Industry Committee on Dec. 14th, 2010

[Shuli Rodal]

I think what you referred to in question 10, when you read it out, is exactly the problem, which is that the Competition Act says that the enforcement powers are exercised where there is reason to believe that there is some anti-competitive conduct in the market.

If you look through all of the provisions of the Competition Act, you will not see any provision that says that being in a position of market power is itself anti-competitive. You will not see anything that says charging higher prices than might otherwise exist is itself anti-competitive. All of the enforcement powers are directed to protecting against anti-competitive conduct.

So if you just add at the bottom “grounds exist”, presumably not including anything that raises any concerns about anti-competitive conduct, what are you talking about? You're talking about the market being just not as competitive as we would hope, and this is an extremely broad question. And you go out into the market, and what are you going to do if you find out that it's true that we have a monopolist or we have three large companies that seem to be the most successful, and others are not really getting in there because their products aren't as...? What are you going to do?

[The Chair, Conservative, David Sweet]

Thank you, Madam Rodal.

We'll now go on to Monsieur Bouchard.

You have five minutes, Mr. Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

Good morning, ladies and gentlemen.

My first question is for Mr. Janigan.

You said that the OECD recommended that we institute a power to implement market studies. If I am interpreting your comments correctly, that means that the Competition Bureau currently does not have the power to implement market studies.

Does Bill C-452 address the OECD's recommendation, in other words, does it have a provision that would give the commissioner the power to implement market studies?

[Michael Janigan]

Yes, I believe that's certainly the power that's been invested with the commissioner in Bill C-452: it would enable those market studies to take place.

As I said before, one of the first acts would be, of course, that the commissioner would develop regulations that would set out the way in which those studies would take place, the powers that would be exercised, and when they're exercised. That's an important component that will accompany this, and when put together I think it would meet the concerns of the OECD that Canada was bereft of an express authority to study an industry simply for the purpose of illuminating competitive dynamics, which is effectively what a modern nation has to do.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I would like Mr. Janigan to answer my next question, followed by Ms. Rodal.

What new authority does Bill C-452 give the Commissioner of the Competition Bureau?

[Michael Janigan]

As I understand and interpret Bill C-452, it brings a new authority or is meant to bring a new authority to the competition commissioner to undertake a study with respect to the competitiveness of a particular industry and to report on the competitive dynamics and the means that might be taken to achieve a more competitive result. It differs from the other kinds of inquiries that are to take place with a specific view to ascertaining whether an offence has taken place or whether or not some kind of marketplace conduct has taken place. The marketplace study may find marketplace misconduct, but that's not the essential reason behind those studies. The essential reason behind them is to establish what the state of competitiveness is in the market and what we can do to increase competitiveness, and to make recommendations accordingly.

[Shuli Rodal]

One thing that perhaps is not fully appreciated is that the power of the Commissioner of Competition to initiate an inquiry is actually quite broad. The first thing is that the Commissioner of Competition can respond to a complaint, which is either made directly or, if the commissioner is paying no attention to a complaint that has been made, a six-resident complaint can be brought essentially forcing an inquiry. But on top of that, the commissioner can initiate her own inquiry without a complaint having been made.

My understanding is that in probably close to a third of the cases in which inquiries have been initiated, it was the commissioner and the Competition Bureau on their own volition suspecting that something might be anti-competitive in the market and initiating an inquiry on that basis. When we talk about the Competition Bureau behaving responsibly and properly exercising their mandate, I think that's exactly what they're doing under the existing law: looking carefully at a market, and if there's an inkling that somebody is doing something anti-competitive, which is what we've said in the Competition Act is a problem, then they go out and look into it. In the absence of a concern that something untoward or anti-competitive is going on in the market, the commissioner and the Competition Bureau say that if they're interested, they will look at it on a voluntary basis, will continue to think about it, will continue to monitor the market, and will listen carefully to market participants.

In my experience, people are not shy to complain if they think they're having a hard time competing in a market. Proceeding on that basis is I think sufficient. I don't see what is really being added by this open-ended power to undertake an inquiry, which we think in the end produces, as I've said, very little benefit.

[The Chair, Conservative, David Sweet]

Thank you, Ms. Rodal and Mr. Bouchard.

It is now over to Mr. Wallace.

You have five minutes, sir.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair. You were looking the other way. I thought you had tricked me there for a minute.

Thank you for coming this morning.

