Bill C-454 (Historical)

An Act to amend the Competition Act and to make consequential amendments to other Acts

This enactment amends the Competition Act to authorize the Commissioner of Competition to inquire into an entire industry sector. It also provides for the imposition of an administrative monetary penalty in respect of cases of abuse of dominant position, and for an increase in the amount of administrative monetary penalties in respect of deceptive marketing cases. It repeals all provisions dealing specifically with the airline industry and criminal provisions dealing with price discrimination, predatory pricing, discriminatory promotional allowances and geographic price discrimination. The enactment also provides that the court may make an order requiring a person who made a false or misleading representation to compensate persons affected by that conduct and may issue an interim injunction to freeze assets where the Commissioner of Competition intends to ask for such an order. It also makes consequential amendments to other Acts.

Competition Act

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I am pleased to speak to Bill C-454. I would like to congratulate the member for Montcalm on his bill.

The origins of the bill can be traced back to early 2002 when the Standing Committee on Industry, Science and Technology released a report entitled, “A Plan to Modernize Canada's Competition Act”. The proposed changes from that committee's report formed the basis of government Bill C-19 during the 38th Parliament, under the leadership of the member for LaSalle—Émard.

Reading this private member's bill, I noticed that virtually all the provisions of Bill C-19 have been included as well as some of the other recommendations from the industry committee's 2002 report, which did not find their way into the original bill.

I understand many of the additions in Bill C-454 had been proposed during the rather lengthy year that the industry committee spent studying Bill C-19 before it died on the order paper in November 2005.

Above and beyond those additions, Bill C-454 has a number of other amendments that were not in the original bill.

While I am willing to lend my vote to the bill at second reading, I do so in the hope that it will receive the same diligent consideration at committee stage that Bill C-19 received in 2005. We must, as legislators, ensure that the objectives of the bill will be met without any unintended consequences.

To reiterate my position for the member, the bill shows good promise and I will support it at this stage. However, I will reserve my final judgment until it returns from committee wherein stakeholders and Canadians will have had the opportunity to voice their praise or their concerns for the bill.

While I am on the topic of committee stage, I hope the industry committee' s efforts to review the bill will be well coordinated with the Minister of Industry's review of the Competition Act. I believe the minister is expecting his panel to report later this spring and I hope that the two tracks will find some common ground.

The underlying purpose of Bill C-454 is to enhance the Competition Act, with a view to ensuring that businesses in our country compete with each other in a fair and open market. The act helps to protect businesses, especially small businesses, but large ones as well, from becoming the victims of such anti-competitive behaviour as predatory pricing and abuse of dominance.

The end beneficiary of this is the Canadian consumer, who will benefit from increased competition, diversified choice and in theory lower prices at the cash register. The act achieves this through the Competition Bureau, which enforces the provisions by responding to consumer complaints and investigating evidence of illegal activity by businesses.

The biggest change that Bill C-454 would make to the Competition Act is it would allow for general administrative monetary penalty, or AMP, provisions to be used against businesses or individuals abusing their dominant position in any industry. This would allow businesses and individuals injured by an abuse of dominance to seek financial remuneration for any damages they have suffered due to abuse of a dominant position. Currently there are only criminal penalties for such breaches of the act.

Similar administrative monetary penalty provisions are already in place for abuse of dominance in many countries around the world. Adding Canada to the list of countries that allows for these fines in cases where dominance has been abused is important, not only domestically but also in terms of strengthening ties with our major trading partners.

Let me move on to other aspects of Bill C-454. One is that the bill would increase the administrative penalties, or AMPs, that a business could be fined for practising in deceptive marketing practices. With the low limits of the current maximums, deceptive marketing can often lead to profits that are far greater than the monetary penalties that can be administered. By raising the limits, we will increase the deterrence factor and help to ensure that the people who are hurt by deceptive marketing campaigns can get a much greater percentage of their investment back from the guilty party.

Another measure included in the bill, which came directly from the industry committee's 2002 report, was to eliminate the section of the Competition Act that dealt specifically with airlines. This special mention of our airline industry was added at a time when Canadian and Air Canada were merging and there was widespread concern that the Competition Bureau needed stronger tools to ensure that the combined giant did not engage in predatory conduct.

