Bill C-41 (Historical)

An Act to amend the Competition Act

This enactment amends the Competition Act to allow the Competition Tribunal to impose an administrative monetary penalty in respect of cases of abuse of dominant position by telecommunications service providers.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you, Mr. Chair.

It's very important for me to be here today. I'm pleased to be here with you. I'm pleased to be before the Standing Committee on Industry, Science and Technology. I'm happy to be here because it's all important, industry in Canada, and I know that it's important to you also.

As you said, I'm here with Richard Dicerni and Ron Parker. Richard is the deputy minister and Ron is the visiting assistant deputy minister.

Mr. Chairman, I am proud to say that my Department and other organizations that make up the portfolio, and for which I am accountable, have accomplished many significant achievements in the last number of months. It is these accomplishments and some future business that I would like to take the next ten minutes to talk about.

Recently I was pleased to join the Prime Minister and the finance minister to release our government's new science and technology strategy. Our strategy can be summed up in two words: excellence and commercialization. Our plan builds on Canada's research excellence, and it improves the ability of researchers and entrepreneurs to turn their ideas into innovative commercial products.

As most of you know, another major undertaking has been the work we've done on telecommunications. Our government telecommunication package includes varying a CRTC decision on access to an independent voice-over-Internet protocol; issuing a policy direction to the CRTC asking them to rely on market forces to the maximum extent possible rather than regulation; establishing the framework for the CRTC and the industry to work together to develop a consumer ombudsman; and, most significantly, varying the CRTC decision on forbearance to introduce true competition to Canada's local telephone markets.

As well, I introduced Bill C-41 to further protect consumers as the telecom regulatory framework moves to a more deregulated and market-based system.

In short, we have reformed the way in which our telecommunications are regulated in Canada, and I'm proud of the work we've done on this file to date.

In all areas of our economy, our government is strongly committed to improving competitiveness and prosperity. Last November we presented an ambitious long-term plan called Advantage Canada to create a positive economic climate. In March, with Budget 2007, we started implementing major elements of that plan. To create a positive economic climate, our government delivered on elements that will work for the economy as a whole.

In Budget 2007 our government increased the capital cost allowance rate on investments for manufacturing businesses. As you know, that was one of the major recommendations of your committee, and I thank you for this recommendation. I'm proud that we followed all the important recommendations in your report.

We also, as a government, reduced the federal debt while making substantial investments in education, research, and training programs, and we put more than $16 billion into infrastructure investments. These measures assist all industrial sectors as they are designed to drive our economy and make Canadian companies international leaders.

As you know, the Canadian aerospace and defence sector is an example of an industry that competes globally every day.

On April 2, we announced the launch of a new, transparent research and development initiative.

We came to office with a very significant piece of legislation—the government accountability bill. Accountability applies across government, as well as to Industry Canada, and specifically to a new program we have introduced, called the Strategic Aerospace and Defence Initiative.

This is a highly transparent program based on new criteria, and aimed at promoting research and accelerating innovation in the Canadian aerospace, defence, security and space industries. This program is expected to invest $900 million over the next five years into new projects. It will support strategic research and development, and new commercial products and services. It will result in significant spinoffs for industry, and it will be my job to ensure that those spinoffs are as positive as they can be and are linked to high technology.

While we've seen positives in the aerospace and defence sectors, the North American automobile sector is experiencing some challenges. Despite these challenges, the Canadian auto sector continues to attract billions of dollars in new investment and new product mandates. Last year, Ontario automobile plants produced more cars and trucks than any other auto-making region in North America. Canadian auto workers are consistently noted for the quality of the cars they make.

Another area we are watching closely is our forest products sector. Canada's forest products industry is an integral part of our nation's economy. Our government is working closely with the industry to enhance opportunities for this sector. We will help the industry grow offshore markets, promote value-added manufacturing, and help protect it from the growing threat of forest pests.

The manufacturing sector is also facing its own challenges. Although there have been job losses in this sector, as I was saying earlier, those job losses have been offset in many regions by strong job gains—jobs that are full-time and pay well. So far this year, close to 153,000 new jobs have been created in Canada. Our unemployment rate is 6.1 per cent, an historic 33-year low.

Yesterday, our government, along with Canadian manufacturers and exporters, responded in a very positive way to the recommendations made by your Committee on manufacturing. We are now taking action to help manufacturers. In Budget 2007, we came forward with measures to address the short-term priorities and long-term competitive needs of this industry sector.

Part of building a competitive and efficient economy is ensuring that goods and services can move to where there is demand. North-south trade, while vital to the Canadian economy, is not the only direction this government is looking at.

As a government, it is our goal to build a stronger Canadian economic union. I'm pleased to report the federal and provincial governments are working together on the removal of internal trade barriers. A key component of this plan is an agreement to implement full labour mobility within Canada by April 2009.

On going forward, Budget 2007 gave me the mandate to establish an independent expert panel to review Canada's competition policies. As the telecommunications policy review panel was helpful in setting a course for telecom reform, it is my hope that we will see the same types of constructive recommendations from the competition panel on how to improve the state of Canadian competitiveness.