I'm going to make an initial comment. All three of you are lawyers. Is that not correct? You're all members of the bar? And as we know, not all lawyers agree, and that's how they make their living.

My initial point, which I've been trying to make everywhere I can, is that in my view this is a one-line, one-word...it's basically a word-change bill. It's an inappropriate way to do law in this country.

Obviously, based on the issues that you've brought forward, based on issues that we've heard at the last committee meeting, to have a complete review of the Competition Act in areas—my colleague here, Mr. Lake, just indicated that there may be some amendments needed.... That work gets done if an appropriate legal document comes forward after lots of consultation and a review of how legal it is and of its wording and of what section fits which section, and so on. These private members' bills with one-word lines are problematic, in my view, and I don't think they are good law-making in this country.

That is my initial point. I have three points to make.

My second point is this. I think, Mr. Janigan, you said that you trust the commissioner's judgment. Is that correct?

The commissioner's representatives were here last meeting, and they indicated that they don't need this clause. It's not a power they need. They have the authority to do....

Do you trust that judgment in this case?

[Michael Janigan]

I guess I exercise the prerogative to demarcate those areas where I believe—

[Voices]

Oh, oh!

[Mike Wallace, Conservative, Burlington, ON]

That's the problem with this law. It sounds good: we trust the judgment of the commissioner. But you quoted two commissioners in the past, and then this commissioner has a different view. You trust the judgment of the previous commissioners, but not this one.

As my final point—and, Ms. Rodal, you have basically commented on it—my real concern, and Mr. Lake pointed it out and used better wording than I was going to use, is profiling. In my business as the politician locally, not just in industries but in immigration and in lots of areas, we get people calling who have opinions that in my view are not correct and actually are profiling, whether of an industry, a cultural group, or all kinds of things.

The danger, in my view, of an open-ended study, which I think this would allow, is that it would put the commissioner in a very difficult position. If the commissioner got hundreds of calls and letters and e-mails from a consumer group, or if another industry wants to compete, say, in the energy field and says they think another group is anti-competitive and they want the commission to study that group, is there a problem, based on your looking at this issue, that there might be a potential for profiling and for industries to use it as a tool to get at other industries?

[Shuli Rodal]

There is definitely a concern about the pressures that would be placed on the bureau to use this power and where those would come from.

The issue you raise also suggests a concern that if the commissioner were to undertake a market inquiry, immediately there would be an inference that something was wrong with that industry. And all participants in the industry, on top of having to pay for the pleasure of being targeted in that market inquiry, would also suffer during the very long period of time it would take to actually conduct the inquiry, with the sort of cloud of something being wrong hanging over the industry.

We know that the Commissioner of Competition didn't think something was wrong or she would have proceeded under the existing powers if there were actually a concern that something was anti-competitive. But I think that nuance may perhaps be lost on the public. What they would see is the commissioner undertaking a mandatory review of sector X, so right away the inference would be that there is something wrong with that industry. And that is something to be concerned about, I think.

[The Chair, Conservative, David Sweet]

Thank you, Madam Rodal.

We have 20 minutes left, so I'll just ask the members to keep it as tight as possible.

Go ahead, please, Mr. Thibeault, for five minutes.

[Glenn Thibeault, NDP, Sudbury, ON]

Thanks.

I'll go back to my previous line of questioning and kind of relate this to what my honourable colleague was talking about just a minute ago.

We were talking about grounds existing, and we see that as something that can be proactive. There was a lot of discussion about the constituents in his riding, and hundreds of people were sending e-mails and calling about a concern. Wouldn't that, then, justify the commissioner calling an inquiry if there were hundreds of people actually expressing concern?

As for whether grounds exist, the way I see it, if one person calls and says there's a problem with widgets, we're not actually going to call an inquiry into that. But if hundreds of people are starting to make phone calls and saying there are problems with widgets, do you not see this as, rather than being open-ended, providing for an opportunity to get in there and actually do the inquiry to make sure things are fair?

[Michael Janigan]

I think it's one element the commissioner can take into consideration in relation to whether or not a study should be commenced of a particular industry, but it's not the sole element. I think they would want to look a little more closely initially at the structure of the industry, the basis for the complaint, and whether or not the origin or the source of the problem lies within the ability of the industry to respond, and then make the judgment accordingly.

