Evidence of meeting #24 for Agriculture and Agri-Food in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was product.
A recording is available from Parliament.
10:25 a.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
So I think we're of one mind here, that the “Product of Canada” and “Made in Canada” labelling is unintentionally misleading or deceitful. The proper phrasing, of course, would be “Partially Made in Canada”, “To Some Extent a Product of Canada”, or whatever.
How did this 51%, this very arbitrary figure, come about? Whoever decided and how was it decided in the first place that even if it was just the packaging that was made in Canada, it would be 51%?
10:25 a.m.
Executive Director, Food Safety Directorate, Canadian Food Inspection Agency
As I indicated earlier, the guidance that relates to “Product of Canada” labelling has been in place since the 1980s. Being as young as I am, of course, I wasn't involved in the consultation at the time, but—
10:25 a.m.
Liberal
10:25 a.m.
Executive Director, Food Safety Directorate, Canadian Food Inspection Agency
No. However, I was going to indicate that the Competition Bureau may have more of the history on that.
10:25 a.m.
Acting Deputy Commissioner of Competition, Fair Business Practices Branch, Competition Bureau
I'd like to say that I was there too, but I wasn't--at least not involved in this.
First of all, I'd like to say the origins occurred when the issue before the Competition Bureau was not a labelling issue, but rather a misleading advertising issue. So it could have been in any media that somebody could have made a claim of an origin, of “Made in Canada”.
At that time, the Competition Act was a criminal act, and there were no civil provisions in the act. Also, we did not have responsibility for the non-food side of--
10:25 a.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
I apologize for interrupting.
You can say no or decline to answer. Would you agree that the 51%, if it was ever the appropriate percentage, should no longer be considered the appropriate percentage?
10:25 a.m.
Executive Director, Food Safety Directorate, Canadian Food Inspection Agency
When guidance was established, it would have been subject to extensive consultation. Certainly as government officials, we do not draw our own opinions or conclusions on that. As we enter into consultation on the issue, we are certain we will hear a lot from Canadians on that issue.
10:25 a.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
That's fair.
Perhaps I could speak to whoever about this abuse of dominance. It's my impression that more and more the distribution of food in Canada is in the hands of fewer and fewer companies. Four companies now, as I understand your literature, are responsible for 75% of all grocery items sold in Canada. So it is happening. The mergers are happening for sure. And I understand that the commissioner of competition is responsible for inquiries under the act, etc. What I'd like to know is, how busy is the commissioner?
10:30 a.m.
Deputy Commissioner of Competition, Civil Matters Branch, Competition Bureau
The commissioner for competition runs a number of units. We've talked about cartels. And we're very busy in cartels. That's agreements among competitors. They have always been the basis of any trust laws around the world. It was the first provision in Canada, well over a hundred years ago, to stop companies from price-fixing. So a lot of our resources go to that.
A lot of our resources also go to review mergers. There are hundreds of mergers a year. We want to make sure they don't lead to such high levels of concentration that prices to consumers go up.
I take your point. In fact, a hundred years ago we used to have 30 or 40 car manufacturers in North America, because it would prove profitable in economies of scale and scope. We went down to 10. McLaughlin in Oshawa went by the boards because making 500 cars a year wasn't profitable.
Our job is to promote adaptability and efficiency but not to allow concentration to get so high that prices to consumers go up. If we look at the retail food price index from 1998 to 2006, it's gone up 2.1%. The general inflation index has gone up 2.3%.
So I take your point, but I would argue that it hasn't shown up in any pernicious effects on consumers in quality, selection, or pricing.
10:30 a.m.
Conservative
10:30 a.m.
Liberal
Lloyd St. Amand Liberal Brant, ON
In terms of pernicious effects, though, the farmers', the Canadian producers' share of the food price has correspondingly plummeted from 1988. Is that fair to say?
10:30 a.m.
Deputy Commissioner of Competition, Civil Matters Branch, Competition Bureau
I don't know that. I don't have those numbers.
The Competition Act is very much concerned about maintaining competitive markets for consumers. It's in our mission statement. It's in our whole DNA.
10:30 a.m.
Liberal
10:30 a.m.
Deputy Commissioner of Competition, Civil Matters Branch, Competition Bureau
No. That's quite true.
April 3rd, 2008 / 10:30 a.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Thank you very much, Mr. Chair.
I want to follow up on some of these questions.
It is very important that we, as a committee, try to drill down and find some of the answers to some of the points that have been brought up in the discussion we had today, so forgive me if I interrupt you. I'm trying to get as many answers as I can, because quite frankly, the farmers and producers we all represent around this table feel they are not getting the results they should be getting from the Competition Bureau.
We need to find out whether or not it's a problem on your side or if it's a problem with the act itself that restricts or inhibits you from doing what we need to get done.
It seems in your conversation, Mr. Taylor, that you talk....
First, coming from a rural background, I take offence to hearing you talk about cheaper prices in the United States for things like automobiles and televisions and barbecues and things that are produced in the United States, and in any way whatsoever comparing that to fertilizer cost. As Mr. Easter said very clearly, the primary cost in fertilizer production is natural gas. In 2005-06 we had some of the lowest natural gas prices we've had in quite some time. In my riding we have an Agrium fertilizer plant, and my producers are paying sometimes double and triple what producers in the United States are paying for fertilizer. There is no comparison between barbecues and television sets.
I don't want this to be confrontational. I want to ask you this. It seems as if the two components you have in this are dominance and profitability, as you yourself have said.
10:30 a.m.
Deputy Commissioner of Competition, Civil Matters Branch, Competition Bureau
That is dominance in prices. Profitability may or may not be indicative of dominance, but it can be.
10:30 a.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
In your response to Mr. Miller, you very clearly referred to the profitability of Loblaws and how it was no longer dominant.
10:30 a.m.
Deputy Commissioner of Competition, Civil Matters Branch, Competition Bureau
What I would say is that if it is dominant and has monopoly power, it's not doing a very good job of exercising it.
10:35 a.m.
Conservative
Brian Storseth Conservative Westlock—St. Paul, AB
Would you not agree, as you yourself have said, that as long as three companies each represent less than 35% of the market, that is not necessarily being dominant, but if profitability is thrown in as something we are looking at.... I mean, Mr. Easter, Mr. Steckle, and Mr. St. Amand could control all the food production of this country, and as long as Wayne wasn't profitable when he bought out the rest of them.... When companies are growing and consuming other companies, often they are not profitable.
It seems as if we have put a very reactive system in place, as if we wait until it's very clearly broken and then we look at doing something to change that. Would you not say that is a fair statement?
10:35 a.m.
Deputy Commissioner of Competition, Civil Matters Branch, Competition Bureau
Loblaws' profitability may or may not be due to their own errors, to the entry of Wal-Mart, to the growth of Costco, to a whole lot of other factors that are changing the dynamic of our food retailing and distribution industry.
The George Morris Centre, which is a leading independent expert on agribusiness, says there is very little doubt that margins of grocery stores in Canada have declined significantly since 1999. That is not consistent with a market that is being dominated. It is consistent with a market that is growing more, not less, competitive.
