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.
Director, Advertising Coordination and Partnerships, Department of Public Works and Government Services
I can't answer that one specifically because they're not my ad campaigns, and I'm not privy to the campaign results in a fulsome way. I see bits and pieces, but that's all, so you may wish—
Director, Advertising Coordination and Partnerships, Department of Public Works and Government Services
You may wish to call large departments that have multimedia campaigns to see how they monitor that and the results they are tracking on.
Director General, Government Information Services Sector, Department of Public Works and Government Services
Under the communication policy, any campaign where the media buy is more than $1 million must be tested before and after, so you may want to call one of those major announcers.
Liberal
The Chair Liberal Hedy Fry
Thank you very much.
We will just pause for a few minutes while we wait for the set-up to occur for the second round.
Liberal
The Chair Liberal Hedy Fry
I call the meeting to order. This is the second hour, and I would like to welcome our witnesses.
Pursuant to Standing Order 108(2), this committee is studying media, access of local communities to all platforms and, of course, what has been the result or impact of consolidation of certain media within Canada, and how we ensure that these local communities have access not only to Canadian news but to Canadian stories.
Basically we are coming to the end of our study, and we have heard some fairly interesting points made by various media, so we called you in here to tell us what your departments are doing and to talk about how the Competition Bureau is looking at competitiveness in Canada with regard to platforms.
Thank you very much, Mr. Brazeau and Madam Pratt from the Competition Bureau.
From the Department of Industry we have Mr. Schaan and Mr. Scott.
Each department, not each person, has a 10-minute presentation time, and then we will open it up to questions and answers.
Perhaps we can begin with the Competition Bureau.
Monsieur Brazeau, begin please.
Julien Brazeau Associate Deputy Commissioner, Competition Promotion Branch, Competition Bureau
My name is Julien Brazeau. I am the associate deputy commissioner, competition promotion branch, with the Competition bureau. I'm joined to my right by my colleague Ms. Jeanne Pratt who is the senior deputy commissioner, mergers and monopolistic practices with the Competition Bureau, and to my left by my colleagues from the Department of Innovation, Science and Economic Development, Mark Schaan, director general, marketplace frameworks, as well as Adam Scott, director, telecommunications policy branch with the department.
We've been advised of a number of the issues of concern to the committee. I'll endeavour to address some of these issues in my remarks today.
I will begin by providing some context about the Competition Bureau and its mandate, then move on to our role as it relates to merger review and how we interact with the CRTC.
The Competition Bureau, as an independent law enforcement agency, ensures that Canadian consumers and businesses prosper in a competitive and innovative marketplace. Headed by the Commissioner of Competition, the bureau is responsible for the administration and enforcement of the Competition Act and three labelling statutes.
The Competition Act provides the commissioner with the authority to investigate anti-competitive behaviour. The act contains both civil and criminal provisions, and covers conduct such as bid-rigging, false or misleading representations, price-fixing, and abusing a dominant market position, among other things.
The act also grants the commissioner the authority to make representations before regulatory boards, commissions or other tribunals to promote competition in various sectors.
In reviewing mergers, the bureau undertakes an exhaustive, fact-intensive review, including an evidence-based quantitative analysis. It's also important to note that each review is conducted on a case-by-case basis, and decisions are made based on a thorough analysis of the available evidence.
The bureau conducts its merger reviews in confidence. All non-public information gathered by the bureau in enforcement matters, whether it be obtained voluntarily or through the use of formal powers, is held on a confidential basis. The law requires that we do not comment publicly until certain steps have been taken, such as referring a matter to the Competition Tribunal. This is done to protect the integrity of the bureau's investigations.
In our merger reviews, we consider many different factors, including the level of economic concentration in the relevant market, the merging parties' market shares, the degree to which the parties compete with one another, and whether there are other effective competitors that could constrain the exercise of market power by the merged entity. In examining a merger, the bureau consults with a wide range of stakeholders, including consumers, competitors, suppliers, and regulators.
Our act is a general framework piece of legislation applicable to all sectors of the economy. I would stress that when reviewing mergers, the bureau's focus is on economic competition and efficiencies related issues, such as the impact of the merger on prices, or in the case of media mergers, on advertising rates and viewership. As you well know, in conducting our analysis, we are bound by the four corners of our act. The factors I just listed are contained in section 93 of the act. It is important to note that it is the combination of these factors and not the presence or absence of a single factor that is determinative in the bureau's assessment.
While the bureau's focus is primarily on price and output, we also consider non-price dimensions of a proposed merger, such as quality, choice, service, and innovation. These factors are approached again from an economic lens and are considered especially in markets in which there is significant non-price competition. The Competition Act is not intended or designed to address social or cultural issues associated with media mergers, such as diversity of voices.
At the bureau, we are aware that there are a number of broader policy issues at play, as evidenced by the Department of Canadian Heritage's review of cultural content that encompasses the CRTC and that may impact this committee's considerations.
