Industry Committee on April 7th, 2021

[The Chair, Liberal, Sherry Romanado]

Good afternoon, everyone. I call this meeting to order.

Welcome to meeting number 29 of the House of Commons Standing Committee on Industry, Science and Technology. Today's meeting is taking place in a hybrid format pursuant to the House order of January 25. The proceedings will be made available via the House of Commons website. Just so that you are aware, the webcast will always show the person speaking rather than the entirety of the committee.

To ensure an orderly meeting, I'd like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of either the floor, French or English. Please select your preference. I remind everyone that all comments by members and witnesses should be addressed through the chair and that when you are not speaking your microphone should be on mute. As is my normal practice, I will hold up a yellow card for when you have 30 seconds remaining in your intervention and a red card when your time for questions has expired. Please make sure that you are on gallery view so that you can see me waving the card.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Friday, March 19, the committee is meeting today to continue its study on the proposed acquisition of Shaw by Rogers.

I'd now like to welcome our witnesses. From the CRTC, we have Mr. Ian Scott, Mr. Scott Hutton and Mr. Christopher Seidl. From the Competition Bureau, we have Matthew Boswell, the commissioner; Anthony Durocher, deputy commissioner and Leila Wright, associate deputy commissioner. From the Department of Industry, we have Éric Dagenais and Adam Scott.

Each witness group will present for up to seven minutes, followed by rounds of questions.

With that, we will begin with the CRTC.

You have the floor for seven minutes.

[Ian Scott, Chairperson and Chief Executive Officer, Canadian Radio-television and Telecommunications Commission]

Thank you, Madam Chair.

I should note at the outset that I'm joining you from the CRTC's offices, which are located on traditional, unceded Algonquin territory. I'd like to thank the Anishinabe people and pay respect to their elders.

As you mentioned, I'm joined today by two of my colleagues: Chris Seidl, the executive director of telecommunications at the commission, and Scott Hutton, chief, consumer, research and communications.

We welcome the opportunity to appear before your committee as it studies the proposed acquisition of Shaw Communications by Rogers Communications. My remarks today will be short and they will focus on explaining how the CRTC reviews transactions in the communications industry. I hope to avoid the red card during this appearance, Madam Chair.

At this stage, I must say that we know little more about the potential transaction than does the public. We're waiting for the parties to file the required regulatory documents, so at this point we know only what has been reported in the media and the industry press. I can, however, explain the CRTC's jurisdiction and the process we typically follow for these types of transactions.

Specifically, there are two components to the proposed transaction. First, there's Shaw's telecom businesses, including its wireless and Internet access business, and second, there are its cable and satellite television and video-on-demand businesses. Under the Telecommunications Act, transactions involving telecom services do not require the CRTC's prior approval. We have no role in approving transfers of ownership or transfers of spectrum, except to ensure that the company remains Canadian owned and controlled pursuant to the foreign ownership rules.

In this case, subject to regulatory document verification, Rogers is a Canadian company.

I mentioned that the CRTC is not generally involved in reviewing ownership transactions of companies offering telecommunications services. We provide ongoing regulatory oversight to ensure that the services provided by carriers meet the objectives set out in the Telecommunications Act, including the availability of reliable and affordable telecommunications services in all regions of Canada.

I am sure the members of the committee are aware that we have undertaken a thorough review of the wireless market to ensure that our regulations allow for competition that delivers better prices for Canadians. Similarly, we are currently conducting a review of the wholesale rates that competitors pay to access the networks of major cable and telephone companies that they use to provide Internet services to Canadians.

I am sure you have questions about the results of these two reviews. I hope you will understand that we cannot comment on these matters, except to say that decisions are forthcoming.

Regarding the broadcasting assets in this specific case, the Broadcasting Act and its associated regulations provide that the CRTC approve a transfer of ownership of these assets. Once a completed application is received, we will publish a notice of consultation and seek comments from the public. We'll examine the proposed transaction, taking into consideration our relevant policies for the sector.

To be clear, this includes policies designed to ensure a diversity of voices in the broadcasting system and ensure that Canadians have access to local and community television programming. In this instance, we'll also consider the impact the transaction may have on CPAC, well known to many of you, which provides independent and non-partisan coverage of Canada's democratic processes. As with all our proceedings, we will render decisions in the public interest based on the evidence on the record of that proceeding.

The transaction, as you well know, is also subject to regulatory approvals from the Competition Bureau under the Competition Act and from the Minister of Innovation, Science and Industry under the Radiocommunication Act.

