Industry Committee on Nov. 14th, 2022

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

Thank you very much.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Lemire.

We have a bit of time left with the first panel.

Mr. Généreux, I know you had some questions, so I'll give you the floor for about two and a half minutes.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair. That's very generous of you.

Mr. Schmeiser, you said earlier that parts represent about 70% of your association's business. Obviously, you're not necessarily the one installing them. In the village where I live, there are two large farmers who have garages as long as an arena. They have their own mechanics and buy parts to repair their equipment themselves.

How important is access to support services, both for you and for farmers? They want to be as self-sufficient as possible, so they can make repairs as quickly as possible. For your part, repairs are also among the services you offer. Aren't you at odds, in a way? How do you see that situation?

[John Schmeiser]

The reality is that we can't do all the repairs that are needed by the customers because of workforce development issues, because of the number of mechanics we have, so we maintain that it is in our best interest to make sure that third party repair shops have the parts and have access to the tools and diagnostic equipment they need.

In your situation of a large customer, absolutely a dealer will quickly realize that it's in his best interest to make that stuff available—the special tools, the diagnostic equipment and the parts—so that a large customer can do their own repairs.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

What about the warranty in that case?

The average price of a tractor today is about $1 million.

What's included in the warranty? How long does it last? How much can a person repair on their tractor while maintaining that warranty?

[John Schmeiser]

In some of our provinces, we have legislation in place that guarantees the customer a one-year minimum warranty on the purchase of new farm equipment. That varies by province, but it's pretty much the standard in the industry.

The manufacturers go beyond. As an example, for that combine I referred to a little bit earlier, the manufacturer has a three-year warranty and three-year aftermarket service support with that, but in actual practicality, what happens is that if it's a piece of equipment that's under warranty, the dealer will address that first with their manpower. It's their customer who has just purchased new and who has made that major investment. Our warranty customers always get high priority.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Généreux and Mr. Schmeiser.

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

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Chair.

My question is for Mr. Kingston. What steps do your members currently take to ensure an adequate supply of automobile components and repair products that consumers can purchase to repair their vehicles?

[Brian Kingston]

CVMA members, through their participation in CASIS, provide the exact same information and tools to the aftermarket as they do to their dealership network. There's no difference whatsoever, and that is to ensure that consumers can get their repair done where they wish up to the OEM standard.

[Han Dong, Liberal, Don Valley North, ON]

For the record, do your members support or oppose the third party manufacturing and sale of repair parts for vehicles that your members produce?

[Brian Kingston]

I'm sorry, oppose the third party...?

[Han Dong, Liberal, Don Valley North, ON]

Do your members support or oppose third party manufacturing of parts that can be used for third party repairs?

[Brian Kingston]

We support repair as long as it's done up to the standard that the manufacturer has deemed through CASIS.

[Han Dong, Liberal, Don Valley North, ON]

Do your members support or oppose the right to repair and modify?

[Brian Kingston]

Under this bill?

[Han Dong, Liberal, Don Valley North, ON]

In general.

[Brian Kingston]

We support repair being done up to the OEM standard through CASIS, which is a very highly functional system that we have in place today.

[Han Dong, Liberal, Don Valley North, ON]

If there is any possibility of an amendment—I'm sure there will be an opportunity for amendments—what would you suggest to this committee?

[Brian Kingston]

First and foremost, we don't think that this is necessary to apply to the automotive industry because we have the standard in place which has been successful and, I would argue, is an example for other industries to follow. This framework is unique, and it has been established. It's working very well right now, and it continues to be improved. We don't think that this type of legislation is necessary for the automotive industry.

[Han Dong, Liberal, Don Valley North, ON]

Thank you, Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, MP Dong.

Thanks to all of our witnesses for taking the time today to inform the work of this committee. It's much appreciated.

I will now suspend the meeting for a few minutes.

[The Chair, Liberal, Joël Lightbound]

Good afternoon, everyone.

