Industry Committee on June 3rd, 2024

[Anthony Durocher]

You're absolutely right. Our report stated that margins increased by 1% to 2%, which is modest but meaningful, in the sense that it impacts...and underscores the fact that we need more competition in the sector.

We did not do a deep dive exploring all of the ways that prices have gone up. There are a number of factors that came into play in the inflationary environment. There have been supply disruptions. However, we did not do a deep dive into all of the issues. We concentrated on examining competition because that's where our expertise lies.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Has the Competition Bureau looked at food production in Canada as a key variable in the cost of food and the competition for products. I come from the part of Canada where we have the highest farm-gate sales in the country, and that's largely due to the supply-managed industries, but we're also the key producer of raspberries, blueberries, strawberries, amongst other products that Canadians use.

What impact does our current capacity to grow food have on what Canadians are paying at the grocery store?

[Anthony Durocher]

In our work, particularly in merger control, there are a number of cases where the bureau has acted to protect competition, be it to make sure that farmers are protected in terms of either the price they pay for fertilizer or their ability to sell grain. There are a number of examples in that regard to make sure that the food supply chain is as competitive as it can be.

Within the context of our market study, we did not do a granular—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Well, let's just touch touch base on that for a second, though—the supply chain. I also have the CN and CP rail lines going directly through my riding in the Fraser Canyon. Have we invested enough in critical infrastructure to allow for cheaper costs for the flow of goods in Canada? Do we do a good enough job of allowing farmers to get their products to market in Canada?

[Anthony Durocher]

If we look at rail competition, for example, we see that is critical for farmers and food producers to get their goods to market. That is a regulated space. We made recommendations in 2015 in the context of the Canada Transportation Act review for how to ensure that the rail system is as competitive as it can be.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Is it competitive enough?

[Anthony Durocher]

I think our mantra at the Competition Bureau is that Canada needs more competition. I think we can point to a number of sectors where we need more competition in this country, and as—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

That would be a no.

[Anthony Durocher]

I can't opine on any specific—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Okay, then, I have one other point with my limited time.

On the cost of labelling, I have a one-and-a-half-year-old daughter, and the cost of formula at Costco is through the roof. It's a real expense for young mothers. The number one thing we're being told at Costco is that it's due to labelling issues. We face the same thing with children's Tylenol. What can we do to make labelling cheaper? How can we reduce red tape, so mothers can get the formula they need quickly?

[Anthony Durocher]

We're constantly advocating for ways to lessen barriers to entry and expansion.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

What key recommendation can you provide—

[The Chair, Liberal, Joël Lightbound]

Mr. Vis, that is unfortunately all the time you have.

Thank you, Mr. Durocher.

Mr. Arya, the floor is yours.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Chair.

First, we have to recognize that Canada, by population, is small at 40 million; geographically, we are very big.

Our southern neighbour has a big population, big economy, etc., so we are in some sort of a special situation when it comes to allowing, or not allowing, companies to scale up and serve Canadians across this vast country.

Professor Larouche, I'm glad to hear your comments on the length and complexity that is there. The only people who benefit from the complexity are the lawyers, and it just adds to the cost of administering the competition laws in the public sector and in dealing with these big companies.

You also mentioned the institutional framework. I have so many bills regarding this particular issue. Are you suggesting that maybe we should have a totally new bill starting from scratch? It's not as if that were possible, but I'm just saying so.

[Dr. Pierre Larouche]

If you ask me as an academic, yes, I would redraft the bill from scratch and make it way simpler. I think the commissioner explained it very well. All the modifications that are on the table do some good, but they also make the law more complex and heavier.

The context is the same everywhere. When the stakes in this litigation get in the $100 million range, or in the billion-range in Europe—I've been in practice—it's very great. You have an open bar. You can bill as much as you want, because everything will be challenged and every little piece of text will be taken apart. I've seen it done everywhere. I think the better approach for me is to keep the law general, let the authority do the job, hammer the authority on the work it did and spend time controlling that work.

[Chandra Arya, Liberal, Nepean, ON]

I agree with that approach of keeping the law and the legislation passed through Parliament as nimble as possible, and delegating the authority for the regulation. That can be flexible, depending on the market needs or the changing circumstances.

We are politicians. As political parties, we have to show people that we are working hard for them. Anyway, that is a different thing for a different time.

