Industry Committee on April 7th, 2021

[Majid Jowhari, Liberal, Richmond Hill, ON]

I have about 45 seconds left. I'd like to quickly go to Mr. Scott.

Mr. Scott, yesterday we heard from Mr. White that two sections—specifically section 7 and section 24—of the Telecommunications Act are the solution for a quick evaluation of this merger. What are your thoughts on that?

[Ian Scott]

I'm a bit at a loss to answer the question, because the commission does not have the authority under the Telecommunications Act to review transactions and changes in ownership. I apologize. I did review the blues from yesterday. I don't recall that, but it's a mistake to suggest that the CRTC has the authority to review or block a change in ownership, but for being disqualified for reasons of foreign ownership.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

We'll now start our next round of questions. The first round goes to MP Baldinelli.

You have five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair, and thank you to the witnesses for being with us this afternoon.

My colleague Mr. Jowhari essentially stole all of my first questions for Commissioner Boswell on the notion of section 96 and the efficiency defence. I was going to pursue that line of questioning to find out what other nations have that type of section within their legislation, so thank you, Commissioner, for answering that and addressing the notion of a comprehensive review. I understand that you're open to doing it and are looking forward to seeing it happen. If I can, I'd like to follow up with you on that.

I believe you came to this committee in December and testified that the bureau is facing some challenging resource constraints. You stated, notably, that the bureau's budget fell by almost 10% in the last 10 years, in real dollars.

Do these constraints extend to the merger review process? If so, how have they hindered the bureau's ability to undertake significant reviews such as this?

[Matthew Boswell]

As I've said before this committee and publicly multiple times, it's clear that our agency's resources are stretched. The demands on our limited resources have significantly increased in just the last few years with the digital economy growing by leaps and bounds, the data-driven economy. This has put a tremendous stress on the organization's investigations.

Just to illustrate the point, I note that in between the 2017-18 fiscal year and the next fiscal year, we obtained an additional 4,459 gigabytes of data in our investigations. One gigabyte of data equals enough to fill a small truck, or 678,000 pages approximately. In one year, with the increase in the data we were reviewing as part of our many investigations—we have other enforcement areas other than mergers—the amount of data brought into the bureau related to those reviews grew by three billion additional pages. Now, that's in the context of our budget, which has been flat for 10 years and has, if you take into account inflation, declined by 10% over that time.

In terms of this review, we will allocate, and prioritize internally to allocate, the resources necessary to conduct a thorough review of this particular transaction. I can assure this committee of that. We do that all the time at the bureau. We have to prioritize. We have to move resources around to do the best possible job we can to protect the public interest and protect Canadians' interests.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you for that, but quickly to your point, if this ends up being prioritized, do other reviews get delayed or held back so that work is not performed at all on certain issues that many others would say are a priority to them?

[Matthew Boswell]

It is always a tricky exercise to prioritize and reallocate internally. Sometimes we have to leave certain important aspects of our work and they will not be as advanced. Specifically, sometimes we have to pull back on some of the important competition advice we provide to regulators and governments at all levels in order to put resources towards enforcement work and to reallocate in other ways. However, I should be clear: It's not always that another case gets hurt specifically because of one case.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

I'd now like to ask Mr. Scott about the CRTC and his comments earlier about public hearings.

Are public hearings for a merger such as this automatic or are they held at the discretion of the CRTC? Does it decide what hearings should be held?

[Ian Scott]

There's a requirement for a process. Whether that process is more administrative in nature or requires a full public proceeding is at my discretion, effectively. There's no question in this case that a transaction of this magnitude requires a public proceeding, and there will be one.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

[The Chair, Liberal, Sherry Romanado]

Our next round of questions goes to MP Lambropoulos.

You have five minutes.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

Thank you, Madam Chair.

I want to thank the witnesses for being with us today on this call to answer questions.

My first question will go to Mr. Boswell.

In general, I think all witnesses who have come and testified for this study so far have said that this merger would definitely not be good for competition, except of course those for Shaw and Rogers themselves. Everyone else has said that this merger wouldn't necessarily be good for competition.

You have stated today that while you're not really able to specifically speak to the case at hand, many of the factors contributing to whether or not this merger would decrease competition are being looked into and considered. I'm hoping that this is a good thing for Canadians.

