Industry Committee on May 20th, 2022

[The Chair, Liberal, Joël Lightbound]

I call this meeting to order.

Good afternoon.

Welcome to meeting number 25 of the House of Commons Standing Committee on Industry and Technology.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Friday, May 13, 2022, the committee is meeting to study the subject matter of part 5, divisions 15, 16 and 17 of Bill C‑19, budget implementation act, 2022, No. 1.

Today's meeting is taking place in a hybrid format, pursuant to the House order of Thursday, November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. Those who are here, in Ottawa, know the health rules in effect. Please act accordingly.

I am pleased to introduce our witnesses for today's committee meeting.

First, I'd like to apologize to the witnesses and thank them for their patience. A vote delayed the start of this meeting, and that somewhat shortens the time we'll have for the meeting today, because we must end at three o'clock exactly. I thank you for your patience and co‑operation.

As an individual, we again have Ms. Vass Bednar, executive director of the master of public policy in digital society program at McMaster University. In Ottawa, we have Ms. Jennifer Quaid, associate professor and vice-dean of research in the civil law section of the faculty of law at the University of Ottawa. We also have Mr. William Wu, partner, competition, antitrust and foreign investment at McMillan LLP.

From the C.D. Howe Institute, we have Mr. Benjamin Dachis, associate vice-president, public affairs. From the Canadian Bar Association, we have Ms. Elisa Kearney, second vice-chair, competition law and foreign investment review section, and Mr. Dominic Thérien, secretary, competition law and foreign investment review section. Finally, from Unifor, we have Ms. Kaylie Tiessen, national representative, research department.

I thank all the witnesses for being with us.

Ms. Bednar, you now have the floor for five minutes.

[Vass Bednar, Executive Director, Master of Public Policy in Digital Society Program, McMaster University, As an Individual]

Thank you.

In addition to my leadership role at McMaster University, I'm one of the country's most vocal advocates for competition reform. I've contributed in modest but meaningful ways to the policy attention to these questions through opinion editorials in The Globe and Mail, the National Post, research published by McGill University and commissioned by ISED, various podcast interviews, and my newsletter “Regs To Riches”.

I think I'm back here to discuss the BIA with you because people are squirming. I don't mean “the people”. I mean corporate interests that have long benefited from the policy inertia on competition. The usual suspects have lost their monopoly on this conversation, which has meant that decision-makers like you are asking really important questions, like how we can promote more dynamic and fair markets. This is a good thing.

It's good because an Ipsos poll from earlier this year illuminated that most Canadians, 88%, say that we need more competition and that it's too easy for big business to take advantage of them as consumers. To me, this kind of last-minute, short-notice INDU meeting on a Friday before a long weekend feels kind of like a perfect example of just that—big business moving to skew a policy process that should be a no-brainer.

The initial amendments to the Competition Act that are currently contained in the BIA are a crucial down payment on competition reform. In this way they are, unfortunately, also a bit of a test. They are a test of whether Canada takes competition reform seriously. For way too long, we quite simply have not.

If you look at the available data, prices tend to go up after mergers, despite what companies claim before the merger occurs. The Washington Centre for Equitable Growth recently put together a searchable database of about 150 economic papers. A lot of these papers show empirical evidence that the permissive approach of authorities in the U.S. has led to higher prices and less competition.

Comparable Canadian research just doesn't exist, but there's so much that Canada should be learning from other jurisdictions. This extends beyond policy ideas, implementation and inspiration to a caution about the insane amount of lobbying dollars that are spent—usually by the largest technology firms—to stall antitrust policy change. A popular company tactic is the whitewashing of their perspectives through otherwise reputable think tanks and academics, or even the creation of shell organizations that are designed to resemble authentic grassroots interventions, like Meta's American Edge, or Amazon and Google's Connected Commerce Council.