I will ask members in the room to take their seats. We're about to start the second hour of the meeting of the INDU committee.

With us for the second panel from the Canadian Automobile Association are Jason Kerr, senior director, government relations, and Ian Jack, vice-president of public affairs.

We also have two representatives from Medtech Canada, who are appearing by videoconference, Raj Malik, vice-president of Federal Affairs and National Strategic Partnerships, and Mia Spiegelman, vice-president of Regulatory Affairs.

Thank you all for joining us.

Without further ado, I'll give the floor to Mr. Kerr from the Canadian Automobile Association to get the discussion started.

[Ian Jack, Vice-President, Public Affairs, Canadian Automobile Association]

Actually, Mr. Chair, it will be me, Ian Jack, who will be speaking first.

Hello, everyone.

Mr. Chair, honourable members, thank you for the invitation to appear before you today to speak about this topic.

As noted, my name is Ian Jack, and I am VP of public affairs. With me is Jason Kerr, our managing director of government relations.

Most of you, of course, will be familiar with our brand, founded in 1913. The Canadian Automobile Association is a federation of eight clubs, providing more than 6.8 million Canadians coast to coast with emergency roadside assistance as well as automotive insurance, rewards and travel services.

Importantly, CAA is also a not-for-profit that has always advocated on issues of concern to its members. Today those issues include road safety, the environment, mobility, infrastructure and consumer protection, which is why we're here today.

Why do we care about digital locks at CAA? The answer is simple: We want Canadians to have access to reasonably priced vehicle repairs. To do that, we need competition in the marketplace. That competition will come from local garages that have been a staple of all of our communities since time immemorial. We need to ensure their future health.

Why do we think vehicles are worth taking note of in a discussion about a law of general applicability? It's because vehicles and vehicle repairs are the most expensive thing most consumers will buy to which digital locks might apply. It's not their iPhone, not their toaster oven; it's their vehicle.

We view this legislation as ensuring technological neutrality, making sure the underlying principles of the existing legislation are respected as technology advances. Time was, mechanics with the proper tools could fix your vehicle. You had options as to where to buy those tools. Now, however, software, including diagnostic software, is king across most industries, including automotive. This has given various industries the opportunity to slap an electronic padlock on their products, to the detriment of consumer choice and price competition on repair.

We don't think this is right, at least not for consumers of vehicle repair. If restrictions are in place that prevent access to a vehicle's software that supports maintaining and servicing that vehicle, Canadians are left with limited options if their vehicle breaks down or is in a collision. They have little choice but to go through their dealership.

That's fine if that's what you as a consumer want, but Canadians should have the right to bring their vehicles to a garage of their choosing. As we've recently been reminded, prices do tend to go up over time. More competition will help with affordability. We'd also point out that not everyone lives a short drive from a dealership. Access to convenient and reasonably priced service should not be limited to those in big cities. In our view, it is important to ensure that those in the aftermarket who are attempting to diagnose, maintain and repair vehicles do not face obstacles such as technological protection measures that could restrict competition.

Indeed, in recent national opinion polling, CAA has found that a significant majority of Canadians agree that independent garages should have guaranteed access to manufacturers' software to diagnose and repair vehicles.

Bill C-244 is attempting to address a potential barrier to repairability, one that will help promote price discipline for consumers. For this reason, we support this bill.

We're further hopeful that passage of the bill would encourage automakers and the aftermarket to come together to outline the gaps in availability of repair data and its accessibility and to address them for today and for the vehicles of the future. That would be good for Canadian vehicle owners by ensuring future convenience, choice and price competition.

Thank you again for inviting us to appear before you today.

We look forward to your questions.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Jack.

We will now move to Medtech for five minutes.

[Raj Malik, Vice-President, Federal Affairs and National Strategic Partnerships, Medtech Canada]

Thank you, Mr. Chair and members of the INDU committee.

