Industry Committee on Sept. 26th, 2022

[The Chair, Liberal, Joël Lightbound]

I'm very grateful to you, Mr. Lemire, as I am struggling to keep within the time limits.

Mr. Masse, go ahead for six minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to all the witnesses.

I'm going to start with you, Mr. Pecman. With regard to continuing discussions with the United States, what is your overall assessment? I think that in many respects Canadian consumers are treated like a colony by many of the large manufacturers and corporations.

I'll give you a good example: Toyota. During their abysmal performance on the recall for deficient brake pedals, we broke the story that it was actually software. They insisted that it was a physical thing and insisted that it was the mat. That led to accidents and serious problems.

In the U.S., their citizens actually got better service. They got their vehicles picked up if they wanted that and, for example, in the state of California, they got replacement vehicles and a massive investment for R and D as part of the settlement. Over here, we didn't get any of those things.

Can you give us some insight? When competition issues related to public safety and other matters are identified, do you think Canadians get treated the same way as our American counterparts? This applies especially to the automotive areas. We're integrated, in that we actually have the same emission standards and the same standards for quality and for roads as well. It's interesting that when it comes to warranties, recalls and so forth, we're not treated the same.

[John Pecman]

Thank you for that question, Mr. Masse.

In terms of the treatment of consumers in Canada vis-à-vis the U.S., obviously rules and regulations in the U.S. are different from those in Canada, particularly in dealing with consumer protection and antitrust situations. The antitrust laws in the U.S. are very severe, with severe penalties, including very active private class action mechanisms that allow companies and consumers to advocate before the courts and obtain damages for conduct by companies.

In Canada, it's nascent in some of the areas. Class action is available to consumers when you're dealing with cartel criminal conduct, such as price-fixing and bid rigging. On the other types of conduct, such as abuse of dominance and other market-type restraints, the Competition Tribunal is allowing access, but there are no damages provisions, so that kind of mutes the effectiveness of that tribunal. It does help free up some of the conduct to make it more competitive, but the consumer redress piece is left behind.

I think you really do have to look at the jurisdiction's consumer redress features. There I think we're behind the U.S. In terms of our legislation for competition and consumer protection, we're close. Again, we need to make some tweaks to align ourselves with the U.S. on the merger side, for example. I mentioned the efficiencies process.

In terms of consumer protection, with the recent amendments, the potential administrative monetary penalties that can be imposed on companies have increased. Again, that will just draw their attention. I don't think companies intentionally intend to discriminate between the two markets, but their attention is focused on where their costs are higher and where there's more liability. As Canada is a smaller market, I don't think it draws their immediate attention. Large markets like the U.S. and Europe are where they pay attention, and they'll get to Canada, and that's what we've seen often when you're dealing with international issues.

[Brian Masse, NDP, Windsor West, ON]

If we leave those holes open.... I'm also the international trade critic and I've always argued that this should be part of our trade agreements if we're going to integrate our markets and we're going to have similar rights for corporations on competition and massive public investments. Most recently, we've had significant public dollars going to many corporations and many different industries. Shouldn't there be at least some thought there? Should we maybe bake that into trade agreements, versus trying to recover later on by doing separate legislation to try to bolster...?

I do appreciate the specifics that you provided on the Competition Bureau update. I think those are really good suggestions. Should we try to bake those things into trade agreements? What do we do now? We just signed another agreement with the United States, but we didn't include consumer protection.

[John Pecman]

I'm going to have to be careful to not speak outside my lane and outside of my expertise.

I'll focus on competition law. Specifically dealing with trade agreements, there are provisions in the trade agreements that deal with harmonization of competition laws. However, in terms of the consumer protection side, I'm not aware that there is a detailed harmonization attempt, as you're suggesting. The trade agreements generally do try to link up competition policy and approaches. It's not clause by clause, so the devil is often in the details. There are attempts to co-operate and attempts to have similar types of provisions, but there is nuance. That sometimes really matters.

[Brian Masse, NDP, Windsor West, ON]

Maybe that's where we're failing Canadians, in the sense of doing follow-up legislation to match those things that we do on the trade front. We finally got in some of those things about health and safety, workers' rights, environmental issues and so forth.

I do want to ask you to expand a little bit on the independence of the Competition Bureau and maybe resources that we should have. I really feel that those are important factors, the independence in particular, especially when we have the dissolution of the media, which no longer does as much investigative reporting because it's so costly. They're also litigated, so we've lost a chapter of our journalistic elements because of a series of different disruptions. They used to provide some type of exposure of corporate malfeasance. I'm wondering whether or not there should be more independence, as you mentioned, and resources for the Competition Bureau to fill that void.

[John Pecman]

The thesis in my paper that I mentioned is something that I've been advocating for some time. The Competition Bureau is currently situated as sort of a sector branch within ISED, the industry department. As a result, it has to report its administrative and financial responsibilities there. Sometimes when there is a program in the department that needs funding, it will be across the board, and the bureau ends up providing some of its budget towards superclusters or whatever the initiative is, taking away resources from the bureau. While I was commissioner, resources of our organization diminished over time as these asks continued.

In terms of the independence of our investigations, yes, the department is hands-off. We just give a heads-up that we're about to take an action, and that's the extent of it. I think there is a chilling effect when the department that the bureau is situated in and reports to is in the business of also promoting business. It's hard to be a referee against those businesses when your higher-ups are encouraging these companies through subsidies or grants. It creates a conflict. It's not transparent. It just chills, and the bureau's advocacy is chilled sometimes in certain sectors because of the activity of the department.

