Industry Committee on June 10th, 2024

[Keldon Bester]

That's a good question.

With Bill C-56, we argued for the commissioner's independent authority to pursue market studies. I think this airline market study will be a good first test of that independence.

Bill C-56 was amended to allow the bureau a freer hand. We do have a balance between the elected officials' oversight of the Competition Bureau and the independence of the commissioner. Focusing on the independence of the commissioner is important, and the airline market study is a first test of that.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Mr. Ross, I want to get your insight. This is a little different from what we're looking at, but it's going to be the future of the Competition Bureau.

I'm looking at global mergers and the interconnectedness of markets. That's about how we're looking at tech giants and the emergence of them, pharmaceutical companies, automotive, finance and retail. In the future, depending on how the world economy goes, we'll probably have to look at how global mergers are happening and how we're handling them not only through our own Competition Act, but in working with other jurisdictions.

Given that this is probably going to come up later, how do we ensure that the Competition Act is adapted to address cross-border anti-competitive practices to ensure coordination with international regulatory bodies?

[Prof. Thomas Ross]

That is a very important question and has been probably for a few decades. People have recognized that international mergers pose significant challenges for domestic competition authorities, particularly in smaller jurisdictions. If you're the United States or Europe, you may have enough clout to deal with the mergers as you wish. For a smaller authority, such as the Canadian Competition Bureau, you have to co-operate.

I'm no expert on the mechanisms of co-operation. I know it's in the legislation that they are allowed to co-operate, but there are sometimes limits put on the degree to which they can co-operate and share information. Obviously, it's more sensitive in criminal matters than it would be in merger reviews. I can tell you that all international agencies that I know of are very seized with the need to coordinate.

One of the reasons the commissioner wanted some changes to our merger review was to put our system more in line with the Americans so that we weren't passing on mergers that the Americans were going to block. Sometimes you might like to free-ride on the others, but you want your own voice in these fights. I think we need to worry about that.

[The Vice-Chair, Conservative, Rick Perkins]

MP Williams, I think Professor Iacobucci has a comment on this.

[Edward Iacobucci]

I think that's a great question, so I just wanted to throw in my two cents.

There are some matters where co-operation might help. There are other issues for which, to me, there is a key question when you think about global economic activity: Are there jurisdiction-specific remedies that can be ordered? Europe takes its own approach to abuse. It tends to be much more aggressive than Canada. It imposes multi-billion euro fines that are paid to Europe. That doesn't interfere with what they're doing elsewhere. Similarly with mergers, sometimes there's a local divestiture. If one country objects and another country doesn't, maybe you can order a divestiture in the local country and, as it's perceived, that will take care of the competition problem in that country.

You've identified a critical problem, and I don't know that it has an easy solution or any solution. It's a global merger that has an impact across the globe that can't have a jurisdiction-specific remedy. That's a real problem. You can co-operate, but what happens if Europe and the U.S. disagree, as they do frequently? All it takes is one person to say “no merger” and the merger can't go ahead.

I think you've identified a really important problem. It's nuanced, depending on context.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Ms. Quaid, from a legal perspective, a remedy might be formal agreements, say, with the FTC and the EU when it comes to this. For that, do we need to look at provisions that consider the global impact of mergers and anti-competitive practices as a global phenomenon? We know we have to look at the act as a whole. Without getting into all the details, is this recommendation needed when we revamp the whole act?

[Dr. Jennifer Quaid]

I completely agree with Professor Iacobucci and Professor Ross that this is an important area and that, increasingly, when we consider the size of certain global firms and combinations of firms, there is going to be a global dimension and you have to be able to deal with that.

I don't know that I have a magic solution to propose except to say that the Competition Bureau does co-operate and regularly collaborate. Over and above individual cases, they are part of the International Competition Network. They collaborate via the OECD and other mechanisms. There's a compendium of authorities that recently published two reports—I don't think there's a third one—on the realities of digital markets and they compare practices. It's not just investigation-specific. It's also the larger conversation about where the problems are and what techniques we can use, because that may prevent up front some of the alignment problems that occur later.

I totally understand where Professor Iacobucci is coming from. The challenge is that every country will have things that it's particularly fussy about. One of the reasons you have to have your own domestic policy—and I think Professor Ross is right on this—is that you do need to identify up front what things you can't give up. What things are so important to us as a nation that, even if others say they're okay with these things, we're going to stand up for them? I can't make that list for you, but it is an important thing to keep in mind to ask. When we object to mergers, what things are we paying attention to? That might be specific.

