Evidence of meeting #52 for Industry, Science and Technology in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was inquiry.
A recording is available from Parliament.
Conservative
The Chair Conservative David Sweet
Good afternoon, ladies and gentlemen.
Welcome to meeting 52 of the Standing Committee on Industry, Science and Technology.
Today, we have two groups with us: the Canadian Bar Association and the Public Interest Advocacy Centre.
I understand that Tamra Thomson and Shulamit Rodal will be splitting their time. Is that correct?
I'll begin with Ms. Thomson for five minutes.
Tamra Thomson Director, Legislation and Law Reform, Canadian Bar Association
Thank you, Mr. Chair, honourable members.
The Canadian Bar Association is pleased that you have given us the opportunity to comment on this bill today. It is one that we have a great interest in, evidenced by the fact that the letter you have before you is dated in September. We are happy as well that these hearings have started on the bill.
The letter before you was prepared by the competition law section of the Canadian Bar Association. That section comprises some 1,500 members, lawyers all, who practise in the area of competition and anti-trust law.
In reviewing the bill, they have looked at it with a view of improving the law and the administration of justice.
I am going to ask Shuli Rodal, who is the vice-chair of the legislation and policy committee of the competition law section, to address the specifics of the bill.
Shuli Rodal Vice-Chair, Legislation and Competition Policy Committee, Competition Law Section, Canadian Bar Association
Thank you, and good morning.
My name is Shuli Rodal. I am a partner in the competition and anti-trust law group of Osler, Hoskin & Harcourt in Toronto. I'm appearing today on behalf of the competition law section of the Canadian Bar Association.
I would like to begin by thanking you very much for the invitation to appear on Bill C-452.
The CBA section does not believe that amending the Competition Act to provide for an industry sector competition law inquiry power is necessary or appropriate. The CBA section believes that it is highly preferable for inquiries to continue to be carried out on a targeted basis, as is currently provided for, where there is a concern about anti-competitive conduct by one or more market participants.
For full detail, I refer you to the CBA section's letter of September 14, 2010, but by way of summary, the inherent difficulties in the use of a market inquiry power can be illustrated by the fact that it is difficult to conceive of a market inquiry that would have a positive outcome.
First, it is possible that the conclusion of an inquiry may be that the sector in question is sufficiently competitive. If this is the outcome, the commissioner and the Competition Bureau would be vulnerable to legitimate criticisms about the significant costs in terms of the bureau's resources, private sector resources, and disruption to business just to confirm that a market is in fact competitive.
The second alternative is that the conclusion of the inquiry may be that the sector is not sufficiently competitive, that this is due, for example, to the structure of the market and not to conduct that offends the Competition Act.
If this is the result, the reality is that there is nothing the commissioner can do, and this can be expected to result in significant frustration. This is because the Competition Act is focused on protecting the competitive process through enforcement action against potentially anti-competitive conduct.
The mere existence of dominance or market power obtained by legitimate means does not violate the act and cannot trigger enforcement action by the commissioner. The Competition Act is not intended to regulate markets or to cast the bureau in the role of a regulator that proactively engineers competition. In the absence of anti-competitive conduct, there is nothing the commissioner can do.
The third alternative is that the conclusion of the inquiry may be that the sector is not sufficiently competitive and that this is due to conduct that offends the act. At this stage, the commissioner would then have to consider whether to proceed with enforcement actions against one or more persons based on information gathered during the market inquiry despite the fact that the success of the bureau's case may be, as a matter of law, considerably weakened and potentially undermined on account of due process concerns that could legitimately be raised about the manner in which evidence was collected.
In particular, serious questions may arise regarding rights against self-incrimination, where information is compelled from a person for purposes of a market-wide inquiry and then later used in enforcement proceedings against that person.
In conclusion, the CBA section remains of the view that in addition to potentially imposing significant costs on the business community unnecessarily, expanding the commissioner's mandate to undertake formal sector inquiries raises serious due process issues and is inconsistent with Canada's approach to competition law enforcement.
Accordingly, the CBA section recommends that this power should not be reintroduced into the Competition Act.
Conservative
The Chair Conservative David Sweet
Thank you, Madam Rodal.
Now on to Mr. Janigan for five minutes, sir.
Michael Janigan Executive Director and General Counsel, Public Interest Advocacy Centre
Thank you, Mr. Chairman. I'm pleased to attend today to speak to this bill. My remarks are generally directed to the principle of the bill, with some emphasis on the significance and history of the desire for these kinds of studies.
