Industry Committee on Dec. 3rd, 2020

[The Chair, Liberal, Sherry Romanado]

Good morning, everyone. I now call this meeting to order.

Welcome to meeting number nine 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 September 23, 2020. The proceedings will be made available via the House of Commons website. 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'm going 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 floor, English or French. Please select the language in which you are speaking.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in the committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled by the proceedings and verification officer.

This is a reminder that all comments by members and witnesses should be addressed through the chair. When you are not speaking, please make sure your microphone is on mute.

With regard to the speakers list, the committee clerk and I will do our best to maintain the order of speaking for all members, whether they are participating virtually or in person.

As is my normal practice, I will hold up a yellow card when you have 30 seconds left in your intervention, and I will hold up a red card when your time is up. Please try to respect the time limits so that all members have a chance to have their round of questions.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, November 5, 2020, the committee is meeting today for a briefing on the office of the Competition Bureau of Canada.

I'd now like to welcome our witnesses.

We have with us today Mr. Matthew Boswell, commissioner of competition; Mr. Anthony Durocher, deputy commissioner, competition promotion branch; and Ms. Leila Wright, associate deputy commissioner, competition promotion branch.

Our witnesses will present for seven minutes, followed by rounds of questions.

With that, I now turn it over to Mr. Boswell.

You have seven minutes. The floor is yours.

[Matthew Boswell, Commissioner of Competition, Competition Bureau]

Thank you, Madam Chair and members of the committee, for the invitation to appear before you today.

This committee has a long history of advancing the public policy discussion on competition issues.

[The Chair, Liberal, Sherry Romanado]

Mr. Boswell, could I ask you to put your microphone a little closer to your mouth, please? Thank you.

[Matthew Boswell]

Canada needs more competition, and your committee's efforts consistently bring competition into sharper focus. We are happy to support your important work.

In these opening remarks, I want to highlight the importance of competition in responding to COVID-19. Although we face an uncertain future, an emphasis on competition today will not only protect consumers when they are at their most vulnerable, but will also ensure that our rebuilt economy is one where competition drives lower prices, improved productivity and increased levels of innovation to the benefit of all Canadians.

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian consumers and businesses prosper in a competitive and innovative marketplace. The bureau does this by administering and enforcing the Competition Act. Under the act, the bureau investigates a wide range of anti-competitive behaviour.

As Canada's competition expert, the bureau promotes a pro-competitive government policy.

Competition enforcement is more important than ever. Businesses can use crises, like the COVID-19 pandemic, as cover to consolidate market power or engage in anti-competitive activity. Vigorous competition enforcement stands opposed to those who wish to capitalize on uncertainty and fear.

Since the first weeks of the pandemic, the bureau has taken action against businesses making unfounded or misleading claims that their products could prevent, treat, or cure COVID-19. As a result of our interventions, most of the businesses have taken corrective action, pulling products that raised concerns from their shelves or stopping the claims.

At the same time, the bureau moved quickly to support the supply of critical products and services across Canada. We issued a statement, which continues to apply, providing the marketplace with a principled yet flexible approach to competitor collaborations designed to support crisis response efforts.

Unfortunately, in the months ahead, we may see a rise in merger transactions involving failing businesses. In assessing these transactions, we must maintain our normal rigour and analytical framework. Relaxing our standards in a crisis period could cause irreversible intensification of market concentration, leading to deeper and longer-term harm to consumers and the economy.

Finally, we continue to prioritize competition in digital and data-driven markets. For example, in the past six months, the bureau has undertaken a number of actions in this area, including: our recent settlement with Facebook related to deceptive privacy claims; our ongoing investigation into the business practices of Amazon; and finally, our participation in the CRTC’s review of Canada’s wireless industry.

The bureau will continue to do everything in its power to protect consumers and businesses from anti-competitive activity throughout the COVID-19 pandemic.

In addition to vigorously enforcing the law, the bureau also champions pro-competitive government policy. Competition-friendly policies can aid economic recovery by stimulating entry, productivity and innovation. To support these efforts, the bureau has released a competition assessment tool kit for policy-makers. This step-by-step guide helps policy-makers to maximize the benefits of competition for Canadian consumers and businesses.

We urge governments across Canada to use competition as a focal point in facilitating economic recovery. In the face of a global pandemic, we can be sure that our focus on competition today will empower consumers and promote productivity, innovation and economic growth during our recovery. The bureau will continue to do all that it can to build a stronger and more competitive Canada.

Before fielding your questions, it is important to note that the law requires the bureau to conduct investigations confidentially and keep confidential the information we have. This obligation may prevent us from discussing some past or current investigations that may be of interest to members of this committee.

Finally, I'd like to once again thank the committee for the opportunity to appear today. We look forward to your questions.

Thank you.

[The Chair, Liberal, Sherry Romanado]

Thank you very much, Mr. Boswell.

With that, we will start our first round of questions, which goes to MP Rood.

