Evidence of meeting #23 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 need.
A video is available from Parliament.
2:20 p.m.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, Ms. Quaid.
I now give the floor to Mr. Généreux for five minutes.
2:20 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Thank you, Mr. Chair.
Thanks to the witnesses for their interesting testimony.
Ms. Quaid, I'm going to continue with you and ask you my question more broadly.
Competition Bureau Canada has reached a decision on the merger between Shaw and Rogers. I listen to the automotive industry people on the matter of data properties. All the web giants in the world are accumulating data on us, and so on.
My question is very broad, but I'm going to give you all my speaking time to answer it.
Is Canada lagging behind other countries? If so, in what circumstances should we expedite changes to the legislation in order to catch up on this whole digital transformation issue?
Data will obviously become the new gold. In fact, we said it earlier: it's the new gold today, as it were.
What's your overall view on the issue?
You discussed Bill C‑19 and division 15 of part 5 of the budget bill. What should Canada's priorities be right now?
2:25 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
Thank you sincerely for that question. I believe you've asked the right question.
We need to ask it more broadly. What do we want to do? What's our place in this new economy, this new society, which is now characterized by all kinds of things that everybody's talking about? The word “digital” is everywhere, but it's more than that. I won't go into the details, but I'm sure you understand that it's a much more complex phenomenon.
I believe that Canada is lagging behind in several ways. It's lagging mainly because the conversation that's required on this matter has not yet begun.
That's why I mentioned that we needed a transversal approach to address digital issues. The economy is digital. Society is now connected. We can't distinguish between the two or look at them in isolation. I believe that's the first phase.
People like me who work in the competition field, and also elsewhere, are impatiently waiting for the beginning of consultations on the modernization of the Competition Act. Canada needs to know what its values are, what its principles are and what it is going to build this architecture upon. Only then can we act.
The Europeans have done some thinking about it. They are very strong on human rights, and human dignity. They are very keen on individual consent and autonomy. All their legislation and all the rules… There is legislation on digital markets, digital services, artificial intelligence, the data act, in addition of course, to the European Union’s General Data Protection Regulation. This provides an umbrella under which all these types of legislation can be organized.
It's important to point out that the Americans have adopted a different approach. Canada has several points in common with them, including the fact that they decided to proceed by means of adapting the mandates of the agencies concerned. These are mainly agencies traditionally linked to the Federal Trade Commission and the Antitrust Division of the Department of Justice. Their mandate is to coordinate and hammer out policies, even though other agencies are of course involved.
Canada is late in terms of the big picture, but also in building its governance architecture.
Our Privacy Act is 20 years behind the times. We have no legislation on artificial intelligence. We have just created a data commissioner, but we don't know what that commissioner is going to do or how the position will really relate to other players like the Competition Commissioner or the Privacy Commissioner.
We need to decide what we want to do. That's where we're running late. We really need to address these questions in depth.
To conclude, I would say that it's going to be difficult and that there will have to be compromises. Not everyone will be prepared to sing from the same song sheet. There will be difficult decisions, but we need to make them. We have to set priorities and then create an appropriate governance architecture.
2:25 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
Otherwise, what are the threats?
2:25 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
There are all kinds of threats. For example, we'll be at the mercy of others.
I'll give you an example. In terms of competition, for many issues that involve the digital giants, there has to be international cooperation. There's no question about that. If we sit to the table with the Americans, Australians, Europeans and British, who are all ahead of us, and we tell them that we want to be part of the discussion, they're going to ask us what our rules and priorities are. We'll be there, but will have nothing to put on the table.
For international collaboration, everyone needs to make compromises. Generally speaking, if we have established what is absolutely necessary and specific to Canada, meaning the non-negotiable aspects of our rules, we would be in a better position to show them our rules and tell them that were prepared to make compromises on this or that. We could, for example, say that the protection of Canadian culture and language are non-negotiable. But we need to have thought about it ahead of time. Otherwise, we're going to get what the others tell us we're going to get and will basically be subject to the political compromises and rules of other countries. And while that may be well and good for them, it won't be so good for us.
