Evidence of meeting #34 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was advertising.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Marc Saint-Pierre  Director General, Government Information Services Sector, Department of Public Works and Government Services
Louise de Jourdan  Director, Advertising Coordination and Partnerships, Department of Public Works and Government Services
Julien Brazeau  Associate Deputy Commissioner, Competition Promotion Branch, Competition Bureau
Mark Schaan  Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry
Adam Scott  Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry
Jeanne Pratt  Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau

12:20 p.m.

Jeanne Pratt Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau

I guess I would speak to that.

We have our merger regulation in review. That's really geared towards making sure that media concentration with respect to a particular transaction is not leading to increased prices for consumers. We also have Julien's shop, which is the competition promotion shop, so we do a lot of work to try to advocate for competition and regulation because competition drives innovation. It's not our enforcement work where we would be doing that; it would be advocating for competition in our telecommunications sector generally.

12:20 p.m.

Liberal

The Chair Liberal Hedy Fry

Thank you.

I'll go to Mr. Waugh for the Conservatives.

12:20 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

I'm just going to pick up on that. When you look at the competition, is there a window that you look at? Is it a year out? Is it five years out? What is the rate of increase, if you can say, for a company that you would look at?

12:20 p.m.

Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau

Jeanne Pratt

I think we look at each transaction on a case-by-case basis. We generally look at 250 merger transactions across all industries in the run of a year, so we are guided by what the competitive dynamics are in the particular industry based on the evidence that we obtain from suppliers, competitors, and customers in the marketplace.

Generally our guidelines would say that it is a forward-looking exercise. We're trying to predict what the competition will look like after that merger transaction takes place. In some cases, it may be that we're looking at a sustained price increase over a few months. It could be that in some industries we're looking at a few years. It really is guided by the particular facts of a particular case in a particular industry, and we're looking at it on a transaction-by-transaction basis.

12:20 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

Okay. We've heard that the Broadcasting Act hasn't been updated for 25 years. What about the Competition Act? Has it been updated, and if so, when was the last time?

12:20 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

Maybe I can speak to that, just from the policy perspective.

Following the “Compete to Win” Red Wilson panel, substantive changes were made to the Competition Act in 2009. Then there's actually a bill currently before the House, Bill C-25, that makes a small amendment to the act to change and clarify the definition of “affiliate”. My shop, in conjunction with our colleagues at the bureau, continue to analyze and assess the continued utility and functioning of the act to ensure that it's meeting its policy objective. Even in the wake of the 2009 substantive changes, where a significant number of the reforms recommended to the act were made, we continued to look at new changes that may need to be made, which resulted in the act that's currently before the House.

12:25 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

When I look at media, and how it changes almost daily, I think seven years to update the Competition Act seems rather long, if you know what I mean.

12:25 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

Yes. The important thing about the act, though, is it is an act of general purpose, and it's not sector-specific. It sets out general principles that allow us to be able to continue to work on things like deceptive marketing, collusion, and then mergers and other transactions. Essentially, the assessment of those would be guided by principle, not necessarily by any new factor or information that's particular to the segment or market. In the zone of telecommunications—and Jeanne might be able to speak to this—in terms of how they would approach a given transaction, the goal of the act is to be at the level of principles, and then allow for that new information, which potentially is extremely changing and rapid and agile, to come to bear.

12:25 p.m.

Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau

Jeanne Pratt

We're evaluating the competitive dynamics of an industry at the time that a particular transaction is taking place. That allows the framework of the Competition Act to live, so to speak, in the real world of competition as it's occurring now. What we look at with respect to merger transactions is whether that particular transaction is going to result in a substantial lessening of competition. We're not looking at general consolidation in an industry. We're looking at the particular parties to the transaction, their business, the competitive dynamics in which they operate, to determine whether or not there's going to be a price increase or quality decrease as a result of that particular transaction. If we do find that, we aren't, ultimately, the decision-maker to challenge that transaction. It is the commissioner who brings an application before the Competition Tribunal, a specialized tribunal, who ultimately makes the decision as to whether it's an anti-competitive merger.

12:25 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

We're seeing that in digital now. Nobody bought Twitter. The group before you talked about digital spending on Facebook and Twitter. How do we regulate this, then, when we have spent at least $3.6 million on Facebook in the last seven months, and we don't know how much on Twitter? Who regulates this? They're not paying taxes, as we've just heard in this country, so who regulates that?

12:25 p.m.

Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau

Jeanne Pratt

I can speak to what we've seen in recent transactions with respect to digital media, in particular with respect to local news and local voices. What we see there, in particular, is newspaper transactions, the Sun Media/Postmedia merger, the Transcontinental/QMI a couple of years ago, and what we see there is that definitely advertising revenues in the newspaper space are going down. It's a declining industry.

