Finance Committee on Nov. 20th, 2023

[Mark Schaan]

I believe that's a question for the minister.

I think the minister was clear that should actions not be taken to stabilize food prices, he would—

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

Are you saying that the department would have no idea what those penalties would have been and that it's only the minister, not the department?

[Mark Schaan]

I'm not in a position to answer specifically as to what the minister may or may not contemplate, other than the fact that he's been clear that he is open to the possibility of consequences should actions not seek to stabilize prices.

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

How has the department been monitoring the promised food price reduction the minister announced at the “public spectacle”, I'll call it, with the grocery CEOs in October?

[Mark Schaan]

I think there are a number of important considerations, Mr. Chair, as to how the overall grocery file is being monitored. One of them, obviously, is the role of food inflation, which is one of the inputs into overall inflation. Published monthly, by Statistics Canada's estimate, we have seen declines over the last number of months in food inflation, particularly, which is going down more quickly than overall inflation.

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

This is the last question, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

We're at the time, MP Williams, so we're going over to MP Dzerowicz now.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all our witnesses today for being here, for your patience, for all your great work and for answering our questions.

I have two questions for you.

The first one is this. I would say the residents of my riding of Davenport would be a little bit surprised to hear there are property controls or restrictive covenants around independent grocery stores setting up in certain areas. In plain language, could you explain what those are and how the proposed changes in our legislation are going to correct competition in the grocery sector?

[Mark Schaan]

Thank you for the question.

In plain language, the way the act currently thinks about collaboration is traditionally a collaboration that potentially is between a competitor and a competitor, and that collaboration potentially harms competition and therefore is within the reach of the bureau. What our change does in Bill C-56 is that it expands the concept of what could be a collaboration to not just those that are between competitors and competitors, but those that are between competitors and someone else in the value chain that actually potentially are going to impact competition.

The case that has often been used, or the example in the grocery sector that has often been cited, has been that it might not be two grocers getting together to collaborate to significantly lessen competition, but potentially a grocer and someone else in the value chain, like their landlord. When the grocer signs a lease agreement, they specifically and explicitly state that part of the lease agreement is that the landlord will not rent any other part of the premises—let's imagine that it's a strip mall—to anybody else who competes or sells in any vertical of the grocery store.

This isn't just preventing another grocery store. In many cases, this is actually saying, if they run a grocery store in this strip mall, you can't have a bakery, because a bakery sells baked goods and we sell baked goods. You actually can't have a hardware store, potentially, if they have homeware items.

What essentially this would do is expand the scope for the bureau to be able to look at those collaborations, deem whether or not they are significantly lessening competition and take action as appropriate.

[Julie Dzerowicz, Liberal, Davenport, ON]

That's very helpful.

I know that you were starting to talk a little about this in your opening remarks. You were talking about some of the changes in Bill C-56, but you also started talking about the fall economic statement.

I was in the business world for about 15 years before I entered politics, and I will say that a lot of people have been saying that we need to make a lot of adjustments to our Competition Act to ensure we have competition in Canada. Can you maybe talk about all the different parts you're looking at to try to ensure that we have good competition and we have a productive, prosperous economy, moving forward?

[Mark Schaan]

I appreciate the question.

If you go back even before the legislative amendments in budget 2022, you can look at the fact that the government has made a significant resource addition to the bureau. By providing a significant injection of new funds to empower the bureau to be well placed and fit for purpose, one of the things the bureau has done with that, for instance, is that it has created a digital markets group that can more specifically look at the way in which technology and data-driven parts of the economy are actually understood from a competition perspective, because they run very differently, in many ways, than traditional industries do.

The 2022 changes to the budget created a number of important foundational elements. It took a look at penalties, for instance. It made penalties uncapped in a number of key zones and created essentially very important consensus-based items that were the foundation for early reform.

Bill C-56 then targets three core areas, and it is now proposed, under motion 30, to include at least one more, which would tackle things like the efficiencies defence, which, as the minister noted, right now allows for projected efficiencies on the basis of the collaboration to potentially outweigh the significant lessening of competition and allow a merger to proceed. Then, what is in the fall economic statement takes that even further, and what M-30 proposes is much similar.

