Debates of March 16th, 1998

Competition Act

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, today the House is considering amendments to one of Canada's most important pieces of framework economic legislation, the Competition Act.

The Competition Act provides basic principles for the conduct of business in Canada. It is, therefore, vital to the functioning of our economy and in some way, directly or indirectly, touches the life of virtually every Canadian every day.

One of the major purposes of the act is to promote competition and efficiency in the Canadian marketplace. This, in turn, leads directly to innovation, a wide variety of consumer choices that are quality goods and services, competitive prices and greater international competitiveness.

The Competition Act was last revised in a significant way in 1986. Clearly, Canada's Competition Act must be kept up to date and remain suitable to economic reality in the 21st century. That is why we are considering the amendments that are before us today.

They are a carefully crafted series of measures that reflect the views of a very wide spectrum of stakeholders who expressed their opinions over the course of extensive consultations. The bill includes provisions that would create a strict liability criminal offence to deal with deceptive telemarketing.

It would allow the law enforcement officials in certain circumstances, and after the authorization by a judge, to intercept private communications without consent to fight deceptive telemarketing, as well as conspiracy and bid rigging.

It would provide for the quicker and more effective resolution of instances of misleading advertising and deceptive marketing practices and revise the law regarding regular price claims by retailers. It would improve the prenotification process for major transactions and the mergers review process.

In addition, it would revise and increase the flexibility of the prohibition order provision to make it a more effective tool for promoting compliance with the law.

Telemarketing predators put this entire industry at risk when they cheat Canadians out of sums of money that law enforcement officials estimate to be a minimum of $76 million in 1996.

These amendments will create a new criminal offence of deceptive telemarketing which will carry criminal penalties for those who break the law.

The new law will also require that telemarketers provide consumers with information on the purpose of the call, the product being promoted and any material, conditions or strings attached to such products. Amendments to the Competition Act will also address misleading advertising and deceptive marketing practices.

We are all aware that advertising is one of the most important and universal tools for business success. Fairness and truthfulness in advertising by all players is essential for a healthy, vigorous marketplace.

The approach of the current Competition Act is too cumbersome and inflexible. Moreover, experience has shown that criminal sanctions, the only remedy available in relation to these offences under the act now, do not always respond well to the problem. What is needed is a range of responses that can be applied to fit the nature and severity of the deceptive practices involved.

Better tools could stop misleading advertising quickly before there is an adverse reaction in the marketplace. More flexible tools would also have greater scope to foster business compliance and voluntary resolution of problems.

The bill retains criminal provisions for flagrant cases of deceptive marketing practices. It also introduces a range of civil remedies that can be applied promptly so the alleged misleading advertising does not continue while lengthy criminal prosecution winds its way through the courts.

The courts and the competition tribunal will be able to issue orders requiring parties to stop misleading advertising. Advertisers who fail to exercise due care may be required to publish information notices to alert the affected public of the nature of the deception.

These amendments will also facilitate voluntary measures to correct the deception that has occurred and provisions will allow such a resolution to become registered and enforceable as a court or competition tribunal order. The area of regular price claims is another where the present act needs updating.

The retail industry has changed dramatically in recent years. Comparative price advertising is more than ever a critical means by which retail competes. Moreover, consumer purchasing patterns are closely linked to sales advertising. Both consumers and retailers have commented that the current law does not reflect the current marketplace reality.

Provisions in the new bill will clarify a critical area of advertising law for business and provide clearer guidance for consumers about the meaning of price comparisons. Two straightforward tests will provide simple criteria for defining a genuine regular price. One test will be based on sales volume and the other pricing over time.

As a result of these and other changes to the Competition Act the changes before us take into account business realities, shifting consumer behaviour and attitudes and the marketplace developments that affect law enforcement.

I am confident that these are worthy of the support of all members of the House. The discussions that will be coming up in committee will be very interesting as we all have additional information that we can add to and improve on the legislation now before the House.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I want to thank the hon. parliamentary secretary for his comments and also his party for bringing this bill forward. I am wondering whether the hon. parliamentary secretary could talk to us a bit about what he sees in this bill that would actually come to grips with the question of competition and the misleading advertising or fraudulent pressure should e-commerce become an issue.

Electronic commerce, as the hon. member I am sure recognizes, is a growing field. More and more merchandise, services and products are being offered via electronic commerce. The transfer of funds, the incurring of loans and the making of deposits and things of this sort are all part of the various agencies that are covered under the Competition Act.

I am wondering if he could address this part of the bill because my reading of the bill would suggest that perhaps this is not covered in the bill. Does he have some opinions about the fraudulent or competitive abuse of electronic commerce?

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, I want to first thank the hon. member on his remarks earlier. I know that his items will be considered within the industry committee and I am sure will have some discussion.

The hon. member brings up a very good point on e-commerce. This is still a developing area, an area on the global scene, and there is more and more discussion going on. I believe there will be a stage when we get more global understanding of what e-commerce is, how it is going to operate, how it is not going to operate and the basic rules of e-commerce which need to be established on the global scene. Those items will then have to be rolled into the Competition Act as we move forward.

There are other items in the Competition Act which will make it very important for us to consider, the telemarketing of today and the telemarketing of tomorrow, as the member opposite has brought forward through the e-commerce.

