Industry Committee on Feb. 19th, 2007

[Maxime Bernier, Conservative, Beauce, QC]

For the time being, I don't have a position on that.

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

Recommendation 3-5 reads as follows:

There should be a transition period of 12 to 18 months, during which time services that are currently subject to economic regulation [...]

That would be very appropriate.

[Maxime Bernier, Conservative, Beauce, QC]

Yes, but as regards recommendation 3-5, we want there to be economic deregulation, in which case recommendation 3-3 would apply.

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

Recommendation 3-3 could apply. The sunset clause would mean that it wouldn't be for ever. As far as Bill C-41 is concerned, all the government has to do is table it. Until it does that, we can't study it in the House. It's the government that hasn't tabled it yet.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you; you're right.

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

That doesn't mean we are going to support it.

[Maxime Bernier, Conservative, Beauce, QC]

You're right. In terms of the legislative agenda, our schedule is quite full. As you know, we are currently debating bills relating to the justice system in the House. If I understood you correctly, when the Government House Leader meets with your Parliamentary Leader to put second reading of Bill C-41 on the agenda, you will not object.

[The Chair, Conservative, James Rajotte]

Mr. Crête, a small question.

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

Any time a bill is tabled, I am prepared to debate it. But I have a different question.

You may recall that the founder of Québec-Téléphone, Mr. Brillant, was from Rimouski. That kind of business could be the brainchild of an entrepreneur like those in the Beauce and Portneuf, but also in Montmagny and Rivière-du-Loup. All we need to do, if we want people back home to continue to own their companies, is give them attractive conditions under which to develop their business.

[The Chair, Conservative, James Rajotte]

Okay, I don't think—

[Maxime Bernier, Conservative, Beauce, QC]

I gather you are referring to cable operators who are new entrants into the local telephone service market. That's a good point.

[The Chair, Conservative, James Rajotte]

I don't think we'll solve who has the most entrepreneurs, the Beauce, Portneuf, or Rimouski.

[Voices]

Oh, oh!

[The Chair, Conservative, James Rajotte]

We'll go to Mr. McTeague.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Minister, I think you'll agree that suggesting that consumers are somehow supporting this particular initiative, as Bell Canada tried to the other day.... I'd be quick to point out that on the first question of the Ipsos-Reid poll they commissioned, 84% of Canadians weren't even aware of the policy to begin with. So this is in fact a very complicated area of public policy.

Notwithstanding the declarations you've made, and obviously the references you had to make to the documents in front of you, I too find it very complicated. I am aware of one thing, as are several members of this committee, with respect to the Competition Act, and I'm also painfully aware why legislation specific to the airline industry was put into question, which is that the cease and desist provision was struck down by the Quebec courts. Your department—your legal advisors—and Madam Scott should certainly have been able to tell you that only in the most egregious and obvious of examples, which is a very hard test to prove, will you be able to in fact arrest a situation where an anti-competitive act is taking place.

This leads me to the real question about the competitor presence test. What you've done is thrown out the standard rule of reason test by which all matters of competition or anti-competitive activity are judged. You've thrown out the opportunity to have a review of the market in which a decision is to be made. And of course consumers know very little about this project.

Given all the recommendations you've set out and given the Quebec court's decision, how can you now be confident that consumers will be protected and that anti-competitive activities won't be prevented under Bill C-41, which, by the way—and I point this out for you, Chair—was the grandson, if you will, of Bill C-19, which remanded it to make it a law of general application?

[Maxime Bernier, Conservative, Beauce, QC]

Thank you.

You are referring to the now defunct Bill C-19 tabled by the former government. That bill gave the CRTC the power to impose administrative monetary penalties on stakeholders in all the different industry sectors. You're absolutely right. That is why I am confident that Bill C-41, which is specific to the telecommunications industry, will be approved by the House at the appropriate time.

With respect to the Competition Bureau and the Competition Tribunal, Ms. Scott said a number of times, when she appeared before you, that she has the necessary resources to take action and would like to be authorized to impose administrative monetary penalties of up to $15 million. She said she would like this bill to be passed by the House and expressed her confidence that this would discourage abusive behaviour. At the same time, she said that if such behaviour were to appear, the Competition Bureau would have the tools it needs to issue injunctions with a view to ensuring that the Act is adhered to and that all industry players, particularly large players, comply with it to the same extent as new entrants.

The test that we are applying for the purposes of deregulation was used by the CRTC itself. It is different from the market share test. If we want consumers to benefit from deregulation and competitive pricing as soon as possible, we can use that test. It is based on facts, is easy for the CRTC to administer, and allows the rule to be applied where there is competition. That is our belief. We want this to happen as quickly as possible.

[Dan McTeague, Liberal, Pickering—Scarborough East, ON]

Minister, the problem is that the Competition Bureau does not have the right, even under Bill C-41, to go beyond the position taken by the judiciary, particularly in Quebec. That is why Bill C-41 contains amendments that take into consideration the legislation in force in the given area.