Let's just say that a merger—not this one—was not approved by you. What would companies be able to do to bypass this? Are you the one who makes the final decision?

You also said that if it were accepted.... I think I misunderstood a bit of your testimony earlier, but you said that if someone were to receive the approval, you could take it to the Competition Tribunal and they would be able to counter this.

Can you explain further and in more detail how that works?

[Matthew Boswell]

I'm happy to provide that explanation.

We're tasked with, as I've said repeatedly, assessing the merger to determine whether it's going to result in a substantial lessening or prevention of competition. Generally speaking, that involves looking at a whole bunch of issues in some cases; talking to all sorts of industry participants, customers and consumers; and retaining experts. All of that is driving towards analyzing the merger, whether it's all aspects of the merger or specific aspects where we have serious competition concerns.

At the end of that process, we'll come to a conclusion about whether the merger will result in a substantial lessening or prevention of competition. At that point we can communicate that to the parties, indicate that it is our finding and engage with them in discussions about potential remedies, that is, what they could do—and I'm speaking generally here—to address those concerns and what could take away the substantial lessening or prevention of competition. If those negotiations don't work, it would be up to me to decide if we file an application at the Competition Tribunal to challenge the merger.

Those are the binary decision points as you go through the matter. If we conclude that a merger is going to substantially lessen or prevent competition, we can negotiate with the parties and come up with a resolution that we believe fixes the problem. If we can't negotiate, we go to court—effectively the Competition Tribunal. There, we put our case forward and the parties put their case forward and it's up to the Competition Tribunal to decide.

We're independent. I need to stress that these decisions are made independently. The government and ministers are not involved in my enforcement decisions.

[Emmanuella Lambropoulos, Liberal, Saint-Laurent, QC]

To the Department of Industry, what could be done to support the Competition Bureau in this task? What can the government do to ensure that a merger that would decrease competition and basically go ahead.... I know we just concluded that this is a Competition Tribunal decision in the end, but what extra support can ISED, the government or the Department of Industry offer?

[Éric Dagenais]

I think it's important to understand that the Competition Bureau is independent and its decisions are arrived at independently. I think Mr. Boswell has laid that out.

The Minister of Innovation is looking at the spectrum concentration and the transfer of spectrum licences. When the minister looks at that, he's really looking at the wireless assets. In the case of a merger, one applicant that has many spectrum licences wants to transfer them to a company that wants to buy them. That's what the Minister of Innovation is looking at, and it's guided by the spectrum transfer framework.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

Mr. Lemire now has the floor for two and a half minutes.

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

Thank you, Madam Chair.

My question is for Mr. Scott from the CRTC.

Mr. Pierre Karl Péladeau of Videotron has stated that in order to ensure the technological development of our telecommunications networks, it is necessary for the service providers who share the networks to maintain or even increase their investments in infrastructure.

This proposal seems contrary to what the CRTC is proposing in its regulations. What are your thoughts on this?

[Ian Scott]

Thank you for the question, Mr. Lemire.

I'm not sure how to answer that question. Again, I think I'll take issue with the premise, but I need to be careful here. Quebecor and Videotron are a part of the wireless proceeding and they have put evidence in front of us. We have that under consideration, and we'll be rendering our decision on what we believe is in the public interest in terms of the future regulatory framework for wireless. I understand that Mr. Péladeau has his views, and he has made them very clear to the commission in evidence and presentations at our hearings.

I hope that answered your question.

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

Thank you.

On another note, can we know when the CRTC will issue its decision on mobile virtual network operators? We know that this decision could strongly shape the future of telecommunications in Canada.

[Ian Scott]

I really don't have an exact date, but it's coming soon.

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

All right.

What do you generally think of the concept of mobile virtual network operators? In your opinion, are they part of the solution to drive prices down even further?

[Ian Scott]

That is one of the principal issues being considered in that decision. Unfortunately, I cannot answer that question.

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

How do you encourage the presence of a fourth, fifth or even sixth competitor on a network without giving regulatory advantages to those companies?

[Ian Scott]

I'm sorry, but I have to give you the same answer again: this question is part of the review process before us.