Industry Committee on Dec. 3rd, 2020

[Matthew Boswell]

I suppose, sir, that the devil is always in the details, as they say. A code of conduct can be helpful. We've seen in the United Kingdom a code of conduct that has generally received positive reaction and has appeared to be helpful to some of the issues between grocery retailers and suppliers in that jurisdiction.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

You said that your bureau, in fact, has been working with enforcement authorities in other jurisdictions to grapple with this issue. Given the provisions of the Competition Act, are there any other provisions that might possibly assist in terms of ensuring that this dynamic, this phenomenon does not continue in our country?

[Matthew Boswell]

From our perspective, sir, there isn't a clear tool in the Competition Act to deal with imbalances of bargaining power.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

Now I will move to a very different area, the area of innovation.

I know that in 2019, for the first time, the Competition Bureau announced that you would be instituting a chief digital enforcement officer. For the benefit of all the committee members, could you share with us what the significance of that appointment is?

[Matthew Boswell]

Yes. This is a part of the bureau's overall focus on being a world-leading competition agency in terms of all that we do in the digital economy.

We were successful in bringing in a chief digital enforcement officer from outside of government to assist us in all aspects of our work in terms of the digital economy. That includes an internal focus and a digital strategy for the bureau, making sure we have the right digital tools to conduct our work as efficiently and effectively as possible, as well as making sure that we're considering and analyzing the competition issues at play in the digital economy, so that we're well positioned to either provide pro-competitive advice on policies or bring enforcement action in terms of the digital economy.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

Given that your mandate is to enhance productivity and innovation.... Leaving that particular position aside, are there any other tools that your bureau utilizes to enhance innovation?

[Matthew Boswell]

Absolutely, sir. Competition is a key driver of innovation in any market-based economy. Competition forces competitors to consider innovative approaches at every turn. In fact, this is something that was pointed out by Tobias Lütke, the CEO of Shopify. Embracing competition, looking at your competitors every day and seeing how you can do better than them and how you can provide innovative new products, that's what drives innovation in our economy and in economies around the world. It drives productivity as well.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you for that.

I'd be remiss if I didn't also touch on another new practice that has been adopted by your bureau, which is the new competition enforcement framework that Canada entered into with the U.S., New Zealand, Australia and the U.K.

Could you provide us with more details on that and provide us with your assessment as to how significant that is?

[Matthew Boswell]

Yes, absolutely. Thank you for bringing this up. This is tied, once again, to the digital economy and the global nature of the economy—

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

Madam Chair, the quality of the interpretation means that we can't understand Mr. Boswell's reply.

[The Chair, Liberal, Sherry Romanado]

Okay.

Thank you very much.

Mr. Boswell, I'm not sure if there's any possibility of getting that microphone a little closer. We're actually out of time on that round, but I'll let you finish that response, and we'll try the translation at the same time.

[Matthew Boswell]

Okay. I apologize.

I'm so sorry, Mr. Lemire.

The point is that we've entered into numerous international co-operation agreements with our partners around the world. International co-operation and competition law enforcement is vital in a digital economy, in a global economy. Our recently announced agreement is part of our emphasis on co-operating to be able to help Canadians.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We will begin our next round of questions.

Mr. Lemire, you have the floor for six minutes.

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

Thank you, Madam Chair.

My first question, Mr. Boswell, relates to your mandate. As I understand it, you have the power to make recommendations as well as the power to coerce.

In a case of abuse of a dominant position, which is aimed at preventing small players from entering a market and therefore constitutes an anti-competitive practice within the meaning of the act, what can the Competition Bureau do to reframe the situation?

[Matthew Boswell]

As I indicated, there is an abuse of dominance provision in the Competition Act, section 79 of the act, that should—

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

Madam Chair, I am obliged to interrupt the witness because there is no interpretation. I understand the interpreters, because the sound quality of the English stream is poor.

What can be done to fix the situation?

[The Chair, Liberal, Sherry Romanado]

Mr. Boswell, you mentioned that you did not have a headset with a microphone. Is that correct?

[Matthew Boswell]

Madam Chair, I'm going to try a different microphone. Perhaps I could ask my colleague Monsieur Durocher to answer Monsieur Lemire's question, and I'll switch microphones.

[The Chair, Liberal, Sherry Romanado]

Okay.

Monsieur Durocher, I see that you have the same kind of headset. If you could put the microphone closer to your mouth, that would be helpful.

Thank you.

[Anthony Durocher, Deputy Commissioner, Competition Promotion Branch, Competition Bureau]

Certainly, Madam Chair.

In Canada, in order to remedy an abuse of dominance issue, we must reach the conclusion that this is indeed the case, and that the three required elements are well established, with supporting evidence.

An amicable agreement or consent agreement may be entered into with the party or parties in question. Otherwise, the file is transferred to the Competition Tribunal, which is a specialized federal court. To do so, a file must be prepared with witnesses, evidence and documents.

The tribunal will make a decision, and can put in place a solution that will eliminate the problematic conduct, or take any other necessary action to rectify the situation.

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

What procedure do you follow when a complaint is filed?

For example, last February, the TekSavvy company filed a complaint with the Competition Bureau against the Bell and Rogers companies for unfair practices.

In my region, Videotron, Cogeco and Maskicom also filed a complaint against Bell.

What are the verification steps with respect to the parties involved? What sanctions may be applied?

[Anthony Durocher]

When the bureau is required to conduct an investigation, it examines the relevant facts and evidence to determine whether an offence has actually been committed and whether there is an abuse of dominance.

To do this, a group of investigators interview witnesses, whether they are competitors, suppliers or industry experts. They analyze the evidence and review documents related to the complaint. The bureau conducts very thorough reviews to ensure that decisions are based on facts and evidence.

After investigation, the bureau often enters into discussions and negotiations with the company or companies involved to see if the dispute can be resolved without the need to refer the case to court.

The bureau may register a consent agreement with the court. If there is no mutually agreeable solution, the dispute is the subject of an application to the Competition Tribunal, in which case it is a legal proceeding. A party may be able to appeal a decision of the tribunal.

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

According to your recommendations, a minimum of four suppliers is required to foster healthy competition. In a remote region like mine, in Abitibi-Témiscamingue, there is only one wholesale service provider and several wholesale service distributors. It is very difficult to have this minimum number of suppliers, even if it is desirable.

In your opinion, should the wholesale service provider be independent of distributors so that it does not offer better prices to its subsidiary or to itself? Could this independence between the distributors and the provider be part of the solution to make the Internet more affordable in remote areas?

[Anthony Durocher]

The minimum number of suppliers principle was part of a recommendation we made to the CRTC regarding the wireless sector. Based on evidence, we determined that the effect of a fourth competitor in a wireless market was significant, given the observed price declines.

In the broadband and high-speed Internet sector, there are some of the same players, but the economic and business realities are different. In this case, we often participate in CRTC consultation processes to ensure that we provide input on any aspect of competition, including methodologies used to assess access to independent parties.

When it comes to investigating specific situations where there are access issues, our role is determined by facts and evidence. We really proceed on a case-by-case basis.

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

I'll ask my question again.

Does the wholesale service provider have to be independent of the distributors so that it does not offer itself better prices? Could separating the distributor from the provider be a solution to make the Internet more affordable?