Let's go back to the question of whether these initial amendments require further study or whether they should be retained. The challenge of wage-fixing has already been deeply explored through the good work of this committee. A range of stakeholders are in agreement that it must be addressed. Do we need to study whether the proposed AMPs are just too strong a punishment or a deterrent? Well, there's a whole body of literature that looks at the deterrent effects of fines in competition law and it supports what's in the BIA. Do we need to debate whether drip pricing has any utility for consumers that get tricked about what the actual retail price is for something by this deceptive marketing tactic?

These proposed changes are the absolute lowest hanging fruit. We shouldn't be examining them further at this point, because they clearly serve the public interest at a time when Canadians are under intense economic pressure. They'll improve the enforcement of the act. They were clearly foreshadowed in a February press release from the minister, they're aligned with analysis from the Competition Bureau and they've been discussed at length in the public domain, including at this very committee. Let's keep these encouraging, overdue amendments in the BIA. You must signal to Canadians that leaders in Ottawa will actually protect them and create the conditions for innovation and entrepreneurship.

Should they be studied further? Yes. We can study their implementation. We can debate the mechanics of that implementation, and we should support more research into the dynamics of competition in Canada, because we obviously need it. We don't need any more backroom baseball or tapping the brakes on reform.

You've heard from some respondents that having amendments contained in the budget bill is anti-democratic. Yes, budget omnibus bills are imperfect democratic tools, but there is an opportunity to better protect Canadians as they face the rising cost of living today.

Can we have more discussion about the nuances of these changes? Yes, and we will. Should we drop them altogether right now? No way. It is impossible to justify the status quo on competition in Canada, yet it persists.

The stakeholders that are agitating behind the scenes can go on the record with their concerns when the government launches a broad, open, inclusive and independent consultation on competition later this year. Such a consultation has been foreshadowed and endorsed by the godfathers of competition in Canada, like Senator Howard Wetston, Lawson Hunter and others.

At that time, those private actors who opposed these promising amendments—these early changes, this down payment—can step forward, instead of hiding behind their lawyers or lobbying behind the scenes. They can go on the record with their rationale for why we don't need these changes and convince Canadians. They can convince Canadians that there are instances where wage-fixing while the cost of living for Canadians rises is perfectly acceptable. They can come and convince Canadians that the AMPs proportional to the size of an offender are just too strong a deterrent. They can come and explain to Canadians why it's okay to hide the real prices from people when they're shopping online.

That is democracy, and that is what we need to improve Canada's competition laws.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Bednar.

I'll now move to Professor Quaid for five minutes.

[Dr. Jennifer Quaid, Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual]

Mr. Chair and honourable members of the committee, I'm pleased to appear before you once again.

Last week, we had very good discussions on the amendments to the Competition Act as part of your study on small and medium-sized enterprises. I'm pleased today to be able to continue the discussion of the amendments in a broader context.

I'd also like to note that the panel of witnesses you have brought together, most of whom I know personally or by reputation, is impressive. They will all surely give very informative and thought-provoking comments.

For those who don't know me, my name is Jennifer Quaid. I'm an associate professor and vice-dean of research in the civil law section at the University of Ottawa. My areas of expertise primarily lie where business law and criminal law intersect: business criminal law, competition law, anti-corruption law and economic crimes, business law and general criminal law.

I will not repeat my remarks of last week, in which I lamented the use of a budget bill to enact substantive changes to the Competition Act. My views have not changed on this. Using a BIA as a fast track for amendments, however well intentioned, is a practice that has gotten out of hand. It undermines the legitimacy of the provisions that are enacted in this way, because there is no time for debate on the merits, even where there is agreement, and there is no opportunity for scrutiny and constructive comments to ensure that the provisions work as intended.

I alluded to it last week. I won't go into detail now, because we're late and short of time, but an example is the enactment of part XXII.1 of the Criminal Code, which was enacted in haste, a substantive change to the criminal law. We are reaping what we sow, because we saw arguments in court last week that suggest that, contrary to the intentions, there were arguments made that were completely different. I think we need to be careful about rushed amendments.