In terms of tools, you have structural remedies and behavioural remedies. There are risks with behavioural remedies, because you have to keep tabs on them. I would say the complement to this—and I'll stop on that—is that you have to make sure your bureau is well resourced and has a strong, independent mandate.

To chime in on the question that I didn't get to answer, I believe that an increased separation of the bureau from ISED would be a very positive step. I do not like political interference in competition enforcement as a general rule.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you very much.

MP Williams, that's the end of your round.

For the next round, we'll go to MP Bradford for five minutes.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you, Mr. Chair.

Thank you to the witnesses. It's been a fascinating discussion.

I am a guest here today, so I'm going to take the perspective of the consumer. Since we're looking at protecting the consumer from higher prices, that might be okay.

I'll address this to Mr. Hatfield. In your opinion, to what extent would Bill C-352 address costs and consumer choice, particularly in grocery stores?

Go ahead, Mr. Bester.

[Keldon Bester]

Is this for Mr. Hatfield or me?

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

I'm sorry; I want to hear from both of you, so I don't care who goes first.

It would be interesting to hear perspectives from both of you.

[Keldon Bester]

The big piece of Bill C-352's contribution is on the defensive side, which is still important. When we look over the past 20 or 30 years, there has been a steady consolidation of the grocery industry, particularly in more remote communities.

Merger enforcement, for better or for worse, really is about a strong defence. The question that Bill C-352 answers is whether we are going to stop this march of consolidation. The answer to that is yes, in this bill. The question then is how we spur more competition and more expansion, potentially through the things we're seeing in, as I mentioned before, the property controls investigation and through unlocking competition from the existing market.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Before I turn to Mr. Hatfield, I have a second question for you. What measures or amendments could be proposed to better meet the needs of the people living in Canada?

[Keldon Bester]

I'll return to my opening statement. The focus we should shift to now, and it's possibly bigger than this conversation, is making the mechanics of competition law work faster, more efficiently and more transparently. Improving the information-gathering powers of the Competition Bureau and changing the transparency requirements could speed up the process of resolving competition issues in one way or another. Maybe we find there's not an issue, but still we find it faster. Then we can give Canadians more confidence because they have a better understanding of what's going on and what the government is doing for them.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Mr. Hatfield, I'll go back to you. In your opinion, to what extent would Bill C-352 address costs and consumer choice, particularly in grocery stores?

[Matthew Hatfield]

Properly speaking, our mandate is telecom and the Internet. We've sometimes been dragged into commenting on groceries because it's so obvious to us in our communities that many of the issues are shared across both.

I don't want to overstep my expertise on this, but in addition to strengthening the bureau's hand in dealing with mergers in general, I think the market study power is important for looking at what's going on with groceries. We can't be sitting here three or four years from now being unsure about what component of price is due to consolidation. We need some hard study of this issue.

To return to the remarks Mr. Bester made, we need an effective timeline for it. As we've seen at the CRTC, studies or decisions that are delayed indefinitely often amount to not dealing with the problem at all. We can't be waiting five years for these kinds of studies. They need to happen within a year or two.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Mr. Bester, MP Vis was addressing some questions to Professor Ross with respect to the study that came out about how the lack of competition is getting worse and worse. Have similar trends been observed in other countries over that same period, from 2000 to 2020? If not, what has been done in these countries to maintain or increase their level of competitive intensity? Are we the only ones experiencing this?

[Keldon Bester]

Many countries are going through a process of looking back at the past 10 or 20 years, and even further back, and unfortunately they're finding general decreases in competitive dynamism and competitive intensity, with a big focus on digital markets that have been dominated by one or two players. Increasingly, they're based on cost of living issues.

Canada is in good company in struggling with this issue. Many countries are looking to their competition law to reverse that decline, whether through more aggressive enforcement or new laws and legislation. We're not alone.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Chair, do I have any time left?

[The Vice-Chair, Conservative, Rick Perkins]

You have 30 seconds, give or take.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

You may have addressed this, Professor Iacobucci, in your opening statement. I'm wondering to what extent the amendments brought forward by Bill C-56 address the proposed amendments in Bill C-352.

[Edward Iacobucci]

There's overlap, but I'd have to go back and cross-reference. One of the challenges I find with this process is that it has come in iterations.

As to what's in Bill C-56 versus Bill C-59 versus Bill C-19 versus Bill C-352, I'd have to take a moment to respond to you on that. I'll just wait and pass.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Okay. If you have a chance to review that and can submit it to the clerk later in writing, that would be very helpful.

[Edward Iacobucci]

Sure.

[Valerie Bradford, Liberal, Kitchener South—Hespeler, ON]

Thank you.