We will soon have Bill C-47, the Olympic and Paralympic Marks Act, before this committee for your consideration. This bill will meet the Government of Canada's commitment to the International Olympic Committee to protect the Olympic and Paralympic brands. It is balanced legislation in line with what other countries have done and are doing when they host similar kinds of international sporting events.

Finally, Mr. Chairman, as an update, I'm pleased to say that Bill C-26, the payday loan legislation we introduced to help protect consumers, received royal assent on May 16. Already several provinces are passing their own consumer protection legislation to apply this exemption and regulate the payday loan industry.

Mr. Chairman, in closing, I'd like to thank the Committee for its diligent work these past months. I can assure Committee members that they will have my full cooperation.

I would now be very pleased to answer any questions you may have over the course of the next hour. Thank you.

Gasoline Prices

[Pauline Picard, Bloc, Drummond, QC]

Mr. Speaker, in addition to his fear campaign, the minister also began a campaign of misinformation. Yesterday, he tried to create confusion by saying that, if we want to give the Competition Bureau greater investigative power, we just had to vote for Bill C-41. However, the investigative powers covered by Bill C-41 relate to the telecommunications sector, not the oil and gas sector.

Rather than trying to fool everyone, does the minister plan to address the problem of the appalling increase in the price of gas by giving the Competition Bureau the investigative power it needs to do its job in the oil and gas sector?

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, as you are aware, this week is strengthening accountability through democratic reform week. It has been a busy week for the democratic reform family of bills.

We sent out invitations for the first birthday of Bill S-4, the Senate tenure bill, which Liberal senators have been delaying for almost a year now.

While we are disappointed with the behaviour of Bill S-4's caregivers, we did have some good news this week with the successful delivery of two new members of the family: Bill C-54, a bill to bring accountability with respect to loans; and Bill C-55, a bill to expand voting opportunities.

There is more good news. We are expecting.

Tomorrow, I will be introducing an act to amend the Constitution Act, 1867, on democratic representation, which is on today's notice paper.

Bill C-16, fixed dates for elections, was finally allowed by the clingy Liberal-dominated Senate to leave the nest when it was given royal assent last week.

With respect to the schedule of debate, we will continue today with the opposition motion.

Friday, we conclude strengthening accountability through democratic reform week with debate on the loans bill, possibly the Senate consultation bill and, hopefully, Bill C-52, the budget implementation bill.

Next week will be strengthening the economy week, when we will focus on helping individuals, families and businesses get ahead.

Beginning Monday, and continuing through the week, the House will consider: Bill C-52, the budget implementation bill; Bill C-33 to improve our income tax system; Bill C-40, to improve the sales tax system; Bill C-53, relating to investment disputes; and Bill C-47, the Olympics bill, which help us have a successful Olympics. Hopefully, we can get to Bill C-41, the Competition Act.

If time permits, we will also call for third and final reading Bill C-10, the minimum mandatory sentencing bill.

Thursday, May 17 shall be an allotted day.

Wednesday, May 16, shall be the day appointed, pursuant to Standing Order 81(4)(a), for the purpose of consideration in committee of the whole of all votes under Canadian Heritage of the main estimates for the fiscal year ending March 31, 2008.

Thursday, May 17, shall be the day appointed for the purpose of consideration in committee of the whole of all votes under National Defence of the main estimates for the fiscal year ending March 31, 2008.

Finally, there is an agreement with respect to the debate tomorrow on the 13th report of the Standing Committee on Public Accounts. I believe you would find unanimous consent for the following motion.

I move:

That, notwithstanding any Standing Order or usual practice of the House, the debate pursuant to Standing Order 66 scheduled for tomorrow be deemed to have taken place and all questions necessary to dispose of the motion to concur in the 13th Report of the Standing Committee on Public Accounts be deemed put and a recorded division be deemed requested and deferred to Wednesday, May 16, 2007, at the expiry of the time provided for Government Orders.

Gasoline Prices

[Maxime Bernier, Conservative, Minister of Industry]

Mr. Speaker, if my friend wants to give the Competition Bureau more power, I invite him to vote for Bill C-41, which gives the Competition Bureau greater power to conduct investigations. The Bloc Québécois has been blocking Bill C-41 for some time.

That said, the Bloc Québécois should also know that gas prices are due to a shortage of inventory in the United States, a breakdown in the production chain. Oil inventories are being built up, and you will see that market forces will soon drive down gas prices again, if Bill C-288 is not adopted.

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

We're not in camera. Yes, we're out in public, of course. It's been a long day.

So we're back with an offer saying that we, as the Liberal Party and other parties, have made twelve recommendations to make this thing work on April 6. You then proposed not to give it to us, conditional upon this motion. Our response has been that this motion has to be there because we have no other way of guaranteeing that what you're going to propose is something we will agree with. What if you, for instance, take out something along the lines of a market analysis, or what if you go back to the dates and say it's contingent on Bill C-41? I don't know what you're prepared to offer, but this cat-and-mouse game is unprecedented. Tell us what you've got; it may very well work. You've been talking about this for 45 minutes, and we have no idea what you have proposed.