However, I want to be practical today. The focus of my remarks today will be on how to move forward in the less-than-optimal conditions we find ourselves in. I have taken to heart some advice that was provided to me by a colleague when I was writing my doctoral dissertation: “Beware, better is the enemy of good.”

I'll review the content of the proposed amendments to highlight what's good, although these amendments could have been better with more time and consultation. Clearly, I'm sharing thoughts with you that have been developed over an intensive period. Indeed, you've made us work quite hard in recent weeks. I may change my opinions, or my thoughts may evolve over time.

Of the eight proposed amendments, only one is not good. I want to stress that. It's the provision that would add an offence related to fixing salaries, found in proposed new subsection 45(1.1) of the Competition Act. We can discuss it. I have a lot to say on the matter. I find that there are a lot of problems, both in principle—is it the solution to the problems in question?— and in execution, or the wording of the provision. It merits considerably more study.

Apart from that, I find that the amendments, although not perfect, can be adopted without any major problems.

I would add that in almost all these cases, the amendments, though they are imperfect, could be, let's say, complemented by advice from the bureau and publication of enforcement guidelines. I really hope that this is forthcoming quickly, because some of these changes will need support.

I'm going to go very quickly and provide one line on every amendment, but of course, I'm happy to discuss them in detail later.

On the increase to the fine under section 45, at the discretion of the court, this brings the fine under section 45 in line with the other serious provisions in the act, sections 46, 47 and 52, but I caution this committee that there is a serious escalation of the penalties for the criminal provisions of the act, and I think that merits consideration in round two. It looks elegant and symmetrical, but it's hiding a bigger problem.

The next thing is the changes to the AMPs. There's been a lot of debate about that. My friends at the CBA will have a lot more to say about that. Let's say that I think we need to focus on the key thing here, which is that the additions are in relation to cases where we go above the maximum. I think that frames a little bit our concerns to really focus on the cases where we would be above those maximums. We're not talking about SMEs; we're not talking about small businesses. We're talking about larger businesses. We're talking about the Facebooks of this world. I think we need to put that into context.

I acknowledge there are some things we can debate, like the metrics.

In terms of drip pricing, yes, there are some things that could have been better done, but at the end of the day, the bureau already enforces against drip pricing; this is just being more specific. I think we can leave room for modification or tinkering. I think there is some stuff that will need to be looked at, but I also think that bureau enforcement advice might help get us through the period before we can modify the provision to our satisfaction.

There are new factors that have been added to the abuse of dominance, merger and civil collaboration regimes in terms of referring to elements of the digital economy like consumer privacy, referring indirectly to nascent competitors and so forth. The language is a little more precise than I'm making it right now. I don't think there's really any problem with that. The bureau is probably already taking into account those provisions through the basket clauses that are provided in each of those sections, and all we're doing is being more transparent about it.

Again, is this the last word? I doubt it. In fact, I think at the consultation we're probably going to have a substantial discussion about whether we need to restructure some of these analytical frameworks, but in the short term, I don't think this is a big deal. Other countries are also taking into account these factors.

I'll be going super fast. In terms of the private right of action, I hear my friends who are concerned that this could be used as a way for unsatisfied competitors to maybe not entirely meritoriously target dominant firms. I'm not sure I share their concerns, and I would be interested to know what kind of evidence suggests that this is really a problem. My greater concern is that a private right of action cannot be viewed as something that diminishes the role of the commissioner, because the commissioner still has an important role here. This is not a savings in enforcement; it's a complement.

On the modifications to the abuse of dominance provisions, I think these were proposed by Professor Iacobucci, who is very cautious about modifying the act, but he thinks there's a gap, and I tend to agree with him. Again, it's not perfect, and maybe we're going to restructure abuse of dominance completely differently after the consultation, but for now I'm not sure this is going to create a huge problem in the short term, as cases on abuse of dominance take time to bring together and analyze.