I'm just saying that it would be a lot cleaner and more efficient if Canada had, like the rest of the world, an independent competition authority not embedded in an industry department. That is the number one thing the OECD recommends to developing agencies not to do.

[Brian Masse, NDP, Windsor West, ON]

I agree 100%.

May I have one last quick question, Mr. Chair?

[The Chair, Liberal, Joël Lightbound]

Be very quick.

[Brian Masse, NDP, Windsor West, ON]

Then more similar to the Privacy Commissioner or something—

[John Pecman]

Yes, that would be my recommendation. They would report directly to Parliament. They're free; they can be more outspoken, and they can be more effective. They'd be accountable for their resources to Parliament, as opposed to being buried within a department where their resources aren't protected. They are not protected there; they are exposed to the department and their takes.

Having them independent makes them, I believe, a better agency.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Colleagues, we're at the end of the first hour. With your blessing, I would propose that we go forward for at least 15 minutes more. We can do the first part of the second round so that every side has the opportunity to ask more questions. Would that be amenable to all of you?

[Some hon. members]

Agreed.

[The Chair, Liberal, Joël Lightbound]

Okay, so I'll ask our witnesses to stay with us for just a little longer, say 15 to 20 minutes.

We'll go now to Mr. Kram for five minutes.

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

Thank you, Mr. Chair.

Thank you to all the witnesses for joining us this morning.

Mr. Wudrick from the Macdonald-Laurier Institute, I found your opening presentation very intriguing. For a minute there, I thought you were going to be very critical of small businesses compared to large businesses, but, as your presentation went on, the conclusion that I came to was that if we're going to increase the standard of living in this country, we need to grow small and medium-sized businesses into large businesses. Would you agree?

[Aaron Wudrick]

Yes, I would agree.

I would also say that some small businesses, by their nature, are just never going to be big. Think of a lot of these small businesses in communities. Don't get me wrong; I patronize a lot of them myself. They may run a small restaurant; they may run a small business in their local area; they may provide a good life to support a family or have a dozen employees. The reality is that most of these entities will never become giant businesses that employ thousands of people, and that's fine. However, if we are really keen—and we do have a productivity issue in this country, as I think everybody knows—putting too many eggs in the small business basket to address that issue is not a great idea.

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

Regarding those small and medium-sized businesses that have the potential to grow into large businesses, what do you see as the major barriers to growth in this country?

[Aaron Wudrick]

The regulatory burden has already been brought up. I think there is room for government support here. For example, Mr. Blanchet's presentation is an intriguing example. There are lots of entrepreneurs who know their craft, who know their industry, but they don't know how to leverage technology, so anything governments can do to connect these businesses to technology will make them more productive and give them a better shot at getting bigger.

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

Thank you very much.

I would like to change gears right now for Mr. Pecman. I found the creation of the competitiveness council a very fascinating idea. I want to be clear. When we talk about anti-competitive behaviour, are we talking about price collusion and price-fixing or just a lack of competition in general?

[John Pecman]

Anti-competitive behaviour is identified in the Competition Act, which was recently amended. It is any conduct that enhances, preserves or creates market power, first of all, for companies that have that and then engage in conduct that is “exclusionary, disciplinary or predatory”, and it now includes “an adverse effect on competition”. It's a pretty broad basket, but basically it's conduct engaged in by companies that are dominant and have market power and harm the entry, access, participation of other companies in the marketplace.

The legislation currently exists to deal with that. The competitiveness council, in my view, should deal with advocacy, advocating to government to remove regulations that harm competition, such as interprovincial barriers, barriers to foreign investment into the country that would increase competition depending on what sector, whether it's telecom, banking.... Just go down the list of international barriers to entry. A competitiveness council would give high-level advice to government on areas to target to increase competitiveness and productivity in our country.

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

SMEs in Canada pay some of the highest credit card processing fees in the world. If we went with your approach and we adopted this competitiveness council, how would the council deal with high credit card fees?

[John Pecman]

Again, it seems to be a very narrow, sectoral issue that I would commend to the Competition Bureau to study through a market study, followed by recommendations, as opposed to a more high-level approach.

We've dealt with credit card issues in the past at the bureau. As you may know, an order was imposed on Interac for debit cards and debit fees which imposed very low rates, and that was a result of the good work that was done by the Competition Bureau. If there is some anti-competitive behaviour behind those high rates, again, that would be something the bureau would take on with its enforcement mandate.

I would suggest that it might be worthy of a market study, and recommendations could be given to the government to change rules, with Finance Canada or whomever, to allow for a more competitive market, which could perhaps lower fees for small businesses.

It's not just the domestic issue. Unfortunately, credit card rates, fees, are high for merchants around the world, but I'm sure that a study could help with some ideas, because it's not clear what the answer is. Following one of our cases dealing with credit card rates at the Competition Tribunal, they said that maybe this is an area for regulation, because market forces just don't work properly.

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

Mr. Chair, I think I'm at time.

[The Chair, Liberal, Joël Lightbound]

I'm sorry, Mr. Kram, you're out of time. We'll now move to MP Gaheer for five minutes.

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

Thank you, Chair. If I have any time left over, I'd like to share it with MP Dong.

I'd like to thank the witnesses for making time for the committee.

My questions are for Mr. Georgaras. You spoke about the challenges that are involved in this current regime with regard to the complexity, the process and the time to acquire IP.

Could you focus on the complexity part of it? Why is this regime so inherently complex, and how can we make it more accessible to small businesses, to start-ups, to under-represented groups?