Evidence of meeting #68 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was prices.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Sheridan Scott  Commissioner of Competition, Competition Bureau, Department of Industry
Richard Taylor  Deputy Commissioner of Competition, Competition Bureau, Civil Matters Branch, Department of Industry
Sandy MacLaren  Senior Economist, Economic Development and Corporate Finance Branch, Department of Finance
Lise Potvin  Director, Sales Tax Division, Tax Policy Branch, Department of Finance
Howard Brown  Assistant Deputy Minister, Energy Policy Sector, Department of Natural Resources
Philip Jennings  Director General, Petroleum Resources Branch, Department of Natural Resources
Geoff Trueman  Chief, Air Travelers Security Charge, Sales Tax Division, Tax Policy Branch, Department of Finance

4:25 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

4:25 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

They do something.

4:25 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

They get in touch and reach an agreement.

4:25 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

We cannot do anything about the price gouging, because it depends on the market forces. Price gouging occurs when dealers are smart enough to avoid using the telephone.

4:25 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

No, not necessarily, because a dealer can take advantage of an opportunity...

4:25 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

—of a situation.

4:25 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

—to raise—

4:25 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

The price will end up being the same as if it had been fixed.

Some of my friends are policemen and they pray every evening to thank God for stupid criminals. It makes their job so much easier. I think that with the distinctions that you draw, you are doomed to never catch them. One must invest in order to make a profit. At least, this is what I was taught, and I am not even sure whether I passed the course. At present, we realize that in the refining industry, avoiding investment is key to making a profit.

The number of refineries is declining. Therefore, the first company to invest in a refinery next to Irving in New Brunswick, Ultramar in Quebec, Esso in Halifax, PetroCan or Shell in Montreal will be kicked out of the country club. They will not have to use the telephone, but its name will be mud.

Are we pretending that we do not see what is going on?

June 11th, 2007 / 4:25 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

I do not think so. Two companies are interested in investing in building refineries. They are only waiting for approval to go ahead. Building a refinery is extremely expensive and requires heavy investment over many years. Moreover, nothing guarantees that gasoline prices will remain high. Those people are not staying outside; they are preparing to make investments.

Those who decide to act independently are reflecting the market. As for your statement whereby we need stupid people to enforce our law, let me tell you that we are very active when it comes to price fixing and telemarketing fraud, as was mentioned. We are successful in prosecuting such people. We do not rely on stupidity.

4:25 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

I would like to come back to the question that Mr. Vincent put to you. Market dominance as such can be a dangerous or even an excessive factor.

4:25 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

4:25 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

We are not talking about criminal activity or conspiracy. We are talking about a situation where it is enough to stay put in order to commit an abuse.

4:30 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

Abuse of dominance is certainly not a criminal act. We intervene whenever a dominant company does anything to harm competition on the market. Such cases do occur, but sometimes such behaviour turns out to be very good for the market. For instance, there is predatory pricing. It consists in setting very low prices, which is good for consumers. Independent oil companies often complain about predatory pricing, but nevertheless, it is beneficial for consumers. This is a civil matter and in no way is it a criminal activity. However, there are certain conditions to be met, and we monitor the situation in order to enforce them.

This is why we are talking about abuse of dominance. It is not illegal to have a dominant position. As a matter of fact, this is what every businessman wants to get. They want a monopoly. Nevertheless, it remains to be seen whether the monopoly is a result of unfair competition or of a profitable investment. We do not want to punish people who are successful on the market and who reach a dominant position. However, they are not allowed to abuse their position.

4:30 p.m.

Independent

André Arthur Independent Portneuf—Jacques-Cartier, QC

Thank you.

4:30 p.m.

Conservative

The Chair Conservative James Rajotte

Merci, monsieur Arthur.

Thank you, Ms. Scott and Mr. Taylor, for coming in today. As you can see, there is a lot of interest by members in this issue. There's obviously a lot of interest by our constituents in this issue.

4:30 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

I can certainly assure you, Mr. Chairman, that we spend considerable resources in this area, because we realize how important it is for Canadians, and for you as well, in looking at this market.

4:30 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

I have a point of order from Mr. McTeague.

4:30 p.m.

Liberal

Dan McTeague Liberal Pickering—Scarborough East, ON

Mr. Chair, it might be helpful to the committee—and I know members on our side would certainly like to see this—if you could direct the researchers to provide us once again with an updated copy of the 2002 industry committee report that the commissioner rightly made reference to.

Second, could the researchers provide us with information, or articles more recent than late, of the relationship between Imperial Oil and, I believe the term was, Canadian Tire, as far as the administration of their marketing is concerned. I know that is available.

Thank you, Chair.

4:30 p.m.

Conservative

The Chair Conservative James Rajotte

Okay, thank you, Mr. McTeague. I'm sure the researchers will take that under advisement and provide that.

Thank you, Ms. Scott and Mr. Taylor, for coming in today. If you have anything further to provide the committee, please do so through me or the clerk. We'd be happy to receive it.

4:30 p.m.

Commissioner of Competition, Competition Bureau, Department of Industry

Sheridan Scott

Certainly.

4:30 p.m.

Conservative

The Chair Conservative James Rajotte

Members, we will suspend for about two minutes. We will ask the next witnesses to come forward immediately and start as soon as they are ready.

4:35 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

We will start the second part. It's 4:35, so we'll try to go to 5:35—although I understand we may have a vote on the extension of hours. We'll watch for that.

We have four to five witnesses. We have, first of all, from the Department of Finance, Ms. Lise Potvin, director of the sales tax division, tax policy branch; and Mr. Geoff Trueman, chief, air travellers security charge, sales tax division, tax policy branch. We have two gentlemen from the Department of Natural Resources: Mr. Howard Brown, ADM, energy policy sector; and Mr. Philip Jennings, director general, petroleum resources branch.

I apologize, but I don't have the other gentleman's name.

4:35 p.m.

Sandy MacLaren Senior Economist, Economic Development and Corporate Finance Branch, Department of Finance

I'm Sandy MacLaren, with the economic development and corporate finance branch, Department of Finance.

4:35 p.m.

Conservative

The Chair Conservative James Rajotte

Thank you.

I believe we'll start with Ms. Potvin. Are you presenting on behalf of the Department of Finance?

4:35 p.m.

Lise Potvin Director, Sales Tax Division, Tax Policy Branch, Department of Finance

I am.