Industry Committee on April 7th, 2021

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I won't put us through another probing of the efficiency defence. I will say this, though, Mr. Boswell. You probably have the most eloquent way I've ever heard of saying, “This is the part of my job that really sucks.” It is really clear how badly we're being outplayed by our own laws.

I want to move to the spectrum auction and ask Mr. Dagenais or Mr. Scott from Industry Canada about it.

We've heard witnesses say that the spectrum auction should be held off. I think one of the problems we're facing here is that Shaw has dropped out of the spectrum auction and it's one of the major players we'd normally have. Others are also now saying it should be held off. This is kind of suspicious timing because it was already delayed by six months.

Is the department preparing any options? What are you doing about the fact that a major player, our fourth-strongest competitor, is dropping out altogether?

[Éric Dagenais]

The application deadline for participants was yesterday at noon. We published yesterday, in late afternoon, the names of those that have applied to participate in the upcoming auction. We actually have 24 participants. This is 50% more participants than in our previous spectrum auction, which tells me that demand for spectrum and interest in getting spectrum are alive and well.

The spectrum auction is currently planned to proceed on June 15, as previously announced. The only reason it was delayed, as you mentioned, was COVID. The industry really wanted to concentrate on making sure that networks were up and running, rather than on the spectrum auction.

[Brian Masse, NDP, Windsor West, ON]

I didn't get a chance to see the list. Is Shaw on that list or did they bow out? I know that it's been published.

[Éric Dagenais]

Shaw did not apply.

[Brian Masse, NDP, Windsor West, ON]

How many times in the previous spectrum auctions did Shaw apply? I know you may not have a specific number, but aren't they assumed to be a usual player in the spectrum auctions? Is that fair to say?

[Éric Dagenais]

I think that's fair to say.

[Brian Masse, NDP, Windsor West, ON]

I only have 30 seconds. I went over my time last time, so I'll cede it to the rest of the group.

Thank you, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Our next round of questions goes to MP Poilievre.

You have five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

Thank you.

My question is for anyone at the Competition Bureau who cares to comment.

This a broader issue, and we've been talking about the need to reconsider, and perhaps review, the Competition Act. The act is designed to have government intervene to ensure there is competition, but what about all the industries in which government intervention is blocking competition in the first place?

The Fraser Institute just published a report showing that something like 35% of our economy is protected against open competition. They list postal services, telcos, maple service, aviation, broadcasting, taxis and liquor, just to name a few. There are countless others that I don't have time to list.

What does the Competition Bureau say about the countless interventions by all three levels of government to block competition and prevent workers and consumers from benefiting as businesses compete for them through higher wages and lower prices?

[Matthew Boswell]

I'll field that question from Mr. Poilievre.

We've actually done a tremendous amount of work in this area advocating for regulatory reform in Canada to allow for more competition. We put out a competition assessment tool kit that we encourage all levels of government, as you said, sir, to use to examine their regulations with a view to reducing or eliminating regulations that impede competition, because this can open up our economy, drive productivity and drive growth.

We've done a ton of work. I've spoken to this publicly in speeches, and I've pointed to an OECD indicator—the product market regulation indicator. Sadly, the last version of it, from 2018, put Canada second last in the OECD in terms of regulatory barriers to competition. We've also advocated publicly that Canada ought to consider following the model of a productivity commission that Australia had in the 1990s, which really focused on these competition issues.

[Pierre Poilievre, Conservative, Carleton, ON]

Right.

[Matthew Boswell]

It made significant changes and drove significant increases in their GDP.

[Pierre Poilievre, Conservative, Carleton, ON]

That's understandable. That's what trade does. Trade forces businesses to compete for workers through better conditions and higher wages, and to compete for customers through lower prices and better products. Absent competition, the fat-cat CEOs and shareholders can sit back and milk the system with governmental protection, as they are doing now. It is a huge cause of wealth inequality. This is everything from skilled and qualified immigrants being banned from working in their sector because professional bodies won't let them work and get a permit—even when they're qualified—to arresting people for simply taking liquor across interprovincial borders. That's from a really disappointing ruling by the Supreme Court. It decided not to enforce section 121 of the BNA Act, which allows us, as a constitutional right, to take produce across interprovincial borders.

