Evidence of meeting #129 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.
12:50 p.m.
Conservative
The Vice-Chair Conservative Rick Perkins
Thank you very much.
Monsieur Garon, you have two and a half minutes.
12:50 p.m.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Thank you, Mr. Chair.
Professor Ross, you are one of Canada's leading specialists in industrial organization, in the economics of competition. In this respect, I think Parliament may need your expertise.
In the House of Commons, some of our colleagues are advocating two important policies to improve grocery affordability.
First, they're suggesting that the government set prices for certain grocery goods. This is an NDP proposal.
There is also a proposal to impose a special tax on the “excessive profits” of large grocers, saying that this will improve the situation for consumers.
I'd like your professional opinion on these two proposals.
12:50 p.m.
Prof. Thomas Ross
I'm not someone who's generally in favour of the invasive regulation of particular sectors. There are cases where we might need regulatory oversight, like if we're allocating spectrum, but for most industries, I prefer to let competition policy do the work.
We need more information about the status of challenges in, say, the grocery sector. It's received a lot of attention because prices absolutely went up. There are a lot of reasons for that, and competition—or a lack of it—is only one proposed explanation out of many. Maybe it has a part to play, but we don't know how big a part.
12:50 p.m.
Bloc
Jean-Denis Garon Bloc Mirabel, QC
Thank you.
I'd like you to talk to us about the “excessive profit” tax on large grocery chains.
12:50 p.m.
Prof. Thomas Ross
I don't like excessive profits taxes. They just discourage investment.
If there is a problem such that grocers are making exorbitant profits, we need to look for a market solution to that. Hopefully, it will attract entry, for example, and that may happen, but I don't like the idea of special taxes for select industries.
12:50 p.m.
Conservative
12:50 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you.
I haven't had a chance to get Professor Iacobucci and Professor Quaid in, so I want to take the opportunity to have them reflect on European law. A good example is the U.K., which just extended their windfall taxes on oil and gas. As Mr. Ross mentioned, that's one strategy out there.
All we have available to us as a tool, and what Mr. Singh had available to him, is a private member's bill, which was eclipsed by other stuff. We can either choose to make some improvements or ignore it altogether and wait for probably another three years to do anything.
Where do we fit in now that we've had Bill C-19, Bill C-56, Bill C-59 and Bill C-352, whatever we choose to do with it, compared to our American and European colleagues, in your opinion, as it pertains to competition protection for Canadians? I'd really appreciate your input and analysis. I know it's pretty hard to do, but just give us a snapshot of where we are.
I understand you're advocating—and so am I—for a larger picture, but this is what we have in front of us, and we have it for a lot of different reasons. It's part of our democratic process until we get a government that wants to do a full review.
12:55 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
I'll go first.
I want to stress that I hope I'm not coming across as negative. I saw the opportunity for a deep dive on reform and I am expressing my disappointment, but it doesn't mean that we haven't done important things and that this has been a waste of time. I wouldn't want you to be left with that sense, MP Masse. Also, the combination of the bills together, I understand, is within the reach of what you could do.
My sense is that in some ways we are trying to align the way Canada approaches things with our main comparator jurisdictions—the United States, the EU, Australia and the U.K. However, one thing we always have to keep in mind is that at the end of the day, it's very difficult to compare jurisdictions based only on their rules. We've now done a lot of work trying to change the structural rules where we thought those were a barrier or where the commissioner felt they were a barrier, and I think a lot of those changes are good. We can debate the details at another time.
The bigger question is going to be about enforcement and the overall approach to how it's implemented. The thing we are probably still missing is more resources and perhaps a rethink of the institutional approach, so I'm not sure we're totally on a par with our peer jurisdictions in that regard. However, we are certainly moving to align our rules in a way that is compatible, at least, based on what other jurisdictions are doing. There is never going to be perfect symmetry because we have constitutional, political and other realities that influence how our law is designed.
12:55 p.m.
Conservative
The Vice-Chair Conservative Rick Perkins
Thank you, Mr. Masse.
We have a few minutes left. We have one item of business at the end, but I know that MP Badawey is chomping at the bit to ask a few questions, with the indulgence of everyone.
As it's an open round, you're the only one who hasn't had a chance, so go ahead.
12:55 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Mr. Chair.
I want to concentrate my questions on performers and performance with respect to what was mentioned earlier about the all-of-government approach. Simply put, it really drills down on the provincial trade barriers and supply management. Performance adjudication would be a part of that, as well as parallel behaviours. Again, that's drilling down on how performers are undermining the act.
