Transport Committee on Oct. 3rd, 2017

[The Chair, Liberal, Judy Sgro]

They are not being moved. They are void.

Okay. That's terrific.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Have we voted on Sean Fraser's amendment?

[The Chair, Liberal, Judy Sgro]

Yes, it was unanimous.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Okay. Madam Chair, I'd like to speak to clause 14 as amended, when we get to that point.

[The Chair, Liberal, Judy Sgro]

I believe you have the floor.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Madam Chair, I'll admit that we initially proposed some clumsily worded amendments to clause 14 earlier in our meeting to try to allow the legislation to give the minister the power to override concerns about competition in the name of the public interest. Clearly, those amendments failed, so now we have in front of us the main clause as amended by Mr. Fraser.

I just want to make the point—and I know members opposite are going to vote in favour of clause 14 as amended, or at least I expect them to—that I really am opposed to clause 14.

I think this is a real step back for competition law in Canada. I remember the changes to the Competition Act in 2004 that were introduced by the government of then Prime Minister Paul Martin, which worked their way through a minority Parliament, whereby we strengthened competition law in Canada by introducing civil remedies for the bureau to go after people who would engage in anti-competitive behaviours. Those civil remedies were significant in administrative monetary penalties, making Canada once again a world leader in competition law.

We've traditionally been a leader in competition law. I understand from memory that sometimes it isn't perfect. We introduced competition law in this country before the United States did, in an era where there was monopolistic competition, and through the decades that competition law has been continually strengthened.

It was made clear to us in committee here by the bureau in, I think, testimony that was fairly direct that this law weakens competition, because it would allow the minister to ignore competition in the name of public interest, which is not very clearly defined—in other words, in the name of politics—to allow for joint ventures to take place without the kinds of conditions that the bureau would put on them.

I'll be the first to say, as a member of Parliament who represents a greater Toronto area riding, that I support a robust airline industry in this country. I think both Air Canada and WestJet are great carriers and I think they provide excellent service, but I also believe in competition. I've heard from constituents time and time again that they feel that flying here in Canada is more expensive than it is abroad, and while there are a variety of factors that play into that, such as airport landing fees and airport rents and other factors, such as fuel taxes and the like, it's also clear that increasing competition would also lead to lower fares.

This is not an insignificant issue. We're talking about an industry that has tens of billions of dollars a year in revenue. I think Air Canada's revenues are in the range of $13 billion to $14 billion a year, and WestJet's revenues are in the range of $4 billion or $5 billion a year, and the rest are smaller airlines. You're looking at an industry that accounts for 1% of GDP. To allow an airline to enter into a joint venture without the bureau being able to impose conditions on it would obviously be hugely advantageous to an airline like Air Canada but disadvantageous to competition and to Canadian consumers. Especially in light of the fact that the airlines have been reporting record profits, which I'm very happy to see, and in light of the fact that they've emerged out of the great recession intact, I think this is a real step backwards. I just want us to vote on this with our eyes wide open, because I think the government has taken a pretty big step in this bill by proposing an exemption to the act that would allow the minister, in the name of public interest, to override competition concerns.

I don't know if Mr. Disend, from the industry department—sorry, I forget the new name—has any comments on this, but that's my big concern about this bill.

A lot of this bill deals with sectors of the Canadian transportation system that are not subject to the kind of competition the airline industry is. We've spent a lot of time on the rail issue, precisely because we have monopolistic competition in the delivery of western Canadian farmers' grains and oilseeds products, and we have an industry in this bill, the airline industry, that went from being government-owned, quite inefficient, and not customer-oriented to an industry that is a robust industry 20 or 30 years after those big changes were introduced, the privatization of Air Canada and the quasi-privatization of our major airports. This industry is growing, providing employment, profitability, and much better customer service.

