Finance Committee on Nov. 20th, 2023

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Is it normal, that 12-month period for implementation of things that require acceptance in the market, for lack of a better way of phrasing it? You can put it better if you like.

[Matthew Boswell]

I don't know the history of delayed implementation after royal assent in all different areas, but I suppose it's fair to the marketplace to allow people to organize their affairs, which may have been in place for a long time, so that they're in compliance with the law.

For example, when a criminal provision to prohibit wage-fixing and no-poach agreements was added to the Competition Act in June 2022, it did not come into effect until June 2023—just this summer—to allow businesses that had no-poach agreements in place to get rid of them so that they weren't criminally violating the law.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay. Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

MP Williams is next, please, for five minutes.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Chair.

PepsiCo hiked their prices earlier this year, and the CFO is on record as saying that they can charge whatever they want for their products.

Is this something that, given new powers, you would investigate? When we look at big studies, we know that PepsiCo is not alone in manufacturing.... We talk about shrinkflation and other big problems occurring across the manufacturing sector.

What do you think off the hop? Would it constitute an investigation from the Competition Bureau?

[Matthew Boswell]

No.

Generally, the Competition Bureau and competition enforcers around the world are not price regulators. We enforce the law as it's set out and don't get into the business of regulating prices in the economy. That's what competition is supposed to do. If somebody is charging too much, there are other competitors, like Coca-Cola, for example. Coca-Cola will sell its products for cheaper and that will take market share from Pepsi. That's how competition regulates things.

We've been pretty clear about this over the years. We don't really want to be a price regulator. We're a law enforcement agency. We apply the competition laws as you folks here in Parliament set them, and that's what we do.

There are other avenues that the government can regulate if they feel it's appropriate, but we would prefer it wasn't us.

[Ryan Williams, Conservative, Bay of Quinte, ON]

We need easier barriers to entry. Maybe we need to see RC Cola re-enter the market or something like that.

I want to swing around and look at the distribution side of the industry for a second.

As you know, the food wholesale industry is dominated by the same companies that dominate grocery sales. Particularly, the middle mile supply is dominated by our two American food giants, Costco and Walmart.

With price margins getting slimmer and a looming recession on the horizon, what is the chance of Canadian wholesalers getting squeezed out of the middle mile and further entrenchment and dominance by our American wholesalers?

[Anthony Durocher]

We took a deep dive in our grocery market study but really focused on the retail side of the issue to customers. There is a wholesale component that's very important, particularly because some of the large retailers are vertically integrated and distribute to some independent grocers. That's something we're very alive to.

Beyond grocery, there are high levels of concentration across the economy and across the food production landscape. I think our continued voice in that debate is to probe for open competitive markets, particularly if there are government regulations that can be at play to make sure we can bring new entry into the market and continue to see dynamism in our economy.

[Ryan Williams, Conservative, Bay of Quinte, ON]

We talked to the minister today about the grocery code of conduct.

It was industry-led, but I guess it was made optional. Is a grocery code of conduct effective if participation is not mandatory?

[Anthony Durocher]

While it's certainly something that is important, we have not studied that particular issue, about the benefits of the code being mandatory versus voluntary. What we can say is that we have been closely watching and speaking with stakeholders about the grocery code of conduct. We recognize its potential importance to giving suppliers the certainty they need to innovate and invest, which can be good for the entire food segment as well. It's something on which we continue to monitor the developments closely in relation to the code of conduct.

Our role in this is to lend our voice as to how it can be as pro-competitive as possible.

[Ryan Williams, Conservative, Bay of Quinte, ON]

We've heard from a lot of industry members about the revised promise of a second phase of the modernization of the Competition Act. I know that you submitted, through consultations, many recommendations.

Do you have any indication from the government...besides what we call this almost drip, drip, drip? We have lots of little parts that are making up some good changes, but we need a really good modernization of the act.

Do you have any indication that it is coming at all? Have you heard that?

[Matthew Boswell]

Well, we heard what everyone else heard in the fall economic statement, that there are four key areas where they intend to further amend the Competition Act.

We're looking forward to seeing what that involves, what the language is, and the specific amendments to the act. Obviously, we're hopeful that they align with some of the recommendations we made.

