Agriculture Committee on March 6th, 2023

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

With respect, Ms. Salvatore, I understand that, but it is 2023. What are your internal benchmarks here? What are your internal timelines for coming to a conclusion?

I understand that it's complex, but at the same time we do want to reach a conclusion. There are Canadians who are expecting an answer. If you could flesh that out a little bit more for the committee, it would be appreciated.

[Ann Salvatore]

Again, the investigation is quite complex. There isn't a set time period that I can point to in terms of how long these investigations take. They are really fact-specific. They really depend on how many parties are involved and the length of time of the alleged conspiracy. In this particular case, we've executed 24 search warrants over that period of time. We've collected a vast amount of evidence, which has to be studied and analyzed. If we have sufficient evidence, we will refer that evidence to the Public Prosecution Service of Canada for a decision on whether a prosecution should go forward.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacGregor. Thank you, Ms. Salvatore.

We'll now turn to Mr. Barlow for four minutes, please.

[John Barlow, Conservative, Foothills, AB]

Thanks, Mr. Chair.

I appreciate the testimony here.

I want to get back to Mr. Durocher from Mr. Perron's question.

You said that under this current study that you're doing, you can't peel back the difference in the profits from pharmacy and food prices with the current mandate and tools you have right now. Is that correct?

[Anthony Durocher]

That's correct. We have to rely on public information or what is provided to us voluntarily. We cannot compel that type of data and information, which is obviously an important factor in assessing the role of competition with high grocery prices right now.

[John Barlow, Conservative, Foothills, AB]

All right.

Maybe you can't answer this question, but how accurate would the study and the recommendations that you provide be if you're not able to dive down into all of that data? Is the data going to be substantial enough for you to provide prudent recommendations with the information that you are able to gather?

[Anthony Durocher]

We're confident that our study is going to produce meaningful recommendations on how to improve competition. We're doing a deep dive. We're speaking to a number of parties, including suppliers and retailers, big and small. We're trying to examine the role of regional competitors. Why are international retailers that could potentially shake up the Canadian market not coming in? We're confident that we're going to provide a report with meaningful recommendations.

Is it as rigorous and as deep a dive as we would like? No, it is not.

[John Barlow, Conservative, Foothills, AB]

I had the opportunity to tour some of the produce producers and visit their farms earlier this fall. They certainly outlined to me some of the concerns they had in dealing with the large retailers and the fees they were charged, kind of pitting one farmer against the next, but they were really hesitant to speak out against those retailers because of the fear that they would lose those contracts.

As part of this study, you said you spoke to 500 different Canadians. Are you confident that you're getting frank conversations and details from those producers who have been hesitant, let's say, to share the true on-the-ground stories that they're telling? Are you feeling that you're getting that kind of detail?

[Anthony Durocher]

I think our focus in looking at those issues is really retail competition. We're trying to speak to the key stakeholders in that respect, including some key suppliers or industry associations representing suppliers.

A key tenet of the Competition Act is the role of confidentiality. People can provide us with information knowing that we're going to keep that information confidential. I think we're relatively confident that we're getting candour from parties. We're not getting full co-operation from everyone we'd like in respect to this study, which is just the regime that we're operating in, but from those who are co-operating, I think we're getting frank views. It certainly is helpful for us.

[John Barlow, Conservative, Foothills, AB]

I don't want to cut you off, but I have one question for Statistics Canada.

Mr. MacDonald, we had testimony earlier in this study from Dr. Sylvain Charlebois, who raised concerns about Statistics Canada's removal of historical food inflation data from the website. You mentioned that this wasn't the case. Was data ever removed from the Statistics Canada database, particularly on the website, yes or no? If it was, then it's been put back up, from what I understand from your explanation.

[Matthew MacDonald]

No. No food price data has been removed from our website, nor are there any plans to remove any data in the future. The previous average prices table that you're referring to remains online and accessible to users. It still has food prices remaining, and they're available back to 1949. We did, however, make improvements to our data and expanded the accuracy and relevance by creating more granularity and much more product detail to exploit the higher-quality data sources that we now have available to us.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. MacDonald and Mr. Barlow.

Mr. Louis, you have up to four minutes.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you, Mr. Chair. Thank you to all our witnesses, both here and online.

Canadians feel unprotected by food prices. That's why we're doing this study. We're looking to understand the high costs that people are seeing every day. Many people are feeling that grocers should be more ethical, because food is a fundamental need. I think that's at the heart of the conversation we're having, and these are important conversations.

