Industry Committee on Feb. 5th, 2007

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You said earlier that without fines, you didn't have too many cases, because there was no reason to go—

[Sheridan Scott]

No, I did not say that. I said that there had been cases. We do not have many of them, because the behaviour described under section 79 is favourable to competition, and provides the benefits of competition. This is why there are not many cases. We do not often prosecute, because we see the advantages on the marketplace. It is quite difficult to demonstrate an offence under that section. Certainly, supplementary tools are always helpful.

In an article in the Quebec magazine Les Affaires, we were described as very persistent. Thus, I think of myself as a terrier, rather than a declawed cat.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In the gasoline file, let me say that I see you rather like a very peaceful cat.

[Sheridan Scott]

And I would say that I am like a terrier.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Regarding the dominant position and the percentage, I find it very difficult to understand what I just saw.

If an entity has 90% of the market, you do not consider that as a criterion. In a given region, the entity that holds 90% of the market automatically buys all the tickets for all the programs that could be beneficial to the region. It wields extraordinary influence.

[Sheridan Scott]

This is an indicator. Of course, we examine this factor. However, it does not end there.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Earlier, you said that you did not take it into consideration at all.

[Sheridan Scott]

No. I said that this was one factor among other factors that we take into consideration.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The minister decides that there should be three stakeholders on a given territory. Could it be that someone who holds 90% of the market in a territory would make sure that the other entity keeps 5%, because if there are only two of them, they immediately become subject to regulation? If that is the case, how would you go about evaluating the situation?

[Sheridan Scott]

I suppose that that would be collusion, and we certainly do have tools for investigating such things.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Do not give me the collusion example, I cannot take it.

[Sheridan Scott]

But you are speaking of two competitors who turn into partners—

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Currently, in the territories that are covered, there should be three stakeholders: the first should have 90% of the market, the second 8% and the third 3% of the market. If the second or the third is out of the picture, the region must be regulated.

Would there be a special situation where the chief stakeholder keeps the second one alive artificially to ensure that they are officially in competition?

[Sheridan Scott]

Our study of the telecommunications market shows that it is a very dynamic market. We are no longer dealing just with the telecommunications market. As Mr. French said, there is a steady growth of markets with matching services. Thus, nothing guarantees that telephone companies can control the market by such means.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Let us take the cell phone market which is not regulated. The prices are about three times higher than in the United States or anywhere else.

[Sheridan Scott]

Not anywhere else. We have done—

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In several places. In any case, this is the case in Canada in the overall market.

[Sheridan Scott]

I would be careful with such comparisons. We made a few comparisons. It is difficult to make them, especially because we are dealing with a set of services. But if we compare public statistics, you are surely right about the comparison with the United States, but not with regard to other countries where that is not the case.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

The United States are our neighbours.

[Sheridan Scott]

Of course, but if we want to study the market dynamics, we cannot necessarily compare ourselves to the United States, because service providers in Canada are different, they are not the same.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

When you tell me that, you are also telling me that you are having trouble studying the markets. You say that it is difficult, because you do not have the figures or the data from the unregulated market.

What we are afraid of is that in a market with large providers, like Bell, as you know, the flexibility available to smaller companies and the possibility that others could replace them...

And this is in accordance with your criteria. Do you not think that it would have been better to continue with the intermediary stage proposed by the CRTC, whereby regulations apply up to the point where someone reaches 25%, and past that point, we have a truly competitive market?

[Sheridan Scott]

The 25% is not guaranteed. There are industries—

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

At least, at 25%—

[Sheridan Scott]

As far as we are concerned, even at 25%, some industries said that it was not enough, nor even 30% or 40%. This is why the market share is not always a solution—

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I want to know whether it would have been better to prolong that stage?