We've been forthright in terms of providing you with what we thought would make this thing work. We haven't received your proposal. Therefore, we're going to the motion. We're going to the motion because, as you know, Chair, this thing kicks in on April 6. If the House of Commons, in all of its deliberations within this committee, and the witnesses, who have come before us and pointed out the faults, the frailties and the shortcomings of the minister's rush to make a decision, are not taken into consideration, then we're going to wind up with a flawed decision, which would be irresponsible for the opposition, Liberals, Conservatives, and NDP to proceed with in terms of a blank cheque.

So what I'm suggesting you do, Chair, if you are prepared to do this—because you received a letter from the minister saying he'll give it to you if you don't have the motion criticizing them.... But I'm not interested in criticizing the minister; the Liberal Party is not interested in criticizing the minister. We're interested in making sure the regulatory framework he's proposed is consistent with the TPR report, the telecommunications report, which came out last year. If he could do so, that would be great, but we're dealing with a deadline of April 6. This is the last day the committee is going to sit. Chair, if we have to sit all night to try to hear where you're prepared to make those compromises, we'll do that, but I haven't heard them yet. We in the opposition, at the very last in camera meeting, gave the government an opportunity to provide us specifically with what they could work with. We offered those in good faith and never made those public, yet you're concerned about criticism. Well, chairman, there's going to be criticism if this motion goes to the House, because this won't be the end of the line. What I'm more concerned about is making sure we get the regulatory framework correct. Now, we know there are problems.

Let me, Scott, if you don't mind, read the recommendations you had put forward to deal with this:

(1) Come forward with policy legislation to move forward on the rest of the TPR recommendations; (2) Introduce a plan and/or program to expand Broadband for rural and remote areas; (3) Undertake to propose measures to ensure local telephone rate stability in rural Canada; (4) Move forward on the recommendation to have an ombudsman for consumers; (5) Entrench the role of the Telecom Competition Tribunal (TCT) to capitalize on their expertise and ability to safeguard the telecommunications industry rather than rely on your proposed but potentially ineffectual competitor presence test; (6) Conduct a thorough market analysis that ought to consider the impacts on economically disadvantaged communities and Canadians with disabilities before proceeding with any measure designed to deregulate the telecommunications industry; (7) Make allowances for additional time before “forbearance” impacts the small, independent cable operators in their areas; (8) Undertake to address the concerns raised about the possible negative impact of unfettered winback strategies on new entrants in the market;

Now, we've said to this end that a motion could be provided. You're saying that motion should be off the table before you present us with what you'd like and dislike.

We've heard from you, Chair. You mentioned nine recommendations, which I presume would include another one of the proposals made perhaps by the Bloc or the NDP. But we don't know what they are; we're literally farting in the wind. I'm sorry, but I'm not going to buy a pig in a poke.

So this motion stands. I'm going to defend this motion, because it's the only other way to get the government to respond to what, in our view, is an erroneous step taken prematurely that will have the unintended consequence, I'm sure, of reducing competition in Canada and hurting consumers. The Liberal Party will not stand for that.

Competition Act

[The Deputy Speaker, NDP, Bill Blaikie]

Order, please. I must interrupt the debate on Bill C-41.

[Maxime Bernier, Conservative, Minister of Industry]

moved that Bill C-41, An Act to amend the Competition Act, be read the second time and referred to a committee.

Mr. Speaker, I am pleased to rise in this House to address Bill C-41. This bill amends the Competition Act regarding the application of provisions dealing primarily with the telecommunications sector. This amendment—the bill only has two clauses—will allow the Competition Tribunal to impose administrative monetary penalties if telecommunications service providers abuse their dominant position.

Bill C-41 will therefore be a powerful deterrent against the anti-competitive behaviour that some players in the industry may display.

The government wants to ensure that consumers and businesses in Canada fully benefit from the deregulation of telecommunications and the creation of competitive markets right here in Canada. To that end, it is essential to provide a credible recourse to punish and deter anti-competitive behaviour which could—and I emphasize the word could—surface during the transition from a regulated to a non-regulated environment.

This is basically the purpose of Bill C-41: to ensure that users of telecommunications services in Canada get the benefits of a competitive market.

In order to properly address this issue, it is important to consider the proposed change in a broader, more global context. The telecommunications sector is experiencing a rapid evolution because of the emergence of new technologies. Telecommunications markets are very competitive and are important to a strong economy.

As we know, competition forces businesses to become more efficient, to invest more in new technologies, to offer new products and to provide services that benefit all consumers.

We are living in a new era of communications shaped by constantly evolving technologies, such as the Internet and the wireless technology. These new telecommunications technologies determine the way we, in Canada, work and live.