Back in 2003, the Competition Bureau put forward a paper called “Options For Reform”. It dealt with a motion that I believe had been proposed by Mr. McTeague, namely, to have the Canadian International Trade Tribunal inquire into the state of competition and functioning of markets. At that time, the option paper provided for that particular way of proceeding in relation to market studies and referred the matter to the Public Policy Forum for a public consultation. A public consultation took place in the summer of 2003, and the Public Policy Forum released its paper, a report on the consultation, saying that there were intervenors on both sides of this question. Intervenors supported the market reference proposal and said they agreed with the principle that Canadians should be able to get a picture of the state of competition and the functioning of markets in any sector of the economy. Opponents gave a number of different reasons for their opposition, including some of the arguments that you've heard: this is suspenders and a belt; the commissioner already has these powers; there may be costs incurred in this; and what procedure is going to be followed?
In 2004 the OECD made a study on the state of Canada's competition policy and recommended that we institute a power to implement market studies. Quoting from their study:
No agency in Canada presently has express authority to study an industry simply for purpose of illuminating its competitive dynamics. This is a tool that should be available to advance the objectives of competition policy. Market studies can reveal previously unsuspected forms of private conduct or government regulation that impair competition. And study results can play an important role in promoting public understanding of how competition works and what benefits it produces.
At the time, the OECD recommended that it would be more appropriate to have the Competition Bureau undertake these studies rather than the Canadian International Trade Tribunal.
We proceed to Bill C-19, which was the first attempt to reform the Competition Act. As that bill was being presented, a government amendment was made to Bill C-19 in committee that created the power for market studies. It was referenced as C-19, G-2, and it was offered by Mr. Pickard. It provided that the commissioner may carry out a study on the state of competition in any sector or subsector of the Canadian economy.
The Commissioner of Competition, Sheridan Scott, appeared before the committee on October 5 and October 27 to deal with this matter. She discussed the power and the precautions that should be taken with respect to the exercise of that power. In dealing with the advantages that would be conferred upon the commission with respect to the power, she said:
If a power to conduct market studies were to be introduced, it would have a number of advantages. A better understanding of the state of competition in various industry sectors could lead to a more effective enforcement of the Competition Act. It could also lead to improved advocacy. It could contribute to the development of good policies to achieve economic objectives, which would benefit all Canadians. Finally, it would lead to enhanced transparency in the marketplace for businesses and for consumers. In our view, it would be feasible to introduce a market study power, as has been done in other jurisdictions, as long as careful attention is paid to the concerns I have outlined today.
These concerns include procedural safeguards as well as assurances that the matters to be addressed are legitimate under the act.
Consequently, of course, the bill died in committee with the fall of the government.
We believe this effort is in aid of a principle that is important in the Canadian economy, important for the state of competitive markets, and we would urge that the committee give careful consideration to the same. We believe—
December 14th, 2010 / 11:15 a.m.
Conservative
The Chair Conservative David Sweet
Mr. Janigan, I'm sorry, but we're well over time. Thank you. If you need to complete some points, you can do that during the question period.
I'll remind members that we'll be continuing for an hour and a half, and then we'll go to clause-by-clause consideration of this bill.
Now I'll go to Mr. McTeague.
Conservative
Mike Wallace Conservative Burlington, ON
On a point of order, Mr. Chair, if we don't need the bottom half, can we go right to the...?
Conservative
Liberal
Dan McTeague Liberal Pickering—Scarborough East, ON
Chair, thank you very much.
Witnesses, thank you for being here.
Mr. Janigan, thank you for bringing us through what I'd almost forgotten over the years: the evolution of where the issue of market studies pertinent to this industry--and I'm sure to others--occurred.
Ms. Rodal, I appreciate your comments. I have, as an article of my work on this file for several years now, been concerned and reflective of the time period in which I started, with the first Competition Act amendments that changed the Restrictive Trade Practices Commission back in 1986. I was appalled to learn that the lawyers of McMillan Binch representing Imperial Oil had an uneven hand in recreating or rewriting the Competition Act, such that people were quite able to assume that it was the first time a country had allowed its competition policy to be written by the very people it was meant to police. I think the concern we have all shared over the years is that this act is by, for, and with the consent of only those who are experts in the field, so I appreciate your expertise. It took me quite a long time to even assume some responsibility for being able to answer and address these questions.
But as you wear two hats here, both as a practising lawyer and as a member of the competition bar, I want to ask you, does Osler, Hoskins have any clients who are oil companies?