I think they also indicated that they are going to amend the Competition Tribunal Act on the question of costs.

I have no more insight than anybody in this room on when that's going to happen or when that implementation bill will be put in front of Parliament.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Williams.

We are getting close to the finish line here with witnesses on Bill C-56.

Our final questioner is MP Weiler. No. PS Bendayan is our final questioner.

[Rachel Bendayan, Liberal, Outremont, QC]

I'm bringing it home, sir.

I would like to thank the witnesses who are present on screen and in person. I understand that it is very late for a Monday evening, so I thank them for participating in this very important exercise with us.

My first question will be for you, Mr. Boswell.

I am wondering if you can help explain to Canadians what happened in June this past year. My understanding is that the Canada Bread Company was fined $50 million, which is the largest fine, I believe, in competition history here in Canada.

I wonder if you can walk us through what exactly happened and, in your view, whether that was a significant step or a significant moment in competition law here in Canada.

[Matthew Boswell]

Canada Bread's criminal guilty plea in the summer related to our extensive investigation into allegations of criminal price-fixing in the bread industry in Canada over many years. Canada Bread was a co-operative party with our criminal investigation through what we call our leniency program, which is an established program that many of our colleagues around the world also have. The fine that it received was the highest price-fixing fine ever in Canada. We continue to pursue that investigation.

The way it works for us with criminal investigations is that we are the investigative body—we're the police force, for lack of a better term—and we go through all the facts and all the evidence we can uncover with respect to allegations of price-fixing or, in other cases, bid-rigging. We then provide that as a package to the Public Prosecution Service of Canada as a referral. It makes a decision on whether or not to lay criminal charges against other parties under investigation.

As far as it relates to other companies that are involved in our investigation, there's no finding of wrongdoing at this time, but we have benefited from the co-operation of both Loblaw and Weston Foods—and now Canada Bread.

[Rachel Bendayan, Liberal, Outremont, QC]

How long did that investigation go on for? Is it still ongoing?

[Matthew Boswell]

The investigation has been going on for some time, and it's ongoing.

[Rachel Bendayan, Liberal, Outremont, QC]

Can you be a bit more specific about “some time”?

[Matthew Boswell]

Do you mean when we started it? It was several years ago. I don't know the exact date.

[Rachel Bendayan, Liberal, Outremont, QC]

Are there any recommendations that you might like to share with our committee in light of that experience you've just had?

[Matthew Boswell]

Fundamentally—and I'm not talking specifically about this particular case—in criminal investigations, the criminal standard of proof is very high, and it's important that we do our job carefully and well. The Public Prosecution Service of Canada expects that of us. It scrutinizes our referrals and applies a test to decide whether or not charges will be laid, whether there's a reasonable prospect of conviction and whether it's in the public interest.

This investigation—and this is public—is a very large, wide-ranging investigation involving many companies over an extended period of time, but as I said, there's no finding of wrongdoing at this point with respect to those other companies.

[Rachel Bendayan, Liberal, Outremont, QC]

Do you think we should raise or modify the minimum fine in relation to matters such as that, or any other?

[Matthew Boswell]

The fines with respect to price-fixing are now at the discretion of the court, so there's no max. There used to be a max, and the Competition Bureau suggested that it wasn't appropriate to have a max. We were pleased to see that removed.

At the end of the day, it is a decision, first of all, for the Public Prosecution Service of Canada to make on what fine, upon a finding of guilt, it would advocate for. Ultimately, it's up to a criminal judge.

The fact that there's no cap, we believe, is important, especially in these criminal conspiracy cases, which can be quite significant.

[Rachel Bendayan, Liberal, Outremont, QC]

In cases of price-fixing, Canadians are the ones paying the price.

Thank you very much, Mr. Boswell.

[The Chair, Liberal, Peter Fonseca]

Thank you, PS Bendayan.

To our excellent expert witnesses, thank you for your hard work and for your advocacy on housing and competition. We thank you for your testimony before our committee on Bill C-56.

We are suspended until Wednesday.

[The meeting was suspended at 9:29 p.m., Monday, November 27, 2023]

[The meeting resumed at 4:37 p.m., Wednesday, November 29, 2023]