According to one study by economist Trevor Tombe, this is costing $6,000 per year per household in Canada. These are recurring losses of income and consumer product benefits every single year.

Can you speak further about how we can take urgent action to practically break down these government obstacles to competition in our economy?

[Matthew Boswell]

What I can say is that we have put out a competition assessment tool kit. We encourage governments at all levels to embrace it and review their regulations with a view to taking away regulations that unnecessarily.... There are other public policy concerns at play, but if a regulation is not necessary and it impedes competition, then amend it or take it out and allow competition to flourish in Canada.

[Pierre Poilievre, Conservative, Carleton, ON]

When it comes to these government obstacles, if it's not necessary to do it, it's necessary not to do it, so I will take a careful look at this tool kit.

Thank you, sir, for speaking out about this, because right now the biggest obstacle to competition in general is interventionist politicians and bureaucrats egged on by self-interested lobbyists who want to keep competition out to keep their profits up.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Poilievre.

Our next round goes to MP Ehsassi. You have five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you very much, Madam Chair, and thank you ever so much to all the witnesses. It's been very helpful listening to all of you.

I will start off with Mr. Boswell.

Not only today but in a previous appearance before this committee, you talked about resource management challenges. Given that this proposed acquisition is what would be referred to as a “blockbuster” one, I was wondering if you could provide us an approximate time frame for how long you think this particular review will take insofar as the Competition Bureau is concerned.

[Matthew Boswell]

First and foremost we're going to conduct a thorough review. We're going to look at all aspects of the transaction, particularly all areas where the parties overlap horizontally or vertically, and dedicate the necessary resources to analyze them. If necessary, we'll bring in outside experts to conduct economic modelling and that sort of thing. We'll also reach out to a variety of participants, as I've already said several times.

How long that's going to take, sir, I cannot predict. It depends on where the evidence takes us. As an evidence-based organization that has to prosecute cases, we have to follow the evidence.

[Ali Ehsassi, Liberal, Willowdale, ON]

Okay, so there is no approximate time frame, something really approximate?

[Matthew Boswell]

It will be done as expeditiously as possible, if that's an approximation.

[Ali Ehsassi, Liberal, Willowdale, ON]

Okay, fair enough.

Now, you spoke about thoroughness, and you also talked about how your mandate and the mandate of the Competition Bureau is to look at market power. In terms of market segmentation, given that we know that Rogers is highly concentrated in places such as Ontario, Alberta, and B.C., for a province such as Ontario, how many market segmentations are we talking about? You don't take the entire province as one market. You slice it and dice it. Can you provide us some guidance on that aspect of the work that the Competition Bureau will be undertaking?

[Matthew Boswell]

Yes. What I can say is that it's not appropriate for us to comment on how this particular investigation might unfold. I think it might be useful for you, sir, if we shed a bit of light on how we went about our submission to the CRTC in that wireless proceeding. Once again, we can say only a limited amount on that because it is still before our colleagues at the CRTC, but my colleague Ms. Wright had the lead on that matter and perhaps she can just give a brief description of how we looked at markets and areas there.

[Leila Wright, Associate Deputy Commissioner, Competition Promotion Branch, Competition Bureau]

Thank you, Commissioner Boswell.

When we're looking at segments of the market, we look both at the product market and at the geographic market. On a geographic basis, what we looked at in the wireless market was either local or city. City is a little bit broader than local. Those were the two geographic markets that we were looking at in the wireless sector.

When we took a look at the product market, what we found was that you don't actually have to differentiate between products, because regardless of what product you're looking at in the wireless sector, regardless of what size of plan you're looking at, consumers generally have exactly the same choice, so it doesn't really matter on the product market side. On the geographic side, we're looking at either local or city.