Evidence of meeting #127 for Industry, Science and Technology in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was merger.
A recording is available from Parliament.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
So we have to ask ourselves how the efficiency gains will be redistributed.
Professor, Law and Innovation, Faculty of Law, Université de Montréal, As an Individual
That's correct.
In the other territories, that work was done in the 1990s, through reinterpretation and progress made in the community. Here, we continued to be limited by very inflexible legislation. We had an absolutely astounding interpretation by the Supreme Court in the Tervita Corporation decision. With all due respect to the Supreme Court, what it did is incomprehensible. We went even further in the wrong direction. Now, it is being abolished.
I think we should leave it to the competition bureau to do what it wants with those arguments. In any event, those arguments are going to be made in every case. The bureau has to take them into consideration.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Is my interpretation correct? I am not a lawyer, but I have worked with people in the field of economics and competition in the private sector. I have the impression that there are so many constraints, so many loopholes in the act, that a company with deep pockets to defend itself will ultimately always be able to get around the act as it now stands.
That is the first part of my question. I will give you the rest of my time to answer my questions after.
The second part of my question relates to the 60% market share issue.
I asked Mr. Singh where he came up with the 60% figure. He answered that he had looked at regimes around the world. When asked which ones, he did not know. Ultimately, we see that there are really no 60% cases, 60% is an arbitrary percentage, and ultimately it is better to be consequentialist and try to look at what the effect of a merger would be on the price to consumers: how the efficiency gains would be redistributed.
I have the impression that this is still adding constraints that may again be going to further complicate the regulator's job. Am I right about that?
Professor, Law and Innovation, Faculty of Law, Université de Montréal, As an Individual
Yes, I would tend to say you are right.
On the first question regarding the behaviour of the corporations, we have to understand that corporations do what they have to do. They have legislation. They hire lawyers and consultants, and they make arguments. The more legislation there is, the more arguments there will be. Especially when it is in the law, judges feel they are able to interpret it. The end result is precisely judgments like Tervita Corporation.
When it is policies of the competition bureau or the authority in place, judges tend to show a certain restraint and give the bureau the benefit of the doubt. I think it is still a good idea to have a balanced law.
On the 60% figure, in the other territories, so that is the European Union and the United States, on the issue of controlling concentrations, they start with tests based on the Herfindahl-Hirschman index, or HHI: all of the concentration indices we have at present or we will have if Bill C‑59 is passed. Market share does not play an enormous role because it is not a very good indicator.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
From what I understand, in the case of the Herfindahl-Hirschman index or other things of that nature, there can be two different distributions of market share that give the same index, for example. Ultimately, reducing it all to market share virtually prevents the work of the competition commissioner from doing its job, because it reduces the commissioner's tools to just one: a threshold.
Professor, Law and Innovation, Faculty of Law, Université de Montréal, As an Individual
Yes, that's correct.
The HHI takes into account not only the biggest one's market share, but also the way that all the other actors are positioned in the market. Take the example of a concentration where one actor has 30% of the market but two other actors have 30% of the market, as a counterweight. It is not the same thing as if you have one actor that has 30% of the market and all there is after that—
Bloc
Professor, Law and Innovation, Faculty of Law, Université de Montréal, As an Individual
That's right. The HHI captures that, and it is the tool that all the authorities use.
Liberal
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Thank you to the witnesses for being here.
I notice a difference in tone from my Conservative colleagues. It must be the early morning caffeine injection they had during the previous witness' testimony.
NDP
Brian Masse NDP Windsor West, ON
I'm glad we are talking about this issue here and appreciate the fact that there have been some changes to the Competition Act over the years. The efficiencies exemption is one that I've been after for a long, long time, and there are others.
We're here, and I think this context is important. I'll ask this question across the board here, maybe starting with Mr. Boswell.
It is correct that this is a very difficult process bringing a private member's bill through. It is one of the tools that's available to us as members of Parliament. As well, we've recently seen that the government did act on changing some legislation, not to the full extent, but here we are with some pros and cons in some of this bill here.
Essentially, the options in front of us right now are either to amend the bill in different aspects and carry on with the work, where there's some good, strong consensus on items, or, alternatively.... Quite frankly, with the date and the things we're looking at, we're probably not going to see other types of changes in the Competition Act for another two to three years. I can't predict the future, but I just don't see that happening given that we have a Parliament whose time frame is winding down right now, given the fact that there will be another electoral call and the fact this committee would have to take this up again.
I'm pleased to hear the competition commissioner's comments about productivity and efficiencies related to regulatory issues—and that's probably a study we could even look at doing—but the chances of our getting to all those things is very, very reduced.
With all that in mind, I'll start with you, Commissioner.
What do we do at this point? Do we look at amending the bill to give extra tools and strengthen competition in Canada right now and work with what we have, or do we wait the time frame that it's going to be and hope, at a bare minimum, that we deal with this years later? That's really kind of where we're at now.