Every day, businesses come up with new products and innovative services. In March 2006, the Telecommunications Policy Review Panel acknowledged, in its report, the costs generated by useless and ineffective regulations in these sectors. As I just mentioned, the panel provided us with a copy of its report in March 2006. It urged the government to regulate only if necessary. It also recommended that appropriate measures be provided to deal with anti-competitive behaviour. The panel expressly recommended using fines to ensure that telecommunications companies comply with the Competition Act.

More recently, the Minister of Finance published a document titled "Advantage Canada—Building a Strong Economy for Canadians".

In this document, the government commits itself to taking additional measures to ensure that Canadians will continue to benefit from competition in the telecommunications sector as well as in all other sectors in Canada.

In the document, we stress the importance of making the Competition Act as modern as possible.

In its report, the task force also reminded us rightly that some measures to regulate telecommunications in Canada date back to the beginning of the last century. Moreover, the report says that even though Canada remains a leader in telecommunications, other countries are catching up and are even starting to get ahead of us.

Canada's new government is determined to take measures to reverse this trend. Our goal is to create a new regulatory framework that will be modern and flexible and will allow consumers to take advantage of new technologies as well as competition.

For example, Canada's new government tabled in the House a set of proposed policy directions to the CRTC, directing it to rely as much as possible on market forces. As well, on November 15, I announced the decision to change the way the CRTC regulates voice over Internet protocol services, known as VoIP.

Canada's new government has instructed the CRTC to begin deregulating access-independent VoIP services. There are few obstacles to entry into this market and there is no reason to retain regulation in this area.

In the end, I proposed a variance to the CRTC decision regarding local forbearance which outlined the criteria for determining when to refrain from regulating local services.

The government proposed replacing the CRTC criteria for market share with a criterion that would emphasize the presence of a competitive infrastructure in a given geographic area.

We are doing this to ensure that Canadian consumers have the widest possible choices, the best services and the most competitive rates in the telecommunications sector. We wish to resort to regulation only when problems cannot be resolved by market forces. Competition is the main means of ensuring economic efficiency and promoting innovation and growth of productivity, as well as improving our quality of life.

I come from an area and a country where entrepreneurship is flourishing. The people of Beauce recognize the importance of individual freedom, autonomy and responsibility. Beauce businesspeople also understand, as do entrepreneurs throughout Canada, that individual freedom and competition are vital values in a democratic country and that all forms of regulation can thwart the innovation of which people are so proud.

Implementing this legislation is important. We believe that it is also important that steps be taken to deter behaviour that stifles competition and to educate citizens about this act. The Competition Bureau—

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I have the feeling that now that the minister has placed our hand in the grinder our whole body is getting dragged in.

If we accept the fact that there is a proposal to deregulate the local telephone service and another to increase the fines administered by the Competition Bureau, which is the purpose of Bill C-41... This is from the big report. Those are two of the steps and you say they are going in the right direction.

In your view, is it possible to take those steps without being concerned that the other measures will not follow? Last week, the minister told us he had prepared no legislation to amend the act. So it is very possible that we will make a few changes to the local service directive, if it ever happens, and that the rest will be delayed forever.

Do you not think it is dangerous to go ahead with these two steps only and to leave the rest up in the air? Is it essential to have the other part, the reform of the Telecommunications Act?

Business of the House

[Peter Van Loan, Conservative, Leader of the Government in the House of Commons and Minister for Democratic Reform]

Mr. Speaker, today we will continue the debate on the Liberal opposition motion.

Tomorrow morning we will begin debate on the procedural motion relating to the back to work legislation, to which the opposition House leader was referring. Also, we will have Bill C-45, the Fisheries Act, following question period.

On Monday, we would like to conclude the debate on the statutory order regarding the Anti-terrorism Act, which is very important for Canadians for public security reasons. We are also getting down to the deadline when certain provisions of the Anti-terrorism Act will sunset.

I have consulted with the other parties and I will propose a related motion at the end of my business statement.

Next week we will consider the following bills: Bill C-37, financial institutions; Bill C-41, competition; Bill C-11, transport; Bill S-3, defence; Bill C-42, the Quarantine Act; Bill C-36, Canada pension plan and old age security; Bill C-10, mandatory minimum penalties; and depending on developments regarding the railway strike, we may call the procedural motion relating to the back to work legislation.

Thursday, March 1 shall be an allotted day.

As I mentioned earlier, following discussions with the House leaders of the other parties, Mr. Speaker, I believe if you seek it, you would find unanimous consent of the House to adopt the following motion. I move:

Motion

That, notwithstanding any Standing Order or usual practices of the House, once the Statutory Order regarding the Anti-terrorism Act is called on Monday, February 26, and when no member rises to speak on debate or at the expiry of the time provided for Government Orders, all questions necessary to dispose of the Statutory Order regarding the Anti-terrorism Act be deemed put, a recorded division deemed demanded and deferred until Tuesday, February 27, at 5:30 p.m.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you.

You are referring to the now defunct Bill C-19 tabled by the former government. That bill gave the CRTC the power to impose administrative monetary penalties on stakeholders in all the different industry sectors. You're absolutely right. That is why I am confident that Bill C-41, which is specific to the telecommunications industry, will be approved by the House at the appropriate time.