It is important that those items be considered in committee in order to detail how these things are going to happen in the future. I thank the member for his remarks. I know he is looking down the road at additional things in terms of how the world will change. That is the situation we find ourselves in with this Competition Act. We need to bring it up to date. It has been brought forward since 1986. We need to get the best information we can in relation to the Competition Act so we can prepare ourselves for the future.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I appreciate the response. The hon. parliamentary secretary might go one step further and talk about another dimension of electronic commerce, the privacy component or the security of information that is transferred from one point to another. I am concerned in particular with the encryption of information so it cannot be side tracked by someone getting into the communication inadvertently or by design, actually stealing the information. Then there is decryption which allows a person to get into that system and make the information sensible.

I am sure the hon. member knows that it is the way in which the information is coded and then decoded, which is really what we we are talking about here, that is fundamental to this whole business. Perhaps he could answer that question.

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, the member brings up some very good questions. He is basically talking about a code of conduct that we need to put in place and about how e-commerce is to operate around the world. More work needs to be done in that area. I do not have all the details that he would like at this time but I am sure those are the types of questions that will be referred to during the industry committee's deliberations. I am sure these deliberations will take some additional time because of the complexity of this type of legislation.

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, I am going to use my time to point out that the Standing Committee on Industry will have its work cut out for it. As I see it, there are really two different things involved. On the one hand, there are the provisions on deceptive telemarketing, where consensus will rapidly be reached on all the provisions. On the other hand, there are the remaining amendments to the legislation.

Starting immediately, I think the committee will have to take the time required, since it took all these years to come up with proposals that would eventually take the form of a bill. The advisory committee's report leaves many questions unanswered. I asked some, as did others, and according to the people who were consulted, this bill does not enjoy unanimous support, far from it.

Once it is amended, this Competition Act will have to reassure Canadians and Quebeckers. We are going through a period of transformation somewhat like the industrial revolution at the end of the 19th century. We therefore cannot do without a strong instrument.

I therefore ask the parliamentary secretary, who has always been very open-minded, whether he is aware that there are actually two kinds of proposals going to committee.

[Walt Lastewka, Liberal, St. Catharines, ON]

Mr. Speaker, I thank the member for her remarks. It is a major piece of legislation. Many stakeholders and groups were involved in the preliminary work. The Competition Act and the changing world around us are part of what the committee will have consider in depth.

I have three pages of people who have provided input. Some of the provinces have participated and some have not. Some departments in the provinces have participated. I believe very strongly that the legislation before the House today, the Competition Act, will require an in-depth study by the Industry Canada committee. It is something that touches everybody in Canada in one way or another.

We will have to take our time as we go through the industry committee to make sure we have heard from Canadians from all provinces and territories to understand how lives will be affected and how lives will be protected at the same time.

Whether it is $4 billion or $5 billion made from telemarketing fraud, the numbers are very high. People have lost their complete life earnings as a result of telemarketing fraud people who do not care at all and want to get as much as they can. We as a committee have to make sure we have laws in place to stop it.

A Canada-US working group has spent a lot of time on it. There are a number of items in the Canada-US working group that both countries need to address. This legislation is trying to address our portion of it.

There are other areas that need to be looked at. As previous speakers said, there is a lot of work to be done to try to make the legislation we have reflect the changing world around us today.

[Angela Vautour, NDP, Beauséjour—Petitcodiac, NB]

Madam Speaker, I am happy to rise today to join the debate on Bill C-20.

As members will know, this is a bill which seeks to modernize the Competition Act to respond to a changing business environment by increasing flexibility in the administration of the act and efficiency in its enforcement.

I would like to focus my speech today on what New Democrats see as the two main parts of Bill C-20. The first part of my speech will deal with the aspects of Bill C-20 which are aimed at getting tough on telemarketing fraud. New Democrats support this part of Bill C-20 without any reservation.

In the second part of my speech I will talk about Bill C-20 as it changes the administration of the merger notification process. This is where New Democrats have reservations with Bill C-20.

I want to begin by talking about the serious problems of telemarketing fraud in Canada. We know that it is a $4 billion industry in Canada and it is growing. We know that after being chased out of the U.S. by aggressive law enforcement efforts, the scam artists started moving north to Canada. Offering prizes, cheques, trips and more, these silver tongued artists have targeted Canada in their latest wave of greed. Victims are usually people in a vulnerable position, most often seniors and even sometimes people suffering from Alzheimer's disease.

I point out that I will be sharing my time with my colleague from Colchester.

While we should all applaud and encourage the efforts of our police to catch and prosecute these offenders, I believe it is important that we also try to make members of our communities aware.

I may have been a victim if I had not caught on. I got a phone call at 11 o'clock at night to say I had won a trip to Florida. All they needed was my cheque number so they could get some money. During that same week people unfortunately did get caught in that scam. We have to make sure people are phone smart so that they are no longer in danger of being victimized.

This time last year New Democrats launched a public information campaign in our ridings to educate the most vulnerable members of constituencies about telephone fraud. New Democrats included in their householders a quick reference card entitled be on guard which could be hung by the telephone. New Democrats also went around to senior residences in our ridings and handed these cards out personally.

A few minutes ago I said that I would talk more about the efforts of the police in tackling this awful crime. I want to single out a certain OPP force which is dealing specifically with the crime of telemarketing fraud. It is called Operation Phonebusters and is a joint OPP-RCMP clearing house.

Several New Democrats have had the opportunity to work with Mr. Bob Elliot, the OPP officer heading up this effort called Operation Phonebusters. I want to express to the House the tremendous job Mr. Elliot is doing, and with limited resources I might add.