On the general anti-avoidance and the revisions to section 11, these were both requests by the commissioner, and I think we need to keep in mind that.... I can't substitute my judgment for what they think is necessary. Maybe this committee can ask them for further details and examples to give a dimension to the problem. Is there an anti-avoidance problem? I can't comment factually about whether this is an overreach or whether this is going to be a problem. I'm sure my friends from the CBA will have more to say on that.

I want to conclude—and I know I'm over time—by saying that this is step one. I'm trying to be practical and give you suggestions for how to get to step two, which is the really important game. We need this consultation; we need the substantive analysis.

I can't stress enough the importance of holding as broad of a consultation as possible.

Our economic policy and Competition Act must be updated, but it needs to be done in a way that helps define the main values we're seeking to promote through our economic policy. The creation of a robust governance architecture, particularly in terms of digital technology, and the passing of coherent laws are not possible without this essential step.

I'll stop here. I'm available to answer any questions from the members of the committee.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Quaid.

Mr. Wu, you now have the floor.

[William Wu, Partner, Competition, Antitrust and Foreign Investment, McMillan LLP, As an Individual]

Thank you very much for this opportunity to appear before the committee. My name is William Wu. I’m a partner in the competition and foreign investment group at McMillan in Toronto.

It has been almost 15 years since the last major review of Canadian competition law and competition policy. I think everybody here would agree that it is time for another review of Canadian competition law. In this regard, I applaud Minister Champagne for announcing a broad review of the Competition Act. That consultation will need to be broad and inclusive. I think everybody here would agree with that.

With that in mind, it is unclear to me why we need to have all these amendments done through this process right now, when the broader consultation is coming in the next couple of months, I believe. In relation to the wage-fixing and no-poaching provision in particular, in the bill itself that provision is only intended to come into force one year after the BIA receives royal assent. It already contemplates that something more needs to be done to that provision. With that delay already built in, I see no compelling reason why that provision in particular needs to be rushed through this regulatory process right now.

In terms of the substance of the no-poaching and wage-fixing provision, I share Professor Quaid's concern that using criminal law to deal with this issue may not be appropriate. Looking at the wage-fixing and no-poaching agreement, I think we can really conceive of it as a competition law issue or as a labour and employment law issue. To the extent that it is a competition law issue, the concern would be that employers are agreeing not to compete in their hiring or compensation practices. If that is a concern, I would say that using criminal law to create a per se prohibition is too blunt an instrument.

There are a lot of legitimate and pro-competitive reasons why employers might want to talk to each other about their hiring and compensation practices. I can speak to those in more detail later. It is not obvious at all that these types of agreements will always cause harm to employees by depriving them of higher wages or job opportunities. In that context, given that there can be harmful no-poaching and wage-fixing agreements and there can be legitimate ones as well, using the existing civil reviewable practices provision in section 90.1 of the act is an appropriate competition law framework to address these issues.

To the extent that the concern is the protection of workers, in particular low-wage workers, that is traditionally within the ambit of provincial labour and employment law and less of a competition law issue. I would submit that labour and employment law and labour and employment law regulators are better equipped and have better expertise and experience in dealing with those issues.

I will stop here for now, given the short time today. I would be happy to answer questions. I do have other views on other amendments, particularly the drip pricing provision, which I can speak to during questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Wu.

I will now move to Mr. Dachis.

[Benjamin Dachis, Associate Vice-President, Public Affairs, C.D. Howe Institute]

Thank you very much.

I have the great pleasure of working with the C.D. Howe Institute's competition policy council, which is comprised of top-ranked competition law academics and practitioners. Elisa Kearney, whom you will be hearing from later today in her role at the CBA, is the chair of the council.

The core concern of the council is that the scope of changes to the Competition Act and the BIA is not fulfilling the commitment articulated in budget 2022 to consult broadly on the role and functioning of the Competition Act and its enforcement regime. Let me address some of the problems that could have been fixed with consultation on the specifics of the bill.