With respect to the Competition Bureau and the Competition Tribunal, Ms. Scott said a number of times, when she appeared before you, that she has the necessary resources to take action and would like to be authorized to impose administrative monetary penalties of up to $15 million. She said she would like this bill to be passed by the House and expressed her confidence that this would discourage abusive behaviour. At the same time, she said that if such behaviour were to appear, the Competition Bureau would have the tools it needs to issue injunctions with a view to ensuring that the Act is adhered to and that all industry players, particularly large players, comply with it to the same extent as new entrants.

The test that we are applying for the purposes of deregulation was used by the CRTC itself. It is different from the market share test. If we want consumers to benefit from deregulation and competitive pricing as soon as possible, we can use that test. It is based on facts, is easy for the CRTC to administer, and allows the rule to be applied where there is competition. That is our belief. We want this to happen as quickly as possible.

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

Minister, I think you'll agree that suggesting that consumers are somehow supporting this particular initiative, as Bell Canada tried to the other day.... I'd be quick to point out that on the first question of the Ipsos-Reid poll they commissioned, 84% of Canadians weren't even aware of the policy to begin with. So this is in fact a very complicated area of public policy.

Notwithstanding the declarations you've made, and obviously the references you had to make to the documents in front of you, I too find it very complicated. I am aware of one thing, as are several members of this committee, with respect to the Competition Act, and I'm also painfully aware why legislation specific to the airline industry was put into question, which is that the cease and desist provision was struck down by the Quebec courts. Your department—your legal advisors—and Madam Scott should certainly have been able to tell you that only in the most egregious and obvious of examples, which is a very hard test to prove, will you be able to in fact arrest a situation where an anti-competitive act is taking place.

This leads me to the real question about the competitor presence test. What you've done is thrown out the standard rule of reason test by which all matters of competition or anti-competitive activity are judged. You've thrown out the opportunity to have a review of the market in which a decision is to be made. And of course consumers know very little about this project.

Given all the recommendations you've set out and given the Quebec court's decision, how can you now be confident that consumers will be protected and that anti-competitive activities won't be prevented under Bill C-41, which, by the way—and I point this out for you, Chair—was the grandson, if you will, of Bill C-19, which remanded it to make it a law of general application?

[Maxime Bernier, Conservative, Beauce, QC]

You're right. In terms of the legislative agenda, our schedule is quite full. As you know, we are currently debating bills relating to the justice system in the House. If I understood you correctly, when the Government House Leader meets with your Parliamentary Leader to put second reading of Bill C-41 on the agenda, you will not object.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Recommendation 3-3 could apply. The sunset clause would mean that it wouldn't be for ever. As far as Bill C-41 is concerned, all the government has to do is table it. Until it does that, we can't study it in the House. It's the government that hasn't tabled it yet.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you for your question. As regards a comparison between the ridings of Beauce and Portneuf, you are right that we represent people who are entrepreneurs, people who believe in their success and in themselves. I am very proud to represent the Beauce region, and I am certain that you are just as proud to represent your riding. People from the Beauce may not benefit from the deregulation of telephone services quite as quickly as we would have liked, but I do hope that one day, they will derive the same benefits as people living in the major urban centres across the country.

I have confidence in the Competition Bureau; I believe the Commissioner is doing a fantastic job. She told the Committee that when there are serious problems, they address them and allocate the necessary resources to carry out studies as quickly as possible and issue injunctions, when necessary.

The Competition Bureau has all the resources it needs to be in a position to take action and sanction anti-competitive behaviour or an industry player that abuses its dominant position. It has all the necessary resources to do that. But we would like to provide it with an additional tool to counter this kind of behaviour. That's why I'm asking the Committee to look at Bill C-41, a bill that is in the interests of consumers, since it will ultimately give the Competition Bureau more teeth, by enabling it to impose administrative monetary penalties of as much as $15 million and issue injunctions after conducting a comprehensive, but expeditious, study of a given situation.

The Competition Bureau has a role to play. It is an independent government organization, as you know. I believe the new power related to administrative monetary penalties that would be given to the Competition Bureau once Bill C-41 has been passed into law, is in the interests of consumers and Canadians as a whole. I am confident that the Bureau will act expeditiously if this bill is passed and if a situation arises in the market place which shows that a company is not abiding by the rules laid out in the Competition Act.

Thank you for your interest in Bill C-41 and I hope that this bill can receive appropriate consideration at second and third readings as soon as possible.

[Maxime Bernier, Conservative, Beauce, QC]

As I mentioned earlier, the Competition Bureau has an important role to play. It must ensure that we have dynamic and competitive industries all across Canada. The Competition Bureau will fulfill its role in the telecommunications industry just as it did, with great success, in the transportation industry when it was deregulated. The Competition Bureau played an important role. At the time, the government had given it the power to impose monetary penalties on any players that did not comply with the Competition Act, that engaged in anti-competitive behaviour or abused their dominant position.