The hard work of Mr. Elliot can be seen directly in Bill C-20 and the changes which will make it easier to prosecute these con artists. I do however feel the need to express to the House and all hon. members the concern that Operation Phonebusters has become virtually a one person operation. While its prosecution record is impressive, its limited resources means that there is a serious delay between the reporting of a crime and the laying of charges. In some cases this allows the offending operation to bilk seniors, close its doors and move on before prosecutions can be undertaken.

I encourage the solicitor general to provide the much needed policing support by bolstering the federal government's commitment to Operation Phonebusters.

I also encourage the solicitor general to instruct the RCMP to take a leadership role in fighting this fraud on a national level. We cannot tackle this problem on a city by city basis because these guys will just pick up their shop and move to the next city. With just a handful more full time RCMP officers, we can send a clear message to the con artists and those who would steal from the innocent, that Canada is not open for that kind of business and is working hard to pull the plug on phone fraud.

There is some urgency in taking a hard line on this type of crime. In fact, it seems kind of silly to me that it has taken the government so long to realize that this is a serious crime. The problem in my mind has been very serious since the 1980s when lower cost telecommunications offered crooks a cheap, effective way of picking pockets.

The victims with whom I have met in my riding are truly the honest and the innocent. They should be able to answer their phones with the confidence of knowing that they are protected by law, especially since the laws are in place to protect them.

New Democrats support any effort which leads to a harder line approach against this type of crime. Canada has been without a national strategy to fight telemarketing fraud for too long. New Democrats are willing to work together with the government to achieve this.

Before I finish, I want to stress that telemarketing fraud is a very important part of the bill. It is a serious problem. I think we all know somebody who has either been or almost been a victim. We can also relate that to where one lives.

At a time when I was a seasonal worker I was told I had won a trip to Florida and thought is was great. They target areas where people are vulnerable and will go for it. It is very easy for some people to get access to phone numbers, even private phone numbers. It is scary how easily some groups access such information.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Madam Speaker, I am very pleased to be able to join in this second reading debate on what I think is very important legislation. I heard the parliamentary secretary indicate that the government is very anxious to hear all ideas on the subject.

I must say that I very much support the legislation. It is very timely and indeed overdue. It addresses a serious problem that affects some of the most vulnerable in society.

I particularly like the provision in the bill that blends criminal penalty with civil penalty. One of the problems with the existing Competition Act is that too much of it is done through the Criminal Code, a pretty heavy instrument to use on what can be in some instances relatively minor infractions in the area of misleading advertising. In the case of telemarketing it would be the same. We need to have a blend of penalties.

However I have significant reservations about one area of the bill. The bill, while very well intentioned, will miss the mark when it comes to applying the provisions for improper telemarketing against organizations which wish deliberately to carry on deceptive practices and wish to evade the law.

There exists in the legislation an ideal way for organizations to evade the intent of this law. I refer to clause 12 of Bill C-20 which will amend section 52.1 of the original Competition Act. This is basically the clause which applies the bill to the various entities that may be affected by it. The clause states that no person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest by any means whatsoever, knowingly or recklessly make a representation to the public which is false or misleading in a material respect.

I submit that there are two problems with that clause. First, it refers to the supply or use of a product. What happens if there is no product involved and what in fact is being telemarketed is a campaign? What if it is fund raising for a non-profit organization?

Then we go on a little further and it states for the purpose of promoting, directly or indirectly, any business interest. Unfortunately a non-profit organization or a charity, either of those two separate entities, by definition are not engaged in a business interest.

[The Acting Speaker (Ms. Thibeault)]

I am sorry to interrupt the hon. member, but we are now in the time allotted for questions and comments. Are you speaking on debate, sir?

[John Bryden, Liberal, Wentworth—Burlington, ON]

Excuse me, Madam Speaker. I had presumed I was speaking on debate. I did not know we were on questions and comments.

[The Acting Speaker (Ms. Thibeault)]

Are there any questions or comments?

There being no questions or comments I will recognize the hon. member for Palliser on debate.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I am happy to rise today to join the debate on Bill C-20. I was waiting for the previous speaker to get to his question, but I guess we will hear it later.

The bill seeks to modernize the Competition Act to respond to a changing business environment. It seeks to accomplish that by increasing the flexibility in the administration of the act and by improving the efficiency of enforcement.

The hon. member for Beauséjour—Petitcodiac spoke about the telemarketing aspects of the bill. That is a section of the bill which we in this caucus strongly support.

I will focus my remarks on the administrative changes in the merger notification process about which we in the NDP have reservations.

However, before I do that, since it has been raised by the hon. member for Saskatoon—Rosetown—Biggar and the hon. member for Beauséjour—Petitcodiac, I want to talk about the be on guard telephone security tips which were sent out last year.

Because of the kind of television audience we often get it is worth running through the list. I believe every member of the House would want to ensure that citizens, particularly senior citizens, do not get caught up in some of the scams out and about these days on the telephone.

I acknowledge a resident of Regina, a gentleman named Al Knox, who spoke to me about this matter last fall. His story was that he was at the post office one day when an elderly woman came in and wanted to send a money order for $2,000 to a company in Montreal. She had just won a prize and she had to send the money in order to collect it. He was there as a customer of the post office. Another customer and the postal agent who was also there tried to talk this woman out of buying the money order and forwarding it, all to no avail. She was so convinced she had won the prize that nothing or no one was going to be able to put a stop to her desire to get that prize.

