Industry Committee on Jan. 25th, 2023

[The Chair, Liberal, Joël Lightbound]

Ladies and gentlemen, colleagues, I call this meeting to order.

Welcome to meeting number 52 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 Wednesday, January 26, 2022, the committee is meeting to study the proposed acquisition of Shaw by Rogers.

Today's meeting is taking place in a hybrid format, pursuant to the House Order of Thursday, June 23, 2022.

Members attending remotely can participate using the “raise hand” function. For those in Ottawa, it's a pleasure to see them again at the beginning of the year.

In this first hour of the meeting, joining us from the Competition Bureau, we have Jeanne Pratt, senior deputy commissioner of the Mergers and Monopolistic Practices Branch, and Anthony Durocher, deputy commissioner of the Competition Promotion Branch. From the Department of Industry, we have Éric Dagenais, assistant deputy minister of Spectrum, Information Technologies and Telecommunications, and Mark Schaan, senior assistant deputy minister of Strategy and Innovation Policy Sector.

I'd like to thank all four of you for being with us in person.

Without further ado, I'll give the floor to Jeanne Pratt of the Competition Bureau for five minutes.

[Jeanne Pratt, Senior Deputy Commissioner, Mergers and Monopolistic Practices Branch, Competition Bureau]

Good morning, Mr. Chair and members of the committee.

My name is Jeanne Pratt, and I am the senior deputy commissioner of the Mergers and Monopolistic Practices Branch. With me today is my colleague, Anthony Durocher, who is the deputy commissioner of the Competition Promotion Branch.

The role and mandate of the commissioner of competition are clear. The commissioner administers and monitors the Competition Act for the benefit of all Canadians.

Protecting competition is essential to serving the interests of Canadian businesses and consumers, and to preserving our overall economic performance.

The merger provisions of the Competition Act are the first line of defence against the accumulation of market power.

Regarding Rogers and Shaw, the bureau conducted a comprehensive review of the evidence during our investigation. This included over 100 meetings with stakeholders and the collection and review of over three million records, as well as 7,800 submissions from the public.

On May 9, 2022, the commissioner filed an application with the Competition Tribunal under section 92 of the Competition Act, seeking to block the proposed merger. This action was taken because our position was that the transaction would likely harm millions of Canadians in Alberta and British Columbia through higher prices, lower-quality services and lost innovation.

At the tribunal, we argued that Shaw is a growing competitive force in Canada. When the proposed acquisition was announced, Shaw was poised to continue as an unmatched, disruptive force. The Competition Tribunal agreed with the commissioner that Shaw was about to launch 5G wireless services and expand their wireless services into new areas, reaching more Canadians. These plans were shelved with the announcement of the proposed Rogers-Shaw merger in March 2021.

On August 12, 2022, Rogers, Shaw, Videotron and Quebecor announced that they had entered into an agreement for the sale of Freedom Mobile. We took the position that the sale of Freedom to Videotron did not sufficiently address the anti-competitive effects of the merger. Videotron itself was not our concern. Rather, even with the divestiture, Videotron would not have the assets needed to compete as effectively as Shaw. Due to several long-term agreements, rather than having ownership and control over critical assets, Videotron would be reliant on their competitor, Rogers. This would reduce Videotron's incentive and ability to compete, and create avenues for Rogers to undermine the new Freedom's competitiveness.

On December 29, 2022, the Competition Tribunal dismissed our application. Yesterday, the Federal Court of Appeal dismissed our appeal. We stand by the findings of our investigation and our decision to challenge the merger. We brought a strong, responsible case to the tribunal after conducting an exhaustive investigation. We continue to disagree with the tribunal's findings and are very disappointed. That said, we accept the decision of the Federal Court of Appeal yesterday, and we will not be seeking leave to appeal to the Supreme Court of Canada.

I look forward to your questions.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

I'll now give the floor to Mr. Schaan or Mr. Dagenais.

[Éric Dagenais, Senior Assistant Deputy Minister, Spectrum and Telecommunications Sector, Department of Industry]

Thank you for inviting me and my colleague here today.

I lead the sector responsible for the spectrum management program, which ISED administers on behalf of the Minister of Innovation, Science and Industry. My colleague is responsible for ISED's strategic policy function, which includes stewarding the minister's role in both telecom and competition policy. You've just heard from our colleagues at the Competition Bureau.

I understand the strong interest at this committee in the transfer of licences between Shaw and Rogers, and then between Shaw and Videotron. While I can speak about the spectrum transfer process, I cannot speak to the ongoing review of the application to transfer Shaw's spectrum licences to Videotron. This matter is currently before the minister.

As I outlined in my appearance in April 2021, access to spectrum is vital to the provision of wireless services, and the power to issue spectrum licences, including reviewing and approving their transfer, is at the centre of the minister's review of and his role in this proposed transaction. The minister regulates spectrum according to the powers granted in the Radiocommunication Act, with due regard to the Telecommunications Act, and in doing so he may take into account all matters he considers relevant to ensure the orderly development and efficient operations of wireless communications.

Given the importance of mobile connectivity and the significant investments associated with it, the minister manages spectrum according to an established set of guidelines and policies.

As such, commercial mobile spectrum transfers are guided by the Spectrum Licence Transfer Framework.

This framework supports the government's objective to maximize the economic and social benefits that Canadians derive from the use of spectrum. It also helps ensure the efficiency, and competitiveness of the telecommunications industry and the availability and quality of services.

In reviewing transfer requests, Innovation, Science and Economic Development Canada, or ISED, analyzes, among other factors, the change in spectrum concentration levels that would result from the licence transfer.