Discussions of media concentration and its effect on diversity of voices are not unique to Canada. While regulatory frameworks do differ from country to country, there is general international consensus that antitrust merger reviews should be focused on economic effects.
As such, antitrust authorities are seldom tasked with examining socio-cultural issues in the context of their reviews. The consideration of public interest issues such as diversity of voices is often the purview of communications regulators distinct from competition authorities. Notable examples include the United Kingdom, where the Competition and Markets Authority, which is the U.K. equivalent of the Competition Bureau, is tasked with reviewing mergers, including mergers of communications entities through an economic lens. Ofcom, which is the U.K. telecommunications regulator, considers public interest issues and advises the Secretary of State whether to intervene in a given transaction.
Similarly, in the United States, the United States Department of Justice's antitrust division is responsible for merger review, whereas the U.S. Federal Communications Commission is mandated with considering broader public interest considerations, including diversity of voices, in the context of their concurrent review with media ownership transactions.
Canada is generally aligned with its foreign partners in this respect. While the bureau through its economic efficiency lens conducts a rigorous economic analysis to determine whether a proposed transaction is likely to result in a substantial lessening of competition, the CRTC, in its concurrent review of proposed broadcasting transactions, is enabled to look at broader public policy issues, including diversity of voices in their determination of whether or not to approve a transaction.
I understand that one of the interests of this committee is the bureau's understanding of the current competitive state of the media and communications market.
Briefly, the bureau does not monitor any market on a day-to-day basis. As a law enforcement agency, our focus on competition in a specific market is driven by a proposed transaction in a given sector, complaints we have received or information that has come to our attention that there may be an issue in a market.
As I previously mentioned, bureau reviews are conducted on a case-by-case basis and thus, the bureau's understanding of the competitive landscape in a given sector is limited to the time frame in which the transaction or investigation arose.
There are many other issues of concern to the committee, so I will end my remarks here. I will note that while the bureau is responsible for the administration and enforcement of the act, the lead for competition policy rests with the Department of Innovation, Science and Economic Development.
I'll, therefore, turn it over to my colleague, Mark Schaan.
Mark Schaan Director General, Marketplace Framework Policy Branch, Strategic Policy Sector, Department of Industry
Good afternoon, Madam Chair.
As indicated, my name is Mark Schaan, and I serve as director general of the marketplace framework policy branch in the strategic policy sector of Innovation, Science and Economic Development. While our sector broadly includes such policy areas as innovation, telecommunications, and technology as clean technology, my branch specifically analyzes the role of marketplace frameworks in meeting the department's objectives.
This includes a deep analysis of corporate governance, competition, and intellectual property in their role in facilitating an efficient marketplace and the innovation economy.
Thank you for inviting me to appear today alongside my colleagues from the Competition Bureau.
I understand that there are issues you would like to explore further following your meeting last February 23, at which Paul Halucha, our former associate assistant deputy minister, appeared before you on behalf of Innovation, Science and Economic Development Canada.
As Mr. Halucha noted at that time, competition policy as opposed to enforcement falls under the mandate of our department. However, the greater question of Canadian media, its ownership and its future, is a crosscutting matter for us. It is one that touches upon questions of innovation, economic evolution toward the digital world, consumer affairs, and the place of government and regulation in the economy more broadly.
Indeed, these overlap noticeably with the central themes of the inclusive innovation agenda that our minister initiated last June as well as those of Minister Joly's current consultations on the digital future.
Since Mr. Halucha's appearance, our department has, in conjunction with the Department of Canadian Heritage, contracted with the Public Policy Forum to explore the role of media in the current environment, particularly its support of the democratic function and its capacity to seize digital opportunities as an industry.
This was touched on by Monsieur Bernier, the director general of cultural industries at the Department of Canadian Heritage during his appearance before your committee last month. We feel it important that an independent voice with a wealth of industry expertise have the opportunity to share its views so as to inform government policy in addition to the work of your committee. We very much look forward to its findings as well as yours.
I would also like to underscore the efforts underway as part of the inclusive innovation agenda to promote Canada as a world leader in innovative growth and the modern economy.
While recognizing the importance of the current media sector and its role, the consultations have highlighted the unique opportunities afforded by the transformations underway.
While it remains critical to understand the challenges of this disruption, we can also see the opportunities it affords Canada to be a world leader in promoting inclusive innovation and real growth.
I would be happy to respond to any questions that you may have. I understand some of those may be in the zone of access to broadband and broadband, which is why I'm joined by my colleague, Mr. Adam Scott, the director of telecommunications policy within the department. We stand ready for your questions.
November 1st, 2016 / 12:10 p.m.
Liberal
The Chair Liberal Hedy Fry
Thank you very much.
You have been very efficient in your use of time, so that gives us the opportunity to get perhaps two rounds of questions going.
I'll begin with the first round, which is a seven-minute round. That includes, as you know, questions and answers. I'll begin with Mr. Samson for the Liberals.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
Thank you very much.
My question is for the Department of Industry.