We see that this market, as you said, is dominated by a small number of suppliers, so maybe I would start with the Competition Bureau. Many of the questions have already been addressed, but they deserve to be talked about.

You say that competition drives lower prices and innovation while fuelling economic growth. Canadians are concerned about price-fixing, and they come by it honestly. We can talk about the packaged bread prices being artificially inflated for about 14 years as companies communicated with each other to raise the price at least 15 times. I understand that you may not be able to comment on a specific case for confidentiality reasons, as you said, and because it's an active investigation, but I'm sure you can appreciate Canadians' concerns.

You've had other inquiries before into the food sector. Can you cite some other examples that you can speak about in generalities and summarize the findings and the charges requested and let people know if those charges were implemented?

[Krista McWhinnie]

I can speak to an extensive abuse of dominance investigation that we did into certain practices that Loblaw had in place with its suppliers. This was a three-year investigation. It was a very, very deep dive into those policies to understand the intent behind them and the effect.

When we're looking at something under the abuse of dominance framework in Canadian competition law, we have to prove three things: that they are dominant, that they're acting with anti-competitive intent, and that their actions cause a substantial lessening or prevention of competition. During the course of that investigation, Loblaw ceased the majority of the problematic practices. Nevertheless, we felt it important to keep investigating to make sure that it had stopped enforcing those policies in all forms and to be able to really understand the behaviour and provide guidance.

We issued quite a lengthy public statement following that investigation to try to explain where the line is in those policies between retailers and suppliers between hard bargaining, which is not prohibited by the Competition Act, and tipping over into being a retailer that is trying to shield itself from competition by other retailers.

[Tim Louis, Liberal, Kitchener—Conestoga, ON]

Thank you for that. I appreciate it.

This might be a question for Mr. Schaan. It's confusing to remember who answered. It's about wage-fixing. I think you would be the person.

Wage-fixing is similar to price-fixing. You mentioned that wage-fixing undercuts competition and that an easy way to think about that, for the average Canadian, was to think about when representatives from Loblaw, Metro and Empire were asked why they made the decision on the same day to decrease wages or to get rid of wages for the frontline grocery store workers during the pandemic.

How do you describe the fact that they moved in that direction, and can you describe any other examples of wage-fixing that are actually going to be in the Competition Act?

[The Chair, Liberal, Kody Blois]

You have about 30 seconds, Mr. Schaan.

[Mark Schaan]

Without getting into any specific instances, because those would be matters that would be under the investigatory powers of the bureau, I would note the shift in law that we made in 2022, which was essentially to put potential wage-fixing coordination under the auspices of the act. The act was amended to ensure that agreements between different employers to collude on wages or on conditions of work, thus harming competition for labour, were treated in exactly the same way that harmful price-fixing agreements are. It's a cost of input.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Louis. Thank you, Mr. Schaan.

Mr. Perron, you have the floor for two minutes.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

If I understand correctly, you are looking at abuse of dominance. That is similar to the issue that we were going to discuss earlier, Mr. Durocher. As to you, Mr. Schaan, if I understand correctly, you are looking at cases of collusion in terms of wage-fixing. I am new to all this, but I think we are seeing both phenomena in the food sector.

What has been the impact of these studies?

I'm not sure who could answer the question.

[Anthony Durocher]

I can start by talking about the amendments made to the Competition Act. The amendments will enter into force in June. Changes have been made to the act, and stakeholders as well as businesses will have a year to adapt to the amended criminal provisions of the act.

We are currently working in order to be able to provide more information to stakeholders on the way that we will be enforcing the provisions. We are developing a guide.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

That means there will be no sanctions linked to previous studies. Stakeholders will have one year to adapt to the new provisions. Is that right?

[Anthony Durocher]

That's right. The big change to the act will come into force in June 2023.

[Yves Perron, Bloc, Berthier—Maskinongé, QC]

Do you believe that the code of conduct will reduce irritants and limit these practices that, from the outside looking in, at least, seem unfair?

[Anthony Durocher]

It is our opinion that the code of conduct seeks to redress a certain imbalance in terms of negotiating powers between two parties, i.e., the suppliers and the retailers. We are concerned about anti‑competitive behaviour, which is a bit different. That said, when there is a code of conduct that can improve transparency within the industry and provide more certainty in terms of practices, it is very possible that this will encourage innovation and investments in the sector.

[The Chair, Liberal, Kody Blois]

Thank you, Mr. Durocher and Mr. Perron.

And finally, Mr. MacGregor, you have the floor for two minutes.