ISED also analyzes the ability of the applicants and other existing and future competitors to provide services. We may also take into account other factors, including current licence holdings of the applicants, overall distribution of licence holdings, services to be provided and the technologies available, availability of alternative spectrum, characteristics of the region—including urban/rural status, population levels and density—or other factors that impact spectrum capacity or congestion, and any other factors relevant to the policy objective that may arise from the licence transfer.

As stated in the framework, the application and supporting materials are treated confidentially. That said, I can confirm that the original Shaw-Rogers transfer application was refused by the minister. This information is on our website and is public. One of the reasons for the refusal is that it raised substantial concerns about spectrum concentration.

So the issue currently before the minister is an application to transfer spectrum from Shaw to Videotron. In short, the original application was denied, and now we're talking about a new application.

As Minister François‑Philippe Champagne confirmed yesterday, ISED will announce a decision on this transfer in due course.

Thank you. I'm happy to take questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Colleagues, I'll note before we start that we'll go for two rounds of questions, which will take us a little further than 11:40, as scheduled, but I will be stricter on time than I usually am. Please govern yourselves accordingly.

We'll start with the Conservatives for six minutes.

We have MP Perkins.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

Thank you, witnesses, for being here.

I want to begin by stating that I believe three issues are causing our economy to be the least productive among western countries: too much government debt; not enough growth, with low production of goods that the world wants; and a cost of living crisis eating up our paycheques. Our many anti-competitive service industries, with only two or three national companies per industry, contribute to this cost of living crisis, forcing Canadians to pay too much for what they need. This is why we are here today.

Today, Canadians pay some of the highest cellphone and Internet prices in the world, primarily because there is much less competition than there was 10 years ago.

Mr. Dagenais, do you believe that Canadians pay too much for cellphone services?

[Éric Dagenais]

There is an issue. Reports have shown that cellphone prices tend to be higher in Canada than in other jurisdictions.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Dagenais.

The chart I have here, if you can see it, shows the regular pricing of various packages for cellphone services available on the Internet last week for Videotron and Freedom. Videotron's pricing, shown in grey, is higher than Freedom's prices, which are in gold, in most cases. Since Freedom's pricing is already lower than Videotron's, the minister's condition that Freedom match Videotron's pricing will not reduce any prices—

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

Excuse me, Mr. Chair. I'd like to get a clarification.

We can't present charts like this in the House, but can we do it in committee?

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Unlike the House, committees have more flexibility when it comes to this. For example, it would be possible to share something on the screens. Personally, in the spirit of goodwill, I would be more inclined to allow that.

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

Okay. Thank you.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll ask the question again.

Since Freedom's pricing is already lower than Videotron's, the minister's condition that Videotron match Freedom's prices really doesn't change anything in the pricing mix, does it?

[Éric Dagenais]

This is part of the transaction before the minister, which I can't really comment on. I apologize for that.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

When Videotron appeared before the Competition Tribunal, it made commitments about how it would operate the business in the future. When any company appears before the tribunal, it makes commitments about the future.

Mr. Dagenais or perhaps Ms. Pratt, are any of the commitments made before the tribunal binding on that business?

[Jeanne Pratt]

Maybe I can speak to the tribunal's decision. The tribunal's decision did not include an order that would enforce any such commitments.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Mr. Dagenais, during the proposed time of the acquisition of Shaw by Rogers, you've been lobbied extensively about the privileged access the Liberal government has granted to Rogers and Quebecor. Will you share with this committee your notes and those of all officials who attended those more than 60 meetings?

[Éric Dagenais]

I don't think I have any notes from those meetings. I'd have to take that back to see how I'm supposed to share them. Perhaps it's through an ATIP, or there is a special mechanism to share them with the committee.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Committees can request documents, and witnesses usually—

[Éric Dagenais]

Okay. I'll get back to the chair.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

—table them if they feel free to do so. I would ask you to get back to us. I'm sure officials took notes in the more than 60 meetings.

Mr. Dagenais, the CRTC is doing an investigation into the preferential pricing Rogers is giving to Videotron in the case launched by TekSavvy. This case deals with undue preference with respect to CRTC regulations. Will the minister wait for this ruling before he announces his public decision?

[Éric Dagenais]

The minister said yesterday that he would make a decision in due course. I can't really expand on that or give you any additional precision beyond the minister's statement from last night.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

The Minister of Industry, as I understand, has unlimited powers to impose conditions, through the Canadian Radio-television and Telecommunications Commission Act, on the issuance, transfer or approval of any spectrum licence, hence the conditions the minister proposed in October.

If concern regarding the high costs that Canadians pay for cellphones drives overall government policy, can you inform me whether, since 2015, the Minister of Industry has ever imposed any conditions on Bell, Telus and Rogers to specifically reduce prices for any access to their towers or infrastructure as part of issuing or renewing licences?

[Éric Dagenais]

Maybe the minister would like unlimited powers, as you suggest, but the powers in the Telecommunications Act aren't unlimited. They're very well defined.

ISED, through the minister, has taken a number of measures to reduce prices. The greatest would be to increase competition and to ensure that there is competition. At the end of the day, when we look at the Competition Bureau's own findings, when you have a regional player that's competing against the three incumbents and they have a decent market share, that brings prices down by 35% to 40%. So competition brings prices down.

We've taken measures. In spectrum auctions, we've had set-asides or caps, and we've imposed competitive measures and deployment conditions. All of these things are designed to ensure that people have the spectrum they need to compete.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I understand that happens, but the question was around conditions. The minister is choosing to impose conditions on this transfer of licence but has not imposed them in previous transfers. That is my understanding. I understand that prices have gone up.

[The Chair, Liberal, Joël Lightbound]

Thank you, MP Perkins. I'm very sorry, but that was all the time you had—six minutes.

We'll have to turn now to MP Fillmore for six minutes.