Debates of March 20th, 1996

Interim Supply

[Some hon. members]

Agreed.

(Motion agreed to, bill read the third time and passed.)

[English]

Competition Act

[Rose-Marie Ur, Liberal, Lambton—Middlesex, ON]

moved that Bill C-221, an act to amend the Competition Act (illegal trade practices), be read the second time and referred to a committee.

Mr. Speaker, I appreciate the opportunity to lead off the debate on my private member's Bill C-221, an act to amend the Competition Act.

The bill would amend the Competition Act by making it an offence for manufacturers and distributors of motor vehicles and farm equipment to engage in certain marketing practices with their dealers. In the great majority of cases in Canada franchise agreements provide that a dealer shall not carry any other line, or dual, without the written permission of the manufacturer. In practice permission is rarely forthcoming.

There are generally two sets of consequences arising from this restrictive arrangement. In the first, the dealer's investment in one line of motor vehicles or farm equipment very often substantially exceeds the investment actually required to efficiently supply the sales and servicing demands faced by a particular a dealer in his or her market. In the second, a dealer may be forced to own several facilities selling different lines and may desire to amalgamate those brand lines under the same roof, thereby saving overhead and more efficiently utilizing his or her resources.

Because of the current prohibitions on dualling found in Canadian dealership agreements in neither of these cases can the dealer take the sensible course of action he desires to take. Further, if the dealer proceeds to attempt to dual his facilities without manufacturer approval, which is rarely granted, his action would constitute cause for immediate termination by the manufacturer of his dealership rights.

I believe all Canadian vehicle and farm equipment dealers aspire to having available to them the option of dualling, which their counterparts in so many U.S. states enjoy. Roughly 50 per cent of American automobile dealers operate their dealerships as duals, in some cases with more than two lines. Why should anti-dualling provisions which prevent that right in Canada be lawful?

By compelling manufacturers and distributors to allow their dealers the choice to offer one or more new lines of motor vehicles or farm equipment I believe two positive results would follow. First, the investment of the dealer would be utilized more efficiently and effectively. Second, the public in the dealer's market would be better served through a wider array of products and services.

As it stands now, in virtually 100 per cent of motor vehicle and farm equipment franchise contracts in Canada the manufacturer has the authority to terminate the contract if the dealer does not abide by the manufacturer's rules of dealer purity. This whole issue was brought to my attention shortly after the last election.

A constituent of mine who is a dealer in new and used farm equipment, and who has contracted with the Ford-New Holland company, wrote to me:

While it is true we have all signed agreements alluding to the sale of competitive products, it should be noted that for many of us we had no option but to sign this agreement, for our ability to stay in business hinged on the exclusive availability of the Ford-New Holland line. If I chose not to sign, I would have lost the business my father and I worked 40 years to build. It is true that Ford-New Holland is not restricting the number of agencies we represent as long as they are housed in separate facilities.

However, most of the lines Ford-New Holland deems competitive do not represent enough volume to operate as a stand alone dealership. Therefore the demand for exclusivity leads to lessening and even elimination of competition. This policy has far reaching consequences to our customers as well. By reducing the number of agencies willing to handle a line, you also reduce availability of service and repair parts. Our farmers today do not need a further erosion of service.

Why should rural dealers and farmers be denied reasonable access to all lines of agricultural equipment? As far as I am concerned, it is essential that dealers be given the freedom to carry more than one line of equipment to be of service to their farming customers.

All major farm equipment associations across Canada have been lobbying the federal government for years to have this onerous restriction on their livelihoods loosened.

The same is true of motor vehicle dealers. A 1993 survey of Canadian car dealers showed that about 50 per cent of the dealers would try to add another line if wide open dualling were permitted.

Presently the Competition Act provides that exclusive dealing can be prohibited by the competition tribunal in very limited circumstances. Subsection 77(1) of the act defines exclusive dealings as any practice whereby a supplier of a product, as a condition of supplying the product to a customer, requires or induces a customer to deal only or primarily in products designated or supplied by the supplier, or requires or induces the

customer not to deal in a specified products except as supplied by the supplier.

Under subsection 77(2) of the act, the director of investigation and research can apply to the tribunal for an order to prohibit a supplier from continuing to engage in exclusive dealing only if three conditions are met: first, if the supplier is a major supplier or if the practice is widespread in the market; second, if the practice of exclusive dealing is likely to impede entry into or expansion of a firm in a market, or to impede the introduction of a product into or expansion of a product's sale in the market; third, if as a result of exclusive dealing competition is or is likely to be lessened substantially, that is, in a major way.