First, the changes proposed in the BIA result in corporations now facing administrative monetary penalties, or AMPs, of up to 3% of annual worldwide gross revenues. The legal details really matter here. If an AMP is penal in nature rather than a deterrent, then it is effectively a criminal penalty. The alleged offender must be tried in accordance with the due process requirements of section 11 of the Charter of Rights and Freedoms. Neither the misleading advertising nor the abuse of dominance provisions that attract these significant penalties are criminal offences.

The burden of proof to be convicted is a lower balance of probability standard. The increase to the fines to be set on global revenues of a firm—this is a critical part—that are not directly related to the harms of the practice greatly raises the likelihood that the fines could be found as penal and therefore unconstitutional.

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

Thank you, Mr. Chair. This is the second time that the interpreter has mentioned problems with sound while the witness was speaking.

[Benjamin Dachis]

Is that any better?

[The Chair, Liberal, Joël Lightbound]

It seems to be a network issue, but if you can, speak a little more slowly, Mr. Dachis.

[Benjamin Dachis]

Sure. I'm sorry about that.

With such large potential penalties, there's a risk of over-deterrence, and firms may shy away from practices that may be beneficial for Canadians. These potential fines raise reputational risks for Canada as not being supportive of foreign investment, given that fines will be disproportionately large for foreign multinationals.

The risks of over-deterrence are magnified by the changes in the BIA to allow private parties access to the tribunal to make a complaint about abuse of dominance. Although private litigants do not have the ability to receive damages themselves, the defendants in a privately brought case of abuse of dominance will face a large potential fine that will be paid to the government. This goes well beyond the appropriate role—and there is an appropriate role for private litigation in abuse of dominance—and risks creating “private sheriffs”, where competitor-driven complaints before the tribunal may result in government levying disproportionate fines against parties.

Moving to wage-fixing and no-poach agreements, there are very sound legal and economic reasons to address them. Price-fixing and wage-fixing are economically similar. However, as we've heard a couple of times today, the language of the new amendment is overly broad and creates great uncertainty.

There is uncertainty about whether the term “employee” captures all categories of workers. There's no definition of “employer” and “employee” in the Competition Act. Given the changing nature of employment, as well as the varying provincial definitions of employee-employer relationships, the proposed amendments would benefit from proper consultation with employment law experts directly from the government, rather than what a single committee like this or a single senator like Senator Howard Wetston can manage on their own.

I can get to various approaches on how to deal with wage-fixing in the questions, but William Wu is a real expert on this, so I defer to him in particular.

The last thing on substance is that the identification of privacy as a specific characteristic of non-price competition, separate from product quality, raises particular questions. If privacy is distinct from product quality, what does this really mean? Will competition law cases—mergers, for example—turn on a privacy issue even if competition issues are otherwise unproblematic? Once again, the amendment would have benefited from broader consultation.

Let me close on the core problem, and that's process. The problems of the BIA are reminiscent of similar process concerns that accompanied the legislative changes to the Competition Act in 2009 via the budget process. Some of the proposed amendments in the BIA now reflect legislative fixes to fix that flawed process, yet by following the same flawed process, the inevitable result is an overcorrection and the need for legislative amendments in the future, which, more importantly, do not achieve the government's objective of improving the operation of the Competition Act.

What's the practical bottom line? Carving division 15 out of the BIA would be the right approach. If that isn't feasible, the committee should call for setting the proclamation date for all provisions—not just some—for a year from passage. We also need to hear more from the government on their plans for further consultation, as they promised.

These proposed changes can be seen in concert with other proposed changes that would come as part of a prompt second stage of Competition Act reviews. Proceeding right to these amendments, especially ones that may be unconstitutional, taking force without further consultation could be potentially reckless. We can work out the details of the implementation of changes before they take effect, with a later proclamation.

I'll leave my opening remarks there, and I look forward to your questions.

