Thank you very much.
Thank you, Mr. Chairman and members of the committee. On behalf of the Competition Bureau I am very pleased to be here today to take part in your study on gas price fluctuations.
As the chair mentioned, my name is Mollie Johnson, and I'm the deputy commissioner of the Competition Bureau’s legislative and international affairs branch. With me is my colleague Mr. Richard Bilodeau, acting assistant deputy commissioner of the civil matters branch. He has appeared before this committee on this issue in the past. We're both very happy to be here today to answer your questions.
Like you, we understand the importance of gasoline to Canadians in our everyday lives, and to the economy in general. No one wants to pay higher gas prices. As consumers, this is something to which we're all sensitive.
Over the years the bureau has done a significant amount of work in the petroleum sector, and I hope that our experiences will be helpful to the committee.
As there are some new members on this committee, I thought it might be helpful to take a few moments at the outset of my remarks to provide you with a better understanding of the bureau’s role and responsibilities, before turning to the issue at hand today.
The Competition Bureau is an independent law enforcement agency headed by the Commissioner of Competition that enforces the Competition Act. Our goal is to ensure that Canadian businesses and consumers prosper in a competitive and innovative marketplace.
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 specific anti-competitive practices. These include: entering into agreements with competitors to fix prices, allocate markets or restrict output; abusing a dominant market position; and engaging in misleading advertising and deceptive marketing activities.
We are also responsible for reviewing proposed mergers to determine whether they will likely cause substantial harm to competition.
The last two years have been particularly dynamic for competition law in Canada. As you may recall, in 2009 Parliament passed the most significant amendments to the Competition Act in 25 years. Some of you here today were part of that process, and we thank you for your efforts.
Among other things, those amendments introduced a new two-stage merger review process to allow for more efficient and effective reviews of mergers. They also created a more effective mechanism for criminal prosecutions of hard-core cartel conduct, while establishing a new civil agreement provision that allows for the review of the competitive impact of other forms of competitor collaborations. They also authorized Canada's Competition Tribunal to award administrative monetary penalties against companies that abuse a dominant position in the marketplace.
With these amendments now in force, the bureau is now even better placed to protect Canadian consumers and businesses from the harm caused by anti-competitive activity.
When it comes to the petroleum sector, as with other sectors of the Canadian economy, our role is to detect and take principled action against anti-competitive behaviour that violates the provisions of the Competition Act. As you know, the bureau has a history of examining the petroleum sector. We have appeared before this committee on several occasions, and we've carried out examinations of the industry as a whole and in specific markets. From that experience, the bureau has developed a familiarity with the workings of the industry.
With respect to our examinations into price spikes, our investigations have not found evidence that these price increases resulted from anti-competitive conduct contravening the act. Rather, the bureau concluded that in those particular instances of price spikes, higher retail gasoline prices were the result of increases in the price of crude oil and other factors affecting the balance between supply and demand. Those other factors have included, for example, low inventories of gasoline in North America, and in the case of higher prices following Hurricane Katrina in 2005, severe damage to North American refining capacity. Factors such as these do not raise issues under the Competition Act unless, of course, they are the result of anti-competitive activity.
This takes me to the issue of our mandate. Not surprisingly, many of the complaints that we receive in this sector have come and continue to come when there are spikes in gasoline prices. I think it's important to note here that we do not determine what is or is not a fair price for any given product or service. We are not a price regulator, and high prices in and of themselves do not fall under the purview of the act unless they are the result of anti-competitive conduct. If, however, high prices result from a cartel, or an abuse of dominance, then we do not hesitate to investigate and take the appropriate action.
For example, the bureau’s investigations into this industry have led to criminal charges for price-fixing, such as those laid in Quebec in the beginning of 2008. Our investigations in this case have also resulted in a number of guilty pleas, fines in excess of $2.8 million, and imprisonment terms of a total of 54 months.
The bureau has also secured remedies to preserve competition in markets in which proposed mergers would likely have resulted in a substantial lessening or prevention of competition, most recently in the 2009 merger of Suncor and Petro-Canada, when we required the companies to sell 104 retail gas stations in southern Ontario, and to share storage and distribution network capacity in the greater Toronto area for ten years.
To conclude, Parliament has provided the bureau with a specific role, and that is the pursuit of principled enforcement actions against individuals and companies engaged in anti-competitive behaviour. The responsible enforcement of the act is the most effective way for the bureau to have a positive impact in the Canadian economy for both consumers and business. Especially now that the 2009 amendments to the act have all come into force, we believe we have the effective tools to appropriately address anti-competitive behaviour in this and any other sector of the Canadian economy.
Mr. Bilodeau and I look forward to taking your questions.
Thank you very much.