In my opinion current anti-dualling provisions in Canada do fulfil elements one and two. However, element three, the substantial lessening of competition test imposed by the act for the director to be able to move against restrictions on competition occasioned by anti-dualling provisions, is unlikely to be clearly presented in the case of most vehicle and farm equipment dealerships in Canada.

To be really affective and fair, an amendment to the act should not only allow for enforcement action against anti-dualling provisions in franchise agreements but should also be framed in such a way that a dealer or a member of the public injured by the existence or the enforcement of such a provision will have the right to take private action against the restrictive provision.

Bill C-221 would effectively solve the problems created for dealers and the public through a simple prohibition of anti-dualling provisions in the franchise agreements. I also believe the bill has the benefit of brevity and clarity while identifying the restrictive conduct in those provisions as against the interests of the Canadian public.

By utilizing a prohibition to deal with the anti-dualling provisions, Parliament would be enabling dealers and members of the public who suffer loss or damage to take legal action for recourse independent of any action which the Bureau of Competition Policy may or may not be able to undertake.

Bill C-221's proposed prohibition of anti-dualling provisions will permit the crown to choose to proceed against an accused manufacturer by way of a summary conviction or by way of indictment. Typically the crown would proceed with a summary offence in less offensive cases and in the case of a first offender while reserving the potential for harsher penalties for cases of outlandish breaches and repeated violations by a manufacturer which has shown contempt for the law. This dual approach is seen in the act's treatment of misleading representation and has proved to work well.

In the process which led to the drafting of this bill, some have questioned whether it is not unusual to be proposing legislation amending the Competition Act that would only apply to just one segment of the economy. Not at all. There are a number of industry specific provisions in the act. For example, section 5 deals with the exemption from the conspiracy provision of the act for security underwriters. Section 6 deals with amateur sport in relation to the act. Section 48 deals with conspiracies in professional sport. There is even a subsection which deals exclusively with soft drink franchisers.

I suggest that the restrictions faced by dealers in motor vehicles and farm equipment are unique and particular to these types of dealerships.

We do not see the same restrictions applied to dealers in electrical appliances or musical instruments. Though each may specialize in one particular brand, each is free to carry other brand names as he or she may sees fit.

I am of the opinion that in the great majority of cases, when business is left alone, it tends to thrive when it is allowed to find its own solutions to problems that confront it. In that respect, I agree with the viewpoint that the role of government is to construct a framework that allows businesses to operate with the least amount of constraint.

However, there are instances when government is called on to correct an inequity which threatens the livelihood of certain sectors of the economy. Over the past two years I have become convinced that the constraints faced by dealers in automobiles and farm equipment must be properly addressed.

I feel it is very important that we give the small business community a break. The Prime Minister said a few days ago that it is time corporate Canada released its iron grip and did its part in allowing small businesses to expand and provide employment opportunities for Canadians.

I believe my bill echoes that sentiment and I ask for support from all members.

[Nic Leblanc, Bloc, Longueuil, QC]

Mr. Speaker, I am pleased to be able to speak this evening on Bill C-221, proposed by the hon. member for Lambton-Middlesex. This is a bill which regulates, or perhaps deregulates. It stops a manufacturer of motor vehicles, farm tractors or farm implements from preventing any dealer from selling other lines of products.

Examining this deceptively short bill, I became aware that there were very serious consequences to accepting something like this. I wonder, in fact, whether the hon. member even took the time to examine the consequences to any extent.

We are aware that this country has a debt load of approximately $600 billion at this time, and we also have our own individual debts. We each of us have fairly considerable debts ourselves, we are even probably more in debt than ever before. In other words consumer buying power is very low.

The automobile and farm equipment industries are barely viable at this time. Many dealers are having trouble keeping their heads above water; many are losing money even. Changing the way dealerships and sales of farm and automotive products are organized too rapidly would be very problematical.

We in Quebec-and I believe the same goes more or less for the rest of Canada-have a network of dealerships in place. In the past 20 or 25 years, many new car dealerships have sprung up, and we have invested considerably in them. We have invested some $500,00 to $2 million in buildings and showrooms.

Highly specialized equipment was bought, as required to perform automotive and tractor maintenance. As we all know, this kind of equipment is becoming more and more sophisticated, with state-of-the-art mechanisms, thus requiring sophisticated maintenance, which means that dealerships must invest substantial amounts to provide good customer service. Sales people must also be trained to sell specific makes of cars, tractors or farm machinery.

All this means a great deal of expense for car and farm machinery dealerships and manufacturers. Very large sums amounts of money are spent on marketing this expensive and sophisticated equipment. Obviously it would be out of the question to change the whole marketing system overnight.

Personally, I think it would be very dangerous and expensive to decide overnight to allow a car dealership to sell other makes of cars for example. That would probably be too easy.