We have the other private member's bill in the Senate, which is great. We don't know what that's going to be, but these are the practical steps that are in front of us to choose from, and those are the paths that we have available to us.
Again, I do take the point that it would be better if a better process were there. While our democracy is one that may fail us in many respects, I still don't know a better process. The alternatives that other places in this world have are not better.
Mr. Boswell, please go ahead, and then we'll go across the witnesses. Please take the time you need. I think we have about four minutes to go.
Commissioner of Competition, Competition Bureau Canada
Thank you for that very pragmatic question. I was hoping to have an opportunity to address that head on.
From the Competition Bureau's perspective, as I said in my opening comments, we're really pleased with the attention that's been paid to competition in this private member's bill, and other private member's and government bills to amend the law. I agree with Professor Larouche. It was probably too complex out of the gates in 1986, when it was, some say, drafted by the business community.
In terms of this bill, from the Competition Bureau perspective, I would say that we don't need to address clauses 2, 3, 5, 6, 7, 8, 9, 10 and 11. Clause 4, which deals with the penalty provision for federal financial institutions, is great in terms of the 14 years, but it should be a fine at the discretion of the court—not a maximum fine, the $25 million that it has now.
On clause 12, the bureau believes—and we put this in our recommendations to ISED—that a three-year limitation period for notifiable transactions is a good step forward. Right now, it's only one year. With our colleagues in the United States, there's no limitation period on reviewing mergers.
Finally, with respect to the costs award, that has been addressed in Bill C-59, but I would just point out that in our submission to ISED, we talked about full immunization. Bill C-59 is a pretty reasonable balance so, one way or the other, we're pretty happy with how that comes out. Really, quite strongly, we don't believe that we need those other clauses. They've been addressed in Bill C-19, Bill C-56, and hopefully soon in Bill C-59, but this has been a valuable contribution to the debate and the marketplace of ideas.
NDP
Brian Masse NDP Windsor West, ON
In summary, we should just carry on our work while looking at all the things you've had there.
Commissioner of Competition, Competition Bureau Canada
Yes. You can go ahead with a few sections, and the rest has been addressed adequately in other bills.
Professor, Law and Innovation, Faculty of Law, Université de Montréal, As an Individual
I mentioned earlier, I think that many clauses are addressed already. From those that were left and that were discussed earlier, I think clause 3 is a good idea, but I would venture that it's going to run into trouble before the courts. The merger thresholds, clauses 8 and 9, are, to me, not a good idea for the reasons I explained earlier.
Secretary, Competition Law and Foreign Investment Review Section, The Canadian Bar Association
The only thing I would point out, as you noted, is that the efficiencies defence has already been abolished. With respect, that is actually the current law of the land.
The key, though, is there's a lacuna in that. In abolishing the efficiencies defence, efficiencies were not added as a factor that the commissioner of the Competition Tribunal can consider in the context of a proposed merger or a civil competitor collaboration. I would characterize that as an oversight, because antitrust laws globally do see efficiencies as a factor that can be considered when assessing competitive effects.
As a result of that, then, efficiency should be built into sections 93 and 90.1(2) of the Competition Act.
Commissioner of Competition, Competition Bureau Canada
Respectfully, I don't agree with Mr. Di Domenico, who is a friend.
I believe that it's been made very clear with the repeal of the efficiencies defence in the merger provisions and in the competitor collaborations. We still have a section that says “any other factor that is relevant to competition”.
Minister Champagne has said that this “any other factor” could be efficiencies that are pro-consumer.
Commissioner of Competition, Competition Bureau Canada
We can look at it. We will look at it. We're not turning a blind eye to it.
We do not need to reintroduce this complicated offsetting and outweigh test that existed in the old version. It's going to complicate things and stick us in the old version where there's a notion that if you have these efficiencies and the merger harms consumers, it could still go ahead.
I'd say leave it out entirely. We will consider it under the “any other factor” provision that's in the act.
Brian Masse NDP Windsor West, ON
Okay. We can follow up on this as well.
I guess the point I'm trying to make here is that things moved on as the bill was crafted and created, and that's normal in terms of processes here. It's the same with my position on the tribunal. Going through Bill C-27, I've kept myself open to creating a tribunal for part of it, but from the evidence that's been presented—and we around this table have never really dealt with tribunals before—I've come to some conclusions that give me great concern. Therefore, we left the door open for an amendment to the tribunal, but not to get rid of it. I mean, we could even get rid of the tribunal here, if this body actually chose to do so.
At any rate, that's kind of where we're at. We're in a work-in-progress environment here. I hope we can actually kind of continue to add on while we have the opportunity.
Liberal
The Chair Liberal Joël Lightbound
Thank you, Mr. Masse.
Mr. Généreux, the floor is yours for five minutes.