Right now, for instance, abuse of dominance is one of the more challenging things to actually enforce against. Can you prove that someone really big in the market actually had intent to use their bigness, if I can put it that way, to harm competition, and that there are then effects of that in the market, as in you can prove that they've lessened competition? What M-30 suggests is that, for those purposes, that test should now be an “or”. You have to be big, but in order to be able to potentially get a prohibition order from the bureau, it's either intents or effects—not necessarily both.

Other really important changes are these killer acquisitions, for instance. It lengthens the period of time that the bureau has to review a merger. Oftentimes when a small company is being acquired—we can think of some in the tech space, for instance—we didn't even know at the time of the merger that it was going to be really foundational or important. Right now, there's a time limit on the degree to which the bureau can actually look at those mergers, so it will extend it to three years to allow for the bureau to be able to look back, take appropriate action and bring action to bear, if necessary.

In sum, what the overall effort has done is that it has tried to tackle the necessary resources, the fit-for-purpose regulator and then a series of legislative amendments that correspond with the kind of market dynamism that I think the government has suggested it seeks.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Next, we have MP Garon, please, for two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

I would like to take a bit of my speaking time to give notice of the following motion:

That, pursuant to Standing Order 108(2), the Committee undertake a study on the carousel tax fraud scheme that international criminal networks are using to collect tax refunds for GST/QST and steal hundreds of millions of dollars from Canadian government coffers; That this study focus in particular on the following points: a) the reasons why Canada appears to be an easy target for this type of fraud; b) identifying and understanding the gaps in Canada’s tax system that make this type of fraud possible and easy to commit; and c) measures that should be taken by the government and the CRA to put an end to these scams and to reclaim taxpayers’ money; That the Committee invite the following witnesses to appear: 1) Appearing together for a period of two hours, former CRA Minister Diane Lebouthillier and current CRA Minister Marie-Claude Bibeau, accompanied by senior CRA officials; 2) For one hour, the Deputy Prime Minister and Minister of Finance, Chrystia Freeland; 3) For two hours each, Marius-Cristian Frunza, an expert in carousel fraud, and Bo Elkjær, a Danish journalist who has been investigating this type of fraud in Europe since 2009; 4) For one hour, Samer Bishay, the CEO of Ontario telecommunications company Iristel; and 5) Any other witnesses the Committee deems necessary; That the Committee allocate a minimum of four meetings to this study; and That the Committee report its findings and recommendations to the House.

Mr. Chair, I would like to use my remaining 55 seconds to ask the witnesses a question.

[The Chair, Liberal, Peter Fonseca]

You have 40 seconds.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Mr. Mercille, in response to the questions I asked, we were told that there were no studies and it was not known whether affordability criteria will be included in Bill C-56.

I am sensing some unease. I get the impression that the measure relating to the GST was put together off the cuff.

Bill C-56 provided the broad outline of the measure, but the rest was sent to us by way of a departmental opinion.

Did your department work on a similar measure or a version of this measure before the pre-sitting caucus of the Liberal Party of Canada in the fall?

[Pierre Mercille]

I am not in a position to answer that kind of question.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Did you work on it in the department before September?

[Pierre Mercille]

I am not in a position to talk to you about this and I do not even have the authority to talk to you about the work done in the department.

[Jean-Denis Garon, Bloc, Mirabel, QC]

You do not seem to remember. That speaks volumes.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Garon.

Next, we have MP Blaikie, please, for two and a half minutes.

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

Thank you.

I want to confirm something with our industry officials. When we talk about measures to reduce anti-competitive measures, it's not to prohibit firms from increasing their market share. It's to require them to increase that market share through offering products that more and more Canadians want to buy at prices they find more attractive than their competitors.

Is that fair to say? I just think that can get lost sometimes in the conversation. It's not putting a cap on anyone's market share if they earn it. It's trying to stop, for instance, increased market share through acquiring competitors who are having the effect of lowering prices or offering superior products.

[Mark Schaan]

Certainly, the Competition Act is an enforcement-based act, which means it takes actions when there is a significant listing of competition. However, it's goal is to engender the right behaviours in the marketplace, which means, as you say, that you can grow. You can continue to have an economic impact and have growth. It just can't come at the expense of competition and, particularly, at the expense of competition where you've rigged, essentially, the competitive landscape in your favour.

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

Thank you very much.

Thank you, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

We're now going to MP Thompson.