Industry Committee on Dec. 14th, 2010

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Is it fair to say that if you were trying to solve the problems, as you see them, you would draft it differently?

[Michael Janigan]

I think that's correct.

[The Chair, Conservative, David Sweet]

Mr. Rota for five minutes.

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

Thank you, Mr. Chair.

Thank you for being here today.

Mr. Wallace brought up something that was interesting, about people calling and wanting a study. As I read it right now in the act, in subsection 9(1), “Any six persons resident in Canada who are not less than eighteen years of age and who are of the opinion that”. It gives three main criteria, with references; they “may apply to the Commissioner for an inquiry”. So that exists. There's nothing new going on. This allows the commissioner to study a whole industry. Right now if the commissioner sees one particular corporation or one particular entity, he or she has the permission to go in to see if they're competing well.

Now, sometimes when you look at one entity within an industry, wouldn't it be a lot more productive if you got to study a whole industry and identify what's going on, what the positives and negatives are? Then maybe from that investigation of the whole industry--and it doesn't necessarily have to be a negative--we could look at a study, an inquiry, an investigation, maybe dig deeper to find out what's going on. Really what we're trying to do is promote competition. How we do it is the question here.

I hear that we don't really trust the person in charge or the commissioner with this. I would think that the Constitution would keep the competition commissioner in line. Is there any truth to that? There are some limitations. Are we running from our own shadows here trying to protect ourselves from the bad old commissioner?

I'll start off with Ms. Rodal, and then over to Mr. Janigan.

[Shuli Rodal]

I'll start. Thank you for your question.

The Commissioner of Competition, when conducting an inquiry under section 10, does actually obtain a fair amount of information from other market participants, and it's all on a voluntary basis, sometimes on a mandatory basis. Careful attention is paid to what is absolutely necessary to carry out the commissioner's enforcement mandate because there are real costs on members of the market who have not done anything or who are not suspected of having done anything anti-competitive in having to provide that information. At the same time, in order to make a proper inquiry under section 10, as it is right now, the commissioner does have to gather information about the market, understand competition in the market.

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

So if I understand this, it's almost like they have a case, they're trying to prove a point on a certain industry, so they're gathering information from different industry participants or different industry entities. What they're doing is trying to prove that this person is guilty, as opposed to looking at the industry and trying to see how it works, and then from there determining whether this person or this entity is dealing within the regulations that are standard or accepted.

[Shuli Rodal]

I think there are some issues that arise going the other way, looking at the whole industry, and then figuring out from there if anybody is doing anything wrong. The real issue is there are weaknesses in the case. The case is undermined by not having made a person properly a target of an inquiry from the beginning.

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

Okay. I'll ask Mr. Janigan, because we are a little limited for time, to comment on that as well.

[Michael Janigan]

I think this is something you would want to address specifically in the regulations in relation to the way in which investigations take place, the way in which evidence is used, and in the event that there was anti-competitive conduct that wished to be proceeded to the Competition Tribunal or to the federal courts, how that will take place, whether or not there's a separation, particularly of the staff that deals with it. There are a host of considerations that have to go into the regulations. I'm confident that given the testimony that the previous competition commissioners have evidenced before the committee, they could deal with that effectively.

Certainly, if we agree there's some utility in a study of competitiveness in an individual industry sector, that it's of assistance to the industry, to consumers, and to possible entrants, who else would you want to do it, other than your competition authority?

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

Very good. Thank you.

How are we doing for time?

[The Chair, Conservative, David Sweet]

We're pretty well out. There are 15 seconds left.

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

Can I make just a quick statement, then, to Ms. Rodal?

I come from a rural area, and I don't agree with charging more in all rural areas to compensate for the wide, expansive geography. That's my statement. I'll end with that.

[Voices]

Oh, oh!

[The Chair, Conservative, David Sweet]

I'm going to ask the Bloc if there are any more questions.

Monsieur Cardin, Monsieur Bouchard, do you have any more questions? Une question?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

My question is for Ms. Rodal.

When you are driving down the street, and you notice that all the gas stations in the city have their gas advertised at the same price, that does not surprise you?

Right now, even if it receives complaints of that nature, the Competition Bureau does not do anything. So Bill C-452 would give the commissioner the authority to conduct an inquiry in that kind of situation.