The other thing is I've read over yesterday's comments from the Competition Bureau. I'm not so certain that what they were referring to is in fact the use of this inquiry as a kind of suspenders and belt routine for anti-competitive conduct. I don't believe I heard them say that having the market reference study power was something that would not be of assistance. And they have a lot of concerns with respect to things like resources and things like the appropriate procedures that might be required to put it in place.

But I don't necessarily read this as being the previous two commissioners against this commissioner. I think it's more a function of the testimony, which seemed to be oriented almost exclusively towards cartel and criminal offences against which in fact the commissioner has all the powers he or she needs.

[Shuli Rodal]

I think when people complain--and people complain about all kinds of things--the real question is, what is the substance of their complaint? So if they call the Competition Bureau and nothing in what they're saying suggests that there is any conduct in the market that is anti-competitive, then it's probably appropriate for the commissioner not to take any action. People frame their complaints in all kinds of ways, and their issues may have nothing to do with competition. I think we need to leave it to the commissioner's judgment as to whether a complaint raises a competition law concern, and we've talked a bit about what competition law does and doesn't cover. And if the complaints do not suggest there is anything anti-competitive in the market, maybe it's better for those complaints to be directed elsewhere.

[Glenn Thibeault, NDP, Sudbury, ON]

Thank you.

[The Chair, Conservative, David Sweet]

Thank you, Mr. Thibeault.

We'll now move on to Mr. Lake, for five minutes.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, again, Mr. Chair.

Just to clarify, Mr. Thibeault referred to hundreds of people calling and that might be grounds for an investigation, but under this legislation, as proposed, nobody would have to call. And nobody even has to make a complaint; the commissioner just decides that they're going to launch an inquiry into a certain sector and it happens. That's what's wrong with it.

We wouldn't allow this in any other area of law. We wouldn't allow the police to determine that a particular segment of society is more prone to criminal activity, so we're just going to investigate all of them, but that's what this does.

From a competitive standpoint, it does that. It basically says, “Hey, you know what? We think maybe this particular industry.... ” Well, we don't even know what the grounds are because they're not listed, but maybe there's just a suspicion in the commissioner's office, and we just allow them to go out there and investigate an entire industry. I think that's what's wrong with this bill.

Then there's a significant cost attached to every member of the industry. And again, there's a significant label attached...just like there would be a label attached to that specific segment of society that is being investigated for whatever nefarious criminal activity they might be involved in because of profiling. We don't allow that because it's labelling. It's very detrimental to society to do that. I think in this case it's exactly the same thing.

The question we have to ask here is, what's the problem we're trying to solve?

Mr. Janigan, if you could, maybe you can tell us, other than the grounds already demarcated in this existing law, what grounds are missing?

[Michael Janigan]

Once again, in relation to your previous comment, in fairness as well, the commissioner, of course, can do the same thing with respect to the other offences, as long as she has reason to believe they are being committed. It's not a situation where she has to act on a complaint.

But let's deal with this. To some extent it's unfortunate that it's plopped in this particular section that deals with a variety of different offences under the act.

This is directed to the commissioner's responsibility to act as an advocate of competition and to promote competition. For example, the act specifically allows the commissioner to make representations on tribunals and boards that are dealing with matters that affect competition. There is a general responsibility in order to create and promote competitive markets separate and apart from going out and finding that there may be anti-competitive conduct that takes place.

There are a whole variety of different ways that competition may be affected that don't trigger anti-competitive conduct. There may be circumstances where there are essential facilities or bottleneck facilities where new entrants can't get access. There may be circumstances where there are supply problems that exist in the market that affect that—

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

But in fairness, these sound more like studies than inquiries.

[Michael Janigan]

If you're saying the preferred word should be “study” rather than “inquiry”, I agree. But the intent of this section, as I understand it, is in effect to parallel the market studies that are being done in the U.K., the United States, the European Union—

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Reading between the lines, though, from your testimony so far, it sounds like you're saying, “Hey, we need to make changes, but this clearly isn't the right way to make those changes.”

[Michael Janigan]

As I said at the beginning, the mechanics of the bill are ones that I have not wordsmithed, nor was I responsible for the draftsmanship. I would assume that if the bill were to pass, a lot of these concerns could be addressed in the regulations in relation to appropriate procedure and how to deal with matters relating to the great degree of difference between the inquiries that are made and the reference to complaints, as well as where there's reason to believe that there is anti-competitive conduct and where you would attempt to pursue studies associated with competition.