Fisheries Committee on June 1st, 2023

[The Chair, Liberal, Ken McDonald]

We can try that and see what happens.

We'll now go to Mr. Small for five minutes or less. Go ahead, please.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Thank you, Mr. Chair. It's good to see that you're alive and well there in Conception Bay South.

Thank you to the witnesses for taking time to come out and take part in this very important study.

My question is going to be for Mr. Guay.

We've heard numerous witnesses say, in particular with reference to B.C. or Newfoundland, that seafood buyers and processors are operating as cartels or in collusion with one another when it comes to buying or competing for product from fishermen.

How would you define a cartel or collusion in this type of situation between buyers?

[Pierre-Yves Guay, Associate Deputy Commissioner, Cartels Directorate , Competition Bureau]

Thank you for the question.

Section 45 of the Competition Act is the conspiracy provision—and I am going to get to your specific question—which says that it's a criminal offence for competitors or potential competitors to fix prices, allocate markets and restrict output in the course of supplying a good or a service. When we're talking about purchasers agreeing together, the problem is that they are not supplying a good or a service; they are on the purchase side, with what we call a buy-side agreement. Under the last amendments to the Competition Act, in 2009, the word “purchase” was taken out of section 45. The possibility for us to intervene under the criminal provision for conspiracy was thus limited.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Mr. Guay, I know there are a lot of people from the fishing industry watching these hearings here now. I've heard the words “collusion” and “cartel” all my life, frankly, about the fishing industry, and I've heard many, many times that the Competition Bureau should be doing investigations. Are you telling me that there's no possibility you would ever be able to investigate such things?

[Pierre-Yves Guay]

Well, under the criminal conspiracy provision, it's not possible at this point, given the change to the law; however, there are other ways to investigate, and we can look into situations of that kind under section 90.1 of the Competition Act, which is a civil provision.

I'm not an expert in that field, so maybe I can pass it on to one of my colleagues to comment.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Well, absolutely, one of your colleagues is definitely more of an expert than I am.

[Anthony Durocher]

Buy-side cartels or conspiracies cannot be looked at criminally right now, with the exception of anything related to fixing of wages or no-poach agreements. As my colleague pointed out, they can be looked at under the civil provisions of the Competition Act under section 90.1.

I would point out that whether the Competition Act should be reviewed to be able to look at buy-side cartels under a criminal track is a live issue right now. The government has launched a consultation on the Competition Act, and there are a few notable issues that are taking up a lot of time, and that particular issue is one.

Looking at the buy side under criminal provisions is a long-standing issue in competition law.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

Mr. Durocher, if independent harvesters can't move freely between processors, is that what you were referring to when you mentioned no-poach agreements? Would that be the type of thing that would fall under “no poach”?

[Anthony Durocher]

To be clear, this is as a result of amendments that received royal assent last year, but this actually comes into force under the Competition Act on June 23 of this year, which is in a few weeks. Wage-fixing agreements and no-poach agreements will now become illegal under section 45 of the Competition Act.

A no-poach agreement would be a reciprocal agreement between two employers under which they agree not to poach one another's employees. They agree not to hire one another's employees.

[Clifford Small, Conservative, Coast of Bays—Central—Notre Dame, NL]

We've heard from some witnesses and had some written witness material that a similar thing is happening in the fisheries, such that processors won't take from each other's suppliers, but the provisions dealing with no-poach agreements wouldn't apply to the fishery in the same way. Am I correct?

[Anthony Durocher]

I think—

[The Chair, Liberal, Ken McDonald]

Thank you.

Mr. Small, you've gone over your time. I would ask the witness, if he has an answer, to send it in writing to the committee, and we'll include it in the study.

We'll now go to Mr. Hanley for five minutes or less.

[Brendan Hanley, Liberal, Yukon, YT]

Thank you.

Thanks to all the witnesses for being here today.

I want to start with Mr. Callaghan.

In your speaking notes, you say quite clearly “the Bureau does not regularly evaluate overall levels of concentration or the state of competition”, but you look more at individual circumstances on a case-by-case basis. Is there a body that does look at the overall impact of competition or concentration?

[Brad Callaghan]

I can add a bit more nuance to what I said in my opening.

Beyond our enforcement mandate, under which we would do specific investigations into conduct such as the merger I mentioned, or allegations of cartels, as we've been discussing here, or other aspects of conduct, the bureau can also do market studies. Our powers are circumscribed, so the ability to collect information in those contexts of market studies is quite different from that in enforcement work, in the sense that we can gather that information for a market study only if it is given on a voluntary basis or is available as public information. Market studies are really a part of our mandate to promote competition, so our goal with those is really to advocate more pro-competitive regulations or policies to policy-makers, but that might be one scenario in which we try to at least look at the dynamics of competition in a specific market.

[Brendan Hanley, Liberal, Yukon, YT]

Thank you.

To be more specific, have you actually done a market study in this area?

[Brad Callaghan]

No, we have not.

[Brendan Hanley, Liberal, Yukon, YT]

But it is a possibility.

[Brad Callaghan]

Yes, it is, and we're guided somewhat by the priorities of our organization in terms of what we will focus on. The study we are currently working on has to do with competition in the grocery retail sector. Before that, we have looked at issues in the digital economy, such as digital health care. What we really try to do is focus in on markets that are going to have the biggest impact on competition and on Canadians. We look at government priorities, the priorities of our minister and those of Canadians. Those are really what feed into what we focus on in a market study.

[Brendan Hanley, Liberal, Yukon, YT]

Thank you.

You mentioned in responding to Madame Desbiens that you have a complaints process. How else do you receive notice? Is there also a reporting requirement that's more proactive than a complaints process?

[Brad Callaghan]

Mr. Durocher mentioned the mandatory notification process with respect to mergers. At the bureau we have obviously a general ability to gather our own intelligence. That may come from other work we are doing. We've been increasing our intelligence function at the bureau to make sure we are kind of keeping our finger on the pulse of what's happening in competition in markets.

Certainly complaints are a big factor in terms of what we may be looking into. There are specific ways for us to detect some of the conduct that was mentioned to you earlier, such as cartels conduct, which can be one of the most difficult to detect. I would let my colleague Mr. Guay add anything he may wish to, but in that area there's a specific program for immunity, under which we try to encourage members of a cartel to come forward, because it is a very difficult area for us to detect.

All of these things combined are how we try to identify anti-competitive behaviour.

[Brendan Hanley, Liberal, Yukon, YT]

I know I have less than a minute, but I want to move quickly over to Mr. Cameron.

Mr. Cameron, you made three recommendations, including one on restricting the sale of licences. You also talked about capacity and increasing regulatory oversight. I wonder if on the human capacity part you could take 30 seconds and expand somewhat on that.

[Duncan Cameron]

I can't very much, really. We just have no people in the department who are working on it. We had one person for a year and a half. That person moved onto a different file in December. From what I understand, they've been replaced, but there's just basically no staff capacity put towards potential changes to licensing or towards realizing socio-economic protections that were put into the recent changes to the Fisheries Act.

[Brendan Hanley, Liberal, Yukon, YT]

Thank you.

[The Chair, Liberal, Ken McDonald]

Thank you, Mr. Hanley.

We'll now go to Madame Desbiens for two and a half minutes or less.

Go ahead, please.

[Caroline Desbiens, Bloc, Beauport—Côte-de-Beaupré—Île d’Orléans—Charlevoix, QC]

Thank you very much, Mr. Chair.

Gentlemen, I'd like to know if you've received any complaints from the fishing industry about bad practices that could harm healthy competition in Canada and Quebec.