My colleagues from those respective authorities are here with us today. Although I cannot speak about the matters currently before the commission, as I've already mentioned, we will be pleased to answer any questions that you have.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next presentation will be by the Competition Bureau.

You have seven minutes.

[Matthew Boswell, Commissioner of Competition, Competition Bureau]

Madam Chair and members of the committee, we are pleased to appear today.

Joining me are two colleagues from the Competition Bureau; Anthony Durocher, deputy commissioner, and Leila Wright, associate deputy commissioner in the competition promotion branch.

From the outset, it is important for me to clarify that the bureau is required by law to conduct its enforcement work confidentially. In particular, this means we are unable to comment on either specific cases or hypotheticals, and we are therefore limited in what we can say about our review of this transaction. As this matter is under review, it would not be appropriate for me to comment on what—

[Earl Dreeshen, Conservative, Red Deer—Mountain View, AB]

On a point of order, Madam Chair, the audio feed is coming through with the same volume in both French and English.

[The Chair, Liberal, Sherry Romanado]

Thank you. I'll stop the clock.

Mr. Boswell, could you verify which language you have selected at the bottom of your screen?

[Matthew Boswell]

Madam Chair, I had it on English. I've just turned it off, if that will help.

[The Chair, Liberal, Sherry Romanado]

If you're going to be toggling back and forth between English and French, I think it would help if you would change it to “floor”.

[Matthew Boswell]

The only options are “off”, and English or French for the interpretation.

[The Chair, Liberal, Sherry Romanado]

Could you put it on “off”?

[Matthew Boswell]

Okay.

[The Chair, Liberal, Sherry Romanado]

We'll see if that works. Thank you.

Please continue.

[Matthew Boswell]

Okay. I'll back up a tiny bit.

As this matter is under review, it would not be appropriate for me to comment on what other witnesses in this proceeding may have said about the transaction.

My remarks today will provide an overview of the bureau’s merger review process. The bureau is an independent law enforcement agency mandated to protect and promote competition in Canada through the enforcement and administration of the Competition Act. The review of mergers is an important pillar of this work.

Generally speaking, mergers of all sizes and in all sectors of the economy are subject to our review. Our merger reviews are conducted through careful consideration of evidence to determine whether a merger is likely to substantially lessen or prevent competition. This test is focused on market power. It evaluates a merger's impact on price as well as non-price dimensions, such as quality, service and innovation. In its review, the bureau collects and analyzes evidence, including interviews, documents and data from the merging parties and a wide range of industry participants. Court orders can also be used to compel information. It is, of course, difficult to predetermine how long a particular merger review will take, as the bureau evaluates the steps that need to be taken on a case-by-case basis.

The enforcement decisions and resolution of issues will depend on the particular circumstances of the matter in question. Approval regarding enforcement decisions resides with me as the commissioner of competition, but should a matter proceed to litigation, the ultimate decision resides with the Competition Tribunal and appellate courts. If I determine that a merger is likely to result in a substantial lessening or prevention of competition, I may apply to the Competition Tribunal for an order to prevent, dissolve or alter the merger. Alternatively, I can negotiate an agreement, that is enforceable by law, with the merging parties without proceeding to litigation. I take this role very seriously.

I want to assure this committee that the bureau's review of the proposed transaction will be very thorough. I will make a principled and evidence-based assessment of its competitive impact and take appropriate action.

We look forward to your questions today.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll go now to the Department of Industry.

You have the floor for seven minutes.

[Éric Dagenais, Senior Assistant Deputy Minister, Spectrum and Telecommunications Sector, Department of Industry]

Thank you, Madam Chair.

My name is Eric Dagenais and I am the senior assistant deputy minister of the spectrum and telecommunications sector of the Department of Innovation, Science and Economic Development, or ISED.

I'm joined by my colleague Adam Scott, who is the director general for the spectrum licensing policy branch. Thank you for inviting us.

The Minister of Innovation, Science and Industry is empowered by the Radiocommunication Act, with due regard to the Telecommunications Act, to govern the use of spectrum. As such, he may take into account all matters that he considers relevant for ensuring the orderly development and efficient operation of wireless communications in Canada. That's why we were invited today.

On the matter before us today, I would argue that the minister's most relevant power is the power to issue spectrum licences. That power includes reviewing and approving the transfer of commercial mobile spectrum between parties.

Access to sufficient spectrum is a precondition to provision of wireless services. This access is crucial to the digital economy and the expansion of next-generation connectivity.

