Industry Committee on May 8th, 2024

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

You went on to say that you have to control misinformation and disinformation. You must have an intent about what you're going to do with that power to censor the Internet.

[Simon Kennedy]

Perhaps, if the chair will indulge me, I'll ask Mark Schaan to speak to this issue, because his area is actually working on the legislation in question.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It's your speech.

[Simon Kennedy]

As I noted already, this was a briefing note prepared by the department. I did not—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

It was a speech—

[The Chair, Liberal, Joël Lightbound]

Mr. Perkins, please let the witness answer.

[Simon Kennedy]

I did not read the speech. Frequently, when I'm asked to come to talk to a breakfast, it's a Q-and-A session, and I talk off the cuff. I often get documents from the department that I read as an aide-mémoire, but I did not read a prepared text, so I can't ascertain whether that exact language was used. However, it's very unlikely, because I spoke off the cuff at the meeting. I'm happy to have Mr. Schaan speak to this substance, because his office prepared the document.

[Mark Schaan, Senior Assistant Deputy Minister, Strategy and Innovation Policy Sector, Department of Industry]

We have proposed to highlight a number of high-impact AI systems that would be subject to regulation and that would have obligations in terms of transparency, red teaming and some of the protections against potential harm and bias that would be put in place as a function of that. This specific reference is about the possibilities for some of these high-impact AI systems to be able to continue to highlight biased information to Canadians, so without appropriate protections from regulations—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. Chair, for two and a half minutes I've been asking a simple question: What specific.... It's not that you're going to address bias. I know that. You've said that, and you've said it in the bill. What biases are you aiming at? To do this, you must have it. You said you're going to stop misinformation.

[Simon Kennedy]

Let's take a hypothetical example of a preferencing system that consistently shows content to young people that encourages them to engage in harmful behaviour and shows them information about how to harm themselves. That might be an example of a preferencing system that we would have serious concerns about because the algorithm is driving people who are still in development to consume content that is quite damaging to their health and well-being.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Kennedy.

Now it's over to Mr. Turnbull for six minutes.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Chair.

Thanks to all of you for being here today; it's great to have you.

I note that many of us have mentioned grocery prices in previous rounds of questions. Obviously, competition is a really big part of our government's agenda to help stabilize food prices, but not only food prices. Certainly, there's consolidation in quite a number of industries in Canada that I think merits serious consideration when it comes to competition reforms.

Mr. Kennedy, maybe you could start by speaking generally about our approach to competition reform and how that's really going to help both stabilize and, hopefully, in the long term, provide more choice and lower prices for Canadians.

[Simon Kennedy]

Working closely with the commissioner of competition and the minister, obviously, we have tried to advance a fairly comprehensive set of reforms to competition.

A couple of examples that would be relevant not only to the grocery sector but also to others would be the ability of the commissioner to conduct market studies. As the minister talked about before, if there's a concern about behaviour in a particular industry and the commissioner wishes to study it, in the past, actually getting access to the data was entirely dependent on the voluntary participation of the industry players. Now there'll be much better power to go in there and do the study and shine a light on areas where there may be problems.

There were changes made to better get at the issue of so-called horizontal collaboration. In an industry, if you have players who are colluding, working together to reduce competition, that's illegal. For example, you have two grocery companies in the industry that get together. It wasn't, strictly speaking, a problem if you had people in two completely different sectors getting together—for example, landlords with restrictive covenants in their tenancy agreements.

That has been addressed by the reforms to the competition legislation.

There is now, I believe, a private right of action, so that parties that feel aggrieved—they are injured—can actually go to the tribunal and seek relief.

There's a whole series of reforms that have been made to, frankly, make it easier to get relief in the case of problems and to make it easier for the commission to go after examples of anti-competitive conduct.

We have removed the efficiencies defence. I think honourable members will know about that. Basically, in Canada, as a result of jurisprudence and so on, it had become an absolute right of defence. As long as your merger resulted in a more efficient outcome that outweighed the damages, that was an absolute defence you could bring to the table to justify your merger. Literally, prices could rise, consumers could be harmed, choice could go down in the market and workers could be let go. As long as the new enterprise was more efficient than the previous two, all of that was fine. Well, efficiencies are no longer a defence that's available to companies.

There have been very significant structural changes made to the legislation. There's been a lot of commentary on that, so maybe I won't add further at this time, but I am happy to have us go into detail if there's a desire.

Thanks.

[Ryan Turnbull, Liberal, Whitby, ON]

Yes, I am interested in what impact that will have in the short and maybe medium to long term. Certainly, it's hard to predict, but some of these changes have probably been contemplated for quite a while, and I know that quite a lot of consultation was done.

What I'm interested in is how quickly we will see the impact of these changes. I'm sure it's hard to predict that, but I wonder how quickly markets respond to the signals that go out there. I'm sure industry is paying attention to our proceedings, and certainly to the finance committee and our work.

Mr. Schaan was with us for many hours on Bill C-59, which made an additional round of changes to the Competition Act.

I'm wondering if maybe you can speak to the impact that will have and how quickly we will see the impact.

[Simon Kennedy]

I will turn to Mr. Schaan to maybe provide a bit more colour. However, I would maybe make two observations, just based on my civil service career to date.

I think there will absolutely be an immediate impact, but that impact may be, in certain cases, that things don't happen. It's counterfactual that there would be behaviour that we would have been concerned about that no longer will happen, because boards and companies, and the legal firms that advise them and so on, will advise that this is going to now be a problem. I think on a go-forward basis you're going to see fewer of some of the deleterious things we were worried about, because the law has been changed.

In terms of the structure of the economy and changes, obviously, that would take longer.

Mark may want to speak a bit more about what we might expect to see.