2:30 p.m.
Conservative
Bernard Généreux Conservative Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC
So you're not suggesting that Canada should copy what is happening elsewhere. Not by a long shot.
2:30 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
No, not at all.
To be sure, we could learn from what they are doing, absolutely. We need to look at what they're doing, but also have to know and recognize… The hard part is to avoid just copying and pasting. There are certain realities that are specific to us. We need to adopt ideas from others, and then adapt them.
2:30 p.m.
Conservative
2:30 p.m.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, Ms. Quaid and Mr. Généreux.
Mr. Erskine-Smith, you have the floor for five minutes.
2:30 p.m.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
Thanks, Joël.
I'll stay with Professor Quaid.
You just articulated the need to be on the same page internationally, yet you expressed some skepticism about the wage-fixing rule. However, the wage-fixing rule would bring us in harmony in a more serious way with our American allies, for example. When we experienced the reduction of wages of employees at grocery stores in the middle of a pandemic, if that had happened in the United States, their competition commissioner would have had a lot more to say than our competition commissioner was able to say. That's because of the nature of their law versus the nature of our lacking civil remedy, I would say.
How do you square the need for harmonization and then say you struggle with this kind of harmonization?
2:30 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
Thanks for the question.
It's really important to put a few things down on the table here. The American approach to criminalizing buy-side cartels, in particular wage-fixing, is pretty much unique to them. We don't have other jurisdictions that have criminalized that. In fact, there are very few jurisdictions in the world that use the criminal law in competition. They use civil remedies and other ways of going about it. What the OECD says is that we need to take cartels seriously, but we're not dictating the way you go about it. That's the first point.
We do have already a civil collaboration provision in the Competition Act. Now, I will readily recognize that section 90.1 of the Competition Act is a provision that requires proof of a substantial lessening or prevention of competition and allows for taking into account efficiencies. It is subject to the efficiencies defence just like merger review is.
That is, in some ways, a weakness. I think that's part of the motivation for creating subsection (1) of section 45, which is to create a per se offence, because then you don't have to prove anti-competitive effects.
2:30 p.m.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
Exactly.
I take your point, and maybe we are in agreement in some ways. I don't need it to be a criminal offence, but with the lack of a per se offence, the need to substantiate in some significant way.... When the indicia that we see here of there being no other reason for them to communicate on this issue at all other than to lessen wages in this particular instance, on a per se basis, there should be an investigation. It would have happened in the United States, but we didn't see that because the law was insufficient for purpose.
Your issue is more with the mechanism of the criminal law rather than to say we need a stronger remedy on this particular subject.
2:30 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
I would agree with you in the following way.
I just want to put on the table that with the Americans, it is far from clear that wage-fixing is going to be a slam dunk. So far, we have preliminary decisions. They are not in sectors that are analogous to what happened here with the hero pay, something that I think could have been coordinated without communication. That's something we have to realize. When you have strong market players—a few dominant players in a market—it's not that hard, necessarily, to pick up signals without communicating directly, so I think we have to put that out.
With the Americans, it's far from clear. They are going on the basis that the Sherman Act has always prohibited buy-side cartels. There is a fairly strong opposition to that on the part of those who are being accused.
We're not at the stage where I can say we have a ton of evidence. They're talking strong talk, and I'm not disagreeing with them on the principle that if there are deliberate attempts to fix wages that it isn't a bad thing. However, I really wonder whether we're going to see that. It's new. The memo that came out in the United States is from 2016.
This is not actually the area in which I think we're out of step with the rest of the world. I think we're out of step on a lot of other things. With wage-fixing, I think we need to take a serious look. I agree with you that there can be serious conduct and it can be problem. Perhaps exploring a civil remedy might be a good idea. I wonder whether that's actually the problem that's being put on the table.
I worry that we're making a promise about solving a problem that in fact is not a problem that can be solved by the criminal law. That's my first worry.