Vice-Chair, Legislation and Competition Policy Committee, Competition Law Section, Canadian Bar Association
You're right that I'm here on behalf of the Canadian Bar Association. I'm not really in a position to tell you about who our clients are, because I'm here as vice-chair of the legislation and competition policy committee, expressing views that have been carefully considered by the Canadian Bar Association's executive on behalf of all members of the executive, who include a wide cross-section—
Vice-Chair, Legislation and Competition Policy Committee, Competition Law Section, Canadian Bar Association
In the course of our work, we consult carefully with the Competition Bureau—
Liberal
Dan McTeague Liberal Pickering—Scarborough East, ON
My concern is that in Canada the defence bar tends to be very much on one side. Small players, over the years, cannot afford the kinds of fees that will get them the expertise to navigate through the very difficult Competition Act. This, too, may be a finding that might be related to the bill before us. In fact, it might allow us an opportunity to demonstrate that unlike the United States, which is under the Clayton and Sherman Antitrust Acts, whereby damages of course go back to the individual who has actually been aggrieved, we don't have a similar or parallel situation in Canada. That's a debate from another time.
But specifically to this question, you do not see this bill, in particular, as being unconstitutional. I haven't heard that word. You've been concerned about due process. Does the question of constitutionality come into this at all?
Vice-Chair, Legislation and Competition Policy Committee, Competition Law Section, Canadian Bar Association
I think the constitutionality of the exercise of the powers contemplated is a concern, depending on how they're exercised. The Commissioner of Competition can undertake voluntary inquiries, which I think is a reasonable exercise of the commissioner's proactive power to enhance competition.
When it comes to mandatory powers, compelling the production of documents and undertaking inquiries that essentially give the commissioner exclusive jurisdiction to undertake those studies, we do then get into areas where constitutional challenges are a possibility, I think.
Liberal
Dan McTeague Liberal Pickering—Scarborough East, ON
Mr. Janigan, in the time I have, I will point out that two eminent members of the Canadian competition scene, both previous commissioners, have opined and suggested that we go in this direction. I refer to Konrad von Finckenstein and Sheridan Scott.
As you quite readily pointed out, we've obviously heard nothing from the current competition commissioner. I don't wish to disparage her. I'm not surprised. She represented the propane industry in the bar on the efficiencies defence, a bill that I brought before the House and that was passed by the House, but of course was retained by the Senate, which is ammunition for my Conservative friends here. It isn't the first time a bill has been stifled by the Senate.
Mr. Janigan, in your opinion, what would be the harm to full disclosure—which this bill I think would try to obtain—given the support of two previous competition commissioners?
Executive Director and General Counsel, Public Interest Advocacy Centre
First of all, to some extent there are two views of the role of the Competition Bureau and the competition commissioner.
One is that the competition commissioner is a cop. The cop goes out, investigates whatever the offence is, and brings it to either the applicable court or the Competition Tribunal.
The other view is that the competition commissioner is more than simply a cop; he or she is an advocate for competition and must promote it in the industries. The Competition Act, for example, gives the commissioner the power to attend before regulatory boards to urge the adoption of competition. In fact, he or she is in many respects an independent observer and advocate on behalf of competition. That's what market studies speak to.
I was reading the transcript of a debate in the previous session. I think the focus on cartel behaviour, price-fixing, and other hard-core offences is a little bit misleading in relation to what is contemplated here. What is contemplated here are industry-wide studies that look across the board at what may be barriers to competition.
Most barriers may not necessarily be with business. They may be with government, unions, or interprovincial relationships. There could be a whole variety of things that may be obstructing competition.
When you want this study done, presumably you want it done by the agency that has the most experience in the area, which is the idea behind market studies. It is to provide the kind of tool that enables policy changes or reform to take place, or to assure the public that the state of the competitive markets is appropriate.
Liberal
Dan McTeague Liberal Pickering—Scarborough East, ON
Are you hopeful that a fair, thorough, transparent market study on the key sectors of the economy--given the sponsor's interest in gasoline--will provide timely answers to why Canadians pay lockstep, uniform regional pricing, as the sponsor of the bill suggested last week? Do you think it will meet the test of finally explaining to Canadians...some transparency in terms of the supply and demand equation in Canada? Of course, we as the Liberal government tried to bring that forth, but it was killed by the Conservatives as the first act of their government in 2006.
Are you concerned about the low level of transparency in this industry and others?
Executive Director and General Counsel, Public Interest Advocacy Centre
Sorry, but I don't think I can speak directly to the problems in those industries. I know for a fact that those kinds of studies have had good results in other countries, such as in the U.K. When Richard Taylor, the Deputy Commissioner of Competition, attended before this committee in October 2006, he spoke of market studies that had been done in the U.K. on car dealerships. They resulted in significant changes in the industry. As he said, these studies aren't just filed on a shelf to collect dust; they've had actual results.
Conservative
The Chair Conservative David Sweet
Thank you.
I allowed some time there, but you were quite a bit over.
Mr. Cardin, you have seven minutes.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Thank you, Mr. Chair.
Ladies and gentlemen, good morning and welcome to the committee.