I'm concerned about this. I would be interested to hear what Mr. Disend has to say about this particular clause 14 of the bill, particularly in respect to this. If clause 14 had been in effect in 2011, and the minister of the day and the airlines of the day, Air Canada, had decided to appeal to the minister in the name of public interest, and the minister had agreed in the name of that public interest to override the concerns about competition and allow the Air Canada-United Airlines joint venture to go ahead without any conditions, would that have strengthened or weakened competition in Canada's airline industry?

[Ian Disend, Senior Policy Analyst, Marketplace Framework Policy Branch, Department of Industry]

Obviously, I can't speak to the government's position on the bill as a whole. I can clarify that the way the bill is structured—and this was obviously stated by the Competition Bureau members when they were at committee—so that the commissioner of competition does not have the final say on a joint venture that has been applied for, obviously. That's not to say the commissioner's views are shut out of the process or not taken into account. One of the main reasons there's a public report aspect of it is obviously so that there is some accountability behind the minister of transport's ultimate decision.

The public can judge, essentially, based on the findings of the Competition Bureau, whether they agree with the public interest rationale. It's deliberately designed to be a transparent process that weighs different factors.

At the end of the day, I wouldn't say that bureau representatives stated this would weaken competition. I don't think they would want to speculate on what the outcomes would be following any passage of the bill, but obviously their role in the process becomes a little bit different, keeping in mind that at present already the commissioner of competition cannot unilaterally impose constraints. It's still done in an adjudicative process.

Effectively, the commissioner still has a forum to air his or her views on a potential transaction, purely based on antitrust principles and competition economics. At the end of the day, that gets weighed by the minister of transport, who rules on a broader variety of factors that take into account other considerations that might go beyond a more strict antitrust analysis.

Ultimately, I can't comment on what might have happened in the 2011 proposal by Air Canada and United. Obviously, a consent agreement was reached in that case that did seek to remedy routes, but that's not to say that something like that wouldn't happen, because obviously there's an opportunity for conditions still to be imposed upon approval of a JV.

[The Chair, Liberal, Judy Sgro]

Mr. Hardie.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

You gentlemen more or less covered in much more technical perfection the points that I wanted to make. I get the sense, and this is maybe a little inexperience speaking here, that the Competition Bureau has a fairly narrow view of what the public interest is.

Obviously they want to see robust competition. They don't want to see predatory activities taking place, but it occurs to me, just from other things that I've dealt with in my careers, that sometimes the public interest has to take a broader view. The spotlight has to shine a little more broadly. It would appear that this will certainly allow the Competition Bureau to do its job, but then put somebody like the minister in a position to apply the broader view of the public interest and adjust accordingly.

Of course, everything will be out in the open and under scrutiny. Certainly we'll be doing our jobs if we have a look at something and ask questions.

[The Chair, Liberal, Judy Sgro]

Shall clause 14 as amended carry?

(Clause 14 as amended agreed to)

(On clause 26)

Now we go back to clause 26, amendment CPC-9.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

If you will refresh my memory, I think I spoke to this amendment, and there was going to be a subamendment considered.

[The Chair, Liberal, Judy Sgro]

Yes. Do you have a subamendment, Mr. Aubin?

[Robert Aubin, NDP, Trois-Rivières, QC]

No, Madam Chair. I have nothing to add to what I tabled earlier.

[The Chair, Liberal, Judy Sgro]

Okay, Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

If we don't have anything in front of us to look at in terms of a subamendment—

[The Chair, Liberal, Judy Sgro]

We will vote on the amendment you have put in front of us.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

Since it has been a little bit of time since we first talked about it, I'd like to reiterate some of the reasons we brought this forward. A number of our witnesses told us many things about regulated interswitching. They believe that it has worked well as a pro-competitive remedy because rail carriers have been prepared to compete for traffic using it and because the applicable rates are known to all prospective participants at the time when they are negotiating potential routes, rates, and other conditions.