There are a number of dos and don'ts. I will read them into the record because they would be useful for people who may be listening: don't believe that everyone calling with an exciting promotion or investment opportunity it trustworthy; don't be fooled by a promise of a valuable prize in return for a low cost purchase; don't disclose information about your bank account or credit card, not even a credit card expiry date; don't be pressured to send money to take advantage of a deal; don't be afraid to hang up, a very important one; don't purchase or invest without carefully checking the product, the investment and the company; and don't be afraid to demand more information from the caller.

Finally I will refer to a couple of dos: do demand the name and the phone number of the caller; do contact your local fraud squad if you believe that is what the call is all about; and remember, perhaps most of all, that if you have really won a prize it shouldn't cost you a dime.

Those are important things to remember about this telephone scam. I am pleased the government has moved ahead in this area.

I want to talk about the merger notification process. As I indicated it deals with the administration. This is where we have some reservations. It is our opinion that if the notification of merger process is to be changed, it should be done so in a way which strengthens the legislation, not weakens it, or keeps it at the status quo level. The changes we see to this notification of merger process in Bill C-20 are simply cosmetic changes.

I would like to take the few moments available to me to lay out some of our concerns. In the implementation area the changes in Bill C-20 are not necessarily the problem. Rather the problem is implementing what the bill seeks to achieve.

Rarely has a merger ever been sent to the review tribunal and actually been reviewed extensively. We all know what happens normally. The head of the tribunal, who after Bill C-24 passes will be known as the commissioner, has the two parties join together and tells them what needs to be done in order to make the merger a successful one. This is ridiculous and will certainly not work. The provisions of Bill C-20 in my mind will never really be enforced when they certainly need to be and should be enforced.

Turning to the sanctions, failure to give proper notification in the past has left the government with the option to pursue criminal charges against the parties involved. Under the provisions of Bill C-20, the bill before us this afternoon, the criminal sanction elements of the previous bill are being dropped and being replaced with a fine which has a maximum of $50,000.

In the great scheme of things with megamergers of banks and insurance companies, $50,000 is simply peanuts and will not act as a deterrent in any way, shape, or form. We think of the Bank of Montreal and the Royal Bank merger talks. A total of four insurance companies are now involved. Two are merging and another two are proposing to merge. We are talking multibillion dollars and $50,000, as I indicated, is peanuts for them to pay any kind of a deterrent fee if they wish to go ahead.

On the job front, this is perhaps the most important element of our concerns. There is nothing in the bill that deals with job losses as a result of a merger. There is absolutely nothing by way of offering to protect the workers from job losses in huge takeovers and megamergers.

We know from newspaper and media reports that as a result of the proposed Royal Bank-Bank of Montreal merger that roughly 10,000 Canadians will experience job losses. It is noteworthy that CEOs of these banks, Mr. Matthew Barrett and John Cleghorn, have refused to commit that the workers in their two respective banks will not have to bite the bullet as a result of this merger proposal, which in all probability as the member for Saskatoon—Rosetown—Biggar said earlier, will go ahead earlier this year despite the fact that Canadians are very much opposed to the two banks merging.

With Bill C-20 the government had the opportunity to and should have instructed the commissioner of notification of merger process to take into account the significant number of job losses when considering any merger. We believe that Bill C-20 fails to order the commissioner to consider the public interest in megamergers and New Democrats believe that the public interest must prevail over megamania.

New Democrats do not see these megamergers as good for Canada's community of workers. In our opinion, Bill C-20 does not make the merger notification process any stronger. That is why the New Democrats oppose this portion of the bill. We will have to decide whether the government will break up this bill and allow it to be looked at in its various entities, otherwise it will be a dilemma for many of us as to whether to support or oppose it. We certainly support the attempts to reduce telephone scams, but on the merger aspect of it we have major reservations.

[Gurmant Grewal, Reform, Surrey Central, BC]

Madam Speaker, I appreciate the comments made by the NDP member.

As my colleagues have already mentioned, the Reform Party always supports vigorous measures to ensure the successful operation of the marketplace such as promoting competition or competitive pricing, strengthening vigorously and enforcing competition in the market.

I would ask the member to throw some light on the duopoly and monopoly situation in certain areas in the market. He said he likes to support the bill, as I am doing. I would like him to comment on certain monopolistic and duplistic situations in the market.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I would be happy to but I would like to ask the previous speaker if there were some areas that he was particularly interested in.

[John Bryden, Liberal, Wentworth—Burlington, ON]

Madam Speaker, I appear to have wound up dividing my time quite inadvertently but nevertheless as I said earlier I am very happy to be a part of this debate because it is an opportunity to offer some constructive criticisms and comments on this legislation.

The bill is deficient because of a deficiency that already existed in the Competition Act. This act describes the person who is affected and constrained by this legislation as a person having a business interest. It also restricts the scope of the activity to the production or the promoting of a product.

The problem with this is it lets fall through the net entirely any organization that is a not for profit organization which could be on the one hand a not for profit organization registered as a non profit organization under corporate Canada legislation or as a charity registered under the Revenue Canada definitions.

In both these instances, both types of not for profit organizations by definition are not engaged in business interests. If a telemarketer that is deliberately engaged in scamming or wishes to promote in a way that circumvents the spirit of this act, that organization can simply reconstitute itself as a not for profit organization. It can either seek charitable status or, on the other hand, it can be a registered non-profit organization. That organization or telemarketer would then fall completely outside this legislation. It could engage in any kind of practice it pleased.

