Industry Committee on May 10th, 2022

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

Yes. The situation in California is an eloquent example. The more generous countries are in terms of programs to encourage consumers to buy electric vehicles, the greater the supply and availability of electric vehicles. California does not have to go looking for electric vehicles much because dealerships are receiving huge shipments of them. That is not the case in Quebec where there is a shortage of them, such as the hybrid Toyota RAV4 and others. You are no doubt more familiar with this than I am.

In your opinion, could this approach make Canada more open than it is now, either by regulating or offering attractive tax credits?

[Trevor Boquist]

I think many things influence that. You have higher adoption rate in places where the weather, the availability and all those things play into it. Certainly cities across Canada, such as Montreal, Toronto, Vancouver and maybe Calgary would have higher adoption.

I think one thing we have to be very aware of is that the technology needs to significantly increase for countries like ours, where we have a significantly colder climate. You have range anxiety around those things. You also have the charging network. Canada is a big country. When you look at the number of people who live in California, which is really the whole country in an area significantly smaller than our country, I think you're going to have a higher adoption in a lot of different places.

I suspect that you will see adoption sort itself out as technology increases, as the infrastructure gets in place for charging and all those kinds of things. I think those things are a ways away of actually fulfilling the requirements that will be necessary.

Therefore, I'm not in favour of more regulation on anything. I think our country has a lot of regulation already. I don't think it needs any more.

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

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

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

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Mr. Boquist, the Driving Change Automotive Group is just your four Ford dealerships. Is that correct?

[Trevor Boquist]

Yes. I have four dealerships in Manitoba and Saskatchewan.

[Brian Masse, NDP, Windsor West, ON]

I actually drive a Ford Bronco, but I'm also the author of the original CASIS agreement, the voluntary agreement that was put in place over 12 years ago. The U.S. Federal Trade Commission is making the right to repair a priority. I've talked with OEMs who understand that the current situation needs to be updated, because digital software and ZEVs were not part of the original discussion. As well, your former Canadian CEO, David Mondragon, was key, in fact, because Ford was not treating Canadian customers the same as American customers.

Is it your position that the current agreement, which is 12 years old, is sufficient, whereas everyone else is understanding that it needs some type of modernization? The Liberals have a bill on it. The Conservatives have a bill on it. I have an automotive bill on it. I'm just wondering where you're landing on that, because that doesn't seem to be the trend.

[Trevor Boquist]

I would say that probably our CADA would be able to give you a more thorough explanation around that.

We believe it does need to be modernized. It does need to be updated. We just don't think we need to have a whole new piece created. We think what's there has some good bones. It just needs to be updated for the current climate that we find ourselves in.

[Brian Masse, NDP, Windsor West, ON]

Yes, because there are some that don't even opt in. It's not mandatory. For example, Tesla is not even participating in the current agreement, and we have some others. This is a major problem. It's a major issue.

Thank you very much for your testimony today.

[Trevor Boquist]

Thanks.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Masse.

Mr. Deltell, you have five minutes.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Thank you very much, Mr. Chair.

Hello, dear colleagues

Ladies and gentlemen, I am very pleased to see you here.

Mr. Kotak, I would like to start with you. You talked about having a proactive support model and being more proactive in supporting our businesses to address the reality today. Do you have any ideas on that? You said at the end of your comments that you had some suggestions on how to be proactive. What would you like to say to us on that?

[Ritesh Kotak]

Thank you so much for your question.

Just as I answered in the last question, I think we just have to make it easier, a one-stop shop, for small businesses to meet the regulatory and compliance requirements. Is it fair for a small business owner to really understand the complexities around doing business and being competitive?

What are some of those complexities? There's labelling, for example, as I mentioned earlier. It is very difficult to really understand all the nuances when it comes to labelling. I was looking for a bottle of something I could show so that you could see all the markings, clearly in English and French, but also something as small as the bar code on it as well. There's also the size of the bar code and the registration of the bar code. The first five or six digits are actually registered. Then you have the product number. There's the way the ingredients are listed. Is it a primary or a secondary ingredient? There are so many things and nuances there.

One of the suggestions would be this. I am a small business owner. I want to get a product to market. I have this great idea for jam, tea or whatever food item I've created. I should be able to get the support that I need without having to do what the current situation is, which is to leverage tens of thousands of dollars in consulting fees to only get some suggestions, create that label, and then present that product to the market.