The concern I have is that in the time it takes to get to the tribunal, the business could be dead and gone and buried and the flowers wilted, and you've lost competition, as you've seen in the United States, Minister. You've seen this happen time and time again.

There was a perfect document prepared for you by the panel, by the report. You've chosen, even in some of the chapters, such as chapters 3 and 4, only to have certain recommendations. I'll give you an example: interconnection. There are a lot of companies that haven't interconnected; yet if you proceed with this, the advances you've made in long distance and in other places will be lost, and also what you've done here in terms of local connection.

Are you not concerned that your decision to rush or to go in haste may in fact have the reverse and opposite effect to what you're trying to achieve and result in less competition and very little in the way of new entrants to this market, which will hurt consumers?

[The Chair, Conservative, James Rajotte]

Minister.

[Maxime Bernier, Conservative, Beauce, QC]

You are talking about the possibility of remonopolization or duopolization subsequent to our using our test and deregulating an urban market.

At the present time, there are a number of players operating in urban markets. They are the former monopolies, the cable operators providing telephone services, and all the businesses offering cell phone service. All across Canada, there is a significant number of players in markets considered to be very limited. I do not believe we will lose the benefits of deregulation or that we are moving towards a duopoly or monopoly. In that regard, I would just like to read a comment made by the President of Cogeco, Mr. Audet, as quoted in the Globe and Mail on December 13, 2006. This is what he said:

“Our costs are very low. If someone decides to lower prices, they are welcome. We'll be in a position to defend ourselves.”

The President of the company is saying here that there is a competitive price structure and that he is prepared to take on the competition in any price war that results from deregulation. That is why we believe we must move to deregulate. There are significant players, and in addition to that, this is in the interests of consumers.

[The Chair, Conservative, James Rajotte]

Thank you, Minister.

We'll go to our last questioner, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, Mr. Minister.

One of the concerns in my riding, where we have Esso, Petro-Canada, and Shell for gasoline, is that nobody believes there actually has be collusion; there's just no competition because of vertical integration in the industry.

With regard to your model, you have telephone, cable, and wireless, which allow for the deregulation component to take place. What happens or what thresholds are in place if, for example, one of those three different pillars exits the market or is not really there in a strengthened position and is going through the motions, so to speak? There are many places where cable or telephone service has really been at the lower end of provision. So what happens if one of those exits the actual area? Does regulation then automatically get imposed back on that area, since they've lost one of the three pillars of the reasons for deregulation?

[Maxime Bernier, Conservative, Beauce, QC]

The CRTC will be able to analyze each market. When the test is met and we have deregulation, it will then become a deregulated market.

The CRTC will have the power to regulate, so I don't think this situation will happen. If another situation is different, the CRTC will be able to examine it and will be able to do what they must do.

It's like things in the remote areas. The CRTC has a role there, and they also have a role in the urban areas. They're going to be the ones to decide if we have deregulation or not. I believe the CRTC will do so in a professional manner, as they have done in the past. I believe we will have competition and won't have re-monopolization, because the market is ready for that right now.

[Brian Masse, NDP, Windsor West, ON]

There has been a lot of rhetoric about who is on the side of the rights of the consumer. At the same time, there hasn't been action in terms of, for example, the review policy that put forth the recommendations. What's your position on the ombudsman's office? When is that going to be established?

One of the things that I think consumers would feel some comfort in is if consumers' rights and bills for the protection of their rights were enhanced prior to deregulation and if this office of the ombudsman was up and running prior to deregulation. If you had those two features established and ready to go, you would at least allay some concerns about where consumers fall as this thing opens up. So what is your position on those two things, and when can we see some action?

[Maxime Bernier, Conservative, Beauce, QC]

The expert panel recommended creating an ombudsman position. That is something that exists in other jurisdictions. Great Britain and New Zealand have an ombudsman who is specifically responsible for dealing with complaints about the telecommunications industry. The government is looking carefully at that recommendation, just as it is all the others.

I would also like to receive comments from your Committee on comprehensive telecommunications reform, in order to give careful consideration to your feedback and propose amendments to the Telecommunications Act when we are ready. That is an important point. We want to be sure that consumers can file complaints about the telecommunications industry with a specific entity. Should that entity deal exclusively with complaints that relate to the telecommunications sector? That is precisely what we are pondering at this time. If you have any ideas on that, I would be delighted to read the report that you will be tabling in a few weeks' time.

[Brian Masse, NDP, Windsor West, ON]

I can tell you right now: before deregulation happens, strengthen the consumer rights aspects and actually have the ombudsman's office open and operating prior to anything happening. Those are two things that I would see as being of particular heightened importance.

My final question, Mr. Chair, would be with regard to AMPs and the penalties. Are the recommendations coming forth going to be such that they'll be reviewed? I think it's a five-year review period, but would you be favourable to a three-year review period with regard to that piece of legislation, so that if consumers are being hit hard, the monetary penalties are going to be significant enough to make a difference?

What really concerns me once again is that if you look at some of the monetary penalties that we have in current industries right now, as you lose some competition from natural mergers and so forth, the penalties diminish in value. Is there an openness to having an open review of that on a more regular basis?