The other aspect of the problem is that telemarketing is very much a transborder phenomenon these days. What is happening is that when you receive that phone call, often from a charity I might say, often from organizations that are soliciting funds, that phone call may in fact be emanating from the United States.

Indeed, some of the very large telemarketers are based in either Pennsylvania or Maryland and are using transborder trunk lines to telemarket anywhere in Ontario or in Canada.

However, the other side of it is that while we have to be worried about organizations that will deliberately evade the law by becoming non-profit organizations, we also have to be very concerned about charitable organizations that may be engaged in what are very unethical activities, at least in the context of a for-profit industry when they are engaged in raising funds.

We may say that if it is a charitable organization surely it would not be engaged in any form of misrepresentation, be it misrepresentation by advertising or telemarketing or whatever you may have. The Internet provides us with all kinds of wonderful information. I was surfing the net, as they say, and I came across an article from the Professional Marketing Research Society which did a study of a practice engaged in by charities called frugging.

Apparently frugging involves charities that deliberately through telemarketing phone up and say they are doing a survey on perhaps social welfare, or tastes in tea, whatever it is. Or they might be doing a survey asking if there should be homes for battered women and this kind of thing.

The article from the Professional Marketing Research Society pointed out that often the surveys are really false surveys which are not a very transparent attempt to draw the client, the donor, the victim or the target into a survey which is really just a way of raising funds.

Two organizations are cited in the article as being engaged in the false survey activity. It is misleading. It is misrepresentation and there is no getting around it. One was the Coalition for Gun Control which did all kinds of surveys trying to get people to say they did not like firearms and that kind of thing. But really it was actually a way of promoting support.

Another organization cited by the report as being engaged in questionable survey practices, which was really another way of fund raising or getting the message out there, was the National Anti-Poverty Organization. It was asking all sorts of questions and said if the recipient responded to the survey a letter would be sent to the Prime Minister.

Behind many of these false surveys is simply misrepresentation for the purposes of fundraising. That is the kind of thing that goes on.

When it comes to telemarketing, charities are not very clean in some respects. Telemarketing is a very popular feature with charities now. A lot of organizations are turning to telemarketers. I think everyone in this House, and everyone in Canada, has received phone calls from people soliciting their donations by telephone. That would be all right so long as the representations are indeed honest. What is said by the telemarketer is not honest.

I refer you to a program that was done by CBC's Marketplace about a year and a half ago, I think it was, in which the theme was telemarketing. The thrust of the Marketplace show was to demonstrate that many of these charitable organizations that use telemarketers where so much of the donated money goes to paying the for-profit telemarketer that very little actually goes to the charitable activity. It may be as little as 10% and often in the outset of a telemarketing campaign it is 0%.

Nevertheless, the reporter interviewed the president of the Canadian Haemophilia Society. Her name is Durhane Wong-Reiger The reporter challenged her.

The telemarketer in setting up the Canadian Haemophilia Society said that he was proud to say that by putting your gift on a credit card—this is what the telemarketer says—over 87% of your donation would go directly to the Haemophilia Society.

The president of the Haemophilia Society did not even reply to the reporter's question. She could not reply. Very obviously, 87% of the donated dollar is not going to the charitable activity.

Therefore, we have a case where there is an absolute misrepresentation by a telemarketer speaking on behalf of a charity. The problem is, as Bill C-20 sits now, because it does not cover charities or non-profit organizations, the Canadian Haemophilia Society will have been seen to have done no wrong., There is nothing to be done about it. Imagine. It is a blank cheque to every non-profit organization, be they charity or not for profit organization, to engage in telemarketing practices, to misrepresent or mislead as much as they please.

Telemarketing does not work in isolation. This is another flaw with the bill. Telemarketing usually works in co-operation and in tandem with a direct mail campaign. In fact, what we are talking about here is not just telemarketing at all, but direct marketing. It is the whole business of sending flyers through the mail and that kind of thing.

People will find that wherever there is a telemarketing campaign or a media campaign, a fundraising letter will come through the mail as well.

Again, it is a deficiency of the bill because in fact, as the Competition Act stands now and with Bill C-20, it does nothing whatsoever about misrepresentation through direct mail advertising if it is a charity or a non-profit organization.

I have a great example. As members in this House will remember recently, there was a hubbub in the press about the seal hunt. It was the International Fund for Animal Welfare that had conducted a major campaign under another title to claim that seals were being wantonly slaughtered on the ice floes.

I think every one of us received form letters cut out of the newspapers from our constituents. They were to protest the seal hunt to their MP.

Quite apart from that, much of the literature produced on the seal hunt by the International Fund for Animal Welfare was false. What was going on simultaneously with this campaign was another campaign called Pet Rescue.

I have some documents here. I cannot show the actual pictures here but Pet Rescue was a direct mail campaign actually launched out of the United States. This is coming from the United States, as most telemarketing does.

Pet Rescue was about how all these animals were being tortured and being kept in facilities that were really awful and that kind of thing. There are pictures of poor cats that were in difficulty.

We see a title here “Your support saves lives”. This is really a fundraising promotion by the International Fund for Animal Welfare at the same time as the seal hunt protest.

Here is what we have. This promotion literature says “Here is how you can help stop the cruelty: `Seventy-nine cents of every dollar spent went toward animal welfare during our 1996 fiscal year, so you know your contributions are helping to stop suffering. The International Fund for Animal Welfare—”'.

I submit that this is absolute misrepresentation and that, if the International Fund for Animal Welfare was indeed a for profit company, if it was indeed engaging in a business interest, if indeed it was doing something other than fundraising, it would be subject to penalty under the law and rightly so.