Thank you again for the invitation to speak on this issue.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Dachis.

We'll now turn to the Canadian Bar Association, with Ms. Kearney.

Ms. Kearney will be splitting her time with Mr. Thérien.

[Elisa Kearney, Second Vice-Chair, Competition Law and Foreign Investment Review Section, The Canadian Bar Association]

Good afternoon, Mr. Chair and honourable members of the committee.

My name is Elisa Kearney. I am the second vice-chair with the competition law and foreign investment review section of the Canadian Bar Association. Thank you for inviting the CBA to discuss the proposed changes to the Competition Act as set out in the budget implementation act. With me today is Mr. Dominic Thérien, the secretary of the section.

[Dominic Thérien, Secretary, Competition Law and Foreign Investment Review Section, Canadian Bar Association]

Thank you, Ms. Kearney.

The Canadian Bar Association, or CBA, is a national association of over 36,000 legal practitioners across the country. The main objectives of the CBA are to improve law and the administration of justice, and that's why we're here today on behalf of the competition law and foreign investment review section.

I'll turn back to you, Elisa.

[Elisa Kearney]

To begin, the CBA strongly believes that the proposed amendments to the Competition Act should not be in the BIA. Given the critical role of the Competition Act in promoting dynamic and fair markets, and given the importance of innovation, meaningful and thorough consultations are necessary to ensure that the underlying policy objectives of the proposed amendments are indeed achieved.

The CBA does support the government in its ongoing review of the Competition Act but believes that the amendments proposed in the BIA need to be further amended, studied and refined to ensure they improve the operation of the act and do not create unintended adverse consequences.

Let me provide a few examples.

On abuse of dominance, we are concerned that the proposed substantive amendments on abuse may be overbroad and carry the unintended consequence of softening competition on the merits. These concerns are augmented by the amendments in the BIA that permit private parties to seek relief. The CBA is concerned that competitors will use the threats of private litigation and large penalty awards to deter conduct by rivals that may be pro-competitive and beneficial to Canadians.

On the penalties, the BIA proposes to increase the amount of administrative monetary penalties for both deceptive marketing and abuse of dominance to three times the value of the benefit derived or, if that benefit cannot reasonably be determined, 3% of annual worldwide gross revenues. In the view of the CBA, there is no policy for considering benefits arising or sales made outside of Canada when determining an appropriate penalty. The CBA believes that any attempt to connect an AMP to the benefit derived or the overall revenue received should be limited to benefits and revenues in Canada.

As you have heard, there are potential constitutional issues with large punitive amounts for non-criminal conduct. We have concerns that punitive amounts will damage Canada's reputation as a good place for foreign firms to do business, with negative effects on the Canadian economy.

My colleague, Monsieur Thérien, has a few more examples.

[Dominic Thérien]

You heard before that I'd like to address the wage-fixing and the no-poach proposed amendments. The BIA would expand the current per se illegal criminal conspiracy offence under section 45 to such no-poach and wage-fixing agreements.

The CBA is of the view that the criminal offence for wage-fixing and no-poach agreements may not be the most efficient way to improve the act's operation. Currently, there's already a non-criminal enforcement track for wage-fixing and no-poach agreements under section 90.1 of the act, but this section has never been used. This provision can be improved to be more effective without resorting to criminal liability, which of course has a higher burden of proof and is thus more difficult to prosecute.

We have concerns that the proposed amendments as currently drafted are both over- and under-inclusive.

First, the proposed wage-fixing offence would basically apply to agreements regarding any term and condition of employment. “Terms and conditions of employment” is without a doubt very broad language and ambiguous, to say the least.

If we turn now to the proposed no-poach agreement offence, I want to echo earlier comments that this would only currently apply to “employees”, which is an undefined term. I share the view that under the current changing nature of employment relationships in the Canadian economy, we should further consider whether the provision is warranted to ensure that it actually captures the government's policy objectives.