On the market share, again, I agree with you on keeping up the right number of 30%, 50% or 60%, without recognizing whether it was a vertical merger or a lateral merger, or the nature of the industry and the sector, etc.

Is there anything on the market share that other countries are are doing better and we can adopt?

[Dr. Pierre Larouche]

First of all, earlier, Mr. Singh mentioned 60% as a European figure. I don't think so. I think in Europe, the threshold for a firm to be found dominant is around 50%. In the U.S., it's around 60%,. However, this is a different question. It's not about merger control.

What is now in Bill C-59.... Again, we can argue whether it should be in Bill C-59 or in guidelines, but the HHI approach is in line with what is being done in the U.S. and in Europe. The thresholds are not quite the same, but they're typically a good way to get into a case and spot the cases that deserve some closer attention from those you can just let go to focus your resources elsewhere.

[Chandra Arya, Liberal, Nepean, ON]

Thank you.

I know you have ideas. If there are more ideas, you can give them in writing to the committee so that we can consider them when we prepare our report.

Mr. Boswell, you mentioned the regulations and policies with different levels of government. If we work together with one, single approach and some objectives, we can benefit.

Are there any examples you would like to give of that?

[Matthew Boswell]

There are many examples.

Let me just back up to say that Canada has been dropping like a stone over the last several decades in terms of regulatory barriers to competition throughout our economy. The OECD does a report on what it calls product market regulatory indicators. In the last report, which came out in 2018, Canada was second-last among OECD countries for regulatory barriers that hinder competition.

They are everywhere. They are at all levels of government—

[Chandra Arya, Liberal, Nepean, ON]

I'm sure.

You and I agree that there are problems. My question is if you can share an example of what we can do and how that can change things for the better.

[Matthew Boswell]

Absolutely. There's interprovincial trade. If we were to eliminate the barriers to interprovincial trade in this country, we would immediately see a significant increase in our GDP. Most notably, it would benefit the poorest provinces the most. There's a great example.

Foreign restrictions on investment also hinder competition in the country, and they are in many different sectors. You can go down, which is why we talk about all levels of government attacking this problem, and it is urgent. We need to attack this if we want our productivity to get back on track and to remain a G7 country.

Go down to the municipal level. There are restrictions on where food trucks can park relative to restaurants—

[Chandra Arya, Liberal, Nepean, ON]

When it comes to interprovincial trade, we have signed free trade agreements with over 51 countries, covering most things, but we don't have free trade within Canada. If you talk to any federal politician, everybody will say we have to work on free interprovincial trade, but nobody bells the cat.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Arya.

That's all the time you have.

Mr. Garon, you have six minutes.

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

Thank you, Mr. Chair.

First, welcome to all of you. It is kind of you to be here today with us.

I want to come back to your testimony, Professor Larouche. We are studying bills here whose purpose is to improve the competition regime, such as Bills C‑56 and C‑59. As you said, there are always additions that seem to have a lot of merit, but they are always minor additions.

What I understand from your testimony is that there are two ways of reforming the Competition Act. The first would be to establish a very clearly defined framework that would give the competition commissioner a lot of latitude, and the second would be to add interminable conditions, which would give the impression of action but would ultimately make the law so complicated it ceased to be functional.

Recently, I spoke with some people about the case of the United States in connection with the structural presumption question. They told me that in the United States there was a presumption in favour of consumers, and that in some cases the competition authorities did not necessarily have to justify their decision to the extent they have to do here in Canada. It would seem that this makes the regime more flexible and faster and reduces the volume of potential appeals, since it provides better protection for consumers. We know that consumers have very diffuse interests, while the interests of corporations, which have resources, are concentrated.

Could this presumption in favour of consumers be adopted into the Canadian competition regime?

[Dr. Pierre Larouche]

Yes, it could.

I would like this to be clear. What you are discussing in the bills and in this one are largely reforms that are going in the right direction. As you say, the work is being done piecemeal.

Take, for example, the well-known exception for efficiency gains, referred to as the “efficiency gains defence”, which has been abolished. It was created in 1980. In 1980, it came out of the legal literature. It was thought to be a good idea, and it was put into the legislation. It took 30 years, or even 40 years, to get rid of it. In the meantime, everywhere else, it was something that was in the authorities' guidelines. In the 1990s, the idea was added that actually it was all very well to have greater efficiency, but it also had to be proven that consumers would get something out of it at the end of the day.