Last week, we heard from Richard Bilodeau, Acting Assistant Deputy Commissioner. He said that Bill C-452 was unnecessary because, at the end of the day, the commissioner had all the power she needed. This is what he said in his brief:
Whenever the commissioner has information that indicates that one of the enforcement provisions of the act has been or is about to be violated, regardless of the source of that information, section 10 of the act provides the commissioner with the authority to commence an inquiry into any matters she considers necessary.
According to him, the bill is definitely not necessary, because the commissioner has the authority to begin any inquiry she sees fit. But, according to you, that does not seem to be the case.
So I would ask the two of you whether you think the commissioner currently has the same authority to conduct an inquiry.
Executive Director and General Counsel, Public Interest Advocacy Centre
I've read or listened to part of the information that was part of the committee. I think to some extent you're talking at cross-purposes. He was referring to the ability to launch an inquiry in relation to all the different types of hard cartel offences that exist under the act, things like price-fixing and collusion. They have all the powers that are needed to carry out search warrants, to make telephone interceptions, to have documents produced. All those powers are before them. However, if they are presented with a circumstance--for example, why is the Canadian retail market so sluggish in relation to competition, or why is there such concentration in that market--they don't have the power to go out and gather information to study that problem, even though its implications may be as great, if not greater, for the population and the state of competition as a whole than would be those of the individual investigations of the hard cartel offences.
So in relation to what these kinds of studies wish to deal with, they don't have the kinds of powers that would require them to collect the information, except on a voluntary basis. Certainly collecting on a voluntary basis is one way to proceed, but generally this is the planet Earth in relation to authorities, and to have the authority to compel the production of that information is generally pretty helpful when you are trying to get voluntary compliance.
Vice-Chair, Legislation and Competition Policy Committee, Competition Law Section, Canadian Bar Association
If I may say so, and with respect, I think that, first of all, it's important to recognize that when the Commissioner of Competition does seek information on a voluntary basis, there is generally a real willingness of the business community to participate in that. I imagine that would be particularly true where there are issues relating to competition that are a barrier to industry members participating.
I think our concern is giving the Commissioner of Competition a power to compel information and to conduct market-wide studies in a framework in which there is mandatory compliance. That requires, first of all, that the Commissioner of Competition undertake an extremely thorough inquiry in order to reach a fulsome conclusion, considering that it is a mandatory act. The costs that are imposed on the business community and on the Competition Bureau when that kind of mandatory action is undertaken I think outweigh the benefit or the perhaps slight added enhancement that would come from doing it on a mandatory basis rather than on a voluntary basis.
So I think we also need to consider one of the main reasons that has been advocated for mandatory enforcement, which is that people are not voluntarily complying because they have something to hide. I think this really gets at the heart of the issue, which is whether we are going on a fishing expedition to find out whether there are people out there engaging in criminal behaviour when there's no reason to think that may be the case. If there is a reason that people are not behaving properly in the market, the commissioner already has the power under section 10 to go out and undertake an inquiry.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Let's refer to an example, then. In the construction sector, for instance, the commissioner can launch a public inquiry or a police investigation. They can be similar.
Let's consider a specific sector. Say I am the commissioner, and I see what is happening in the construction sector. I will try to identify any competition that could possibly exist in that sector, and not just in Quebec, because I get the sense that is how it works everywhere. Even though it imposes costs, as you say, the fact remains that, in this situation, there are certain things that suggest the bidding up of prices. Some stakeholders could have agreements to increase costs by 30%, which represents billions of dollars. Therefore, it would be beneficial to invest a few million so the commissioner, who wants to look into the matter more closely, could conduct an inquiry in order to determine exactly where competition stands in a particular sector and find a solution.
So, Mr. Janigan, under Bill C-452, could the commissioner decide to conduct an examination of the state of competition in the construction sector, in an efficient and effective manner, of course?
Executive Director and General Counsel, Public Interest Advocacy Centre
I certainly think if there were a perceived problem with competition or competition-related concerns in the construction industry, certainly that is something for which, with this bill, he or she would be able to launch an appropriate inquiry.
With respect to the compelling of information, when I'm not attending before parliamentary committees, I'm usually in utility proceedings, where we are attempting to get information from the regulated company. I can tell you that without those powers of compulsion for the tribunal, there would have been a considerable amount of information that would have been lacking before that tribunal in order to produce the record. Whatever the intentions—it wasn't the fact necessarily that the companies were attempting to occlude—this was necessary information for the tribunal. This happens all the time.
I trust that the Commissioner of Competition will have the judgment in relation to pursuing market studies to do it in a judicious fashion and to do it in a way in which the collection of information advances the goal of market studies and is not simply a fishing expedition.