Industry Committee on June 3rd, 2024

[Dr. Pierre Larouche]

On clauses 8 and 9, I would think that what is now in Bill C-59 with the HHI is good. That's more in line with worldwide standards than market share thresholds, for sure.

As far as clause 3 is concerned, to me, the underlying problem is this need to always choose between sections 45 and 90.1 as a vehicle. That will not be changed. Then it would be a good idea to put some serious sanctions in clause 3 as well, but it will run into problems before the courts, because these are criminal provisions.

If you want to have a level of sanction that matches what is done elsewhere, it should be around 10% as a theoretical maximum. Typically, the authority will go around 4% or 5% of turnover at the level where the profits should be. That's the practice. That would mean, in Canada, if you go by a factor of one to 10 with the EU or the U.S., we would be playing in the $100 million range.

[The Chair, Liberal, Joël Lightbound]

Mr. Van Bynen, that is all the time you have.

Mr. Garon, the floor is now yours for two and a half minutes.

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

Thank you, Mr. Chair.

I was not expecting to talk about this, but since Mr. Williams has addressed the subject, I have a question for the commissioner, Mr. Boswell, whom I also want to welcome.

There are three large airports in the Montreal region: one in Saint-Hubert, one in Dorval, and one in Mirabel. One airport authority administers two of those airports, with the result that it has virtually shut one down to travel for the general public, for commercial flights.

This scheme seems to me to have been designed by the federal government to be anti-competitive and to generate anti-competitive behaviour on the part of Aéroports de Montréal.

Is that one of the subjects that interests you, now that you have new investigative powers?

[Matthew Boswell]

Thank you for the question. I apologize for answering in English

I think we are going to be looking at a broad array of issues in this market study. We have the draft terms of reference out now and hope to have those finalized later in June or July. Right now in the draft, we talk about looking at airport governance as it impacts competition and we'll see if that becomes part of the final terms of reference.

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

In the private sector, would it be tolerated, for example, for one company to buy another, acquire virtually all its market share, and shut down its business activities?

In a field like aviation, would that kind of practice be tolerated if the sector is having capacity problems?

[Matthew Boswell]

It's difficult to speculate on hypotheticals on the fly—

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

Have a bit of fun.

[Matthew Boswell]

—so I will refrain from the temptation to give you an answer.

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

Thank you.

Professor Larouche, you talked about regulatory constraints that are constraints on competition in themselves. Having worked in Europe, a region that is quite well known for having a fairly substantial regulatory framework, how much do you think we have to do if we want to start working on having more regulatory flexibility?

Where should we start, and how?

[Dr. Pierre Larouche]

That is a big question.

[The Chair, Liberal, Joël Lightbound]

You have 12 seconds left.

[Dr. Pierre Larouche]

I think Mr. Boswell is entirely correct when he talks about the horizontal or transversal approach. There is a huge amount of work to do. The investigative procedure that will be applied for the first time in the airline services industry in Canada should also, if it is used as in the United Kingdom, for example, allow the competition bureau to propose specific recommendations about the regulatory amendments to be made. That is a transversal approach. The competition authority can also point out problems in other sectors.

Apart from all that, a change of mentality is under way. I came back to Canada seven years ago, and I think things are quiet in Canada; the markets are lazy. Take the example of grocery stores, which has been discussed today. We are seeing surprising things there. First, the margins are high. Here, we think a 5% margin is not much. In reality, they are about 2% in the United States and 1% in Europe. So the margin achieved in Canada is very high.

In addition, the major actors here practise identical policies. They all have supermarkets that look like one another. If people complain about prices being too high, they open supermarkets where the range is expanded, with Maxi and Super C, for example. In the United States and Europe, business models are much more diversified.

There are entrants. Whole Foods may position itself in the high-end market. From time to time it will engage in a price war. At the low end, there will be a supermarket with lower prices that will from time to time say it too offers quality. So each supermarket has its own business model and they attack each other.

In these markets, a situation has to be created in which the companies are afraid of what the others are going to do, rather than a situation in which the companies can easily predict what the others are going to do, as is the case here today.

[The Chair, Liberal, Joël Lightbound]

Thank you. That is very interesting.

Mr. Masse, you have two minutes and a half, but if you can use less than that I would be grateful.

[Brian Masse, NDP, Windsor West, ON]

I will, Mr. Chair, so I'll let our guests go as well.

However, I do want to make sure I get on the record something about the 60%. This committee did deal with a situation that had a 60% threshold and it was Superior Propane. They used the efficiencies defence and this had an effect on rural communities in particular.

In this committee I think we would even have a recommendation or work on this in the past with regard to Superior Propane, as it was a significant issue that we dealt with in the study of this before.

Thank you, Mr. Chair, and I'll let everybody get their extra two minutes now.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Masse.

Thanks to the witnesses for participating in this exercise.

(Meeting adjourned.)