, if certain allegations were made and they were proven, we would take action in any matter. I'm not talking necessarily about this situation here. We have the Competition Act, and if allegations are made and the act is violated, we will take action. But right now we don't have any concerns based on the information that's available to us at this point.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

How would you collect those concerns? Would you have to actually do some investigation or is it by complaint? Would somebody have to file a complaint with you?

[Richard Bilodeau]

Filing a complaint is generally the primary method by which we become aware of certain conduct in the marketplace. It's not always the only method. We can learn of situations through the media or through immunity applicants who decide to divulge their participation in a criminal cartel, for example.

The first step in our investigation is to assess whether or not the alleged conduct falls within the ambit of the Competition Act. If it does, then we will investigate and collect information. If we think it fits what the act sets out and there is a violation, we will take action at that point. We have in the past, as we have in the gasoline and any other industry--

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

I understand that. As it stands right now with this case, it doesn't fall under your purview is what you're telling me.

[Richard Bilodeau]

At this point we're not engaged in any matter with regard to Shell Canada's closing of the refinery.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

So it doesn't fall under your purview. Yes or no?

[Richard Bilodeau]

Right now, on a decision like that, no.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Okay, so it doesn't.

Where would we go for something like that? I ask because we obviously are wasting your time, and I don't want to waste your time and we're only here for a short period. So where would we have to go, if you know? If you don't, that's fair too. So you don't know?

[Richard Bilodeau]

I don't know where you would go for that. I would defer to my colleagues. Maybe they can....

[A voice]

Refuse to deal.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Well, there's another option, which is to refuse to deal. That is one of the clauses within this.

[Richard Bilodeau]

Yes.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Where does that fit in here?

[Richard Bilodeau]

I don't want to speculate on what would fit and what would not fit. What I can do is to explain to you what refusal to deal is, if you are interested in hearing about it.

A refusal to deal is in section 75 of our Competition Act, where a person refuses to sell product to somebody else.