Industry Committee on May 20th, 2022

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Ms. Bednar, do you feel the Competition Bureau is structured well enough right now to be able to handle any of the changes that are taking place? I'm curious as to what needs to be done there if there is more strengthening.

[Vass Bednar]

I think the recent budget increases to the bureau were welcome. I think they have some great policy advice they've gone on the record with. There was a really phenomenal response from the bureau to Senator Wetston.

If I can comment and contextualize about our bureau in an international context for the purposes of this discussion, our reputation abroad has seemed to factor prominently. On the international stage, we don't register on competition. Canada's reputation on competition reform is nothing short of absolutely humiliating. It's captured very well in a recent G7 compendium. No one is looking at us because we aren't doing anything.

Again, these are necessary first steps, and I don't have doubts that the bureau would be able to receive them as we look ahead to further reform.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

I'll go back to the original testimony later on.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Masse.

Mr. Kram, you now have the floor for five minutes.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much, Mr. Chair.

Thank you to all the witnesses for being here this afternoon.

Mr. Dachis, in your opening statement you used the word “unconstitutional”. Could you elaborate on why you feel this bill may be unconstitutional?

[Benjamin Dachis]

Yes. This goes again to the question that we're talking about in terms of penalties and the question of it being a penalty versus a deterrent. When a fine is so large as to be well beyond any potential benefit that the company directly receives from the activity, we're starting to get into a different level of penalty. The Constitution gives a greater level of protection and a higher burden of proof that companies will be able to receive.

This goes to the drafting of the amendments. If there had been a line drawn earlier on with an increase in penalties but not to this level, along the lines of what the CBA has talked about—here we're talking about things that are connected to Canadian revenues, not international revenues, which are by nature and by definition not connected to the harm in Canada—there might have been a solution. However, we're looking at some serious risk of unconstitutional changes here that are going to throw the whole enforcement regime in the future into great uncertainty. I don't want the Canadian Competition Act enforcement regime to be thrown into that uncertainty because of poorly drafted legislation.

[Michael Kram, Conservative, Regina—Wascana, SK]

It is section 11 of the charter that deals with “proceedings in criminal and penal matters”. Are you saying that the bill may be in violation of section 11 of the charter?

[Benjamin Dachis]

Yes.

[Michael Kram, Conservative, Regina—Wascana, SK]

You also mentioned that we have a couple of options. One would be to carve out division 15 from this bill. The other option would be having a later proclamation date. Do you have a preference between those two recommendations?

[Benjamin Dachis]

I totally get why the government would be hesitant to carve out division 15. Time is the most valuable commodity in the House of Commons, and adding one more bill into a legislative schedule is going to be really tricky and create congestion. I totally get that even though this would be the best approach, it would be something they are hesitant to do.

Delaying proclamation has a couple of benefits.

The first benefit is that, rather than drop tools on everything when we have other obligations, it gives us more of a chance to provide submissions on the details before things have implementation. It allows us the time to properly digest the changes.

It also helps create a bit of a deadline for the second round of review. We've heard no details from the government in terms of what that review is going to look at. If they have a timeline of a year from now, we can look at these amendments and what else we might need in order to properly digest how all these reforms, which a lot of people in the competition world and the economics world are looking for, fit together and find a compromise that we can all work with.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you very much.

I'd like to turn now to our two witnesses from the Canadian Bar Association.

Your organization sent a letter to the committee a couple of days ago, and I would like to read you a quick quote from the letter. Under “Administrative Monetary Penalties” it says, “The apparent lack of ‘national treatment’ afforded to foreign companies may be inconsistent with Canada’s obligations under international trade agreements.”

I wonder if you could elaborate on which international trade agreements you feel Canada may be violating and why.

[Elisa Kearney]

I can take that one.

We don't have specifics on which international trade agreement we think may have a specific concern, but the issue is one of treating foreign companies the same as you treat your Canadian companies. To the extent that the provision does treat foreign companies differently, which we are presuming have a larger worldwide revenue, then they would be subject to AMPs for potentially even less harmful conduct in Canada at a higher degree.

There are assumptions built into the statement. Of course, there are Canadian companies with significant worldwide revenue that could equally be in the same situation, but I think the point is that if you have a fine that's twigged to worldwide revenues for harm that's conducted in Canada, there is a possibility that foreign companies will be subject to higher penalties and thus treated differently from their Canadian counterparts.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We'll now move to Madame Lapointe for five minutes.

[Viviane LaPointe, Liberal, Sudbury, ON]

Thank you Mr. Chair.

My questions are for Ms. Bednar, and I'd like to build on the questions that were raised by my colleague MP Erskine-Smith.

I'll invite you, Ms. Bednar, if you have some thoughts, to elaborate on the exchange that took place between Mr. Erskine-Smith and Mr. Dachis.

