Industry Committee on May 6th, 2022

[Lauren van den Berg]

I don't have a crystal ball. If I did, I'd probably have a more comfortable desk chair, but I think what we can expect is that a lot of companies are going to have no choice if they want to stay open. If they want to keep the lights on now that they can keep the doors open, how do they staff up?

That shift to more tech-friendly automated solutions is a direction that some brands are going to choose to explore. I don't know how long term or permanent any of those will be. Frankly, I think we've all the seen the movies where the robot servers get too much power, but arguably, innovation has always been at the heart of our sector: innovation in food, innovation in service, innovation in hospitality and, now, innovation in technology.

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

Thank you.

Mr. Kurland, you talked about the reluctance of the IRCC to give up power and control of processing times. We've heard of programs like the top talent one, and one of the recommendations by the CCI is an increased turnaround time of 48 hours.

What specific recommendation on that power would you have for the IRCC or for our government to look at in changing that in a longer-term or a shorter-term time frame?

[Richard Kurland]

In a shorter time frame, it is possible to cookie-cut successful temporary status programs that have been rolled out in our overseas operations. For example, there are streams of “preferred” students attending educational institutions in Canada that are gold class. When we know the perspective employee, and when we know the Canadian employer, enforcement, which is at core the issue here for program integrity, is simplified.

Looking at the big picture, something that we can do right now is systematically, industry by industry, and, if necessary, employer by employer, pre-approve, check them out and vet them. That way it's a question of identity, background check security, criminality check and medical check, which can be done in advance in most cases. A 48-hour standard is in play at our ports of entry in this country, if you don't need a visa to come to Canada. We can review, country by country, which countries still require visas. We do that all the time.

There's no fast turnkey solution. It requires careful... It requires a lot of stamina. Check every box possible to deliver exactly what you're proposing, which is a dream state.

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

Thank you very much. If you or any of our witnesses have anything else to add, please submit it in writing and we can add it to the report.

Ms. Hearn, I don't have a lot of time. I'm just going to ask you some questions. If you don't have enough time, please submit the answers in writing.

How is the lack of skilled labour going to impact Canada's competitiveness? That's a big one right now. We're almost a million workers short.

Second, does Canada need an innovation strategy?

Third, is the labour shortage impacting social enterprises? You write a lot about philanthropy and impact investing. Are we seeing labour shortages impact those industries? If so, what are the long-term ramifications of that for Canada and its social enterprise capacity?

[The Chair, Liberal, Joël Lightbound]

Mr. Williams, although those are great questions, it would take some time to answer. We're out of time. Perhaps the witness can submit a response in writing.

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

Yes, if you could submit that in writing, thank you so very much.

[The Chair, Liberal, Joël Lightbound]

Thank you.

We'll now move to Mr. Gaheer for five minutes.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Chair.

Thank you to the witnesses for making time for this committee. It's been very informative so far.

My questions are primarily for Ms. Bednar and Ms. Hearn.

Ms. Bednar, you mentioned that Amazon is an internal competitor. What comes to mind when you say that is something like AmazonBasics, where they have their own product line developed under that name. What also comes to mind is “Amazon's Choice”, which is how they highlight certain products that do well or sell well. I often see that the “Amazon's Choice” is an AmazonBasics product.

Could you comment on that? What other ways are there in which Amazon is an internal competitor?

[Vass Bednar]

Sure, with AmazonBasics, it competes directly against third party products that are in its marketplace. Kudos to when something is labelled AmazonBasics. In other instances, where we see that kind of copycatting and replication, sometimes there's an overlay where there's a private label or it's a different company name, so it looks very distinct.

In terms of other examples, it's easy to talk about how Amazon uses data and information perhaps even across some of its platforms. There are subscriptions, recurring fees and revenues that locks in people, for example, Amazon Prime. Amazon's collecting information from us when it's considering what to commission or invest in for television or video, because it also knows from Kindle what books people are pre-ordering, how fast they're reading them and what they're highlighting. It owns Goodreads, so it knows what people are talking about when it comes to books. It owns IMDb, so it knows who the popular directors, actors and actresses are.

This allows it, in a broader kind of cultural context, arguably, to de-risk the decisions it's making and move toward a Spice Girls model, which is “tell me what you want, what you really, really want”, and changes how we create artistic value and who gets an opportunity. I know this government cares a lot about Canadian content creation and supporting artists. Amazon's certainly a factor there, as well.

I fear I've skewed a bit from AmazonBasics in my answer, but it's a fascinating firm to study in terms of behaviours, because it's setting a norm. Other companies are replicating how they compete, because that firm is changing the terms of digital competition, which is why we need to look at it.

[Dr. Pierre Larouche]

I want to add the fact, if I may, that what is now directing a lot of attention to Amazon is the so-called box that you see on the upper-left corner with the recommendation. There are also allegations and some evidence that merchants have to do fulfillment by Amazon to come up high in the rankings in the box. Amazon extends and leverages its power on the platform to get some extra commitment from the merchants. Namely, the price to pay to be high up in the box that gives you the first choice in the click box, as it is called, is that the fulfillment will be done by Amazon.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you so much.

My next question is open to Ms. Bednar or Ms. Hearn.

We know that Amazon is doing this. What about the alternatives? Wayfair comes to mind, as well as Home Depot and Home Hardware. Are the alternative online retailers doing the same thing?