Let me give you an example. Say a dealership signs an agreement with a manufacturer to sell a line of cars with several models but later realizes that the models do not sell well or that it is unable to market the product properly. Because these models do not seem to sell, the owner decides, overnight, to start selling-assuming this was a GM or Pontiac-Buick dealership-Nissan or Toyota cars.

I do not think the Nissan or Toyota dealer would be very pleased to see a GM dealer selling his products. He would probably choose the top-selling models to the detriment of those that are less popular and thus hurt his competitors.

I am neither for nor against this bill, but after examining it, it seems to me that there are serious risks to passing this type of bill. It would certainly be very important to allow a period of adjustment. Certainly, five or ten years, and maybe longer should be allowed to change this marketing structure, which has been in place in Canada and the United States-but we are concerned here with Canada-for years, and particularly for the last 25 years, during which automobile and farm equipment dealers have invested large amounts of money.

I am sure that if we began to upset this marketing approach, chances are there would be a considerable number of bankruptcies, and many jobs lost. That is why I mentioned at the beginning of my speech that we are not in a period where we should make changes too quickly. A lot of jobs could be lost. What we need now is to create jobs, but I think that we would risk losing a lot of jobs if we turn the existing marketing structure for automobiles and farm equipment upside down.

I would suggest that the hon. member continue to examine and work on her bill. She could try to form a small committee to analyse, to question witnesses from the makers, for example, to ask them their opinion.

What do consumers think of it? What do dealers think of it. They should be asked because I am not even sure that a consumer would feel very secure if he saw a large car dealer, in Montreal or Toronto, selling a dozen lines of automobile and a hundred or so models. I cannot see the consumer being reassured, knowing the complexity of the service and the guarantee.

Would he feel secure about after sales service? The consumer might also perhaps have doubts. Can certain monopolies arise among automobile dealers? Large dealers could sell several makes and decide on the prices, as if they had a monopoly. Prices would then increase.

The hon. member said that prices might go down, but it could also be the reverse. In the long term, prices might go up, because there would monopolies in the distribution and sale of motor vehicles or farm equipment. This could indeed be a danger in the long term and should be thoroughly examined.

It may be that remote areas need dealers selling several makes of cars or tractors. It might be a good thing in this case. However, would dealers selling several makes of cars or tractors be in a position to adequately service the vehicles bought by consumers for a rather large sum of money?

A farm tractor costing $100,000, $150,000 or $200,000 is a major investment. I think that consumers would be concerned if a dealer sold too many makes of tractors.

I can understand a dealer in a remote area saying that he will not survive if he can only sell one make of tractors. That may be the case. But then again, perhaps that dealer should have a smaller franchise that better reflects the size of the local market.

Again, I am not opposed to this idea, but I feel that this bill could cause major upheaval. The marketing structure that has been in place for many years works rather well and seems to meet the demands of consumers. Changing that structure could be quite risky.

It would also set a precedent. For example, suppose that a Saint-Hubert BBQ restaurant in Quebec does not do very well. Could the manager of that restaurant start selling burgers from McDonald's to improve sales?

If we agree to do that for motor vehicles, people in the food industry might want the same. When you think of it, a person becomes a dealer of his own free will. He signs an agreement with the maker of a car or farm tractor of his own accord, whereby he agrees to sell only certain models and makes.

In that sense, the current act gives a person the opportunity to choose the products he wants to sell. If, some day, that person realizes that the products he sells no longer meet his expectations, he can always sell his business to someone else.

[Paul Steckle, Liberal, Huron—Bruce, ON]

Mr. Speaker, I am pleased to take part in the debate this evening on Bill C-221.

As a former machinery dealer and one who was involved in the industry for a good many years, I can tell the House that the bill has significant importance to me, as I believe it does for most of us in the House.

I am in complete support of this private member's bill as proposed by the hon. member for Lambton-Middlesex, which is a neighbouring riding to mine. I would like to commend my colleague for her efforts to amend the Competition Act.

The purpose of this bill is to put an end to a restriction in almost all franchise agreements that does not allow car or farm equipment dealers to sell a competitor's product. This practice is known as dualing.

As members will know, dealers are only allowed to display and sell the products of the manufacturer or distributor with which they have a franchise agreement because the agreement contains anti-dualing clauses.

In some cases the franchise agreement states that a dealer cannot dual without the written permission of the manufacturer. In practice such permission is rarely given. Franchise agreements can be cancelled and torn up by the manufacturer or the distributor if a dealer sells another line of products. For example, a John Deere dealer cannot sell New Holland tractors.

I have talked to the local farm equipment dealers having a part in those organizations over the years in my riding and in other areas of the province and country. They basically support this bill. They want to be able to sell more than one line of product.