The second thing is that we have no—
2:30 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
—basis in Canadian competition law to use a per se basis in civil matters, and I think you will find howling opposition to that.
2:30 p.m.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
I understand.
What I would put back, though, is that there's no way they would have communicated at all had the proposed offence been on the books. I take your point that you can still have signals in the marketplace, that they might have gotten to the same place—may or may not have—but I think we wouldn't have seen the egregious conduct of CEOs directly collaborating on a subject that they had no business discussing.
With the remaining time, the efficiencies defence is an area where we are out of step. Would you say, in the next level of review that we're going to see on the Competition Act, that we should seriously reform that particular provision?
2:35 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
Now you're asking for my position. Clearly, I have never been a fan of the efficiencies defence. I guess I've held that opinion for a long time. I was a junior lawyer on the propane case way back in the day. I have fairly strong views on that.
Not everyone agrees with me. I think you will find that it is an extremely divisive issue between the different sides in the competition. I believe, however, that it's not my view that should prevail—although I will forcefully make the arguments that I can. It really has to be a decision that's made on the basis of what values we want to promote.
Right now the way competition law is structured and the way it has been interpreted, which I think is the most important thing because none of this is really written in the act that way, has the effect of really putting a lot of emphasis on efficiency gains and, particularly, puts the burden on the commissioner in terms of providing quantification of anti-competitive effects. The way that the efficiencies defence has been applied, it has become a trump card. I think that really needs to be revisited.
I think everyone agrees that the efficiencies defence has gone to a place it shouldn't be, but there is profound disagreement on whether we abandon it completely, even though we are—you are correct—the only jurisdiction in the world with a developed economy that has this provision.
2:35 p.m.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, Professor Quaid and Mr. Erskine-Smith.
Mr. Deltell, you have the floor for five minutes.
2:35 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
Thank you very much, Mr. Chair.
I'm in agreement with all my colleagues about the high standard set by our guests today. We always have good witnesses, but today has been rather impressive.
Ms. Quaid, I'd like to continue the conversation we started at the very outset, particularly by dealing with the questions from my friend Mr. Généreux.
To summarize your remarks, you began by saying that we were lagging behind, but that it was never too late to get it right. Then you said that there were two models in the world at this time: the American model and the European model. Your third point was that we had to learn from the two models but not necessarily stick to one or the other.
As the United States is our largest economic partner, should we not follow the lead of the Americans more than the Europeans?
What do you feel are the best elements we could emulate from each of these approaches?
2:35 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
Thank you for these excellent questions. That's a very good summary of my comments, you've put it better than I could have done myself.
I would say yes, we need to look at what the Americans are doing, but not only because they are our largest partner. It's also because we have a lot in common, including our political structures, even though they're not identical. In terms of competition, we have always tried to align what we do with what they are doing, particularly with respect to things like mergers, even though we remain separate for reasons of efficiency.
I would nevertheless say that the Americans recognize that there are things that need to be added to their legislation. There are in fact six bills before the U.S. Congress on this subject. President Biden has decided to use his political advantage to make progress in this area. I'm not certain that they will be adopted, but it shows that the Americans are aware of this need.
I would nevertheless add that the Americans have not yet succeeded in adopting legislation to provide a framework for some aspects of digital, not because they don't want to, but because it's impossible for them to do so. So I think we could learn a lesson from the Europeans here. It's worth thinking ahead and having a better organized structure, broad principles and rules, to provide a framework for the right to privacy and all other matters of this kind, like interoperability and intellectual property.
It's therefore important for us to draw upon what the United States is doing and to try and adapt to it, without necessarily reproducing every one of their weaknesses. What we need most of all are framework laws. Our Competition Act is already much more detailed than theirs. I don't know if you have read the Sherman Act, but it's extremely short and vague. An act like that would never pass here, owing to constitutional constraints. We need to know that we will have to have more legislative structures, but I tend to believe that we're going to have to do more than that.