[Vass Bednar]

In terms of replication, they may be. Again, this is why it's useful to think about the behaviour itself and the implications for businesses and consumers.

It's unique in Canada. Earlier, one of your colleagues was asking about contextualizing Canada in that international context. Something we do that's kind of special, in the Canadian way, is that we've decoupled the Competition Act and competition federally from consumer protection considerations provincially. Australia blurs these together.

When we remove that consumer lens from competition issues, it makes it a bit harder for us to talk about some of these issues, because you're right. Are other platforms doing this? Yes, but it's harder to know. It takes a lot of homework and research.

Small businesses might feel it, and they do. The work that Denise has been doing in the U.S. has illuminated that, often, these small, independent businesses are afraid to speak out and to talk not just about the experience of being potentially copycatted but about all of those other coercive contract terms that we mentioned in that laundry list in our opening remarks, because of the ramifications to their businesses.

I don't know, Denise, if you wanted to follow up there.

[Denise Hearn]

I was going to make a broader point about data, which has come up as well. It's important to consider that for Amazon, Google, Facebook and many of the technology platforms, the reason this business model of hoovering up as much data as possible is the basis of what's been called “surveillance capitalism” in how they make their money. More so, too, there is now this vertical integration between the data and the compute power that they are amassing with the hardware.

Facebook has built one of the largest supercomputers in the world, so the scale of the data that these companies have is something that will have many ramifications on the shape of markets in the future. That is a really important question for regulators to be actively thinking about and considering.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you so much.

[The Chair, Liberal, Joël Lightbound]

Thank you Mr. Gaheer.

Mr. Lemire, you now have the floor for two minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Professor Larouche, you said earlier that our laws were not well suited to SMEs. I get the impression that our economy, in Quebec, is based on SMEs and that that is what sets us apart from the Canadian economy, which relies more on large companies.

During a crisis, when the government needs to support the economy, it obviously turns to aid programs to save the auto industry, in southern Ontario, or the oil industry, in Alberta. I get the impression that the regulatory frameworks are poorly suited to the reality of SMEs.

Would it be beneficial to the Quebec economy for laws and regulations to give more support to SMEs than to large companies?

[Dr. Pierre Larouche]

Let's just say that the laws are poorly suited to SMEs because Canada's Competition Act places a lot of emphasis on defence. It is very easy for defending companies to be successful.

There has been a lot of discussion of the dependency of SMEs on platforms. However, at this time, Canadian law lacks teeth. It does not really make it possible to do anything. This is an aspect that must be considered in the reform of the Competition Act. Again, it is in our interest to draw inspiration from what is being done in Europe and the United States.

In passing, I would like to apologize to Mr. Généreux. I did not answer his question correctly. Bill C‑18 is indeed a good bill in general.

To come back to your question about SMEs, I would say that there needs to be the courage to do things but in a different way. In its current form, the Competition Act is based on the fact that Parliament always tries to resolve specific problems. Other countries have an approach that gives greater flexibility to the competition authorities.

Competition authorities deal with the matter 24 hours per day. They are experts. If we want the interests of small businesses to be considered, the appropriate authorities simply need to be told that it is important and they will consider it. That is how things work elsewhere in the world.

That is what I would like to see in a new version of the Competition Act. I would like the Competition Bureau to have free rein and be able to handle problems. They would simply need to be told what the problems are, without having to rely on provisions of the act to resolve them.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

In your opinion, there is therefore an urgent need to reform the Competition Act, which differs from what is done in terms of legislation around the world. As well, the government is behind schedule in its review.

Have I understood correctly?

[Dr. Pierre Larouche]

Yes, that is right.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Professor Larouche and Mr. Lemire.

Mr. Masse, you have the floor for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

I'll be really quick

Ms. Bednar, Dr. Larouche and Ms. Hearn, can you answer quickly? The other witnesses have been awesome. This has been a really important thing.

With Internet service providers and those that use the fibre optics public right of way and the ISPs' spectrum auction, this is a public asset. I pushed for a digital bill of rights, which is also responsive. When we're actually doing the public policy for ISPs and those that want to use the public right of way, should we be thinking backwards perhaps and building in some safeguards for consumer protection even when we auction this stuff off?

We can actually set the rules since it's a public asset. I'm wondering whether you know if that's been considered anywhere else. I would love to know that because we're always reactionary.

[Vass Bednar]

It would be smart to do that, of course. The example of Internet in Canada is just like owning and operating a platform, because telecommunications compete both in terms of the infrastructure and also the layer on top.

I'm not being articulate there. I'll turn to my colleagues for other comments.

[Dr. Pierre Larouche]

If I may step in on this issue, it's a slightly different problem. Here, we actually created our own problem, in the sense that Canada followed the U.S. in being very liberal on the firms and telling them essentially that as long as they invested in their network, they'd be free from a lot of intrusive regulation.

Europe chose the other way. The evidence is kind of in at the moment. The European choice did not significantly deprive them of infrastructure investment. There's an argument to be made that we could be a little bit harder on our telecom firms in Canada and try a bit more to stimulate competition without fearing that we will lose out on network investment. The empirical evidence doesn't bear it out.

[Denise Hearn]

I would also add that Canadians have consistently paid some of the highest rates in the world for telecommunication services. There was a lot of discussion about this earlier this year with some of the wholesale providers trying to negotiate fairer rates. The decisions that were made in that case were, I think, very unfortunate for Canadian innovation and for Canadian consumers going forward.