We also want to bring to the committee's attention that an offence under section 45 basically triggers significant collateral consequences. First of all, we're talking about class action risks and also debarment risk, losing qualifications or being disqualified from public contracts. These issues have not been discussed. They should be fully debated before amendments that would bring no-poach and wage-fixing agreements under the criminal offence in section 45 are rushed through the BIA process.

That concludes our opening comments.

We would be pleased to answer your questions.

We thank you again for inviting us to come share our concerns with you today.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I now give the floor to Ms. Tiessen, from Unifor.

[Kaylie Tiessen, National Representative, Research Department, Unifor]

Good afternoon, everyone.

My name is Kaylie Tiessen. I'm an economist and a policy analyst in the research department at Unifor. I'm here to discuss the long-awaited initial changes to Canada's competition policy that are inside the budget implementation bill.

This is the third time in just under two years that Unifor has appeared before this committee to discuss Canada's wage-fixing problem. The first was in 2020, when our president, along with two local union leaders in the grocery store sector, appeared to ask this committee to investigate the blatant wage-fixing that occurred in the sector when the major grocery stores all cancelled pandemic pay on the same day. The second was in the spring of 2021, when I appeared here to discuss our recommendations for strengthening the Competition Act. We want to improve outcomes for workers and consumers in Canada through a Competition Act that actually accomplishes creating the conditions for healthy competition in this country.

I'm here before you for the third time to remind you of four things. One, making wage-fixing and no-poach agreements a criminal offence is the bare minimum that must be done to foster fair competition in Canada in the labour markets. Two, wage-fixing and no-poach agreements used to be considered criminal offences in the Competition Act. Three, two egregious cases of anti-competitive behaviour in labour markets have recently been rejected by competition investigators—this is in the last 18 months—because of the high threshold required by civil law, not because any competition officer thought that the actions were not anti-competitive. Four, administrative monetary penalties are supposed to be high enough to deter the behaviour, instead of low enough to become a cost of doing business.

I'll address each of these in more detail individually.

First is doing the bare minimum. Moving wage-fixing and no-poach agreements back to the realm of a criminal offence is just one of several changes that are needed in order to improve outcomes for workers and consumers through the elimination of anti-competitive behaviour.

As it currently stands, the Competition Act doesn’t specifically consider the effects of anti-competitive behaviour on workers at all. The bureau can pursue anti-competitive behaviours that impact workers through its merger reviews and potentially through other civil provisions, like section 90.1—which we've heard about already today—which deals with competitor collaborations. However, to date, we find no evidence that the bureau has actually done a serious investigation. Some of that is because that threshold is too high; they would have liked to pursue that, but they couldn't. This means that Canada might be allowing actions that artificially suppress wages and working conditions, decreasing the well-being of workers across the economy, and we don't even have the tools to find out if that's happening. Recent research from the Department of the Treasury found that anti-competitive behaviours in American labour markets have depressed wages by 20%, so they're 20% lower than would have been the case if no anti-competitive behaviour existed.

Number two, wage-fixing and no-poach agreements used to be criminal offences under the Competition Act. It wasn’t until a change in 2009 that these actions were relegated to the realm of civil law, where the law has languished and remained ineffective at dealing with the anti-competitive behaviour I have just mentioned. We're a laggard when it comes to workers' rights under competition law, and the opportunity to change that is right here in front of you today.

My third reminder is that there are two recent cases that were rejected by competition officers because of this high evidentiary threshold in civil law. The first was the grocery company same-day pandemic pay cancellation I mentioned earlier, which we've spoken about on multiple occasions here already. The second was a class action lawsuit accusing Tim Hortons franchises in B.C. of artificially lowering wages and working conditions of workers in the industry through no-poach agreements. Both of those cases have been rejected under competition law in the last 18 months because of this high threshold of evidence required, not because any competition official thought the actions weren't anti-competitive.

