Mr. Speaker, it gives me great pleasure to speak to Bill C-235, a bill that if passed would have a profound effect on the way companies do business in Canada. The bill is sponsored by the member for Pickering—Ajax—Uxbridge, the chair of the Liberal caucus committee on gasoline pricing. Since its inception last September, the committee has conducted a number of meetings across Canada to receive comments on gasoline prices.
This bill is similar to the bill introduced by the same member in the 35th parliament. It was then known as Bill C-381. In reality the member's intent to adjust the Competition Act with this bill is born from the fact that in several complaints to the competition tribunal, independent retailers have been unable to prove either of the following infractions took place, predatory pricing or abuse of dominant position.
Instead of accepting that there is a competitive unregulated market, Bill C-235 seeks to skew the playing field in favour of the independents. Occasionally it is warranted for the Parliament of Canada to intervene in the marketplace. However, in this situation we have to ask if Bill C-235 as it stands is such a reasonable intervention.
In order to judge the merits of the bill we need to look at the potential impact of the bill. My colleague, the member for Markham, addressed the point that the infractions the bill seeks to address are already covered by the present Competition Act. Section 50(1)(c) of the act already deals effectively with potential predatory pricing. Section 61 deals with price maintenance. Section 78(a) addresses price squeezing by vertically integrated companies.
Now that we have established that the act as it stands already addresses the member's concerns, let us discuss what ramifications could result from Bill C-235. The fundamental problem with this bill as seen by the Progressive Conservative Party is its blatant manipulation of basic free market principles.
In this case the bill would create a regime whereby gasoline pricing would be set based on a formula that would include a combination of market forces and a provision for a minimum profit margin. Clause 50.1(2)(a)(ii) would allow the courts to interfere in what constitutes a reasonable profit. This situation is worsened by the fact that the bill would entrench certain conditions between vertically integrated suppliers and their customers. Whether or not governments should be interfering in that relationship at all is certainly a point for debate.
However, the issue that most disturbs me is that this bill completely disregards any efficiencies that arise from vertically integrated companies. For example, Imperial Oil would fall under the definition of a vertically integrated supplier. It operates refineries, it has its own retail outlets and it sells to independents that are its competitors. Under the terms of Bill C-235 it would not be permitted to pass on savings realized by its economy of scale to its customers without doing two things. First, it would have to ensure that its price reduction was in compliance with Bill C-235, a decision that would have to be adjudicated by the competition bureau. Second, it would have to make a corresponding reduction to any competitors that buy from it.
Advocates of this bill have come to the conclusion that this is fair and proper. However, I respectfully submit they are living in a fantasy world. A more reasonable expectation would be that Imperial Oil would make a smaller price reduction if any were made at all. That way it could remain compliant, the independents would receive a small benefit and the consumers would lose. This point needs to be stressed.
Different spokespeople for Bill C-235 have tried to sell it as a bill that would protect independent retailers as well as consumers. The harsh reality is that consumers would only be victims under this bill.
I want to go a step further with my analogy. Another possible outcome of the situation facing our analogous company, Imperial Oil, could be a decision on its part to discontinue supplying independents altogether. If it is no longer a vertically integrated company, it would not have to deal with the Competition Bureau every time it wanted to lower its prices, offer coupons or give away a two litre bottle of pop. This is not an unreasonable outcome to predict, and it would be the exact opposite effect of what the bill's sponsor is trying to achieve.
My party has spoken to many stakeholders on this issue and through those interviews we have come to learn a great deal about the whole industry. Several years ago Canada and its provinces began moving from a regulated to an unregulated gasoline industry. Instead, we have preferred to maintain general rules of competition, as embodied in the Competition Act. This situation does not exist in the United States and as a result rules change from state to state. I am sure my hon. colleague can understand what kind of inefficient marketplace this creates.
There can be no doubt that the result of Bill C-235 will be to increase gasoline prices across this nation by creating an artificial profit margin. This quite frankly is legislated protection of inefficiency.
Up to this point my comments have focused on the oil industry and I have done so for a reason. This bill has been developed to specifically target that industry. Unfortunately, just as indiscriminate tuna nets catch dolphins, this bill will impact many other industries.
One aspect that should disturb us all is that if passed we would enter a new retail environment, one where wholesalers and retailers would be encouraged to communicate and agree on retail prices in order to comply with provisions of the bill. The result would be an increase in the likelihood of illegal price maintenance clauses. That is not my opinion but instead the reasoned opinion of the president and CEO of the Stentor Company.
The letter also goes on to concur with what my colleague, the member for Markham, said in this House previously. Bill C-235 will create another level of bureaucracy with inefficient, burdensome compliance regulations. The following point bears repeating. The courts will be used to determine prices and margins and not market forces. This would have to be the case because no definition exists for the bill's provision of what constitutes a reasonable profit.
The last point I want to make is that we have in existence right now a comprehensive world class Competition Act which was enacted as such by the previous Conservative government in 1986. I take this opportunity to assure my hon. colleague that the foresight of that government saw to it that necessary protection for all sizes of companies was implemented.
The act covers perdition, pricing with the express purpose of destroying a competitor. It covers below cost selling. It covers abuse of dominant position.
In short, there is nothing in Bill C-235 that is not already effectively and fairly addressed by the act. Legislation that benefits only special interests and not the whole marketplace cannot be supported. Therefore we will be voting against Bill C-235 in its present form.