Thank you.
Mr. Chair and members of the committee, thank you for the opportunity to appear before you this morning as part of your study of Shell Canada's recent decision to close its Montreal refinery.
My name is Richard Bilodeau, and I am the acting assistant deputy commissioner of competition for the Competition Bureau's civil matters branch. I am accompanied today by Martine Dagenais, assistant deputy commissioner of competition for the bureau's merger branch. We look forward to assisting the committee today in its deliberations.
As the committee members are aware, the Competition Bureau is an independent law enforcement agency that is headed by the Commissioner of Competition. The bureau administers and enforces the Competition Act, which is designed to maintain and encourage competition in Canada in order to promote a number of objectives, including increasing the efficiency and adaptability of the Canadian economy and providing consumers with competitive prices and product choices.
The act applies, with very limited exceptions, to all sectors of the Canadian economy, including the petroleum sector, and sets out criminal and civil penalties for a variety of anti-competitive practices. These include, for example, entering into agreements with competitors to fix prices, allocate markets, and restrict output; abusing a dominant market position; and engaging in misleading advertising and deceptive marketing practices.
The Bureau takes its enforcement responsibilities very seriously, and is acutely aware of the importance of promoting competitive markets in the petroleum sector.
As committee members may recall, the Bureau announced in June of 2008 that criminal charges would be laid against 13 individuals and 11 companies which conspired to fix the price of gasoline at the pump in Victoriaville, Thetford Mines, Magog and Sherbrooke, Quebec. Those charges, which so far have resulted in almost $3 million in fines and jail terms totalling 54 months, arose from the largest criminal investigation in the history of the Competition Bureau. Investigators seized over 100,000 records, searched 90 locations, and intercepted thousands of telephone conversations over the course of their investigation.
Very recently, on July 15, the Bureau announced that new criminal charges had been laid against an additional 25 individuals and three companies with respect to this same price-fixing case, bringing the total to 38 individuals and 14 companies accused. Price-fixing is widely considered to be among the most egregious forms of anti-competitive conduct. And we will pursue these criminal activities to the fullest extent of the law.
The committee members may also recall that in July of 2009, the bureau completed an extensive review of the merger of Suncor and Petro-Canada. Ultimately the bureau entered into an agreement with the parties to resolve concerns that the merger would lessen competition substantially, which we concluded could lead to higher gasoline prices. The agreement required the companies to sell 104 retail gas stations in southern Ontario as well as significant storage and distribution network capacity in the greater Toronto area for ten years. In securing these remedies, the bureau not only preserved competition in those markets where concerns were identified but also facilitated entry by new and vibrant competitors.
With that background, I will now turn to the specific topic that is before this committee today, the impending closure of Shell Canada's Montreal refinery.
As the bureau has stated in previous appearances before this committee, our overriding concern in all cases is whether the conduct in question amounts to a violation of the Competition Act. The bureau obtains information on possible violations of the act through its own monitoring activities, from complaints by those in the market, and from firms that assist the bureau in its investigations in exchange for immunity from prosecution or leniency in sentencing. Where evidence establishes a violation of the act, the bureau does not hesitate to take appropriate action.
Provided that conduct does not contravene the Act or any other applicable law, businesses are free to determine how they operate. In that regard, generally speaking, a unilateral decision by a firm to discontinue the use of a manufacturing or other facility does not raise concerns under the Competition Act. The Bureau presently has no basis on which to be concerned that Shell's closure of its Montreal refinery triggers any concerns under the Competition Act.
If, instead, Shell ultimately were to decide to sell all or part of the refinery, the Bureau would likely review the transaction pursuant to the merger provisions of the Act. Any such review takes into account a variety of factors, including the parties' market shares, the level of economic concentration in the relevant industry, the effectiveness of remaining competitors and barriers to entry.
Where the Bureau determines that a merger is likely to lead to a substantial lessening or prevention of competition, the Bureau may apply to the Competition Tribunal for an order to prevent, dissolve or alter the merger.
Participants in the petroleum sector and Canadians in general can be confident that the bureau takes its work very seriously and recognizes the importance of competition as a key driver of growth, productivity, and innovation in the petroleum sector and in the Canadian economy more broadly.
With that, Mr. Chair, I thank the committee for its time and welcome any questions from committee members.