It is our hope that the Competition Bureau will have the same powers in the telecommunications industry. That is why we have tabled Bill C-41, which takes its inspiration from a bill tabled by the previous government that confers the same powers on the Competition Bureau. So, it is our hope that this legislation can be passed as quickly as possible, in order to afford greater protection to consumers in deregulated industries.

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

He is answering. And there's a question that comes with that.

Minister, you know full well that with respect to Bill C-41, as you've proposed it--and we've heard why you've wanted to introduce this bill--there's great concern that the damage is after the fact. So if someone is put out of business as a result, it'll take several months before somebody actually gets some kind of resolution. By that point, the business is gone, it's history, it's toast. And it'll take several months before someone is able to actually get back into business, if indeed they can at all.

This is a recipe for disaster, Minister. How do you explain that?

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

Sir, on the subject of Bill C-41--

[Maxime Bernier, Conservative, Beauce, QC]

Thank you for asking that question about Bill C-41. It gives me an opportunity to say that this is an important bill that will allow us to ensure that these industries can be part of the free play of market forces in areas or centres which have been deregulated, while still complying with the Competition Act. By giving the Competition Tribunal the authority to impose monetary penalties, the government is promoting voluntary compliance with the Competition Act and, at the same time, protecting the consumer from anti-competitive behaviour that could be harmful. It is important to see Bill C-41 in its full context. The telecommunications market is evolving very rapidly, and there is a need for modern, flexible and effective regulations that allow consumers to benefit…

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

Chair, thank you.

Minister, I want to come back to the earlier questions that I didn't get an answer to. In the meantime, you've raised a number of very interesting points, particularly with respect to wireless win-back, Bill C-41, and airlines.

Minister, when you last appeared before this committee on June 6, 2006, you stated categorically to my question that you didn't see any need to change the Competition Act. I'm glad to see you now see that, although I suggest the reason you're doing it has a lot to do with piggybacking on the issue of creating separate laws for the airline industry. As you know, competition law is the law of general application and general rule. I'm sure there are a number of competition lawyers and consumers out there who would probably want to argue that, as they did with me over the years.

Minister, you've talked a bit about the issue of win-backs, and I understand win-backs to work only on the following circumstances: if you leave the service, you will then get rewarded. So I hardly see how it's possible for you to connect wide consumer benefits with only a few people, who decide to leave, being paid handsome amounts to come back.

There's the experience in the United States, Minister, which I raised with you in December after you made your policy announcement just before the House rose. I talked about the experience of decline in competition in the United States. In fact, not only were they concerned about the decline, but to the same mantra that wireless and VoIP would be effective substitutes, we know that those technologies are a long way off. In fact, if they are precluded under your plan, they may never be realized.

So let me ask you this, Minister. An area that my colleague Mr. Carrie talked about in Durham region with Oshawa was with respect to what consumers are concerned about. They're very concerned about wireless. I want to know where you are with respect to this review, especially given that you have now three players. I note that under your criteria for having competition there has to be one of the wireless players who is not affiliated with the others. It's going to be pretty hard to deal with only three companies, which usually constitute either a telephone or a cable company. But this, Minister, probably has a lot to do with the fact that you didn't go through all the recommendations and follow the expert panel review.

Where are you with wireless? And when are you going to respond to a true need of consumers, as opposed to one that you seem to be inventing here now?

[Maxime Bernier, Conservative, Beauce, QC]

I do not share your views with respect to the comprehensiveness of this reform.

We have taken concrete action. There is competition in certain markets, and it is now time to deregulate those markets. The CRTC itself, using its market share test, admitted last fall that it wanted to review that test because it has realized that based on new data, there is very strong competition in certain urban centres. By using a test based on competitive infrastructure, we will ensure that where there is competition, there will also be deregulation that benefits consumers.

It is important to say that we are currently studying all of the panel's other recommendations and that, following that review, we will act on the other recommendations at the appropriate time.

I agree with you: many of the panel's other recommendations are of interest. We are in the process of reviewing them. So far, we have issued one policy direction to the CRTC — it was one of the recommendations deemed by the panel to be a priority. We brought that forward. We also tabled Bill C-41, an Act to amend the Competition Act, which will provide for consumer protection.

Our vision is a comprehensive one, because if telecommunications carriers or former monopolies adopt behaviour that is not in keeping with the Competition Act, as you know, financial penalties can be imposed. The Competition Bureau and the Competition Tribunal will have the power to impose fines of up to $15 million. We believe this will act as a deterrent and result in competition which is as harmonious as possible in deregulated areas. That is a power that the Bureau already had when we deregulated the airline industry, and it is a power that the Competition Bureau was asking for.

So, we are acting on several different fronts. We are taking action through the policy direction given to the CRTC, on the forbearance decision, and we are also acting to protect consumers.

[Maxime Bernier, Conservative, Minister of Industry]

Thank you, Chair, and thank you, everybody. I'm very pleased to be here today.

I'm very happy to have this opportunity to speak with Committee members today.