Dealers with a franchise agreement are also required to invest large sums for facilities, equipment, personnel and training in order to provide the sales and servicing deemed necessary by the manufacturer. Sometimes the dealer's investment in inventory and overhead required by the manufacturer is more than economically practical, thus tying up funds that could potentially be used to sell and service a competitor's line if the dealer was allowed to do so.

In small rural areas it makes sense to offer variety. A Case IH dealer, for example, may not be able to go it alone but if allowed to combine with another product, could stay in business.

Franchise agreements with anti-dualing provisions are restrictive and should be trashed. Dealers are unable to provide their customers with the choice from more than one line and consumers are not given the advantage of being able to compare and chose between competing lines of product. This problem becomes more significant in communities and markets not big enough to justify a dealer making a large investment to sell only one line.

It is interesting and ironic to point out that franchise agreements with anti-dualing provisions are illegal in many American states such as Iowa, Missouri, New Hampshire and others. The threat of termination of an agreement is grounds for a civil suit in the U.S.

If American dealers have operated successfully for years without anti-dualing provisions, there is no justifiable reason whatsoever that Canadian manufacturers and distributors can argue to maintain them in this country. On top of that, many of these American companies, such farm equipment dealers, are allowed different products in the U.S., but these same dealers in Canada are not. This is a farce.

Canadian laws do not protect our car and farm equipment dealers from unfair franchise agreements. Current laws are not adequate in their terms or satisfactory in their enforcement to strike down anti-dualing provisions. Bill C-221 proposes an amendment to the Competition Act that will disallow anti-dualing provisions in franchise agreements. It will put us on a level playing field with the U.S. and help our small business people compete in our own markets.

Last year one automaker in Canada recognized that sales were plunging and agreed to allow its dealers to sell cars from other companies. Mazda Canada Incorporated was the first to do so, but others are sure to follow. Mazda had built a very large dealer network but it was not selling enough cars to justify it.

Today's market calls for diversification. Consumers will head to the dealer with the most selection. Competition is healthy. I believe it is the government's responsibility to provide a climate that will

end anti-dualing provisions in franchise agreements to allow dealers to sell products from competing manufacturers.

Manufacturers, distributors or suppliers can argue that scrapping anti-dualing rules is not the way to go. First, they may suggest dealer loyalty will be diluted if they are allowed to sell products from more than one producer. Dealer loyalty should be earned by a manufacturer, not forced or coerced by the threat of termination of an agreement. Imagine if a grocery store were only allowed to sell one brand of peanut butter.

Selling competing brands allows the consumer to choose. Again this is a capitalist system. This bill will strengthen and enhance the free market system.

Second, manufacturers may argue customer loyalty will be lost if dealers are selling products from competing manufacturers. I submit that customers will remain loyal to a dealer as long as they feel they are being dealt with fairly. I also submit a customer will remain loyal to a dealer that does offer them the choice of more than one product. Service and selection are the two main reasons for shopping for and buying any product, whether it is a car, a seed drill, a planter or a new suit.

Third, manufacturers may threaten to take away exclusive distribution of their parts from dealers. That is exactly what this is: a threat that could be used by a manufacturer against a dealer that takes legal action against anti-dualing provisions.

Fourth, a manufacturer may claim if anti-dualing is prohibited that a car or farm equipment dealer would or could become a monopoly supplier in the local market. But, on the other hand, is that not what a manufacturer is promoting if he argues that no other product line can be sold out of that dealership?

Another argument that could be brought forward if an end to anti-dualing practices is put into effect is that the number of dealers will decrease. However, we have to recognize that this is reality in today's marketplace. Companies are diversifying in order to survive. Today, as many MPs from rural areas will know, the farm equipment dealers are gone. There used to be five in the town of Dresden, a town of 2,800, and today there are no dealers left in that community.

In summary, Bill C-221 will allow for automotive and farm equipment dealers to sell products from competing manufacturers. This is diversification. The more selection dealers have to offer consumers, the more likely their businesses will prosper. The amendments in the bill are good for business and they are good for the consumer, who will benefit from more selection.

I applaud my colleague from Lambton-Middlesex for coming forward with this bill. She truly represents her constituents from her mainly rural riding in southwestern Ontario. As was mentioned last night during private member's hour on Bill C-201, partisan politics has no place during Private Members' Business.

I urge all members from all parties to support Bill C-221. It makes sense, it will enhance competition and it will put our small business entrepreneurs on a level playing field with those in the U.S. That is the direction in which we should be going.

[The Deputy Speaker]

I believe there are three or four members who wish to speak. Unfortunately, we are going to be short of time. I would ask members if they would be so kind as to keep their remarks a bit shorter than they might otherwise intend.

[Werner Schmidt, Reform, Okanagan Centre, BC]

Mr. Speaker, I will try to observe your request.