The challenge is when you try to be proactive—I personally have dealt with this—and call the CFIA and say, “I have this product. I have this label. I need some advice.” There's no mechanism set up to provide that advice. It is, “Sorry. We will only provide it if there is a complaint or some enforcement that needs to be taken.” By that time, you've created all these labels, you've created all these products, you have the product in the market, and now you're looking at a recall and potential enforcement.

With the small business hub, essentially, if we had the resources there, you'd be able to get that advice right then and there. In addition to that, you'd be able to get advice on setting up your business and on being more competitive and networking with other local businesses as well.

The others issue is around shipping. I think Canada Post, for example, should have a stake in the small business hub. The reason for this is that if I want to get a product from Ottawa to Mr. Ballingall in the Okanagan Valley, we know that it will be extremely expensive—we all know that—if we go to Canada Post to ship it. Should that be the case? Should we not have small business shipping credits, for example, that could be tied right into that business from Canada Post? Now I have x thousands of dollars that I can apply. Now I can compete. I won't get the preferred rate if I don't have volume. I'm not going to have volume if I'm going to charge somebody $40 for shipping that widget across the country.

There has to be a better way. I think the better way is that if we amalgamate some of these resources to provide that support, we will be able to go from zero to 100 a lot faster.

Thank you. I hope that answers your question.

[The Chair, Liberal, Joël Lightbound]

You have a minute left.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

I will only say that if you want to send something to Mr. Ballingall in B.C., it will be a good gift for his birthday.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

On that note, I will now give the floor to Mr. Erskine-Smith, to begin the final round of questions.

Mr. Erskine-Smith, you have the floor.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks very much.

Professor Larkin, I really appreciate your remarks. Just so that this is clear to me, with regard to the concentration of market power and the efficiencies defence, for example, in the Competition Act, is it your view that when the competition commissioner looks at the efficiencies defence, as an example, they aren't taking into account the longer-term challenges to efficiencies for the economy writ large as this relate to market concentration?

[Dr. Yelena Larkin]

I believe that the existing focus on efficiency is a bit weird because, first of all, when you think about efficiency gains, they apply first and foremost to the company owners or the shareholders and, if anything, these gains might hurt consumers and perhaps lead to some employment cuts, so there may be some negative consequences as a result.

Another aspect that I find problematic is that when you consider this trade-off between efficiency gains and potential losses that increases market power, the efficiency gains typically are the ones that are easy to quantify because, essentially, if you are a company that proposes a merger and as a part of the merger you can reduce some duplicate operations, you have the numbers right in front of you on how much you're going to save and you're going to save it relatively in the short term, as opposed to its being much more difficult to quantify the long-term implications for consumers, to the labour force, and so on. Also, as you correctly mentioned, they happen in the longer term, so—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Exactly. In your remarks, it may be that there are efficiencies from, in some cases, reducing staff and avoiding duplicate IT systems or otherwise—

[Dr. Yelena Larkin]

Right.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

—but in the longer term, you've suggested that more concentration may mean more profitability for the existing players—but certainly less R and D, and ultimately Canadian consumers are likely worse off as a result.

[Dr. Yelena Larkin]

Correct. Essentially, what ends up happening is that even an efficient merger is not a guarantee that the merged entity will not exercise its market power in the long term. In fact, both can happen.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

With respect to that market power, when we see a country like Canada, which strikes me as a county of oligopolies, we see in the telecommunications space, in the banking space, in the grocery space industries that are more like monopolies, as well as in the cinema space. If you go through sector by sector, we have high concentrations. You've identified the Competition Act reform as a serious answer to that, and I think in your paper you show that it's not only weak antitrust in the United States, but also weak antitrust in Canada that's led to concentration in both jurisdictions.

When you identified additional strategies to lower barriers to entry, can you speak more specifically to what we can recommend to reduce some of those barriers to entry, and is it sector-specific?

[Dr. Yelena Larkin]

I think additional barriers to entry can relate to anything that reduces the burden on the small firms, because if you think about regulation, if you think about even the current environment of increasing inflationary pressures and labour shortages, all of that affects small corporations and small firms disproportionately more than larger firms. So I think everything that can correct this bias can help small businesses and, in the long term, economic growth.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Based on your analysis, it strikes me that a highly concentrated industry like telecommunications becoming even more concentrated would probably be a bad idea.