When we look at mergers and acquisitions and their impact on consumers and labour, the fewer performers that are part of supply management, the more impact there is on consumers and labour. Of course, ultimately there are remedies to encourage more competition and lessen labour impacts.
I'm going to drill down on the grocery sector. When we look at it, we recognize that prices increased minimally over the years until there were fewer performers. That was based on the incentivization by manufacturers and wholesalers to shrink the distribution market. I'll give you an example, and I'll be blunt. When you look at manufacturers like the Cargills of the world, Kraft and all the big names, they imposed minimums on many retailers and mom-and-pop businesses. That left maybe two or three distributors—the GFSs and Syscos of the world—and therefore the inability to have more performers. What have we seen in the last 10 years? Prices have spiked.
To the Conservatives and all those who are giving an analysis on why grocery prices are going up, I've been in the grocery business for the better part of my life, over 40 years. I can say that this is what I saw on the ground while I was trying to meet payroll, while I was trying to meet supplier demands, while I was trying to ensure that my suppliers got taken care of when bills came due.
That said, Mr. Bester, I would like your opinion on how that has rolled out over the years and how it can fit into this legislation to ensure that consumers are being looked after with fewer labour impacts.
June 10th, 2024 / 12:55 p.m.
Executive Director, Canadian Anti-Monopoly Project
You make a phenomenally important point that's been missed from the discussion over the past couple of years. It's that the issues with food system consolidation and concentration are not just at the retail level, but at the distribution and wholesale levels, with all processors and input providers. You mentioned Cargill, both at the level of providing inputs to primary producers and also as a dominant processor in the beef space in Canada.
What I'm encouraged by is the market study power from Bill C-352, brought in through Bill C-56. We need to go further up that chain and understand beyond what the consumer sees. We have had—and I use the term “concentration begetting concentration”—a process over many years that would be very difficult to unwind. However, the first step is a stronger approach to competition and understanding that consolidation is costing us today not just at the grocery store shelf, but all the way up the chain.
1 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Mr. Bester, when we look at those drivers and the mom-and-pop operations we see in communities, or that we used to see in communities, whether it's a corner store, hardware store, grocery store or furniture store, the lack of buying power that some of the smaller operations have creates an inability to have the margin grow, to have more employees, to be competitive and to stay alive and be around, quite frankly.
That's what we're seeing in communities now. The bigger players, like Walmart, have the buying power to make the margin because of the volumes they're purchasing at any given time for any given product. Second to that, they're still making the margin they expect, whereas the smaller operations, the ones that people used to have the choice to shop at, are not. Their margins shrink. They have to second-guess whether they'll be around tomorrow.
Again, how do you see that being looked after in any legislation we're contemplating right now?
1 p.m.
Executive Director, Canadian Anti-Monopoly Project
It's a very difficult topic. It's a very difficult task. I often say that consolidation is a one-way street. It makes the challenge, once the market is concentrated, that much higher. I've written about it in the past. I'd be happy to share that.
It's about the concept of fair competition and moving away from competition based on the exercise of power—you referenced the buying power—and instead to the offering of a superior product. I don't have an easy answer, but fair competition is at the heart of it.
1 p.m.
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you. This is my last point.
Frankly, what this drills down to is the ability for us to balance the playing field and ensure that the impact on these businesses, as well as the people they're supporting, is such that they don't drop by the wayside over time and we don't have basically one option for the consumer. Partly, it's the consumer who will drive that agenda, but ensuring that they have the choice is something this legislation has to look at in the future. Then we won't necessarily see the mergers and acquisitions from the top end, but from the bottom end, which is sometimes hidden, as the “performance” to the “performers”. That is exactly what some of the bigger players are imposing on the consumer, ultimately. It's about buying power and the minimums that have to be established. Those who can't meet the buying power minimum fall by the wayside. Then there are fewer options for the consumer and there are impacts on the labour market.
1 p.m.
Conservative
The Vice-Chair Conservative Rick Perkins
Thank you, MP Badawey.
I want to thank the expert panel of witnesses. I had one question, but I've pushed it long enough. Maybe I can talk to you off-line about it before we go.
If the committee wants to begin clause-by-clause on this bill next week, we need to set a deadline for submitting amendments. From talking with the clerk, we can make it noon on Thursday so we can start, if that's okay with the committee.
1:05 p.m.
Conservative
The Vice-Chair Conservative Rick Perkins
Great.
Thank you very much, everyone. This was a fascinating meeting with a great panel. I really appreciate that. I'm sure we'll be seeing more of you in the future.
The meeting is adjourned.
