Industry Committee on Jan. 25th, 2023

[Jeanne Pratt]

Well, we are a law enforcement agency, so our job is to investigate. The commissioner, if he sees a problem and cannot resolve it, has to bring a case before the Competition Tribunal. That is our framework. Our job is to investigate and see if we can come to a negotiated resolution, which becomes an order of the tribunal under section 105 of the Competition Act.

The parties tried to negotiate with us. We couldn't come to an agreement based on the concerns we had in accordance with our evaluation under our remedies bulletin, so we filed an application before the Competition Tribunal. Fundamentally, we disagree with the Competition Tribunal's assessment, but we are a law enforcement agency that has to bring our case before the court.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Were you aware that other competitors, other buyers, were trying to buy Freedom Mobile?

[Jeanne Pratt]

We were aware. At the time, in the lead-up to our application—and this is set out in both our notice of application and the injunction materials we filed before the tribunal—there were a couple of remedy proposals that we evaluated in accordance with our remedies guidance. In those proposals, again, it was the asset package that we had concerns with.

[Ryan Williams, Conservative, Bay of Quinte, ON]

If you would have had a chance to provide more guidance to the solution, would you have looked at other competitors as an option for remedy, or do you look at just the one competitor?

[Jeanne Pratt]

We will evaluate what the parties bring to us in terms of a negotiated resolution, but part of that evaluation.... If the assets are there and we think there's a viable operating business that will address the SLC, we move to looking at the buyer.

If the buyer itself raises competition concerns, that is one of the criteria we apply. We wouldn't approve a competitor's buying if we thought that was also going to lead to anti-competitive effects emanating from the remedy. Those are the things we look at with respect to the buyer.

[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 very much, Mr. Chair.

My questions will be for the Competition Bureau.

You've demonstrated in a transparent way, both in action and in words, that you believe this merger will be bad for consumers. You've talked about the extensive investigation you undertook that led you to that conclusion.

What I would be interested in hearing about from you today in terms of that investigation is what you believe the impact will be on rural communities in Canada. Specifically, how will this merger impact rural communities in terms of competition, service, choice and even equitable access to service?

[Jeanne Pratt]

We didn't look at that in particular because we saw the impact on all consumers generally. We were concerned about all of those consumers.

What I can say is that before the Competition Tribunal, we did look at the impact on different deciles and income segments. That was part of our assessment of the anti-competitive effects of the transaction. We looked at the impact there would be on the bottom decile of taxpayers as a result of this merger, and that was evidence we put before the tribunal.

[Viviane LaPointe, Liberal, Sudbury, ON]

What did that evidence indicate?

[Jeanne Pratt]

I think from our perspective it indicated that there would be a disproportionate impact on lower-income Canadians. We looked at the transfer of wealth emanating from this transaction, so it was about who was going to suffer and who was going to gain. For that, we looked at Statistics Canada information and had experts evaluate that question, and we put that evidence before the tribunal. We saw that not only was there going to be an impact on consumers, but the wealth transfer would disproportionately affect lower-income Canadians.

[Viviane LaPointe, Liberal, Sudbury, ON]

You also mentioned that, as part of your investigation, you heard from over 7,000 witnesses. Can you tell us if there were common themes that came to light around what you heard from those witnesses?

[Jeanne Pratt]

We received 7,800 submissions from Canadians. We looked at each and every one of them and evaluated them—not so much for the views but for the facts they contained—to get the views of Canadians on what the impact of this transaction would be. Our focus was not on their opinions. It was on the impact that this transaction would have on them.

We looked at each and every one of those 7,800 submissions for the facts and evidence in them to inform our investigation.

[Viviane LaPointe, Liberal, Sudbury, ON]

Were there any trends or concerns you heard from those 7,800 Canadians?

[Jeanne Pratt]

I would have to go back and get the real numbers to see how many were in favour of the merger versus not. However, I'm quite comfortable saying that the vast majority of consumers were concerned about the proposed transaction.

[Viviane LaPointe, Liberal, Sudbury, ON]

With the final decision of this merger now with the Minister of Innovation, Science and Industry, can you tell us what you think is the most important consideration for the consumers you've identified as being the most negatively impacted and vulnerable to this merger?

[Jeanne Pratt]

I'll talk about it under our framework.

What we're looking at under the Competition Act is harm to the competitive process. We believe the benefits of the competitive process flow through to consumers in lower prices, greater innovation and greater quality. Our focus isn't necessarily on the consumer. It is about the impact on the competitive process that leads to the benefits for consumers, which are lower prices and innovation.

It's a different question for us. We're looking at whether this particular merger is going to enhance the market power of the acquiring firm in a way that could lead to an ability to exercise market power to cause higher prices, lower quality and lower innovation across a market.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Ms. Lapointe. Your time is up.

Mr. Lemire, you have two and a half minutes.

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

Thank you, Mr. Chair.

Ms. Pratt, you mentioned earlier that other offers could make it possible to acquire Shaw and Rogers. I'll come back to the Fox project again. It says this:

“TELUS-Globalive network and spectrum sharing agreement announced to boost Globalive's bid to purchase Freedom Mobile.”

Do you consider that an offer from Globalive, backed by the TELUS network, would have had solid enough assets? Actually, that is where you were critical of the sale to Videotron.

[Jeanne Pratt]

I don't think we've evaluated such an agreement.

It was an evaluation of the parties bringing an asset package to us. They did a sale process to entertain bidders. They brought us the outcomes of that process, and we evaluated what was negotiated under our remedies bulletin.

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

I think that if a player is backed by one of the current big three players, that won't promote competition.

I also agree with what Mr. Schaan said, that the telecom service providers can do better. I think we've already looked at possible solutions in committee and that we could do this again objectively to see how improvements can be made and how things can be changed to accelerate the reduction of prices.

My question is for Mr. Dagenais.

Are you satisfied with the current public policies on competition, particularly with respect to the long-term effects of such an agreement? You've imposed conditions, such as having a long-term operator that is committed to more than 10 years and that will be able to offer wireless services in Ontario and western Canada at prices comparable to those offered in Quebec, which are about 20% lower than the rest of Canada. That's a condition that Vidéotron has declared acceptable.

Are you convinced that a fourth player can finally be established in a reliable, viable and sustainable way thanks to the public policies you have put in place?

[Éric Dagenais]

Unfortunately, as I said earlier, the issue is venturing into the Shaw/Videotron transaction, so I can't comment.

I know it may be frustrating, but it's a decision for the Minister.

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

Objectively speaking, do you believe that the public policies you have put in place allow for the presence of a fourth player and that this fourth player can be established in a reliable, viable and sustainable way?

[Éric Dagenais]

I think we've put in place a lot of pro-competitive public policies, such as those related to auctions.

Mr. Schaan can round out the answer about policies, such as those encouraging competition, which are more within his purview.

[Mark Schaan]

I think it's important to note the improvements and increase in Canada's telecommunications policies.

The government has added many aspects to this program in recent years.

That includes not only the continuation of set-asides and some of the more stringent build-out conditions in any of our licences, but also the obligation to ensure there are significant obligations under the CRTC. We've worked on pricing with the 25% reduction, and it has been successful to date in lowering prices, as per the baseline we sent out. The new policy direction for the CRTC completes that in many cases by ensuring that we look at the overall framework for competition to get at those goals.

We believe more work needs to be done, but we've laid out the foundations and the pillars, whether that's through spectrum policy pricing or otherwise, including through the new policy direction that can aim to get to those outcomes.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We'll now turn to Mr. Masse for two minutes and 30 seconds.