This committee's work is very important, and I'm following your study closely. I have read with great interest the testimony of some of the witnesses who appeared before you last week and the week before. As always, it is a pleasure for me to be able to speak to you today.

As you know, the telecommunications sector plays a critical role in Canada's economy. Over the next two hours I want to take some time to describe the decisions I have made and the reforms we have proposed to date to modernize the dynamic telecommunications sector.

Upon being appointed Minister of Industry, I moved quickly to set priorities. I strongly believe that opening the telecom sector to decreased regulation will increase competition, increase our national competitiveness and productivity, and, most importantly, it will be a great benefit to Canadian consumers.

It was obvious that modernizing the policy and regulations that guide the telecommunications sector had to be a priority for our government. In April 2005, the government appointed the Telecommunications Policy Review Panel to study the policy and regulatory framework governing this industry. They were mandated to analyze the telecom sector and to make recommendations that will help transform the industry and turn Canada into a strong, internationally competitive player, all for the benefit of Canadian consumers.

A fundamental finding of the panel was that competition in telecom has evolved to the point where market forces can be relied upon, and they concluded that the need for regulation in certain markets should no longer be presumed. Giving due consideration to the panel's finding and 127 recommendations, the government is pursuing a course of policy and regulatory modernization in the area of telecommunications.

As you know, the concept of greater reliance on market forces is in keeping with the government's overall objectives of improving competitiveness and productivity in the Canadian economy; it is also consistent with the government's vision for a stronger, more prosperous country, as outlined by my colleague, the Minister of Finance, in the document entitled Advantage Canada.

Last June, I tabled a policy direction in Parliament instructing the CRTC to rely on market forces to the greatest extent possible and to regulate only when necessary. This was followed by our decision concerning Voice over Internet Protocol, commonly known as VoIP.

Stating the need for greater reliance on market forces, the CRTC was asked to forbear from the economic regulation of access independent Voice over Internet Protocol (VoIP) services offered by traditional telephone companies.

In the best interests of Canadian consumers, in December, the government proposed to amend the CRTC's decision to forbear from regulating local telephone services.

In its ruling, the CRTC laid out its criteria for determining when it will refrain from regulating retail local telephone service on the basis of a market share test. However, the CRTC is still inhibiting competition beyond what is necessary, as it may take up to two years under the CRTC plan before deregulation comes to major urban centres. In the meantime, consumers are deprived of the benefits of competition.

The government is proposing to replace the CRTC's market share test with one that emphasizes the presence of competitive infrastructure. In markets where consumers have access to telephone services from a traditional telephone service, a cable company, and at least one non-related wireless provider, deregulation can occur. Under this test, service providers will no longer need CRTC approval to set their prices for residential services in markets where there are at least three facilities-based telecommunications service providers owned by three non-affiliated companies.

In a competitive market, consumers, not a government agency, should determine the prices they pay for telephone services. In a competitive market, there is no reason to regulate some companies while allowing others to offer the services they want at the prices they want.

In addition to leaving in place existing safeguards that protect consumers, such as a price cap for stand-alone residential service and continued price regulation in regions where there's little competition, we are proposing to amend the Competition Act. In December, I tabled in Parliament Bill C-41, An Act to amend the Competition Act. This bill will establish financial consequences for companies that engage in anti-competitive behaviour in deregulated telecom markets. This measure will aid in the reduction of unnecessary regulation and act as an effective deterrent to prevent anti-competitive behaviour and, where necessary, help to rectify such behaviour.

Let me just say, once again, how pleased I am with your work. I very much hope to take a closer look at the comments made as part of today's discussions. However, as you heard from Hank Intvent, the Telecommunications Policy Review Panel stressed the need for timely action by the government in terms of deregulating the telecommunications industry, where necessary. Why is that?

Well, the telecom industry is driven by innovation and high technology. As well, the landscape changes rapidly, and the government has to be responsive to the pace of this industry.

We should remember that the CRTC had already initiated a review of its frameworks surrounding mandated access to wholesale services, something addressed by the policy direction. As well, all statutory requirements under the Telecommunications Act were completed and extensive consultations have taken place.

Moving forward with this direction provides an intended course of telecommunication policy in Canada to the market, to the CRTC, and to the world. The reforms we have introduced will benefit Canadian consumers, providing them with even more choice of better products and services.

Thank you, and I'm very pleased to be here with you. I am now ready, with my officials—Deputy Minister Richard Dicerni and Ron Parker—to answer your questions.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you for clearing that up.

Another thing we talked about was Bill C-41. If it were adopted, do you think it would help prevent the abuse of dominance in the market?

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

Thank you for being here today and thank you for the frankness and the brevity with which you presented your concerns here today. I can tell you that on the opposition side we are deeply concerned about the rush by the minister to proceed notwithstanding the number of recommendations made in the TPRP.

I wanted to point out for my colleague Mr. Shipley that Bill C-41's genesis was Bill C-19, and it was this member of Parliament who had everything to do with making that happen. Unfortunately, we had a lot of opposition at that time, including that from your party.

