Industry Committee on Nov. 25th, 2024

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Indeed, I’d just like to summarize the answer.

The answer is no, you don’t do it only when someone blows the whistle. An investigation can be initiated in other ways. For example, you could, on your own accord, launch an investigation.

[Matthew Boswell]

Yes, that’s correct.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Mr. Masse, you have the floor.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

With regard to the Interac time frame, can you disclose when there might be consideration of or a look at their practices taking place? You have a history going back many years. Is it open from that time frame forward? You'll be able to use the past issues, I suppose, as grounding. I am wondering whether there is a certain point in time when you can publicly capsulize things.

It's probably too early for that, anyway, because you don't know where your investigation will lead.

[Matthew Boswell]

That's exactly right. We're certainly at the early stages. As I said, we have a fairly long history, so we understand certain aspects. That particular previous case was confined to the two services I flagged earlier: ATM withdrawals and point-of-sale debit transactions.

I can't give you a timeline. I apologize.

[Brian Masse, NDP, Windsor West, ON]

No, that's fair enough.

While I have you here, an issue I flagged—this is previous to your time, but I think it's a good example of what's taking place—was when Live Nation bought Ticketmaster. We've seen, most recently, a number of things taking place on that front. Is there anything you can say about that situation, in general, to the public? If not, you can just not do that. I'm just curious, because I have pushed this issue in the past.

Basically, you noted a few of the different takeovers that have taken place.

A famous one was Target taking over Zellers. Zellers actually had unionized employees and was paying them above the grid. It had benefits for its employees. Target came in, closed it down and we lost that competition. We have RONA taken over by Lowe's and so forth.

Do you have any general comments, as I leave you here, about how we can avoid getting into these situations? Is it really, at the end of the day, at the ministerial level, with allowing these things? Every minister changes their opinion and interest about dealing with these corporate takeovers. Best Buy is another example, taking over Future Shop, and I can go on and on, where we've seen the elimination of competition by a minister's opinion at that point in time.

[Matthew Boswell]

In terms of the Ticketmaster situation, I'm aware of the letter that you sent to Minister Champagne on that particular issue. When it comes to ticket prices, as we often say, we're not a price regulator. Our job is to enforce the Competition Act. Price gouging and very high prices are something that, perhaps, the provinces can deal with.

Obviously, the Ticketmaster/Live Nation merger from 2010 was something that went through the bureau. At that time, we identified certain competition issues and required certain remedies, including divestitures and some behavioural remedies on that transaction.

In terms of the actual ticket price issue that you flagged in your letter to Minister Champagne, that's really not something within the bureau's remit.

[Brian Masse, NDP, Windsor West, ON]

That's why I didn't write to you on that one. I've been writing to you far too often, I think, anyway.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

MP Perkins, the floor is yours.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Commissioner and team, for coming on this important study. It's technically on e-transfer, but I'd like to talk a little more broadly about Interac and take it one step up.

Generally, Commissioner, I believe that you have a policy that anything more than one company having 30% market share is a problem, in terms of oligopoly, at least, if not market dominance. Is that correct?

[Matthew Boswell]

That's in our abuse guidelines, which Ms. McWhinnie can speak to.

[Krista McWhinnie]

I'll just step back to say that simply being large and dominant is not a violation under the Competition Act. We have certain thresholds for when a dominant entity is engaging in conduct that might violate the act. We also have to prove that they are, in fact, dominant, and that's where those market share thresholds come in.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

In looking at the market share, five or six banks control, essentially, 80% or 90% of the financial services market.

When I sign up for a transaction banking account, am I given a choice of service providers on things like e-transfer or debit?

[Matthew Boswell]

I can't answer that, because I've never actually looked into it.

I don't know if my colleague—

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I worked for a bank for five years. I know what the answer is. The answer is no; otherwise, they wouldn't print the Interac logo on your debit card. You don't really get a choice, do you? It comes with Interac.

The Interac market share is massive. I would say it's close to 100% of what Canadians do, whether it's on debit or e-transfer, all of that. Strangely enough, it's the banks that own it. It seems like a convenient way to keep other competitors out, by controlling the fact that I, as a banking customer, actually don't get a choice of service providers and what fees, ultimately, I would pay for transferring money or using electronic debit. Is that not correct? That's monopolistic power, is it not?

[Krista McWhinnie]

I think that type of thing really would speak to that first part of our test, under the abuse of dominance law, of whether or not there is market power. Then, there are two additional big parts of the test that we have to analyze and prove, one of which is that there's been conduct violating the act. That's conduct with an intent to harm either a competitor or competition, broadly. Then, we have to look further at what the effects in the overall market are, and whether there's a substantial lessening or prevention of competition.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Okay, so as a consumer, when I buy my financial services, I have zero choice as to what company I get with my bank account that does that. To me, that looks like market dominance, especially when Interac is probably 90% to almost 100% of everything that happens. It's pretty clear it's well above your 30% threshold for Interac.

This will be part of your competition, but we've had evidence that “Membership has its privileges”, so to speak, to quote a former American Express credit card marketing firm. The membership here is the four banks and Desjardins that own Interac; they are the board that governs it and they get preferential rates. If you're not there and if you're trying to come in as a credit union or as somebody who's not part of the membership or the club of Interac, as a financial institution, you seem to get charged seven, eight, nine or 10 times the rate for the fees.

If you have 100% market dominance, if the financial services customers have no choice in what service comes with their bank account and if the fees charged for those who aren't part of the Interac club are 10 times what they are for those who are in, that sure looks like a monopoly power that needs to be broken up.

[Krista McWhinnie]

Those are exactly the types of things we would be looking to determine through the investigation and get evidence to establish. Normally, the act, as we've been saying, doesn't dictate how an upstream business can charge its downstream customers, but as you're saying, if that upstream business also competes downstream and has an element of control, then they may well have an anti-competitive incentive to harm downstream rivals, in part by increasing costs.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

If I insist that the company my retail customers use to process transactions is a company I own, is that not a monopolistic power? I don't get a consumer choice.

[Krista McWhinnie]

That information would feed into the overall assessment of whether they have dominance and whether they're doing something deemed anti-competitive under the Competition Act, and then we would look at what the overall effects are in the market.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

This examination shouldn't take long, when you have 100% market control, your members have preferential pricing and your consumers have no choice about what they use. I don't know a bigger monopolistic power than when I see the banks owning Interac and forcing that as the only choice on the consumers.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Perkins.

I'll now turn it over to MP Badawey.

[Vance Badawey, Liberal, Niagara Centre, ON]

Thank you, Mr. Chair.

I'm going to follow the same line of questioning as Mr. Perkins. I'll start off with respect to pricing practices.

Mr. Boswell, how does the pricing structure of Canada's leading e-transfer providers compare to global benchmarks? That's question one. Further to that, are the fees consistent with competitive market prices and practices?

[Matthew Boswell]

I don't have answers to either of those questions at this point in time.

[Vance Badawey, Liberal, Niagara Centre, ON]

I'll put the same question to Mr. Durocher or Ms. McWhinnie.