[Mark Schaan]

Just quickly, I'd say that it's a law of general economic application that applies across the entirety of the economy. It will modify behaviour as it relates to how people approach the overall actions they're going to take in areas in which competition has a really big bearing. That's things like mergers and acquisitions.

It also sets the rules for a number of these private rights of actions in terms of abuses of dominance, and some of the real concerns in the marketplace.

I think, as the deputy has noted, some of that's going to be immediate. We're going to have mergers that people will look at and say, “Well, under the new rules, I'm not sure that's going to happen.”

Some of that will happen over the medium term—things like the increase to the look-back period for “killer acquisitions” in the digital space. This is adding the time period in which the bureau has the capacity to look back and say that that actually was a really important technology, and that was a major company coming to rout out competition by buying this up. That's the kind of thing that will have a more significant impact over the medium to long term.

[Ryan Turnbull, Liberal, Whitby, ON]

I have a quick follow-up.

In terms of the strategic thinking and competition reforms, there are multiple rounds. They're not going to have all of the impact in terms of breaking corporate consolidation in different industries, but is there also another pillar of the strategy, to invest in smaller companies, to grow the economy from the base—or from the start-up—and scale some of those start-ups? Is that part of the strategy to increase competition?

Mr. Kennedy, could you speak to that?

[Simon Kennedy]

If we take groceries as an example, just as a practical matter we can kind of focus on one industry, and I would say that competition reforms were seen as an important step.

There has been work, as members know, on the grocery code of conduct to try to really mediate behaviour among the players in the supply chain. We think that the consumer sector and consumer advocacy in Canada have been an area that frankly hasn't had a lot of attention in many years—decades, in fact.

The ministry has made a fairly sizable reinvestment in the consumer rights and agenda side of the ledger. There's been a very significant increase in support for consumer groups. The minister has had a number of meetings with consumer groups in order to be out there basically shining a light on bad practices, naming and shaming and turning up the heat around consumer issues.

We have been working with the provincial governments. We've had a first meeting of ministers on this topic. There have been a number of meetings of senior officials. I have to say that it's been many years—I don't have the date—since consumer affairs ministers and senior officials have had these regular series of meetings.

I wouldn't claim that all of that has changed everything. It's just to say that on our relations with provinces and territories, which have a lot of the on-the-ground responsibility for consumer issues and so on when it comes to legislation, the code of conduct, the supply chain and our financing of the consumer sector, I would say that we've tried to take a multipronged approach in the grocery sector to bring some pressure to bear on the various players to act.

[The Chair, Liberal, Joël Lightbound]

Thank you.

It is now Mr. Garon's turn.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

Welcome to the committee, ladies and gentlemen. Thank you for being with us today.

The minister told us earlier—and it came as no big surprise—that there wasn't a national aerospace strategy in the works. While we recognize that constructive efforts have been made to support the industry's growth, we nevertheless believe that a national aerospace strategy is needed.

You certainly know that Canada recently announced sanctions in relation to titanium. The people at the aerospace companies explained that titanium is an important material, possibly even indispensable, and that finding a replacement in the very short term is quite challenging. As I understand it, titanium is used to make bolts, and it's very difficult to replace those components in the very short term. It would appear, then, that because of the sanctions Canada alone is imposing, the titanium that isn't coming here is still going elsewhere. With those sanctions, Canada is doing a good bit of damage to one of Quebec's flagship sectors, aerospace.

As the member for Mirabel, I'd like to know whether the aircraft manufacturers, namely those in Quebec, were consulted before the sanctions were imposed and whether Mr. Champagne's department was consulted beforehand.

[Simon Kennedy]

Thank you for your question.

On the issue of titanium, I can tell you that we are working closely with the Department of Foreign Affairs, Trade and Development and with the industry. We want to ensure that the policy change you're referring to allows for exemptions when necessary, so the industry can access those specialized products.

[Jean-Denis Garon, Bloc, Mirabel, QC]

If I understand correctly, your department is in favour of exemptions for aerospace companies, in particular, and you are working to that end.

[Simon Kennedy]

Yes. In terms of how the policy was developed, you're better off asking the Department of Foreign Affairs, Trade and Development, which is responsible for that. Our focus is really on making sure that the aerospace sector isn't negatively impacted. We are engaged in a meaningful dialogue with Global Affairs Canada to make sure that the measures don't impact the sector.

Does that answer your question?

[Jean-Denis Garon, Bloc, Mirabel, QC]

I actually wasn't trying to get you with that question. I was merely trying to raise the concern. It's an important sector, and it can sometimes seem as though decisions are made just like that. I wanted to hear your take on the situation, so thank you for that.

Now I have a quick question for the deputy minister responsible for Bill C-27. Under the bill, a new tribunal is being established, which the government says is necessary because the Privacy Commissioner's new responsibilities will result in more legal proceedings and things will get complicated. However, I can count on one hand the number of times the Privacy Commissioner's decisions have been challenged before the Federal Court, Federal Court of Appeal or Supreme Court. That casts doubt on the need for the tribunal. With the commissioner being given more tools to do his job, it seems as though the creation of this new tribunal might seek to undermine the commissioner's role.

I want you to understand why I'm raising the issue. As parliamentarians, we talk both behind the scenes and here, publicly, and we have questions. We know that the minister carried out consultations, so we want to find out which companies in the sector he consulted. Obviously, the committee hasn't met with those stakeholders, since we're having to work on this in a bit of a rush.

Can we, the members of the committee, know exactly which companies in the sector the minister consulted before bringing forward Bill C‑27 and his countless amendments? Clearly, the original version of the bill wasn't up to par, unfortunately, even from the department's standpoint.

[Simon Kennedy]

The question was for me specifically, but I can provide a general answer or—