My feeling with respect to Bill C-20 is that it is a step in the right direction, even though that step is incomplete. We have to recognize that with telemarketing spreading across the country and direct mail becoming increasingly an avenue of fundraising, telemarketing and direct mail advertising is a costly way of fundraising. Seventy per cent to eighty per cent of the actual dollar goes to the cost of telemarketing and direct mail solicitations, much of which come from the United States. This bill can do nothing even if it is a for profit direct mail advertiser or telemarketer operating out of the United States.

I hope the government and the committee will very carefully consider taking the opportunity Bill C-20 gives us to widen the catch of the Competition Act so it includes not for profit organizations as well as for profit organizations.

I have two suggestions. In clause 52(1) we could insert the words “or fundraising and any fundraising activity” after the words “any business interest”. Second, we should make charitable and not for profit organizations responsible for the activities of the telemarketers they hire. At present, if a charity hires a for profit telemarketer and the telemarketer misrepresents the charity, under Bill C-20 only the telemarketer can be caught. I believe that if it is the intent knowingly and recklessly of a charity or a not for profit organization to use a telemarketer or a direct mail advertiser to misrepresent that charity to the public then the charity itself or the not for profit organization should be subject to the same penalties under the law. I hope the committee will consider these thoughts.

[Gurmant Grewal, Reform, Surrey Central, BC]

Madam Speaker, I listened to the point of view of the member from the government side. I am prepared to support Bill C-20 as long as this act achieves its intended objectives to modernize and amend the Competition Act and to make consequential and related changes in other acts.

I have two brief questions for the member. One is about telemarketing. We know that Air Canada is tripling its call centres in Canada, in particular in Winnipeg. It is tripling its staff in the Winnipeg call centre. Banks, credit unions and other financial unions are vigorously promoting and pursuing the operation of call centres across the country.

Some businesses operate by selling lottery tickets to senior citizens normally in Canada and abroad, Lotto 649 and so on. From time to time they sell emotions to seniors. It is gambling sold over the telephone. Can the member tell the House if this bill will restrict selling gambling or pressure selling over the telephone?

We all receive a certain type of unsolicited mail which we define as junk mail. We sometimes receive car keys with the message that we have won an automobile. Sometimes we see nicely printed certificates that indicate we have won millions of dollars. People usually perceive these as scams. Can the member tell the House if these things are being taken care of in this bill? As a member of the government side could he throw some light on that? Can we restrict these types of scams?

[John Bryden, Liberal, Wentworth—Burlington, ON]

Madam Speaker, I am not a lawyer but my interpretation of the bill is that it aims at transparency. If the telemarketer or the direct mail campaign tells the truth then it is up to the person who receives the solicitation to make a decision. The bill is aimed at misrepresentation. My problem is that if that misrepresentation is for a product or for business interests then all the penalties of the bill apply. It is the law. You could go to jail under this bill.

It is unfortunate that if a charity or a not for profit organization like the Canadian Automobile Association does the same thing, the bill will not catch it. These organizations can misrepresent as much as they like and the bill does not catch them. That is why I think an amendment is in order to the bill itself.

[Chris Axworthy, NDP, Saskatoon—Rosetown—Biggar, SK]

Madam Speaker, I would like to ask two brief questions of the member. He talked in glowing terms about his support of this bill.

I would like to focus on two points, the first being the meagre enforcement measures which have been dedicated to deceptive telephone canvassing in this country. We have perhaps $4 billion or $5 billion worth of crimes being committed with one very small unit headquartered in North Bay that is dedicated to dealing with this question.

What steps will the member take with the solicitor general to make sure that there is adequate policing resources available to deal with this significant crime?

What is there in this bill that would deal with assessing the desirability to Canada and Canadians of the mergers between The Bay and K-Mart, the Royal Bank of Canada and the Bank of Montreal, and the insurance companies of Mutual Life and Metropolitan Life? What is there to suggest in this bill any commitment to a competitive market economy in Canada?

[John Bryden, Liberal, Wentworth—Burlington, ON]

Madam Speaker, on the first point, I do not think there is any question that this bill is well aimed at the deceptive telemarketers because of its provision for wiretapping.

One of the problems with telemarketing as it exists now is how does one get the evidence if one did not receive the phone call. I believe this is the reason why the government has put this provision in the bill. It is a very controversial provision and I would hope there is considerable debate in committee on it. However, at this glance I do support the provision.

Second, very clearly the bill is aimed at deceptive telemarketing by providing Criminal Code penalties for deceptive telemarketers. Again, not to repeat myself, I just wish the bill were designed so that it would catch not for profit organizations as well as for profit organizations.

Finally, there are difficulties with the mergers of major corporations. It is a heartbreak when a store closes down and people are put out of work. However, it is very dangerous in a free enterprise society for a government to intrude with the rights of the marketplace to sort out the weak from the strong. Usually in a merger environment what is happening is that there has been change in public taste and because of that certain businesses and industries have weakened. Insurance and retail shopping are two classic cases where there have been major changes in public taste and public purchasing. The ultimate end to that is that there is a consolidation of the industry which leads to mergers which, I do regret, leads to the loss of jobs.

[Werner Schmidt, Reform, Kelowna, BC]

Mr. Speaker, I always enjoy the comments of the hon. member who just spoke. He always provides another perspective and impresses me with the research he has done. He did not disappoint me today either. It was wonderful.

