Good morning, Mr. Chair and members of the committee. Thank you for the invitation to appear before you today.
My name is Krista McWhinnie and I'm the deputy commissioner of the monopolistic practices directorate at the Competition Bureau. I'm joined today by my colleague Brad Callaghan, who's the associate deputy commissioner of the bureau's competition promotion branch.
The bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. We administer and enforce Canada's Competition Act, a law of general application that applies to every sector of the economy. We investigate and address abuses of market power, anti-competitive mergers, price-fixing and deceptive marketing practices. The bureau also advocates for pro-competitive government rules and regulations.
It’s important to recognize that we are enforcers of our legislation and advocates for more competitive markets. We are not adjudicators or regulators that set rules for companies. The Competition Act requires us to meet several thresholds and standards when we bring cases before the courts, such as proving that there has been a significant harm to competition.
In the context of your study, the issues most relevant to the bureau’s mandate relate to investigating and policing against monopolistic practices and guarding against deceptive practices.
The Competition Bureau has experience analyzing issues related to the Canadian payments sector. For example, in December 2010, the bureau filed an application with the Competition Tribunal under the price maintenance provision of the Competition Act alleging that Visa and Mastercard were imposing restrictive rules on merchants who accept their cards. In the bureau’s view, these rules reduced competition among credit card network services, including competition with respect to credit card acceptance fees.
Ultimately, the Competition Tribunal dismissed the application in 2013, finding that it did not meet certain requirements under the price maintenance provision of the Competition Act. That said, the tribunal also carried out an alternative analysis in the event that it was wrong in its legal interpretation, and under this analysis the tribunal found that these rules had raised prices and had an adverse effect on competition.
While the application was dismissed, the tribunal noted the importance of this issue for Canadians. Notably, the tribunal said that even if the bureau had proved its case, the tribunal would not have given an order to remedy the concerns raised by the commissioner’s application. Instead, it suggested the issues would be better addressed through regulation. Following that case, Visa and Mastercard submitted separate and voluntary proposals to the Minister of Finance in 2014 to reduce their credit card acceptance fees for a period of five years, and to date, the government has not regulated these fees.
The bureau does not play an active role in commitments from companies to lower fees. We also have no mandate to develop or implement industry codes of conduct. Our role is limited to enforcing the Competition Act should its provisions be engaged and, advocating that any government action be carried out in ways that encourage the most competition.
Before responding to your questions, I will note that the law requires the bureau to conduct its investigations in private and keep confidential the information we have. This obligation may prevent us from discussing certain details of our investigations.
I'd like to again thank the committee for the opportunity to appear today and we look forward to your questions.