I realize, Mr. Shipley, you weren't here at the time, but I want to make it abundantly clear that the issue of fines concerns us. Fines, if they are limited only to administrative monetary penalties that go back to general revenue, assuming the time it takes to even get a fine, cannot possibly help you, the aggrieved party.

Tell me, from your perspective, how you see these fines--assuming that your various companies have been found to be in a position of having been egregiously violated--helping your company stay in business, or will you be gone by that point?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I was going to get some comments on it from some of the others.

Just one. In our position, we've asked for support for Bill C-41in terms of the competitive productive practices. The opposition obviously is not supporting that. We want to get it moved as quickly as possible. If it were passed, do you believe that would maintain the fair practices in the telecommunication market?

[Colin Carrie, Conservative, Oshawa, ON]

Do you think Bill C-41 would help in that regard?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

If Bill C-41 is not passed, you'll be more or less like a declawed cat.

[Sheridan Scott]

The $15 million is a maximum amount. It's a cap. It cannot be more than $15 million. It would be up to the tribunal to determine what amount it could be. It could be $3 for that matter. It's anywhere from zero to $15 million. Bill C-41 has a number of criteria that the tribunal is to assess in determining what the appropriate amount should be.

Other jurisdictions around the world that do have financial penalties associated with abuse of dominance frequently have an amount that's related to the volume of commerce, like 10% of the volume of commerce. If you look at the bottom lines of the incumbent telephone companies, you'll see that $15 million is probably less than 10% of their volume of commerce.

It would relate to the specific charge that is brought forward, so we would look at it on a charge-by-charge basis. It's not really on a charge—that's more of a criminal concept—but on an order-by-order basis that they would be bringing forward evidence of a particular contravention. It would be on a contravention-by-contravention basis.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We were talking about Bill C-41 and the penalties, and we heard $15 million. Is that per occurrence, or would that be a collection of occurrences?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I thank you both for coming.

It was asked at the last session, and I just want to clear the record, but I'll fashion the question somewhat differently. Some have suggested that the minister's policy direction was illegal. I would like to ask about the policy direction of the report on Bill C-41, with the forbearance. Was it prudent? Did the minister act prudently in moving in this direction?

[Colin Carrie, Conservative, Oshawa, ON]

With the tools you have today, if you compare it to Bill C-41, is an amendment like that really necessary?

[Sheridan Scott]

Well, we certainly hope so, and I hope I'll have the chance to come back and speak to you again when Bill C-41 comes before this committee.

What I can say for now is that we've clearly been on the record supporting the introduction of administrative penalties relating to abuse of dominance in the marketplace. We believe this has an important deterrent role to play, as well as providing the opportunity for the Competition Tribunal to address the anti-competitive behaviour in a financial way, if indeed it proceeds that long. But we trust it will have both this deterrent effect, so there will be less of this activity in the marketplace, and provide us with tools to address the situation, if indeed the anti-competitive behaviour takes place.

[Colin Carrie, Conservative, Oshawa, ON]

Okay, thank you very much.

I'd like to talk a little bit about the proposed Bill C-41. One of my colleagues brought up abuse of dominance, and I think that's something we're all concerned about.

If Bill C-41 is adopted, will it help prevent abuse of dominance in the market?

[Sheridan Scott]

It's not up to me to determine what procedure should be followed. Bill C-41 is perfectly in keeping with the recommendations of the review panel, because it recommended—

In fact, they referred to Bill C-19, presuming that this would become law. They felt that the CRTC should have the same kind of system of sanctions as they did, presuming that C-19 would pass. That's one reason why that part was repeated in Bill C-41.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The minister announces a directive. Then he tables Bill C-41 during the consultations. Maybe this doesn't come under your purview, but it seems to me that that's putting the cart before the horse.

[Sheridan Scott]

They go together. There are three parts, if I can put it that way. There's the directive, there's Bill C-41 and there's the change.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Yes, but Bill C-41 was tabled before the market was deregulated.

[Sheridan Scott]

—and that we be allowed to impose pecuniary sanctions when it is deregulated.

From what we can see, Bill C-41 is supposed to follow deregulation. So it is indeed in keeping with the report.

There were no sanctions for the CRTC, but this was limited to the regulatory period. So the fact of giving us the power to impose pecuniary sanctions as soon as the market was deregulated was part of the recommendations contained in the report.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In your opinion, is Bill C-41, which gives you the power to impose sanctions, sufficiently in keeping with the recommendations of the Telecommunications Policy Review Panel or is this a power that's given to you piecemeal? Are there other points in the review panel's recommendations that seem essential to you?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

For example, Bill C-41 states that the Competition Bureau is responsible for imposing fines, while the report gave the CRTC this responsibility.

Are the minister's positions in keeping with the thrust of the report? I know this is somewhat delicate for you.

Competition Act

[Maxime Bernier, Conservative, Minister of Industry]

moved for leave to introduce C-41, An Act to amend the Competition Act.

(Motions deemed adopted, bill read the first time and printed)