I would like the member to get off the charitable and non-charitable organizations and get into another area which is a rather significant one. It has to do with the business of tied selling, offering a product or service on the condition that one buys another product or service from the same organization. It is one of the ways a business actually forces a customer to do something. While it is not misleading advertising or deceptive in some way, it does restrict completely the competition between one business and another one.

I wonder whether the hon. member could make a comment about that.

[John Bryden, Liberal, Wentworth—Burlington, ON]

I certainly agree, Mr. Speaker, that this issue of tied selling is a very difficult one because it pertains to the freedom of competition. I do not have the answer and I do not know if this bill really addresses it in any satisfactory way.

I know the minister and the department have been looking at the issue of tied selling for years. I wish I could offer the member an easy answer as I can with respect to my own hobby horses. I thank him for the question because I believe it is very appropriate.

[Howard Hilstrom, Reform, Selkirk—Interlake, MB]

Mr. Speaker, my question is with regard to the criminal offences that have been mentioned in this act. I would like to know if the act amends the Criminal Code to have these criminal offences designated under the Criminal Code for the purposes of the proceeds of crime legislation. Can the moneys be recovered under the proceeds of crime legislation? Are there provisions made for that?

[John Bryden, Liberal, Wentworth—Burlington, ON]

Mr. Speaker, I wish it were the parliamentary secretary on the spot instead of me. Again the hon. member takes me out of my area of expertise. I would prefer to give him a simple answer but he is now looking at the issue of the legal impact of the legislation as it sits before us.

I am saying in a longwinded fashion that I cannot reply to the hon. member's question. What really is key here is that when we debate legislation, we can only debate it in principle. It is for the lawyers afterwards and before committee to look at the legal nuances.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Mr. Speaker, I want to say a few words on Bill C-20 before the House this afternoon, specifically on the part that deals with the administration of mergers and merger notification process. I do that for only one reason. Very recently back in January we had a blockbuster announcement which surprised everybody in this country, namely the proposed merger between our largest bank, the Royal Bank, and our third largest bank, the Bank of Montreal. The concern that we have seen across the land since then should make us think seriously about strengthening the competition policy in this country, particularly with the administration of mergers.

I submit to the House that what has been done in Bill C-20 is very weak in terms of what it does with merger legislation in Canada. This is one of the few opportunities we have to talk about mergers and why we need stronger competition policy in this country. It is important to put that on the record today.

The case in point is the one everyone hears about on coffee row no matter where they are in the country, the two largest banks. The banking industry in this country has been very protected over the years in terms of content rules. No individual can own any more than 10% of an individual bank. That rule has been very clear. We have five or six very large banks and there has been a policy that large does not buy large or big does not buy bigger. Despite the fact that an individual may have a lot of money, he or she cannot buy more than 10% of any particular bank. This of course applies to my friend from Palliser or my friends from anywhere else. One cannot buy more than 10% of a bank in this country.

What we have here is a real surprise. Our largest bank, the Royal Bank of Canada, proposes to merge with the Bank of Montreal. The two of them have stock market value of around $40 billion. The largest merger to date in the history of this country is a merger of two companies worth about $14 billion. This merger is three times bigger than anything we have ever had in the history of this country. It is a very large proposition in terms of merging. The assets of the two banks are worth about $453 billion.

Four hundred and fifty-three billion dollars is a lot of money. It is a major proposal between two large banking institutions in this country that would lead to the creation of a mega-bank.

Yet in this country we do not have competition policy that is strong enough to adequately, in my opinion, look at a proposition of this sort.

The banks announced this very quickly. They took the Minister of Finance off guard. Since the announcement of the merger we have had skyrocketing in the share value of not just these two banks but the other banks as well.

In many ways the banks are saying to the Minister of Finance “We dare you to say no. We dare you to stop this merger”. They are saying to the competition bureau “We dare you to stop this merger”.

Unless we have stronger legislation or political will in this country, a domino effect will occur very shortly, by the fall of this year. Not only will there be the merger of these two banks to create a large mega bank, there will be other mergers as well which will lead to the great consolidation of banking in our country. If that happens there will be a couple of large Canadian banks.

These banks want to merge because they want to have access to foreign markets. Mr. Cleghorn and Mr. Barrett have made that very clear. Mr. Cleghorn is the president of the Royal Bank of Canada and Mr. Barrett is the president of the Bank of Montreal. They have made it very clear they want to be large on the world scene so they can compete in Europe, in Asia and in third world countries. If they have access to markets in other countries, then of course as a quid pro quo banks in other countries will want to have access to the Canadian market. Today they do not have that access. If our banks are to have that access, then of course the argument goes that our doors will be open for their banks.

All of a sudden we will lose control of the financial industry in this country. If that happens there will be immediate pressure to get rid of the 10% rule. If the 10% rule is gone, we will see the buying of Canadian banks by foreign banks and there may be no Canadian owned banks left. That is why this is such a vitally important issue.

It is important that we flag this issue in the debate on the competition policy bill before us today in terms of mergers and acquisitions. We can change forever the direction of the country, the financial independence of the country, the autonomy and the sovereignty of our great country of Canada. I am sure members would agree with me that it is a very important issue.

It is not only the sovereignty, the integrity and the independence of our country which concerns me. I am also concerned about service to ordinary Canadians. If we look around the country we will find that there are a lot of bank branches. In fact these two banks themselves have about 2,800 branches stretching across Canada. In a consolidation of this sort it is almost certain that a large percentage of those branches will disappear.