I would like to commend the intent which the hon. member for Lambton-Middlesex has presented in Bill C-221. The intent of trying to create more competition and providing a more competitive marketplace is a good idea. Some of the things which the hon. member is trying to achieve are laudable and worthwhile.

I certainly agree with the previous speaker that this is not a partisan issue. It is a good idea to observe that, especially when we are debating Private Members' Business.

I would like to look at this from the perspective of the principle of legislation. The legislation should be supported by principle. The principle which is involved in this legislation is that it should encourage and maintain competition and entrepreneurship, as well as providing a level playing field.

Another characteristic is that it should be enforceable. That means it has to be clear, it has to be reasonable and, of course, it has to enjoy general public support. Those are rather significant matters of principle which any bill should have.

I would like to briefly refer to the provisions in the current legislation. It is very interesting what section 77(2) states. It states that the the director of investigation and research can apply to the tribunal for an order prohibiting a supplier from continuing to engage in exclusive dealings, if the supplier is a major supplier or if the practice is widespread in the market, and if the practice of exclusive dealing is likely to impede entry into or expansion of a firm in a market, or to impede the introduction of a product into or expansion of a product sales in the market, or to have any other exclusionary effect on the market, and if as a result of the practice of exclusive dealing competition is or is likely to be lessened substantially, that is, in a major way.

I would respectfully suggest that the provisions in the current legislation are adequate. Their enforcement however is very inadequate. The hon. member in this legislation is trying to find a way to

have the provisions that are contained in the existing legislation enforced more equitably and a little more easily.

If that is the issue, then the bill goes too far. It applies exactly the same way as the bill is being proposed to urban situations where there are very dense centres of population and to areas where there is sparse population. The problems of doing business are different in a highly concentrated population centre as compared with a sparsely settled area.

The intent of her legislation would definitely appeal and apply to the sparsely settled population centre. I could not agree more. I am not sure however that the same universal application would be equally well supported in large cities like Edmonton, or Toronto, or Ottawa for that matter.

Perhaps the question is, should we not provide for a more effective enforcement mechanism of the current legislation? I do believe, and the hon. member for Huron-Bruce indicated this, that Mazda had recognized that they should allow dual lines to boost the sales of their Mazda line. It is great. It is wonderful. That is the kind of line that the market will provide.

The legislation should allow for that freedom to exist. Where that freedom is interfered with, the director under the existing Competition Act should be allowed to interfere. The reason why he does not interfere is not totally clear to me. In the background information the indication was made that resources are inadequate for the director to actually pursue these kinds of deviations from the intent of the law.

I would respectfully suggest to the House that the appropriate resources be made available to the director so that he or she can prosecute those people who are not meeting the intent of the legislation. We need to be very careful about that sort of thing.

Something else exists in the current legislation which I believe is very inadequate. I would like to refer to some of the notes that the hon. member did make available to my office, which I really appreciate. I would like to read this into the record: "The exclusive dealing provision of the act gives exclusive jurisdiction to the director to move against restrictions on competition such as those inherent in anti-dualing provisions".

That is correct. That exclusive prosecution capability ought to be included in the dealer's ability to go to the tribunal and alert them that there is a problem. I would agree.

Perhaps the amendment includes that. But the amendment would have been more appropriate if that could have been expanded so that dealers could do that.

The next paragraph goes on: "Therefore individual dealers whose businesses are injured by the restrictions contained in anti-dualing simply do not have the right to instigate proceedings". That is the point and I agree completely with it. I know the hon. member said the amendment does that but I am not quite convinced that it does. Section 77(2) or earlier sections which give the director that exclusive right have not been eliminated. Therefore a different set of litigation laws has to be appealed to in order to make happen what the hon. member suggested would happen.

Finally, to be really effective and fair, an amendment to the act should not only allow for enforcement action against anti-dualing provisions in franchise agreements but also should be framed in such a way that a dealer or a member of the public-we are adding the member of the public now-who is injured by the existence or enforcement of such provisions will have the right to take private action against the restrictive provisions.

Those are the kinds of things that I believe should be included in the amendment to the current Competition Act. I agree with that and support it.

I find myself not in opposition to the bill but suggesting that some changes could be made that would make it a little more effective and that would make a distinction between the sparsely populated centre versus the densely populated centre because the problems are different. I know the sparsely populated centres are the ones where the current anti-dualling provisions handicap the dealers tremendously. They do not do the kinds of things the member is trying to do with this bill. I agree completely with that.

Perhaps this will improve it a little. Maybe the next time we come at this we will have it put together the way we need it.