Today, however, there are many low cost carriers that have emerged and the airline industry no longer needs special mention in the act. The industry can go back to being covered by the general provisions, which, as I have mentioned, would be strengthened the bill.

I am glad to see that the Bloc Québécois have taken an interest in helping to build a stronger 21st century economy, supported by a competitive marketplace and a competition with the tools to ensure that they get the job done. The Bloc often takes a narrow and isolationist approach to economic matters, so it is nice to see it put country before its own party interests.

It would have been very easy for the Bloc for instance to dismiss a bill, such as C-19, as an intrusion of the federal government into matters of provincial jurisdiction. For instance, price controls are the exclusive jurisdiction of the provincial government, save for in emergency situations. The Bloc of old might have believed that the federal government had no place deciding when a business had engaged in predatory pricing. Determining the appropriate price of something could be interpreted as a matter purely for provincial jurisdiction.

In this instance I am glad to see that my Bloc colleague from Montcalm was willing to table a bill that proves a federal bill can be good for all Canadians including the people of Quebec.

I look forward to seeing what the industry committee does with Bill C-454 and when it arrives back here in the House for report stage and third reading.

[Colin Carrie, Conservative, Parliamentary Secretary to the Minister of Industry]

Mr. Speaker, I am pleased to rise to take part in the second reading debate on Bill C-454, An Act to amend the Competition Act and to make consequential amendments to other Acts.

As members are no doubt aware Bill C-454 proposes a wide range of amendments to the Competition Act. Among its many provisions, Bill C-454 proposes to amend the Competition Act to provide restitution for consumers harmed by deceptive marketing practices and would give the Competition Tribunal the ability to issue injunctions to stop the disposal of assets by anyone engaged in deceptive marketing. This is to ensure that there is money available for restitution.

Bill C-454 also proposes to deter companies from abusing their dominant position by giving the tribunal the ability to award administrative monetary penalties, commonly known as AMPs.

The bill proposes to further discourage deceptive marketing practices such as false advertising, by increasing penalties for the violation of these legislative provisions.

Furthermore, Bill C-454 proposes to decriminalize the criminal provisions dealing with price discrimination and predatory pricing. It also proposes a number of consequential amendments to the act and other statutes.

I do not intend to address specific provisions of the bill today. Some of my colleagues will handle that, I am sure.

It is my hope that should Bill C-454 be referred to committee, there would be a thorough and detailed analysis of its provisions.

My primary purpose in rising to speak on this issue is to express my view that any amendments to the Competition Act should not be made lightly.

More particularly, there must be careful consideration as to how the act fits into broader competition policy, specifically the “price gouging” or, to put it another way, price regulation provisions which are provincial, not federal, jurisdictions, as well as the “anti-cartel” provisions which might negatively impact supply management.

This Conservative government understands the necessity of a modern and aggressive competition policy in this global economy. That is why in July 2007 this government took the proactive step and announced the creation of the Competition Policy Review Panel. The panel's core mandate is to review two key pieces of Canadian legislation: the Competition Act and the Investment Canada Act.

The panel will review key elements of Canada's competition and investment policies to ensure that they are working effectively, allowing Canada to encourage even greater foreign investment and create more and better jobs for Canadians. The government is looking forward to receiving the report on June 30.

What I would like to do today is set out why I believe that a careful approach to amending the Competition Act is essential.

Competition stimulates innovation and enhances productivity and economic growth. I think my colleagues from all parties recognize the importance of these factors for Canada.

I would hope they would also agree that economic prosperity is closely linked to the intensity of competition that exists in a country's markets.

Canada has achieved substantial economic success through privatization, free trade and deregulation, despite outright disapproval at one time for one of these economic provisions by all opposition parties. Through a reliance on competition and market forces our economy has thrived.

This government takes the issue of our economic competitiveness very seriously. We are determined to create the kind of competitive environment that will make Canadians much more prosperous.

In saying that, we are well aware that prosperity is not created by governments. What might come as a shock to the Bloc is that a government's job is to put in place conditions that encourage entrepreneurship and innovation. It is the private sector's role to innovate, take risks and create wealth in a way that benefits our entire society.

The Competition Act is an important part of Canada's competition policy. However, it is only one part of a larger legislative policy and regulatory framework.