In carrying out this work, we are guided by the spectrum licence transfer framework—I'll just call it the “framework” from here on in—that supports the government's policy objective, which is to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource, including the efficiency and competitiveness of the Canadian telecommunications industry and the availability and quality of services to consumers. The intent of the framework is to provide guidance to licensees as to how transfers of spectrum licences will be reviewed, as well as introduce additional conditions of licence regarding the transfer of control of spectrum licences.

In making a determination as to the impact of a licence transfer on the policy objective, ISED analyzes, among other factors, the change in spectrum concentration levels that would result from the licence transfer. Also, ISED examines the ability of the applicant and other existing and future competitors to provide services, given the post-transfer concentration of commercial mobile spectrum.

As part of our determination, we would normally take into account the current licence holdings of the applicants in the licensed areas; the overall distribution of licence holdings of all commercial mobile spectrum bands; the services to be provided and the technologies available in the spectrum bands; the availability of alternative spectrum; the characteristics of the region, including urban and rural status, population levels and density or other factors that impact spectrum capacity or congestion; and, any other factor relevant to the policy objectives that may arise from the licence transfer.

As stated in the framework, all parts of the application and all supporting materials are treated confidentially. Once a decision has been made, we will publish it on ISED's website.

I'm happy to take your questions.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll begin our rounds of questions.

Again, make sure that your interpretation is set on the language you prefer to use, to make sure that you have the proper interpretation service.

We will start with MP Poilievre for six minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

I'm going to start with Mr. Scott.

For those listening who may not be familiar with the overlapping and also the divergent jurisdictions here, I'd like to do a “who does what” exercise, because we have three approval bodies, and I want to make sure that we understand who is doing what. You did describe it, and you described it well, but I wonder if you might do it in point form, in simply a Coles Notes point-form summary of all the decisions that your body, the CRTC, will have to approve or reject in this decision.

[Ian Scott]

Thank you for the question, Madam Chair.

Mr. Poilievre, in point form, on the telecommunications side, we're responsible to ensure that Canadian carriers are indeed Canadian and qualified to act as such. In this case, I think that is a moot point subject to verification of documents, but the acquiring firm is Rogers, which we understand to be a wholly owned Canadian company or Canadian-controlled company. That is the extent of our jurisdiction with respect to the transfer of ownership on the telecom side.

On the broadcasting side, Rogers and Shaw have a number of activities that require our approval. Their broadcast distribution undertaking businesses, their cable business, their video-on-demand licences and Shaw's satellite-delivered video programming—BDU is a satellite operator—must be approved. Transfer of ownership for all of those require approval by the commission. That is a summary of the requirements with us.

[Pierre Poilievre, Conservative, Carleton, ON]

Again, if you can do a Coles Notes version, by what criteria do you make decisions with respect to the broadcasting side? I think it's very clear—black and white—on the Canadian ownership side, but on the broadcasting side, what would be the test you would apply to make those decisions?

[Ian Scott]

As I mentioned in my opening remarks, fundamentally, with respect to competition—and more—we will want to look, generally speaking, at the diversity of voices. That's an important element of the broadcasting system. We generally are not prepared to allow one person—one company—to control all television service providers in any given geographic market.

It can include an assessment of the size of the affected market and the market share of other television providers and, overall, the competitiveness of the market, but as we mentioned, with respect to a substantial lessening or not of competition in the telecom space, that is the responsibility of the Competition Bureau.

[Pierre Poilievre, Conservative, Carleton, ON]

What I took from mainly was that the major decision you have to make has to do with the diversity of voices and whether or not this merger would limit the number of voices heard in the broadcasting space. Did I miss something?

[Ian Scott]

No. I don't like to make forward-looking statements. Once we receive all of the documents from the firms, we will issue a notice, and it will identify any issues, but I wouldn't disagree with you that perhaps the fundamental issue to be considered on the broadcasting side is diversity of voices.

[Pierre Poilievre, Conservative, Carleton, ON]

It sounds to me as though the foreign ownership side could easily be done by ISED. ISED has to make decisions about foreign takeovers in other industries all the time. Why do we need the CRTC doing this, given that ISED does it already?

[Ian Scott]

We have different responsibilities under two different acts. My colleague, Mr. Dagenais, might want to add to this if needed.

We're responsible for it under the Telecommunications Act. ISED is responsible for transactions with respect to the Radiocommunication Act. Not to be cute, but that was a determination made by parliamentarians. That's what is set out in the telecom and radiocom acts.

[Pierre Poilievre, Conservative, Carleton, ON]

Right. And parliamentarians of course are always perfect, so that could not have been a mistake.