[Bernie Collins, Liberal, Souris—Moose Mountain, SK]

Mr. Speaker, it is indeed a great honour for me to support private member's Bill C-221 presented by my esteemed colleague from Lambton-Middlesex. The issue at hand is a grave one for many of my constituents. I will digress for a moment to respond to the member from the third party with regard to three of the observations he made.

The first is in relation to sparsity. The city I come from was so sparse that all the dealers left, that is 10,000. We must be careful when we talk about sparsity. What does sparsity mean? For people in rural Saskatchewan everything is fairly sparse. We have to ensure that dealers have a place and that they are protected.

Let me go one step further and consider a company like McDonald's. Anyone who competes against McDonald's wants to be located right next door because he likes the competition. Yet within the framework of these large companies they are telling the John Deere dealer not to move beyond the scope of John Deere.

People travel hundreds of miles to get parts and this dealer who is having trouble competing in the world around him adds one or two parts to provide that level of service, and they are prepared to see him lose his dealership. On the other hand if they were really competitive and open minded individuals they would say: "No, John Deere we want you to handle that and we want you to handle Case as well. If our machinery is the kind of machinery we say it is, ours will be selected over Case anyway". I appreciate what my

hon. friend from Huron-Bruce who was in that business had to offer on this very important topic.

With regard to the proposal in Bill C-221, the machinery dealers are now saying they are prepared to go along with the proposal on this type of thinking: "We will step in and allow you to sell combines, but we will not allow you to sell tractors". They are going to move in and add additional pressure on the people who are providing that service on their behalf.

I support the bill. I think the bill is well framed. We do have to look at it. The question was raised of why does somebody not move in and take some action against this inappropriate behaviour? That small dealer is not going to go against his company because his survival is based on that company's supporting him with that machinery. If he loses that line, he is out of business. In rural Saskatchewan when someone comes to pick up his machinery, he picks up his fuel, he picks up his food and he picks up his mail. It is another way to ensure that rural Saskatchewan, rural Manitoba and rural Canada in general will eventually die.

It is incumbent on all of us to do something as we speak on this very important private member's bill. Again I commend the member for Lambton-Middlesex for having the courage to come forward and say there is something in this private member's bill that we want everyone to look at. The time has come for us to set aside our personal feelings and ask: Is it good for Canada? Is it good for rural Canada? Is it good for all of us? Can we support it? In my opinion, we can support it and we will support it.

I sincerely thank my friend opposite for allowing me the privilege of taking part in this very serious discussion. I look forward to the statements from my fellow MPs from Saskatchewan.

[Len Taylor, NDP, The Battlefords—Meadow Lake, SK]

Mr. Speaker, I appreciate the opportunity to speak on this important private members' initiative.

I too wish to congratulate the member for Lambton-Middlesex for her dedication to this issue. She and her office have worked diligently with some in the industry to achieve a goal. I am very happy to spend time in support of her work.

I was very pleased to hear the interventions of the other members this afternoon which indicated that there is a great need to make changes in the Competition Act to support the communities we represent and the economy of our country. At the same time, the debate indicates there is considerable support for the bill and the ideas that go along with strengthening the bill.

The member for Huron-Bruce gave us a good indication about what someone from within the industry thinks of the need for the bill. I was grateful for his intervention because it strengthened my confidence in the overall outlook on the bill.

For the benefit of those who are hearing about this for the first time, Bill C-221 is an act to amend the Competition Act, which creates an offence for manufacturers and distributors of motor vehicles and farm equipment to engage in certain marketing practices with their dealers. In virtually all cases, franchise agreements provide that a dealer shall not carry any other line or "dual" without the written permission of the manufacturer. In practice we know that permission is rarely forthcoming.

I come from a farming area in northern Saskatchewan where the communities are very small. The people who farm in those communities have great distances to travel for their support. In the past, farm dealers have driven throughout our area as they do in other parts of Canada. Over the years, the economics of rural Canada with a sparse population with decreasing incomes from the farm have led to a lot of changes in the way in which the agriculture industry is serviced. Where we once had many dealers, we now have a handful.

It makes it very difficult because there are many different product lines and there is a lot of loyalty to the original product lines on the farms scattered throughout northwest Saskatchewan and elsewhere. Fewer dealers and a great number of product lines results in many farmers finding it difficult to obtain the parts and service for the equipment they originally bought.

This private members' initiative gives the opportunity to some of the dealers currently carrying single product lines to recognize, understand and support the marketplace within their area. Many different product lines are not able to be serviced under the current arrangements. It would be marvellous if the local single product line dealer in one community could provide parts and service for many of the product lines that exist within that dealer's community. It would be of great benefit to the whole region.

At the same time, there might be an opportunity for new dealerships to open their doors, servicing not just one product line but several product lines. They could service the entire community. Rural Saskatchewan, particularly the remote rural part where several members of this House come from, is currently so underserviced by the equipment dealers.