This framework has a crucial impact on the competitiveness of Canadian businesses and Canada's economic performance. As I mentioned earlier, that is why this government created the competition panel in order to ensure these policies are modern and internationally competitive.

This government has also acted in other ways to increase innovation, productivity and strengthen our economy.

We are committed to providing effective economic leadership for a prosperous future and to strengthen the Canadian economy through our long term economic plan, “Advantage Canada”, and through our science and technology strategy.

In our recent economic statement, we built on that foundation, introducing important new measures that will help Canadian businesses compete, attract new investment to Canada, increase productivity, and create more and better jobs for Canadians.

The results are already paying off. Just last week Statistics Canada announced that Canada's unemployment rate had decreased to 5.8%, the lowest in 30 years. In Quebec the unemployment rate has decreased from 7.4% to 6.8% and 77,000 new jobs were created since January 2007.

Canada's economy is still creating better paying, full time jobs, while the U.S. economy is on the brink of recession because this Conservative government has put in place all the right economic fundamentals.

Let me now briefly describe the Competition Bureau's role and mandate, and discuss the importance of the Competition Act.

The Competition Bureau is an independent law enforcement agency. It contributes to the prosperity of Canadians by protecting and promoting market competition and allowing consumers to make informed choices.

Led by the Commissioner of Competition, the Bureau investigates anti-competitive practices and ensures compliance with the laws under its jurisdiction.

An extremely important piece of this legislative framework is the Competition Act. It touches on virtually all sectors of the Canadian economy. It promotes and maintains competition so Canadians can benefit from competitive prices, product choice and quality services.

The Competition Act is important for both consumers and businesses. The legislation contains several provisions to address false or misleading representations and deceptive marketing practices. For example, the Competition Bureau investigates misleading advertising and deceptive telemarketing targeting Canadians. It ensures that businesses provide accurate information to consumers when marketing their products and services.

False or misleading representations and deceptive marketing practices can have serious economic consequences, especially when directed toward large audiences or when they take place over a long period of time.

The Competition Act also helps businesses. A competitive marketplace promotes the efficiency and flexibility of the economy. It expands opportunities for Canadian enterprises in world markets and ensures that small and medium sized Canadians businesses have equal opportunities.

Competition is the foundation of a strong, modern and knowledge-based economy, spurring innovation, competitiveness and productivity growth. The Competition Act is one of the key pieces of framework legislation that we have in Canada. As such, it should only be amended after there has been very careful consideration of the impact of any amendment. I would particularly note two provisions in Bill C-454 that warrant careful consideration.

First, I would hope that the Bloc members would revisit the proposal to amend the definition of an “anti-competitive act” for the abuse of dominance provisions to include “abusive exploitation” of a dominant position.

In other jurisdictions this language has been taken to mean excessive pricing or price gouging. Determining whether a price is too high requires price monitoring and regulation, which are matters of provincial jurisdiction, not federal jurisdiction. Such monitoring may best be left to the hon. member's colleagues in Quebec City. This government will not support provisions that will intrude on provincial jurisdiction.

Second, the proposal to amend the anti-cartel provisions might, as it now stands, criminalize a number of common forms of business arrangements such as supply management or joint ventures that can be beneficial in the long term to competition. Again, the government will not support provisions that could criminalize business arrangements as joint ventures or supply management.

In carrying out their deliberations, I hope the Bloc members will do their best to ensure that these substantive changes are addressed. I also hope a wide range of stakeholders representing consumers, small and medium sized businesses and other interested groups will have the opportunity to make their views known.

In closing, I hope my comments today have shown how important competition and the Competition Act are for Canadian consumers and Canadian companies, no matter what their size.

I also hope my hon. colleagues—

[Roger Gaudet, Bloc, Montcalm, QC]

moved that Bill C-454, An Act to amend the Competition Act and to make consequential amendments to other Acts, be now read a second time and referred to a committee.

Mr. Speaker, it is a pleasure for me to introduce Bill C-454, An Act to amend the Competition Act and to make consequential amendments to other Acts, for second reading. While we have a Competition Act at present, there are major flaws in that Act that are in need of speedy correction. I would like to demonstrate the need for the House of Commons to take action to improve the existing Competition Act.

Every time the price of gas soars, the government invariably responds by saying the same thing: there is nothing to be done because the Competition Bureau concluded that there was no agreement among the oil companies to fix prices and so there was no problem.