On behalf of Medtech Canada, we're grateful to have the opportunity to participate in the committee’s review of Bill C-244. My name is Raj Malik. I am the vice-president of federal affairs for Medtech Canada. Joining me today is Mia Spiegelman, Medtech Canada’s vice-president of regulatory affairs.

Medtech Canada is the national association representing Canada's innovative medical technology industry. We represent approximately 120 member companies that range from small emerging med-tech companies to large multinationals serving the Canadian market, collectively employing over 35,000 Canadians. Medical devices range from the smallest technologies, such as pacemakers, to the largest of diagnostic imaging technologies, such as MRIs, and everything in between.

With our time at the committee today, I would like to share some insights on the current regulations under which the med-tech industry operates and how this relates to our recommendations for Bill C-244 to ensure protections for patients and health care providers are upheld.

Our primary concern with the proposed amendments to the Copyright Act in Bill C-244 is that this would allow for the access to highly sensitive medical technology software by unregulated and untrained service providers. In addition, the amendments would allow for the creation of uncontrolled and unregulated service parts for medical devices, leading to potential patient or health care provider harm.

To be clear, our industry continues to support the availability of federally regulated third party entities to service and repair medical devices. We know this is critical to the functioning of the Canadian health care system.

Medical devices in Canada are heavily regulated by our federal government. Most medical devices undergo a rigorous licensing process that ensures the medical devices sold in Canada are safe for use, and this includes any related software and accessories. In addition, most facilities or organizations that handle medical devices throughout the supply chain are also regulated, such as hospitals, manufacturers, importers, distributors and regulated third party service providers that fall under their umbrella. Through this network, we ensure that throughout the life cycle of a medical device, which can range anywhere from seven to 15 years, the device remains as effective and safe as the day it was approved for sale into Canada.

At this time, third party service providers who provide only a service of repair are not covered under any government quality assurance regulations, which leaves very little protection for our patient and health care provider populations.

As an example of federal safeguards, the Protecting Canadians from Unsafe Drugs Act (Vanessa's Law) was passed in 2014. This legislation was brought forward by the Oakville MP at the time, Terence Young, following the death of his 15-year-old daughter Vanessa in 2000 when she used a prescribed therapeutic product as intended but suffered an adverse reaction.

Vanessa’s Law was enacted to further tighten the post-market surveillance and oversight of therapeutic products. As of 2019, manufacturers, importers and other companies across the supply chain are now required to further analyze and/or gather reports on risks and issues identified after the medical device is sold into the Canadian market. Unregulated third party service providers, on the other hand, are not currently captured under these requirements.

Additionally, unregulated service providers today are not required by Health Canada to adhere to any standard procedures such as proper training of personnel, evaluating parts suppliers, calibrating tools, maintaining records of device service and preventive maintenance or maintaining device design.

The current Copyright Act prevents unregulated third party servicers both from circumventing technical protection measures—TPMs—in our medical devices and from replacement of untested or unapproved repair parts. These protection measures ensure that only highly trained and authorized service providers can access this highly sensitive technology to perform the necessary repairs. These protections are in place to lower the risk of impacting device effectiveness and the risk of causing serious medical harm to patients.

When it comes to medical devices, TPMs are vital to the safety of patients and health care providers, as they are an integral part of what Health Canada reviews during the licensing process. TPMs ensure the device functions properly and alarms appropriately and that malicious actors cannot access patient data. If TPMs are bypassed and software modified improperly, serviced medical equipment can malfunction, causing risk to patients and technicians.

In conclusion, as medical devices are heavily regulated products requiring licences and adherence to robust safety standards, including aftermarket surveillance and reporting requirements, allowing access to unregulated third party servicers undermines existing safety measures that protect patients and our health care providers today. On behalf of Canada’s medical technology industry, we strongly recommend that medical devices and technologies regulated for sale by Health Canada be provided a specific exemption in any proposed amendments to the Copyright Act.

Thank you. We will be pleased to take any questions.