My understanding was that the Competition Bureau had all the power it needed. In this case, does the Competition Bureau currently have all the authority it needs to launch such an inquiry? If so, is it a lack of resources that prevents the bureau from responding and carrying out a market study in that kind of situation?

[Shuli Rodal]

I don't think anyone would accuse the Competition Bureau of not spending any resources in looking into the oil and gas industry. We see them quite regularly doing studies on a voluntary basis on that industry. I can only assume that if the Competition Bureau had any inkling that anti-competitive conduct was responsible for the nature of pricing in the oil sector, they would not be shy to take action, certainly now that the criminal conspiracy provision is much easier to prove. I can only assume there would be an immediate inquiry if there were any suggestion of anti-competitive conduct.

[The Chair, Conservative, David Sweet]

Thank you very much.

Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Ms. Rodal, you suggested that the Competition Bureau is the enforcement agency. Mr. Janigan suggested it was an advocate for competition. I think it's somewhere between the two.

There has always been a belief that the bureau acts more like a cop on the beat. It's probably best known—my Conservative colleagues would know this—that you can trust a police officer to understand a little more about the situation as it presents itself and be able to make some recommendations, given their first-hand knowledge of things.

The cost of doing business for many of these companies--they might be European-based or U.S.-based. They exist under far more rigorous oversight, you would have to agree, than companies here in Canada. The real question for members of Parliament and consumers is, how do you explain not knowing what the supply and demand picture is at any given time in Canada? The United States does it every week. In fact, tomorrow morning at 10:30 a.m. they will let the world know exactly how to account for every drop of energy. That has had some very positive, pro-competitive outcomes, in particular for the stock markets, the futures markets.

We also have the conundrum here in Canada of trying to explain why wholesale prices in most large, urban centres--whether it's Mr. Van Kesteren's riding, Mr. Wallace's riding, or Mr. Stanton's riding--move in a lockstep fashion. The fact that the Competition Bureau has not been able to address this fundamental reality is the huge divide between the public's expectations and the status quo. I believe that's the position the Canadian Bar has consistently taken over the years.

I wonder if you can resolve once and for all that we need a fair, unfettered, and transparent review of this industry. To do that we will have to allow the Competition Bureau to do what it normally does very well in other jurisdictions, and that is to say, “Here is the lay of the land. We find ourselves in a situation where supply is low and demand is high. We find ourselves with three players where we once had seven or eight. We understand that wholesale prices for gasoline and energy across this country are dominated by one or two players that don't need to compete against each other at wholesale. Why does the issue of predictability become so easy at four o'clock the day before the prices are set?”

I understand that the language, Mr. Janigan, is not correct. It's not exactly what you would like. Can you live with it?

[Michael Janigan]

You would certainly look to the regulations to fill in some of the gaps that seem to be evident in the amendment. I think it's possible to craft a solution that would satisfy some valid objections, or at least some valid concerns associated with implementing a market studies position. So yes, I think the regulations could respond to that.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I have a final question.

The way the Competition Act is currently written—on the civil side, certainly—if part of it has violated the Competition Act, a number of remedies are made available, but none of them include damages to the aggrieved party.

I'm wondering if in your opinion, Mr. Janigan—and perhaps Ms. Rodal could explain this. Why is it that lawyers in this country, who do extremely well, who are very much eminent members of the Canadian competition bar, never see the side of the little guy?

[Michael Janigan]

I think the fact that the primary competition authorities are largely people who are devoting their practice to attempting to insulate their clients from the effect of the competition law arises from the fact that we haven't had a tradition of private enforcement of the competition law in the same way as the United States has, bringing actions under the antitrust act. You have a plaintiff's competition bar in the United States as well as a defendant's competition bar. We don't necessarily have that up here.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

I think I'm going to make a last statement.

You credit that with the difference in prices we see on every street corner in the United States, which is the extreme reverse opposite in Canada.

[Michael Janigan]

I haven't done any empirical study related to those two factors, so I can--

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Americans have no trepidation with doing studies on industry and asking them to open their books in order to achieve that inquiry, whether it is done at the local court.... I assume most Canadian companies who are parented or headquartered in the United States would certainly now want a situation where they can do in Canada what they know is perfectly illegal or verboten in the United States.

[Michael Janigan]

Certainly I think it's fair to say we haven't inculcated the same culture of competition that exists in the United States, and I think we're attempting to do so.