Evidence of meeting #147 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 interac.
A recording is available from Parliament.
Commissioner of Competition, Competition Bureau Canada
I can't speak on the specific agreements.
Do you want to add to that?
Deputy Commissioner, Monopolistic Practices Directorate, Competition Bureau Canada
In terms of making sure membership and decision-making don't advantage only certain players and allow incumbents to set the rules that dictate who can join the club and how competition takes place, that is something we looked at a number of years ago. We had a consent order put in place in the nineties that lasted for a number of years. That looked at the governance structure and made sure it couldn't unfairly preference certain members over others. At the time, Interac was engaged in conduct that actively kept other members out, raising barriers to entry and making it more difficult for other members there to compete vigorously.
Liberal
Ryan Turnbull Liberal Whitby, ON
I think it's clear that Interac has a near-monopoly, in terms of its market position. It seems to me that this would prevent fintech companies from offering comparable e-transfer services.
Have you investigated that at the bureau at all?
Commissioner of Competition, Competition Bureau Canada
Not at this point in time, that specific fine issue....
Liberal
Ryan Turnbull Liberal Whitby, ON
You mentioned that you opened a preliminary investigation of e-transfer companies. Was that on Interac specifically? What led to that decision? I realize you might not be able to talk about the investigation, because you're bound by confidentiality. However, you might be able to talk about what tipped you off to initiate an investigation. Can you speak about that?
Commissioner of Competition, Competition Bureau Canada
Quite frankly, as I said earlier, hearing some of the questions and answers in this committee shed new light on what might be taking place. We thought it was appropriate to launch a preliminary investigation.
Liberal
Ryan Turnbull Liberal Whitby, ON
Is there evidence, to date, of anti-competitive behaviour, Mr. Boswell?
Commissioner of Competition, Competition Bureau Canada
I can't give you that conclusion at this point in time.
Liberal
The Chair Liberal Joël Lightbound
You're just out of time, Mr. Turnbull. Thank you.
Mr. Savard‑Tremblay for six minutes.
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Thank you, Mr. Chair.
I want to thank the witnesses for their opening remarks today.
Obviously, I have a few questions to ask, but I'd like to start by thanking the witnesses for being here and for their ever-informative remarks.
First, does the competition bureau believe that the concentration in the e-transfer market, which centres around a few easily named major stakeholders such as Interac, Visa, Mastercard, not to mention the big banks, limits competition and innovation? Yes or no?
Anthony Durocher Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
Thank you for the question.
Obviously, in a concentrated market, we always want to ensure greater competition. The competition bureau's role is truly to enforce the Competition Act.
There are two aspects to consider. On the one hand, we make sure that there's no anti-competitive behaviour in the market. Of course, we pay particular attention to concentrated sectors such as financial services. On the other hand, we also promote competition to regulatory agencies and Parliament to ensure the most pro-competitive rules possible, to encourage new entrants, competition and innovation in all sectors, including concentrated ones.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
To ask the question is to answer it. More concentrated sectors entail infinitely greater, if not unlimited, risks in terms of competition and innovation. That said, the two go hand in hand.
Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
Yes.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Have you identified any cases where exclusionary practices, such as denial of access to payment infrastructure, have prevented new players, such as fintechs, from entering the e‑transfer market?
Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
Yes. As my colleague Ms. McWhinnie mentioned, we had a consent order with Interac, from 1996 to 2020, if I'm not mistaken, concerning conduct that was undermining competition in the relevant financial markets. However, we didn't identify any cases involving e‑transfers. The consent order didn't apply to the market the committee is looking at today, meaning the e‑transfer market.
Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
The consent order expired in 2020. It was applicable from 1996 to 2020. There were some changes, but as I mentioned, it didn't apply to e‑transfers.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Since we're talking about another type of agreement, i.e., tacit or explicit agreements among the major players that could limit access by smaller competitors to the e‑transfer market, can you tell me whether the competition bureau has discovered any such agreements?
Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
If we discover an anti-competitive agreement, we gather the relevant facts and data. As a law enforcement agency, we rely on evidence and facts. We therefore always encourage stakeholders to submit evidence of anti-competitive conduct to us when they have it, be it agreements among competitors or other types of behaviour.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
Have you heard of any cases where it was clear that a bank or other financial institution had used its dominant position to impose conditions that put its partners or competitors in that sector at a disadvantage?
Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
As the commissioner said, we've launched a preliminary investigation into the matter, but at this stage it's too early to draw any conclusions. Our role is to analyze the relevant facts and evidence to determine whether or not there has been a breach of the Competition Act.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
That said, there's an ongoing investigation. In other words, there are suspicions; things have been said and you're in the process of checking them out.
Deputy Commissioner, Competition Promotion Branch, Competition Bureau Canada
That's correct. As I mentioned, the letter from the committee members and the testimony received by the committee prompted us to open a preliminary investigation.
Bloc
Simon-Pierre Savard-Tremblay Bloc Saint-Hyacinthe—Bagot, QC
I know you're going to tell me that your role is to enforce the act and not comment on it, but I'm going to test my luck anyway.
Is the legislative framework sufficient, in your opinion, to monitor anti-competitive behaviour in the electronic payments industry?