Number four, administrative penalties are at risk of becoming a cost of doing business. This is a situation the Competition Bureau has stated it wants to avoid. It's my opinion that administrative penalties must be high enough to deter the behaviour the law is trying to prohibit, not so low that companies can just absorb the cost of breaking the law.

I have more recommendations to make to the Competition Act review that's coming later this year, and I look forward to coming back here to talk to this committee about them all.

Canada's workers are directly and indirectly affected by Canada's competition policy every day. In my experience, the bureau lacks the power it needs to ensure that anti-competitive behaviour does not negatively affect wages or working conditions in Canada.

Thank you, and I look forward to taking your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much to all of our witnesses.

Before we open up the discussion, I want to inform colleagues that, given the delays, we'll only have time for the first two rounds of questions.

Without further ado, we'll start with Mr. Deltell for six minutes.

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

Thank you very much, Mr. Chair.

Thank you all for taking part in this very interesting and extremely enlightening meeting, as always. This meeting is shorter than what was scheduled, but there are a lot of elements that we can discuss. I'd like to start by addressing Mr. Thérien from the Canadian Bar Association.

Good afternoon, Mr. Thérien. Welcome to the committee.

I am going to follow up on something your colleague said. However, for discussion purposes, I'll speak mainly to you and in French.

I'd like more details on one point. In your presentation, you spoke about the impact this bill could have on Canada's reputation abroad if we were to pass it or amend it too quickly.

What are your concerns in this respect?

[Dominic Thérien]

Thank you for your question.

First, the comment about the potential impact the bill could have on Canada's reputation is more about the calculation of the administrative monetary penalty that could be imposed in the event of abuse of dominant position, as proposed in the bill.

Essentially, the concern is related to the method of calculation. Professor Quaid already mentioned it, I believe. It can be hard to calculate the benefit from a problematic practice. The calculation takes into account up to 3% of the company's revenues, but is not limited to revenues generated by or linked to activities in Canada.

The fear is thus related to the calculation of a fine. The need to increase the value used in the calculation can certainly be debated; the maximum is $10 million for a first offence. However, it's problematic to have a new cap that could be calculated based on worldwide revenues, depending on the company in question. We believe that there must at least be a discussion to better identify what we're talking about, particularly as relates to the calculation of the penalty based on a figure of 3% of the company's revenues.

I believe that Canada's reputation could be tarnished if, going forward, the calculation was based on all of a company's worldwide revenues without any impact for Canadians.

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

Several witnesses found that some of the administrative monetary penalties were disproportionate. We agree that, if someone acts illegally, they must pay.

However, in your opinion, since the current monetary penalties are deemed to be too high, do we risk doing the opposite if we exclude the example that you just gave concerning the calculation based on 3% of a company's worldwide revenues?

[Dominic Thérien]

I believe that our section's position and that of the Canadian Bar Association are in fact a combination. I must note the somewhat technical aspect of the act. Honestly, the caps are also regulated. The new caps in question here applied to cases of abuse of dominant position and misleading advertising. In our opinion, there could be debate if such calculations were to be based on revenues for misleading advertising. We're not certain that there would be equivalencies in other countries in relation to misleading advertising.

There are checks and balances, if you will, because the judge or tribunal has tests to consider, such as the duration of the practice, the repercussions, the actual objective. An investigation will certainly help limit the caps.

The problem, here, is the combination of new thresholds and private remedies related to abuse of dominant position. Without reiterating what has been said and done, this raises important questions. We've never seen this in Canada. These businesses could complain, possibly with reason, and we aren't questioning that. However, the administrative monetary penalty that could be imposed doesn't go into the pockets of the company complaining; it goes to the Receiver General for Canada. It's a system that we don't understand. It's new and it's never been seen in Canada. What will happen if this type of situation comes up? What type of incentive will it provide for potentially strategic litigation?

The combination of civil remedy and new caps is what concerns us. That needs to be examined more closely.

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

Would it be the first time this has happened in Canada?