Well, the Competition Bureau has never investigated the matter properly, because it does not have the power to do so. All the Competition Bureau does is produce studies of the industry explaining how it operates. And when it does a study, the Competition Bureau has virtually no power, because the purpose of the studies is to explain the general operation of the oil industry, not to discipline it. Those studies have no impact and they provide no incentive for the government to take action.

The flaws in the existing Act prevent the Competition Bureau from doing any real work. The Competition Bureau cannot initiate investigations of its own accord; they have to be done in response to a request by the minister or where there have been a number of complaints. Well, we know very well that the minister is not requesting real investigations from which tangible results could be obtained.

In addition, the Competition Bureau cannot compel disclosure of documents or protect witnesses when it does a general industry study. In that kind of situation, how can we expect that individuals who have no protection will come forward to testify? As can be seen, there are limits to what the Competition Bureau can do—and that is putting it mildly. In point of fact, its hands are tied.

We need only look at the current situation to understand that it is urgent that the Competition Act be amended. The price of petroleum products is rising steadily. The price of crude oil has risen by 230% since early 2004. The price of heating oil has gone up by more than 50% in two years. Three years ago, in April 2005, a new price record was set in Montreal: the price of regular gas broke through the one dollar ceiling. Since then, it has stayed at an even higher level. In Quebec, the price continues to go up: the price of a litre of gas was 91.6¢ in May 2005, $1.06 in May 2006 and $1.10 in May 2007, and it has wavered between $1.09 and $1.18—and we have even seen $1.23—since the beginning of 2008.

But that is not all. Refining margins vary remarkably. It actually costs between 3¢ and 5¢ to refine a litre of gas, depending on the type of gas used.

According to the Association québécoise des indépendants du pétrole, when the refining margin is between 4¢ and 7¢ a litre, the company is making a healthy profit. On average, from 1998 to 2002, refining margins were 7.2¢ a litre. That is a little high, but it is within the limits of what is reasonable.

In 2003, on the other hand, the average margin in Montreal was 10¢ a litre, or twice as much as a reasonable amount. In 2004, the average refining margin increased 10% to 11¢ a litre. By 2005 and 2006, it was regularly exceeding 15¢ a litre, and in May 2007, it even reached 28¢ a litre. That is four times the reasonable margin.

At the present time, the refining margin has fallen back to 9¢ a litre, which seems better. However, when the oil companies decide they want their refining profits to soar again, the Competition Bureau will still not have the tools it needs to conduct a real investigation unless the House passes Bill C-454.

It is a great concern as well that a very small number of players have virtually total control over a market as important as gasoline. Is this situation international or not? We do not know because the Competition Bureau does not have the tools it needs to answer that question.

There is no need to remind the House of how shamelessly the oil companies are taking advantage of this. They are posting record sales. In 1995, the entire Canadian oil and gas sector posted combined sales of $25 billion. By 2004, this figure had climbed to $84.9 billion, which amounts to an increase of 239%. Total sales soared to $106.7 billion in 2005 and $118.9 billion in 2006. That is a 376% increase over 1995.

Net profits are also skyrocketing of course. The combined net profit of the six big integrated oil companies in Canada—Imperial Oil, Shell Canada, Husky Energy, Petro-Canada, Encana and Suncor—reached $12 billion in 2006. That is a $5 billion or 70% increase over 2004. The 2007 data are not available yet for all these companies, but there is every reason to believe that their results will be even more astronomical. For example, Petro-Canada finished its 2007 year with a profit of $2.73 billion or 57% more than in its 2006 financial year, which it finished with a net profit of $1.74 billion.

The net profit of the entire oil sector rose from $17 billion in 2003 to $20 billion in 2004 and then $35 billion in 2006, for an increase of 100%.

The Competition Bureau will only be useful and effective if it is able to conduct real investigations. It is illusory to think that it can take real action and come up with real results under the current legislation.

This worrisome situation—the increase in the price of gas, the upward trend in refining margins and the increase in profits—and the flaws in the current Competition Act are a constant source of discussion at the House's Standing Committee on Industry, Natural Resources, Science and Technology. In fact, in the committee's 2003 report on the Competition Act, it recommended reversing the onus of proof for handling “agreements between competitors” and determining whether there is a conspiracy.