[Vass Bednar]

In terms of points to elaborate on, I think we are observing the policy process in action. There is consensus, both that people want action on this and that it is overdue as a policy priority.

We have heard from a range of stakeholders here today. It isn't about the “what”; it's about the “how”. It sounds very much as though, across everything we are talking about, this is actually the only intervention for which we are talking about people—everyday people, not corporations and not large foreign corporations. I am supportive of further exploration as to the precise implementation of how we articulate that in legislation so that people are comfortable with it and there is clarity. I would not want to rush forward with something that won't be beneficial.

To some of our other questions, even related to exploring these AMPs, this conversation also assumes that we can even prove a competition case in Canada and actually fine someone and fine one of these companies. Back when we fined Meta, then Facebook, which was brought up by Professor Quaid, again, to put that fine in context, it was less than an hour of Facebook's annual revenue for that year. Now I'm pulling at a fines question, but thank you for the opportunity to slightly elaborate.

[Viviane LaPointe, Liberal, Sudbury, ON]

For me, it is important to try to make this very relevant for everyday Canadians.

The change to the Competition Act proposed in clause 257 creates a new criminal offence that would prohibit employers from conspiring, agreeing or arranging to fix, maintain, decrease or control wages and terms and conditions of employment. Help me understand: Would this clause have been helpful to have when three of Canada's major grocery store chains all stopped pandemic wages on the same day?

[Vass Bednar]

I believe it would have been helpful, yes. I find it difficult, personally, to rationalize to anyone, including myself, that there are instances in which wage-fixing works in favour of workers or consumers. I think we've seen that franchisees have an interest in being able to intervene in the labour market and that there is a stronger role for the state to play, whether through the Competition Act or, as was said earlier, through labour law, looking at the province. That is something there has been increasing research and activism around—that Canada could take a more holistic, all-of-government approach to achieving the competition outcomes we would like to see. There certainly does seem to be a stronger role for the provinces here.

[Viviane LaPointe, Liberal, Sudbury, ON]

Do you think that the new provision being a criminal offence, as opposed to a civil matter, would act as a greater deterrent?

[Vass Bednar]

Yes, I think it could act as a greater deterrent. We are speaking, again, concurrently about the penalties—the AMPs. We fundamentally want the law to deter poor behaviour. We want it to hopefully not happen in the first place, before we take action and bring cases forward.

[Viviane LaPointe, Liberal, Sudbury, ON]

That's a good point.

You have referred to corporate interests wanting to avoid significant changes to the Competition Act, including some of the ones outlined in the BIA. Why do you think those interests are mobilizing against these proposed amendments?

[Vass Bednar]

I think we have a weak competition law. I've written about this extensively. It's difficult to bring a case forward. We win cases, but we don't win them often. We have trouble bringing cases forward. There is a huge disconnect with what everyday people seem to expect. I get these questions all the time from the media, from people, from people who want to learn, from policy colleagues: “Hey, I see this case happening internationally again in a big tech context, or digital context. Are we taking it here? What happens here? What does it mean?”

With so many of them, we can't even contemplate them under our current law. That is the reason for some of the research you previously heard about from Robin Shaban when they testified. Starting to take cases and starting to take a data-driven approach and back it into our law could be something we could look at, going forward, when we are in a consultation. Again, Canadians expect more. They want more on competition, and I think they talk about it all the time. They just don't use the words we are using, in terms of competition law.

[The Chair, Liberal, Joël Lightbound]

Thank you, Ms. Lapointe and Ms. Bednar.

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

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

Thank you, Mr. Chair.

I'd like to address another topic, the issue of awarding public contracts based on the lowest bidder. Clearly, that involves several risks and drawbacks today.

It's important not to overlook the possible repercussions of awarding public contracts on competition and on small and medium-sized enterprises, which probably cannot take into account competition based on price. Projects may cost less over the short term, but they cost a lot more over the long term. Also, those businesses are often deprived of the ability to innovate.

Is there another solution that could ensure the quality of projects and make it easier for small or medium-sized enterprises to participate in the public contracting process, a solution better suited to those businesses in terms of competition based on price?

My question is for Ms. Bednar, but other witnesses may also want to comment afterwards.

[Vass Bednar]

I'm happy to turn it to others as well. I'm sorry that I had to step away from my chair for a moment.

The Competition Bureau actually put out, a few years ago, their guidance on people self-selecting or self-declaring against bid-rigging. There's research that I'll have to pull up, although I have papers all around me on my desk related to it. Again, I think it's something that would happen outside of the act, but that is fundamentally a pro-competitive outcome that signals the intention we want to achieve and helps people get there.

I think your question was whether something like that would also benefit SMEs. Yes, I'm optimistic that it would, which is why I included it in the brief that Denise Hearn and I submitted, which is now available online, which I believe you referenced. So if anyone wants to take a look, please do.

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

Thank you.

Is there anyone else who wants to comment on the principle of public contracting?