The glitch, I believe, is that our competition agency, the Competition Bureau Canada, has neither the weight nor the funding required to achieve the broad objectives we are aiming at. If we are serious, we truly need to review the bureau's funding and assign it certain powers, including the ability to carry out market studies in addition to investigations. They can't do that at the moment. It would be very useful if it could study digital phenomena. There's a digital sandbox, but it's not big enough to force the market participants to give it the information or data to know what's going on concretely, rather than simply speculation. Right now, we don't necessarily know everything that's happening, and I'd be the first to acknowledge that.
So it would be very important to give the bureau the resources and powers it needs to carry out a mandate analogous to what the FTC, the Federal Trade Commission, or the DOJ, the American Department of Justice, do. They have completely different resources, and we shouldn't have overly high expectations, in my view.
2:40 p.m.
Conservative
Gérard Deltell Conservative Louis-Saint-Laurent, QC
When you were drawing parallels between Canada and the United States, you said that both were federations. In Canada there are provinces, and you will no doubt understand that I'm naturally more attentive to what happens in Quebec. Minister Caire introduced several bills on this matter and developed a framework.
Are you afraid that in our current system, the provinces and the federal state would tread on each other's toes?
2:40 p.m.
Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual
That's certainly possible, but I would say it's important to begin to envisage a collaborative approach for economic management, economic policy and competition policy.
It's perhaps just a dream, but just as we have seen in environmental matters, it has become clear that a single level of government can't do everything. It takes cooperation, because the issues are too important. In the end, it might be wise to envisage the provincial and federal competition authorities working together.
I think we're getting there, because there have always been problems with qualifications and skills. There will of course be overlaps, but in other sectors, both levels have been able to work together. In the interest of all Canadian citizens, we need to find a way to collaborate. I recommend more collaboration, even though it's difficult.
2:40 p.m.
Liberal
The Chair Liberal Joël Lightbound
Thank you very much, Ms. Quaid.
Mr. Fillmore now has the floor for five minutes.
2:40 p.m.
Liberal
Andy Fillmore Liberal Halifax, NS
Thanks very much, Mr. Chair.
Thanks to the witnesses for sharing their time and their excellent testimony today.
To start, I'd like to direct my questions toward Monsieur Champagne and Mr. Leal. The questions are going to be regarding the right to repair. I'd like to explore two things.
The first is the broad question of how we can balance consumer rights while still trying to encourage innovation and protect IP. This is the fundamental tension. I wonder, from the perspective of your industry, how you might see that playing out and what government can do.
2:40 p.m.
Board of Directors, Automotive Industries Association of Canada
In my view, if you think about it, in some of the arguments we've heard from different areas around the world, people are using the opportunity to say that they want to protect IP. For us on the service side, we're not against them protecting their IP. It's just about sharing it in a way that we can have access to the information to make sure we can fix the cars.
I don't think we have a concern with their protecting their IP. That's never been out there. I think there are ways of delivering portals or data that's protected that we can share and people would have access to. I would say that, in our view, the problem is.... We need a voluntary agreement and legislation by the government to force the OEs to put all their information in a trusted resource that is managed by industry.
People are paying for it, so we're not asking for the government to sponsor it. Basically, give the structure of what it should look like to protect their information, while at the same time providing the information to the people who need to fix the car. I think creating that portal of sharing and collaboration and making sure that we get the right information to fix the car properly....
We always look at the mechanical side, but I'll pick the collision side. When you look at the collision side, when I have to repair a car that's been in a car accident, I need to know a lot of information in order to put that car back on the road. The majority of the dealerships in Canada do not have a body shop. They use the aftermarket, so they need to work with us at that point, and we need to have access to the parts and the information to properly repair the vehicle to put it safely back on the road.
When you look at the whole segment, mechanical is one piece, collision is another and the other one is glass. When you change a windshield now, you need to have ADAS calibration. The OEs need to make sure they share the data on the vehicle in order to make sure that when I recalibrate the camera, the car doesn't go into the wrong lane.
I think it's happening so fast. Every car now has calibration coming out of it off the line, but for the aftermarket, and even the dealers, no one is up to speed yet.