I am very proud of the equipment dealers that currently function within northwest Saskatchewan and Saskatchewan in general. They have had a very difficult time throughout the past 10 years with the decline in farm prices. They have stuck with their communities and they work hard in them. Quite often they and their staff volunteer their time in the communities for everything from coaching minor hockey and baseball through to calling some of the church bingos that still exist throughout the riding. I am very grateful that those people are able to contribute to the communities in the way they do. This legislation offers greater opportunities for those people to remain in our communities and for others like them to find themselves there as well.

I do not want to go on at great length because there are others who wish to speak to this bill. The restrictions that have been put in place have certainly increased costs and reduced availability within the marketplace. I hope that this bill has the support of the members of the House.

The member for Lambton-Middlesex has certainly done her homework with regard to this bill. She has talked to everyone in the industry from the Ontario Farm Implements Dealers Association through to dealers across Canada. I know they have contacted her because some of them from Saskatchewan have contacted me asking to whom they can direct some of their information, concerns and support.

I am also aware that the Minister of Industry has tried to address this issue through the competitions bureau and that earlier this year the competitions bureau was to hold hearings and should have reported on this. I would have been happier to be standing here today supporting a government bill that I knew was going through all three readings in this House and that I could vote in favour of to ensure that with government support the legislation would go through and this would have full government support.

In the absence of government support and in the absence of a bill presented by the Minister of Industry, I am very happy to be able to stand today and support the private member's initiative by the member for Lambton-Middlesex. As I said earlier, I commend the bill to the House. I would hope that members of the House will find it in their power to put some pressure on the government to see that this type of legislation finds its way into reality.

The member's diligence, dedication and hard work in this regard should have its rewards. I only hope that they are forthcoming.

[Morris Bodnar, Liberal, Parliamentary Secretary to Minister of Industry]

Mr. Speaker, it is my pleasure to speak on private member's Bill C-221 as introduced by my colleague representing the riding of

Lambton-Middlesex. I congratulate and thank my colleague for the work and research she has put into this bill.

This bill proposes to amend the Competition Act by making it a criminal offence to prohibit manufacturers and distributors of motor vehicles and farm equipment from engaging in certain marketing practices with their dealers.

As I understand it, the purpose of the bill is to improve the efficiency of dealer operations. The view has been expressed by my colleague that restrictive arrangements between manufacturers and dealers prohibiting the the practice of dualling may result in inefficiencies for dealers in the sales and servicing of motor vehicles and farm equipment.

The objective of increasing efficiencies is a valid one in the context of competition legislation. Promoting efficiency and adaptability of the Canadian economy is specifically cited at section 1.1, the purpose clause of the act, as one of the principle purposes of the legislation. The provisions of the Competition Act have been created with this objective in mind.

The second objective addressed in Bill C-221 is to protect and encourage franchise dealers operating throughout the country by allowing them greater opportunity to realize gains in efficiency in their operations. Small and medium size businesses are at the very heart of our country and their success is key to the growth of the Canadian economy.

Accordingly, this objective is equally as important and noteworthy and is also recognized in existing competition legislation. It is recognized throughout the specific provisions of the Competition Act, which have been created with this purpose in mind, and more specifically in the purpose clause which provides that the purpose of the act is to ensure that small and medium size enterprises have an equitable opportunity to participate in the Canadian economy.

While the objective of the proposed legislation to control the anti-competitive consequences of prohibitions against dualling is worthwhile and should be supported and encouraged, the proposed bill is not the most appropriate for ensuring this objective.

A provision which addresses the very same objectives and conduct as the proposed bill attempts to address can already be found in section 77 of the act. This section deals with the issues of exclusive dealing. In order to understand why the existing provisions are more appropriate than those found in Bill C-221 to address the conduct complained of, it is important to consider the Competition Act and the structure under which it has been created.

The current legislation is a framework law of general application. It applies with some notable exceptions to all sectors of the Canadian economy, namely manufacturing, resources and services. The law touches on the everyday life of all Canadians by maintaining and encouraging competition in the marketplace with the objective of providing consumers with competitive prices and a variety of choices in the goods and services they buy.

Competition policy is a fundamental element in the government's economic framework aimed at fostering efficiency, adaptability, innovation and growth in the Canadian economy.

Bill C-221 would create criminal offences punishable on summary conviction or on indictment with the possibility of a fine in the discretion of the court or imprisonment for a term of up to five years. It is important to remember that criminal law is a powerful legislative tool, one that ought to be used with restraint.

In particular, this is a legislative tool that ought to be invoked in limited circumstances. It should be invoked in respect of conduct that gives rise to clear, serious harm and in respect of types of conduct that are likely to be harmful across a wide variety of economic conditions and business circumstances.