They have also noted that the long-haul interswitching remedy in Bill C-49 is far less user friendly. They made many points, but there are two that I would highlight at the end of this conversation. First, on a more fundamental level, LHI is very similar in concept and overall structure to the competitive line rate remedy that has been in the legislation since 1988. That remedy has been inoperative since the early 1990s because CN and CP have effectively declined to compete for traffic using the CLR. That was the conclusion reached in the statutory review of the National Transportation Act in 1993, which was almost 25 years ago.

Second, when speaking with regard to the four western provinces, the witness group stated that for most shippers in western Canada, the nearest interchange with a second carrier was an interchange between CN and CP, and they provided a map to us when they made their testimony. They stated that, like CLR, whether LHI provides competitive alternatives to any shipper will depend largely on whether CN and CP are prepared to compete with each other using this remedy. Unless they are, LHI will remain a concept on paper that has little or no practical application.

[The Chair, Liberal, Judy Sgro]

Are there any comments or questions?

(Amendment negatived [See Minutes of Proceedings])

(Clause 26 agreed to)

(On clause 29)

I believe we were at LIB-3. There were a couple of subamendments being discussed.

Mr. Fraser.

[Sean Fraser, Liberal, Central Nova, NS]

Where we left it was at my misunderstanding of the fact that there was additional French language required to accommodate the fact that we had a turn of phrase that wasn't defined in both languages.

Do we have another copy of this to pass out? Okay.

There is some proposed language. I understand the legislative clerk has seen this already, so essentially what we are going to do is adopt Monsieur Aubin's language for proposed subsection 136.9(3) in the French version.

In the revised language that you are receiving, I note that it does not include the proposed subsection 136.9(3) for the English version, which was in the initial amendment document I sent around. That should still remain in the document. I believe it tackles a problem that was raised by multiple parties, because it ensures that when a company removes an interchange, doing so does not relieve the railway of its service obligations.

[The Chair, Liberal, Judy Sgro]

Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I recognize that we had been speaking to an amendment that we put forward, CPC-16. In our amendment, we had added after line 17 on page 29 some proposed subsections similar to those Mr. Fraser is looking to include in his amendment, and he has changed that.

In our amendment, we asked that clause 29 be amended by adding after line 17 on page 29 the following:

(3) A railway company shall not remove an interchange from its list without applying to the Agency for permission to do so.

I note that was not included in LIB-3, and it is not included in the subamendment, so I would just ask the mover of this subamendment to speak to that.

[Sean Fraser, Liberal, Central Nova, NS]

Sure.

The department might be able to offer some thought on this as well, but there's a process built in—I think it's a 90-day process—that allows a shipper to complain upon the removal of an interchange. They can complain to CTA, who would have input at that stage. Forcing that to happen each time might create an unnecessary step in the bureaucracy. If we increase the notice provision to 120 days, this will allow more time to get the word out there, reducing the impact on a shipper's service level obligations and allowing them to take advantage of the complaints process by launching a level of service complaint. I don't know that it would be necessary to include the language that you've suggested.

I would love to hear the department's point of view because, quite frankly, that wasn't part of my motion to begin with, and this is the thought process I've had during this committee meeting. I'm open to feedback and further commentary as well.

[The Chair, Liberal, Judy Sgro]

Ms. Block.

[Kelly Block, Conservative, Carlton Trail—Eagle Creek, SK]

I hear what you're saying in terms of what could happen as a result of a complaint and lengthening the time within which a shipper can complain.

I guess I would put to the committee that if a rail line has to apply to the agency to remove an interchange, we then forgo all of what you've just described as being an onerous process when dealing with a shipper's complaints. The agency would take a look and say, “No, the level of service that you are providing right now will not be there if you remove that interchange.” We'd actually be simplifying the process by putting this clause in place that a railway has to apply to the agency if they want to remove an interchange.

[Sean Fraser, Liberal, Central Nova, NS]

I find your point of view interesting. One of the things that stuck in my mind is how we deal with a circumstance where there is no objection to the removal of an interchange. Are we still going to make the railway go through the process of seeking regulatory approval?

I'm thinking on the fly a bit here and we have experts at the table. Can you offer some clarity?