12:25 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

And Internet's going up.

12:25 p.m.

Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau

Jeanne Pratt

Internet is going up, but it hasn't become a substitute for advertising in local media. We've seen it increasing, but it's still on the margins. It's not part of that product market that advertisers are looking for. What they've told us in those transactions is that they continue to reserve a portion of their budget for that local advertising. It's part of their mix to ensure that they're getting that display advertising of their local products in the way that makes sense for their business.

12:25 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

Okay. On the Internet now, we're seeing newspapers closing, but we're also seeing at the same time more and more Internet competition. Blacklock's, Rebel, are they regulated by you? Or can I just have an Internet company and start advertising tomorrow and have no regulations?

12:25 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

In terms of the regulation of advertising, as a commercial activity it would be regulated in the various forms that we regulate any commercial activity. If you are found to be anti-competitive or...a significant lessening of competition, you would fall under the guise of the Competition Act. For the purposes of incorporation of that new entity, you would likely choose to incorporate either federally or provincially, and you would fall either under the statute that I have oversight for, the Canada Business Corporations Act, or a provincial statute of that kind, which would require you to set out objectives of your company, and then have a corporate governance structure that would determine your actions. It would depend on what specific aspects of regulation you were looking for in terms of that direct-to-consumer—

12:30 p.m.

Conservative

Kevin Waugh Conservative Saskatoon—Grasswood, SK

We're seeing more of those now. Would you not agree with me on that? We're seeing newspapers gone—let's say in Kamloops—and I see blogs with advertising on Kamloops.

12:30 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

Yes, and that advertising is regulated insofar as any advertising is regulated. If it makes a false claim, it would fall under the guise of the Competition Act.

This is more in the zone of the Public Policy Forum study that we have been working on. The PPF has encountered a number of local news media Internet-only sites that are filling a vital local news media gap. In northern Ontario there are some of those. On the east coast there are some of those. In Winnipeg there are some of those. In a number of zones, the ease of being able to incorporate in Canada, and the efficiency of being able to set up shop and set up shingle are actually relatively positive factors. We can seize the opportunity of digital and allow for that to fill a potential market void.

12:30 p.m.

Liberal

The Chair Liberal Hedy Fry

Thank you, Mr. Waugh. I think we ended that seven-minute session.

Now we go to Mr. Nantel, please.

12:30 p.m.

NDP

Pierre Nantel NDP Longueuil—Saint-Hubert, QC

Thank you, Madam Chair.

I want to begin by thanking the witnesses for being here.

We have heard so many things that add to our study. We have heard from representatives of print media and local media, which are at the heart of our study, talk about all their difficulties.

Mr. Schaan and Mr. Scott, could you tell me how many individuals in your respective teams have the mandate to deal with this industry?

12:30 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

My particular shop has roughly 35 people. We look at acts in general. All of my statutes are laws of general purpose. I have a team related to copyright and trademarks. I have a team related to patents. I have a team related to competition insolvency and competition. I don't have anyone in any given sector who looks at a specific sector.

Adam can speak about telecommunications.

12:30 p.m.

Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry

Adam Scott

We have a similar set-up. We're not occupied with content. I have a small team focused on availability of broadband and broadband policy. They want to know who has it and at what price, and what the competitive framework is. Within the department there's a much larger team that does program delivery, rolling out the government grants and contributions to fund the network. We're network-centric as opposed to content-centric.

12:30 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

Just to add to that, within each one of the functionings of our act, we have stakeholder communities dedicated to understanding the particular need. In copyright, a huge chunk of my stakeholders are publishers and content creators, and I spend a lot of time with them. These are the complexities of a department as large as Innovation, Science and Economic Development. Our functionality is split across different sectors. But in this spectrum, in the information technologies portion, there's a digital policy group that also looks at digital players. In their stakeholder group they have folks who are particularly interested in these digital transformations.

12:30 p.m.

NDP

Pierre Nantel NDP Longueuil—Saint-Hubert, QC

Thank you.

You said that you're partnering with Canadian Heritage on consultations.

Are your referring to the consultations of sectoral tables that are currently taking place at Heritage Canada?

12:30 p.m.

Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry

Mark Schaan

Yes. That contract is with the Public Policy Forum. That organization established the contract.

Over the course of the summer, they held eight or 10 round tables in Halifax, Toronto, Saskatoon, and Vancouver. In the course of those, they were dedicated to the question of the role of the media in the democratic function. I was an observer at the one in Ottawa and the one in Toronto. They were sector-specific.

12:30 p.m.

NDP

Pierre Nantel NDP Longueuil—Saint-Hubert, QC

Okay.

But they are not a corollary of the consultations Minister Joly is holding now.