Industry Committee on June 17th, 2024

[Ryan Turnbull, Liberal, Whitby, ON]

Maybe if I could clarify, it's not that market share wouldn't be taken into consideration upon merger review. It's just that we wouldn't be saying there's an outright ban on market share over 60% based on this.

We heard from witnesses, the lawyers, Mr. Iacobucci, and others, Ms. Quaid, and I think all spoke to this. They were unanimous when they were here. I don't think that there was one witness, as I recall, who was interested in seeing this particular amendment move forward.

Mr. Chhabra, was that your understanding?

[Samir Chhabra]

That is, indeed, our understanding as a department. It's probably worth pointing out that, in the last several weeks in deliberations of the House committee on finance as well as in the Senate committee, there have been a number of important changes undertaken to the Competition Act.

Bill C-59 at its outset proposed to enable the tribunal to take into account market share, which it was previously barred from doing. The House committee on finance took that a step further and introduced the structural presumptions approach that essentially reverses the burden of proof and puts it on the merging parties under certain conditions as they have been laid out.

This approach here would then, again, in a matter of weeks—and I believe C-59 is scheduled for third reading in the Senate today, so we can expect that it would move forward to become law shortly—introduce yet another change on top of that series of changes that have already taken place.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you, Chair.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Turnbull.

We now go to MP Williams.

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

Thank you, Mr. Chair.

While this looks good on paper, I do agree with our friend from the NDP on this. Based on some of the other testimony and the lack of some other testimony as well, looking at having a blanket clause and the problems it would have.... Look, we know that the problems in the past with Superior Propane and its merger led to a major monopoly in Canada, but if we look at the other provisions that we're eliminating, like the efficiencies defence, that was enough to take care of that sort of instance.

When we looked at this case, we asked some of our witnesses like Jennifer Quaid whether this would be another provision that would take care of the issue of major monopolies. The testimony that came back was pretty clearly saying that having that percentage would bring up some other problems.

We already have a 30% in law and raising it to 60%, given the fact that it will not alone ensure that we're taking care of the problem and some of the other things we're looking at with this bill and others, we will vote no to this, but it's not that we're not looking at the other clauses. There are going to be other things on that, but given the testimony that 60% was too high, we're going to be voting against it.

Thank you.

[The Vice-Chair, Conservative, Rick Perkins]

Mr. Garon.

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

Thank you, Mr. Chair.

In the same vein, we recognize that market shares are among the indicators that can and should be used by competition authorities, as are concentration indices. However, I am reminded of what has been clearly stated by the experts who have testified here. I'm thinking in particular of Mr. Edward Iacobucci, legal experts, as well as Mr. Thomas Ross, from the University of British Columbia, a highly recognized economist in the industrial economics of competition.

They began by pointing out that this made the framework too strict for the Competition Bureau, and that this could have counterproductive effects and prevent it from working.

On the other hand, there is the question of establishing a fixed threshold, say at 60%, which could lead to disputes about the threshold itself. For example, one could look at how a market is defined and try to determine whether or not one exceeds the threshold, rather than looking at the consequences of market shares.

In this context, I want to reiterate the fact that nobody likes monopolies and nobody likes to see companies with significant market power. However, the exceptions and pitfalls are enough for us to vote against this motion.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Garon.

MP Masse.

[Brian Masse, NDP, Windsor West, ON]

One thing that doesn't get enough attention—and I'll use a specific example—is the grocery store chains and their monopolization now of pharmacies and other convenience stores as well. Their market share dominance goes beyond the physical brand that you see when you pull into the parking lot directly. Indirectly, they have been purchasing and also moving their food products inside those different businesses, which is affecting consumers, so their market share dominance is actually larger than what it would seem. We still support this.

I heard the same arguments against the efficiencies defence, and we've been trying to get rid of that for decades.

As well, similar to what's going to happen for the NDP clause, we have to predict what's going to take place in the Senate as part of this and I would not want to do that.

Again, having a backstop is a backstop, it makes sense to actually do things that we can control. The next amendment will also face that type of challenge, but it's a challenge we should embrace rather than run from.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Masse.

Are there any more comments on NDP-2.

Seeing none, are we ready for the vote?

