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.

[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?