In fact the day in January on which the merger was announced I was in the small town of Outlook, Saskatchewan. Besides the credit union there are two banks. They are both on Main Street. One is the Royal Bank and the other is the Bank of Montreal. I could imagine the tellers in those banks looking across the street and wondering “Do you go or do we go?” Which one will go? There will be a consolidation and some branches will disappear. Many Canadians will no longer receive the service.

I am not just thinking of the rural people in small towns such as Outlook or Esterhazy, Saskatchewan, or indeed any town across the country; I am thinking about the metropolitan areas as well, the large urban centres. A lot of neighbourhoods will not have bank branches. Bank branches will be closed down in the inner cities because it will not be profitable to have all of these branches once there is a large, centralized mega bank in place.

From a competition point of view it is important that we look at strengthening the merger legislation in terms of service to ordinary Canadians. It is a great concern.

Another concern I have is the loss of jobs due to the merger. Some 92,000 people work for these two banks. Mr. Barrett and Mr. Cleghorn would have us believe that there will not be a loss of jobs, that jobs will be maintained. They have told us not to worry about the jobs.

Look around the world where banks have merged. Look in this country where banks have taken over trust companies and other financial institutions. What has happened? Around 20% to 30% of the jobs disappear. People are laid off. The same thing will happen with the merger of the Bank of Montreal and the Royal Bank of Canada if it is allowed to go ahead.

I am not only concerned about the ordinary workers in the banks. These two banks have head offices. What will happen to the jobs in the head offices when they consolidate? What will happen to the jobs of the people who run the technological systems and the information services as those two banks consolidate into one large corporation?

That is another argument why we need a strong competition policy. It is so when people are concerned about an issue like this one have recourse in terms of going to the competition bureau. We can do that today. I hope there are people who will take the initiative to go to the competition bureau and demand an investigation. I hope that happens. Even more importantly, what this country needs is some very strong legislation to make sure that does occur.

As I said before, it is a question of jobs. It is a question of service to rural communities. It is also a question of the kind of financial future we want in terms of our financial institutions. If this occurs, we are opening a whole new can of worms, a whole different future in banking and financial institutions in Canada.

It seems that these two big banks think they have the Minister of Finance on a leash. They have ambushed him. They believe he is going to give in and listen to the big bankers on Bay Street.

The Minister of Finance is saying “Let us wait a while”. There is a financial services task force looking at banking in this country. It is headed up by a very fine gentleman from Regina, Harold MacKay. That financial services task force has now been under way for quite some time. It is looking at all these important issues. The task force is going to report sometime in the month of September. After that the Minister of Finance is saying that the finance committee will look at the report and what is going to happen in the future of banking.

Mr. MacKay's task force is not looking at this particular merger. It has no specific mandate whatsoever to look at this particular merger. It is looking at all the other questions in terms of the future of financial institutions in Canada. For example the task force is looking at the issue of whether or not banks should be allowed to get into a full array of financial services in this country; whether or not banks can buy up insurance companies and sell insurance throughout their branches; whether or not banks can get into the auto leasing business. That is what the task force is looking at.

That is why we need right now a committee consisting of members of Parliament from all five parties in this House to look at the wisdom of this particular merger. That is why I am rising at this time to say that when we deal with competition policy we should be talking about the most important merger proposition in the history of this country, one that is so large that all the others pale in comparison.

The banks have been lobbying for years to sell insurance. The banks want to sell insurance. The insurance industry has been lobbying against the banks selling insurance. The Minister of Finance was very close to saying yes before the last federal campaign but the election was too near. Finally he said no, the banks cannot sell insurance.

The banks have been lobbying since then. They have engaged a very prominent lobbying firm which is based in Toronto and Ottawa to do the blue chip lobbying for them to allow them to go ahead and do their mergers, or to sell insurance, or to buy up insurance companies and to get into the auto leasing business. The more I talk about this, the more important issues there are that we have to deal with as parliamentarians.

In the last few years the banks have bought up brokerage firms. The only brokerage firm now of any size in this country that is not owned by a bank is Midland Walwyn. The rest are all owned by the banks. The Royal Bank has a large brokerage firm. The Bank of Montreal has a large brokerage firm. They both have trust companies. They are getting bigger and bigger all the time. Is that the right way to go?

We are supposed to represent the people of this country in this House. All of us. We are all elected as equals to represent the people, yet we do not have a parliamentary committee looking at the very important issue of the mergers and the future of banking and the financial service industry. That is absolutely and totally wrong.

We should turn this debate into a debate on a big specific issue, the merger of banks. I hope other members will get in this debate today and talk about this issue.

I want the Minister of Finance to do a very simple thing. I want him to strike an all party committee that has the power to travel this country, to hear witnesses, to hear input from the Canadian people about whether or not this merger should go ahead.

What is happening is the majority government across the way is being lobbied by blue chip lobbyists who say that the merger should go ahead. They say that the banks should have more and more power, the banks should have the right to buy and sell insurance.

In fact some of the banks are getting into what is called tied selling. There was an example of that last week. If you bought certain items from the bank or if you wanted a loan or a mortgage from the bank it was expected for example that you would shift your RRSPs to that financial institution. Those are the kinds of things that are happening.

The member for Regina—Lumsden—Lake Centre has just made a comment about how they expect the whole family to be involved. We bring our whole family into that bank. How big do these people want to be? They are like the big sumo wrestlers. They get bigger and bigger all the time.