Industry Committee on April 13th, 2021

[The Chair, Liberal, Sherry Romanado]

My apologies but you're out of time, MP Cumming.

We'll now move to MP Lambropoulos.

You have the floor for five minutes.

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

Thank you, Madam Chair.

I would like to thank all of the witnesses for their particularly interesting testimony today.

I have to agree with my colleagues that many different angles have been looked at, so I really appreciate the information we've received today.

Many of you made reference to the fact that fewer investors are being attracted to the Canadian economy right now, that the number of publicly traded companies has significantly decreased since its peak in 2006, and that there isn't currently much recourse for companies that are trying to compete against the big players. My questions will revolve around those things.

Ms. Larkin, I'll go to you first. You mentioned a lot of the stats that you guys found. Did your study find any reasons for this decrease? Would you care to comment? I know you mentioned that you might be doing future studies or focusing on this in the future, but what are the main reasons you found?

[Dr. Yelena Larkin]

Overall, the nature of our study is more descriptive. We do find that companies are getting bigger. By the way, I want to make just a minor remark. It doesn't necessarily mean that investors shy away from Canadian markets. The overall market has remained stable, so there is still money going into the Canadian economy. However, this is concentrated, essentially, primarily, in large corporations. This is what we see. There is a shift in the distribution but the size remains fairly stable overall with growth consistent within the economy. However, essentially the money goes to large corporations.

The question of what the drivers are is an excellent question. Unfortunately, given the level of the data we have, we are not able to pinpoint the specific mechanism. Therefore, it would be important to look at more specific data in this case. However, it seems that the findings are, overall, consistent with the idea that, potentially, markets could be becoming less competitive.

We see an increase in concentration, which by itself, does not always point to a decline in competition. However, it comes hand in hand with more merger deals, more domestic merger deals, larger deals, horizontal deals. Those large companies are more valued by shareholders as we see in the market cap. It seems that all the signs together are consistent with the idea that, potentially, this could be a sign of decline in competition. Having said that, I still want to caution that this is aggregate data and a more detailed analysis, maybe industry-level analysis or specific market-level analysis, is something that would be warranted.

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

Thank you very much.

Mr. Vaillancourt, you spoke about the ways in which we could change the Competition Act to better deal with the most prevalent issue and complaint that is currently received by the competition commissioner, which is about abuse of dominance. You gave us certain ways in which we could change the act in order to allow people to deal more directly and be able to privately litigate and find recourse.

However, I was wondering if there were ways in which you think we could change the rule of the commissioner or change the reasons that only 11 cases were looked into and not more. What is blocking the commissioner from doing more, and are there ways in which we can change the system, the way that it currently works, to make it more efficient?

[David Vaillancourt]

I think one of the easiest practically but maybe not easiest politically would be to significantly increase the budget of the commissioner of competition. If the commissioner of competition had significantly more resources to deal with these issues, then one assumes that he would.

I don't think it's a question of any sort of wilful neglect or anything like that. I think, really, there are matters that take urgent priority. Criminal enforcement for price fixing and bid rigging, obviously, is one of them. The mandatory merger review is another. It's just a question of using whatever money is left to deal with these abuses of dominance and other civilly reviewable matters.

I don't think it's a question of structural change as far as what the commissioner's role is. I think that it's a matter of giving significantly more money to the commissioner to fulfill that mandate. One way to ease the burden would be to allow private litigants to bear some of that burden themselves.

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

Okay. Thank you.

I have 15 seconds left, so that's it for me.

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you so much.

We'll now start our third round of questions.

MP Dreeshen, you have the floor for five minutes.

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

Thank you very much, Madam Chair.

Thanks to all the witnesses for appearing today.

Ensuring that Canada has an appropriate regulatory environment will be critical to maintaining our competitiveness and ensuring more jobs and economic growth in the future. On that point, I'd like to speak to Mr. Swampy. I know that one sector of our economy where there are regulations and regulatory concerns is the energy sector. I have met numerous people from first nations in my time at Aboriginal Affairs and Northern Development. They were amazing individuals. I think many people would be happy to have them as CEOs of their companies, but they're being restricted and there are limitations. We end up with the difference between regulatory burden and political considerations.

There are many ways in which we can support this vital sector. You mentioned the concern about the northern gateway decision, which was political. It had nothing to do with the environment. So many aboriginal groups wanted to be a part of this—39 first nations that produce oil and gas, and the over 100 that rely on the economic benefit from pipelines passing through their territories—but we can't get that message to the rest of the politicians who make these decisions. I'm just wondering if you can give a bit of an idea as to how we could change this so that there are no more decisions made in that manner.

[Dale Swampy]

I think we need more indigenous participation and dialogue and involvement in natural resource development. As you know, the northern gateway project guaranteed two billion dollars' worth of benefits for 31 out of the 40 communities along the corridor. It also included a guarantee that the funding partners—there were nine producers and Enbridge as an operator—would hire a CEO from one of the first nations from the communities in B.C. That was real participation that meant something. That meant that the industry itself and the producers themselves were willing to do what it took in order to get full participation from first nations to develop the project.