In my riding, Sackville–Preston–Chezzetcook, in Nova Scotia, the constituents have not been consulted on the placement of cell phone towers. They have sent several letters about that. I personally sent a letter, and another one is currently being prepared by the community.
The community is not against the installation of those towers, but it is against the chosen placement. What can be done? It seems that people cannot express their disagreement, as their letters have still not been answered. That's really a problem.
Adam Scott Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry
This is somewhat outside my field of expertise, but I will try to answer your question.
That is a typical example of a public demand. Many people are insisting on having mobile or Internet service that is dependent on a tower. However, it is difficult to decide where to place a tower because of aesthetic and environmental repercussions.
There are lots of concerns. The placement of the tower isn't decided by the government. That's a decision that's made by the company providing the service, and there is a process in place for consultation. Consultation doesn't always go as everyone would hope, so there is a tension, and we do see a lot of these letters.
It's something that we're going to face continually as the demand for the service grows. It necessitates placement of towers, and they need to be where the people are, which creates a fair number of tensions.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
If I understand correctly, the company in question decides. If somebody in the region says, “Put it right here, I have an empty piece of land”, they may choose that piece. Then the community, when they're voicing their concerns, based on certain factors.... For example, the Lawrencetown Beach in my region is probably one of the most famous beaches for surfing. With the tourism that will be attracted there, people will have to look at the cell tower, which is not very good to look at.
Now, the service is not the question. They agree that there have to be towers, and they agree there should be a tower, but they're saying that the tower shouldn't be there. They've used many possible opportunities to express that. They have continuously indicated that they have not been consulted in the way that they should be consulted and that no one is taking responsibility.
What do I tell this community that they should do next? That's my question.
Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry
I would encourage them to continue speaking with the service providers. If they're having disputes, they can certainly reach out to our department.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
The service provider, you realize, is the one who is putting the tower there and has the offer from someone to put the tower there.
Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry
Understood.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
No one is regulating that. There's no basis to that.
Industry Canada is indirectly letting it happen. My question is whether there is something we should be looking at that we're not looking at.
Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry
There may be. I'm sorry, it's not an area that I'm overly familiar with.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
Maybe we could get an answer from Industry Canada on that question.
I've written a letter, and a second one is on its way this week. Many people have written to the municipal council, as well as Industry Canada. They are finding a deaf ear. It seems like, if I understand it correctly, the provider has all the power in the world, and can pretend to consult but does not really have to consult. That's unacceptable, in my opinion.
Liberal
The Chair Liberal Hedy Fry
Mr. Samson, I really don't know that this is under the purview of our study or this committee at the moment, so perhaps you would like to ask a question with regard to media availability or to the other things that are on the table.
Liberal
Darrell Samson Liberal Sackville—Preston—Chezzetcook, NS
I appreciate your comment, Madam Chair; however, in my opinion, it does have to do with media because it has access to it, but I will forgive the rest of my time. Thank you.
Liberal
The Chair Liberal Hedy Fry
All right, thank you.
Does anyone want to pick up the almost two minutes that are left?
Yes, Julie.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
I was happy that you, Mr. Schaan, raised one of the issues as being access to Internet. That's something that came up in some evidence we heard from Professor Winseck about Internet access not being universal because of income inequality. That's been raised in my community. I've heard that from people as well. I was wondering if there has been any analysis of that when we're talking about access to media and moving towards the digital shift in media. How do we ensure that people—who may not have access for socio-economic reasons—get to access the Internet? What are we doing at Industry try to increase that access?
Director, Business and Regulatory Analysis, Telecommunications Policy Branch, Strategic Policy Sector, Department of Industry
I can speak to that.
This is an area that we're starting to look at. More typically, Industry Canada's programming has been focused on improving access, and the issue of affordability hasn't been as directly addressed. The primary driver really is competition, and that's one of the most effective means of putting downward pressure on pricing. We do see a number of new providers coming to market with competitive pricing offers, so there's a wholesale framework in place by the CRTC that encourages new entry, and we do see a dramatic impact that those new entrants can have on lowering prices.
You're absolutely right that there is a difference in terms of subscriber uptake based on income. At the highest quintile, it's virtually 100% adoption of Internet services, and at the lowest quintile, I think we're about half or maybe in the 60% range. It's dramatic. It's fair to say that a large portion of those households that don't have Internet service are among the low-income earners. That's something that we're definitely looking at. It's something that came up extensively in a recent CRTC review. Their decision hasn't been issued yet, but there is a lot of evidence filed on that issue. When we talk about digital gaps, traditionally we focused very much on kind of the infrastructure gaps. This issue of an affordability gap is very top of mind.
Liberal
Julie Dabrusin Liberal Toronto—Danforth, ON
It was mentioned that the Competition Bureau deals with pricing as one issue. I know the finance committee has been looking at telecom as well, I believe. I thought I saw it somewhere there.
Is there something from the Competition Bureau's perspective about how to increase competition with mergers between our telecom companies and affecting affordability?