This is why the Competition Act has been drafted to include both criminal prohibitions and civil reviewable matters. Criminal law should be reserved for the most serious acts where it is clear that a particular conduct should be outlawed. Offences of the act which fall into this category include conspiracy and bid rigging.

On the other hand, the Competition Act contains other matters which are not criminal prohibitions but are categorized under the legislation as matters that may be reviewed by the competition tribunal, an administrative body under a civil standard of proof.

The tribunal may make remedial orders to overcome the effects of such practices but penal consequences are not imposed for a violation of these provisions.

Bill C-221 would create an absolute prohibition and declare certain conduct undesirable in all circumstances without recognizing that circumstances may equally exist which would make the conduct pro-competitive or competitively neutral.

This issue will certainly be raised in committee when we discuss the amendments to the Competition Act once they are introduced.

[The Deputy Speaker]

The hour provided for the consideration of private members' business has now expired and this item is dropped from the Order Paper.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Maud Debien, Bloc, Laval East, QC]

Mr. Speaker, in this House, on March 13, I questioned the President of the Treasury Board about his intention to establish a Canadian securities commission. I pointed out to the minister that the various provincial securities commissions were already busy setting up the system for electronic document analysis and retrieval, commonly known as SEDAR. This new system, which should be operational in a few months, will ensure a true integration of financial markets. The funniest part of it is that the minister seemed totally unaware of the very existence of the system.

On this issue as on many others, the federal government is showing that good intentions do not necessarily give good results.

The Bloc Quebecois understands that a degree of harmonization is required between the various provincial commissions for the sake of efficiency and effectiveness. The private sector also came to that conclusion, and that is why, in a very near future, SEDAR will make the issue of securities easier between provinces.

The system that the federal government intends to establish, on the other hand, has nothing to do with wanting to simplify the process; chances are it is yet another attempt at centralizing and interfering. The idea is not new, by the way. Aggressive action to create a Canada-wide securities commission was undertaken as early as in 1964 by a royal commission. In 1979, another attempt was devised in the form of a draft bill. Finally, less than three years ago, the premiers of the maritime provinces also called for the establishment of a Canadian securities commission.

As is its custom, the federal government is once again duplicating what the provinces are already doing, without worrying about costs or effectiveness. To add insult to injury, it wants to interfere in an area in which the private sector is about to harmonize the rules in co-operation with the other provinces. Federal-provincial overlap? Totally out of the question, Mr. Speaker.

At a time when socio-economic stakeholders in Montreal deplore the serious economic problems plaguing Quebec's largest city, the federal government is once again trying to steer financial operations toward Toronto. Brokers, lawyers, accountants in the financial sector might be forced to leave Montreal for Toronto.

This is the effect the creation of a Canadian securities commission would have, by centralizing financial activity on that Ontario metropolis. It is not, moreover, mere happenstance that the English speaking provinces, and Ottawa, are trying to isolate Quebec and to force its commission to be subservient to the Canadian one.

The government must put an end right now to its centralist plans for the Montreal region, which are prejudicial to that region. Let us keep in mind that, only days ago in the throne speech, the federal government announced its intention to face up to the realities of the 20th century, and to withdraw from areas of provincial jurisdiction as much as possible.

Now, only a few days later, it makes a complete about face and wants to interfere in an area where the provinces and the private sector are managing very well.

We see clearly what is going on now; those old ghosts of centralization are still haunting this House.

[Barry Campbell, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, the hon. member has asked a question about the system for electronic document analysis and retrieval, or SEDAR.

It would perhaps be useful to tell the House what SEDAR does. SEDAR makes it possible to transmit documents electronically to securities commissions and to create an electronic data base accessible to the public.

Rather than being mailed to each of the provincial administrations, as is now the case, documents would go out once electronically. For us and for those involved in the securities market, this is clearly a welcome measure. In fact, if we were to set up a Canadian securities commission, SEDAR would be an essential part of it.

With the advent of SEDAR, the Canadian securities commission is not superseded. In itself, SEDAR does not eliminate the overlap in the present securities regulation system in Canada. It does not solve the problem of approving prospectuses and registering brokers. The approval of at least 12 regulating bodies is still required.

It does not eliminate the inconsistencies in the application of provincial rules, the discrepancies in execution, or the time and effort necessary to co-ordinate the policies of provincial administrations.

The commission would promote the effective application of regulation and improve access to Canadian financial markets. As financial markets are increasingly linked to foreign markets, we must increase the efficiency of our markets in order for our businesses to be competitive.

[The Deputy Speaker]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at 10 a.m.

(The House adjourned at 7.26 p.m.)