It's like when we organized the National Coalition of Chiefs so that the core members went to the funding partners after the cancellation and said, “Can we work toward getting the northern gateway project back?” The funding partners, who wrote off $630 million in development costs, including regulatory costs, said that northern gateway was done, but they would support an indigenous-led pipeline initiative. That was important. It got us, to a certain extent, to a level at which we thought, and a lot of first nations agree to this day, that we can develop our own projects.

That's what we want to do. I think one way to get the regulatory process in place is to have full participation from first nations. You won't have the consultation problem. You won't have the rights and title issues that go up to the Supreme Court. You will have indigenous people at the table, because they will lead these projects. That's what we're working toward getting, not just leading the projects but owning the natural resource itself.

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

There are other projects that have been presented and looked at. It seems as though, because they are energy projects, the regulatory burden that has come from Bill C-69 and so on is just putting roadblocks beyond that which you were speaking of.

Do you think governments would listen to you with regard to how damaging those regulations are, or are we just going to be spinning our wheels and talking about this forever?

[Dale Swampy]

No. We are under the impression and believe that two-thirds of the chiefs we canvass every year are in support of natural resource development. We are a group with 81 members right now from across Canada. We believe in the next year or so we'll have over 100. In the next three years, we may have as many as 400. We're in a big national movement. Right now there are no real indigenous organizations that are promoting first nations defeat of on-reserve poverty through getting involved in the economy. This is what we have to do. Let the governments worry about environmental protection when it comes to regulations, because we'll be leading these projects and we'll be doing the environmental protections that we're concerned about most.

We have to keep the drive going. We have to keep getting more members. As we become bigger, we'll be a voice to overturn the really binding regulatory legislation that really hurts our ability to be able to sell the biggest asset we have, and probably one of the world's biggest assets, which is our natural resources.

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

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now go to MP Ehsassi. You have the floor for five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you very much, Madam Chair.

Thank you to everyone who has appeared before our committee today. I will start with Mr. Vaillancourt.

Thank you very much for your submissions today. I found them incredibly helpful.

We've been hearing for many years about the need to change the Competition Act for many years, particularly where the abuse of dominance provisions are concerned. You obviously have been following this discussion for many years.

In your estimation, for how long have these types of recommendations been made? If memory serves, we've been hearing about the need to make changes for the past 20 years, but I defer to you.

[David Vaillancourt]

Yes, I think that's an accurate estimation. When the initial changes, which permitted some private rights of access, were made in 2002, there was a discussion at that time about including abuse of dominance. Since then, the proportionate support for it has increased, in part because there wasn't a stampede to the tribunal of everybody trying to bring a private action for everything under the sun.

In attending conferences, events and whatnot, I have noticed that there are a lot more panels on whether there should be private access. That's happened in a more concentrated way, I'd say, over the last five years or so, but certainly it's been out there in the environment for at least 20 years.

[Ali Ehsassi, Liberal, Willowdale, ON]

As you know, there have been no abuse of dominance cases over the past five years.

Have you had the opportunity to look at other jurisdictions, other peer countries, and do you have a sense of how many cases they go through on an annual basis insofar as abuse of dominance is concerned?

[David Vaillancourt]

Just as a small correction, there actually have been two abuse of dominance cases over the last five years, one with the Toronto Real Estate Board and the other with the Vancouver Airport Commission.

I do not have any sort of empirical sense of how much enforcement is taking place elsewhere, but I did read an article that said it's being enforced in the United States at a rate of 10:1 by private entities versus a public enforcer. You could extrapolate from that how much you would expect to see in Canada.

Again, I don't know if the budgetary constraints in the United States, for example, are quite as severe as they are in Canada, so even the numbers of publicly brought abuse of dominance proceedings, I would guess, are higher on a per capita basis in the United States.

[Ali Ehsassi, Liberal, Willowdale, ON]

Ms. Larkin, do you have a sense of the numbers in other peer jurisdictions?

[Dr. Yelena Larkin]

When it comes to the U.S., I just have the numbers from the Sherman Act, which the Department of Justice uses, and they have also been quite low. In fact, there have been years in which they had zero cases, so it's been quite low in the U.S.

[Ali Ehsassi, Liberal, Willowdale, ON]

Okay.

I will return again to Mr. Vaillancourt. With respect to your suggestion that there be a private right of action, have you had an opportunity to look at the legislative frameworks in other peer jurisdictions? If you have and if you had to select one of them, which one would you consider the most appropriate for the purposes of guiding the members of this committee?

[David Vaillancourt]

The American model is based.... The wording of the statute in the United States is incredibly broad. I think that would probably be more of a model than the European model. I haven't gone into depth with the legislative scheme in Europe.

I think the framework that already exists in the Competition Act—the section 103.1, which already provides for private access to the tribunal for some of these other reviewable matters—could just be plugged into that. It would have to be subject to the earlier qualification about dropping the need to prove someone has been substantially affected in order to bring a proceeding, just based on how that term has been interpreted by the tribunal.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

Ms. Larkin, do you have any further comments on that one?

[The Chair, Liberal, Sherry Romanado]

My apologies, Mr. Ehsassi. You're out of time.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thanks.

[The Chair, Liberal, Sherry Romanado]

We'll now go to MP Lemire.

You have the floor for two and a half minutes.