(Amendment negatived: nays 9; yeas 1 [See Minutes of Proceedings])

(Clause 9 negatived: nays 9; yeas 1)

(On clause 10)

Thank you.

We're moving on to clause 10 and NDP-3.

MP Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

This is similar to the previous one, so I'm not going to belabour the point.

This makes it clear that we will actually take care of it here as opposed to predicting what will take place in the Senate. That's why we're in favour of this, but we don't have to rehash the arguments unless there's a willingness to do so.

[The Vice-Chair, Conservative, Rick Perkins]

Are there any other comments on NDP-3?

MP Turnbull.

[Ryan Turnbull, Liberal, Whitby, ON]

Just really quickly, I think this is an attempt to fix and back out. We removed the efficiencies defence in Bill C-56. I think the original clause that was proposed by the NDP threatened to reintroduce that back in. Perhaps that wasn't intended, and I think this tries to fix that. I think it's just simpler to vote this down because we already did the work on this, and let Bill C-56 and Bill C-59 stand.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Turnbull.

MP Williams, go ahead.

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

Thank you.

We agree with that, and I know that the efficiencies defence.... The first one came from my private member's bill and I think this one came from the NDP leader's as well. We don't want to bring it back in. We worked too hard to get it through, so we're not going to support this one.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you.

Are there any other comments on NDP-3?

(Amendment negatived [See Minutes of Proceedings])

(Clause 10 negatived)

(On clause 11)

We move to clause 11. Are there any comments on clause 11?

MP Turnbull, go ahead.

[Ryan Turnbull, Liberal, Whitby, ON]

My understanding is that this is entirely redundant, given the passage of Bill C-59, which was the fall economic statement bill. We already did this work in that bill.

[The Vice-Chair, Conservative, Rick Perkins]

Are there any further comments?

(Clause 11 negatived)

(On Clause 12)

We have an amendment proposed, NDP-4. Is there any discussion?

MP Masse, go ahead on NDP-4.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair. Hopefully, this one finds a better path.

It increases the one-year limit to commissioners to challenge a notifiable merger to three years. Bill C-59 increased the limit to three years only for mergers for which the commissioner has issued an advance ruling certificate or for not-notifiable mergers but excludes notifiable mergers. We can keep the exceptions for advance certifications under section 102 to align with Bill C-59, but extend three years for all other mergers based on the commissioner's advice that three years would be helpful, which he raised in his testimony.

What we're doing is giving more runway for the commissioner. I don't have to get into further details, but we had a lot of testimony in favour of that, and I think that giving the competition commissioner more time is a modest improvement to what we have.

[The Vice-Chair, Conservative, Rick Perkins]

I have MP Williams next.

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

Thank you, Mr. Chair.

Yes, we agree. I think that giving more resources and more time to the commissioner and the bureau is going to be beneficial to their ability to do their job, and we support this.

[The Vice-Chair, Conservative, Rick Perkins]

Go ahead, MP Turnbull.

[Ryan Turnbull, Liberal, Whitby, ON]

I go to the officials to ask whether this creates an unintended consequence. I know that advance ruling certificates might be something that we see every merger party apply for in the future. Do we think this would create some unintended consequences, in terms of increasing the amount of time from one year to three?

[Samir Chhabra]

Thanks very much for the question.

From our reading, this amendment imports about half the formulation or language that was voted on through Bill C-59. It essentially allows parties to benefit from a shortened limitation period when applying for an advance ruling certificate. That is a mechanism to ensure that the bureau is aware of a transaction, but it doesn't make this allowance for fully notified mergers, as Bill C-59 does. In that sense, it's a half-measure.

What it will do is create two different pathways by which an organization can do that kind of notification approach, and it will create a lot of administrative burden for the bureau as well as for companies because it will simply encourage them all to apply for advance ruling certificates rather than simply notifying. That creates a lot of extra work for the bureau to then review, assess and respond to. It essentially becomes an ineffective half-measure. It allows for this extension to occur but only in certain circumstances, which will then incentivize behaviour to take, essentially, the other pathway.

[Ryan Turnbull, Liberal, Whitby, ON]

Take the longer route in order to delay.... Is that correct, possibly?