In other words, when the Competition Bureau conducts an investigation, only at the request of the minister or if there is a complaint, of course, the Bureau must prove that there was an agreement between the companies, when it should be the opposite. If we consider the economic issues that are at stake, businesses should have to prove their good faith. Businesses that want to sign agreements should also have to prove the social or economic value of the agreements.

For example, in Quebec, there is a single refinery that supplies all the companies, Petro-Canada, Ultramar, Shell, Exxon, Olco, Esso Imperial and so on. The prices are all the same. How can we talk about competition when all the oil companies are in bed together helping each other out and sharing the market? This situation is reminiscent of a cartel—a group of businesses conspiring to create a monopoly.

When Konrad von Finckenstein, the competition commissioner, appeared in front of the Standing Committee on Industry, Natural Resources, Science and Technology on May 5, 2003, he identified the following shortcomings in the Competition Act:

—while the bureau's mandate includes the very important role of being investigator and advocate for competition, the current legislation does not provide the bureau with the authority to conduct an industry study.

He added, and I quote:

It seems to me that it would be preferable to have a study on the overall situation carried out by an independent body that would have authority, that would be able to summon witnesses and gather information. It should also have the power to protect confidential information that someone is not necessarily going to want to share, but which would be vital in order to reach a conclusion based on the real facts.

These statements prove that the existing Competition Act does not enable the Competition Bureau to undertake a real investigation of the industrial sector. How can it gather information if it can neither force the disclosure of documents nor protect witnesses?

During the last Parliament, a review of the legislation was undertaken. The Bloc Québécois found it too weak, but nevertheless supported it and proposed amendments to improve it. The bill died on the order paper, and the Conservatives decided not to bring it back, so the Bloc Québécois introduced Bill C-454 to strengthen the Competition Act.

Bill C-454 was inspired in large part by Bill C-19, which the Liberals introduced shortly before the 2005-06 election, but it corrects that bill's shortcomings. When the Standing Committee on Industry, Natural Resources, Science and Technology studied the act in 2003 and 2005, it found that the act contained a number of provisions that were outdated and no longer useful. In essence, the bill seeks to adapt the Competition Act to today's economic realities. It gives the Competition Bureau the power to conduct its own inquiries into industry. The Competition Bureau will be able to call witnesses and protect them. That last point is very important.

Under current legislation, if businesses decide to reach an agreement to fix prices, no evidence of that will be left behind. If we cannot call and protect witnesses, there is a very good chance we will never be able to prove anti-competitive practices.

Under the new legislation, when businesses try to reach agreements with their competitors, they must demonstrate that those agreements are in the public's best interest. Presently, these agreements among competitors are permitted, unless it can be proven that they are contrary to public interest. This is unhealthy.

The bill contains another proposal: a significant increase in the amount of fines to be paid for violations of the Competition Act, from $10 million to $25 million. If this legislation were passed, the Competition Bureau would be much better equipped to fight against businesses that try to use their dominant position in the market to fleece consumers and damage other economic sectors.

On the whole, Bill C-454 will allow for the creation of a comprehensive strategy to deal with the rising cost of petroleum products. For some time now, the Bloc Québécois has been pressuring the government to take action to address the rising cost of petroleum products. Fighting to defend the interests of Quebec, the Bloc Québécois would like to see the oil and gas industry disciplined. Bill C-454 is a step in that direction. It is time to correct the situation and give the Competition Bureau the powers it needs to do its job properly.

Bill C-454, An Act to amend the Competition Act and to make consequential amendments to other Acts, is pivotal to any real investigations into the oil and gas sector. Passing this legislation would give the Competition Bureau the powers it needs to carry out its mandate.

[Roger Gaudet, Bloc, Montcalm, QC]

moved for leave to introduce Bill C-454, An Act to amend the Competition Act and to make consequential amendments to other Acts.

Mr. Speaker, today I am very pleased to introduce, in this House, a bill to amend the Competition Act, to authorize the Commissioner of Competition to inquire into an entire industry sector.

The current situation with gas prices is becoming alarming, and the fluctuating prices have motivated us to take action. This is why I am tabling this bill today, seconded by my colleague, the member for Trois-Rivières and industry critic. I am tabling this bill today for our constituents, who must deal with constantly increasing prices.

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