You have the floor for six minutes.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much, Madam Chair.

Thank you for that presentation.

You were mentioning that part of your job is to protect consumers throughout the pandemic. Throughout the pandemic, we've seen food security issues in some places in the country. We've seen issues with grocery giants trying to gouge producers and food processors, and we've heard testimony of this at the agriculture committee as well, from folks who are in the industry. We've seen record profits by the grocery giants. We're talking about nearly $350 million by one grocer in the last quarter. We're talking about a 12.5% increase from last year in their profits.

At the same time, Metro, Loblaws and Walmart want to impose extra fees on top of the fees they already charge processors and farmers for the privilege of selling to their stores and supplying them with goods, at a time of a pandemic when food security is of utmost priority. I have asked the Prime Minister about this. He said that he was going to ask the Competition Bureau to investigate the fees that are charged to producers and processors by grocery giants.

Has he asked you to investigate this with respect to the grocery retailers?

[Matthew Boswell]

Of course, the bureau is very much aware of these issues. They have been at the front of media coverage for some time. I can tell you today that we are already engaging at the federal, provincial and territorial level with respect to these particular issues and sharing our expertise on competition. The bureau is Canada's competition expert, and we will continue to be so going forward.

Of course, in our work we are guided by the facts and evidence. The reality is that competition law in Canada does not provide for a tool to regulate imbalances in bargaining power. From our perspective, that is what this situation appears to be.

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

I must raise a point of order, Madam Chair.

[The Chair, Liberal, Sherry Romanado]

You have the floor, Mr. Lemire.

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

We have no interpretation. The witness is probably not close enough to his microphone.

Since the reply is of particular interest to me, I want it to be interpreted.

[The Chair, Liberal, Sherry Romanado]

Yes.

Mr. Boswell, could you put your microphone closer to your mouth so that translation can pick up the sound, please?

[Matthew Boswell]

Yes, I'm sorry.

[The Chair, Liberal, Sherry Romanado]

Thank you.

[Matthew Boswell]

I'm sorry it's not working well. It was working well yesterday.

Mr. Lemire, can you hear me now?

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

You need to talk a bit more.

[Matthew Boswell]

To return to this issue and repeat briefly what I said, the bureau is very much aware of these issues with respect to retailers and their suppliers. We are already engaging at the federal, provincial and territorial level with respect to this issue, sharing our expertise on competition issues.

That said, I did make the point, and it's important to make it today, that competition law in Canada does not regulate imbalances in bargaining power. There are no provisions in our act that would specifically address that.

We know as well that this has been an issue in other jurisdictions around the world, which have taken different actions because their legal framework has permitted that.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

Given that there's a concentration and 80% of the grocery market is controlled by only five major chains or retailers, would there be grounds for an investigation of an abuse of dominance? Could you elaborate on what the definition of abuse of dominance would be?

[Matthew Boswell]

We've discussed these issues in detail as a result of an extensive investigation we conducted into Loblaws' business practices in 2017, when we looked at potential issues of abuse of dominance. As I said, this situation appears to be an imbalance in bargaining power, something the Competition Act does not have specific powers to deal with.

Abuse of dominance is, effectively, in the short version, where a company has a dominant market position and engages in anti-competitive acts with an intended negative effect on a competitor. That conduct results in a substantial lessening or prevention of competition.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Could you also perhaps explain what the grounds are and what the process is for the Competition Bureau to set up a competition tribunal? Is this something you would look into on the issue of grocery retailers?

[Matthew Boswell]

We have a prosecutorial model in Canada for competition law violations. We must bring our civil cases to the Competition Tribunal of Canada and establish, to their satisfaction, the elements of any violation of the act, which is what we do when we bring allegations of abuse of the dominant position, cases that we've brought in the past.

[Lianne Rood, Conservative, Lambton—Kent—Middlesex, ON]

Thank you very much.

[The Chair, Liberal, Sherry Romanado]

Thank you very much.

We'll now turn to MP Ehsassi. You have the floor for six minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you very much, Madam Chair.

Thank you, Mr. Boswell, for appearing before this committee.

Perhaps I could just follow up on the questions that Ms. Rood was asking.

In your opinion, are the abuse of dominance provisions in the Competition Act of any utility insofar as the issue that Ms. Rood raised is concerned, with respect to big grocery companies?

[Matthew Boswell]

It would seem that this is a situation of imbalance in bargaining power, and not a situation of abuse of dominance. That's the bureau's perspective. Having done extensive work in this area in a previous investigation, that's consistent with our previous findings in that matter.

Now, I should point out, sir, that I made reference to other countries that have been able to adopt codes of conduct in this area. The bureau doesn't have the power to create or enforce a code of conduct that would apply to large grocery retailers.

[Ali Ehsassi, Liberal, Willowdale, ON]

In your opinion, having looked at other jurisdictions, would the adoption of a voluntary code of conduct help with respect to this particular issue?