Madam Speaker, I am pleased to say a few words in this debate on behalf of my colleague, the member for Markham.
I acknowledge as well the efforts of my colleague from Pickering—Ajax—Uxbridge in sponsoring the bill, an act to amend the Competition Act which is a protection for those who purchase products from vertically integrated suppliers that compete with them at the retail level.
As ominous as vertically integrated suppliers sounds, I think we owe it to all stakeholders to give every consideration to the intent of the bill. Beyond the intent we must also look at the bill's effectiveness.
Essentially Bill C-235 is attempting to accomplish fair pricing between a manufacturer that sells a product at retail either directly or through an affiliate and supplies product to a customer that competes with the supplier at the retail level. The bill's sponsor is also hoping to achieve an opportunity for a supplier's customer to make a similar profit as the supplier at the retail level in a given market.
Another major goal of the bill is to prevent anti-competitive acts such as predatory pricing and price discounting in industries where suppliers of products compete with their customers at the retail level.
Canada has not been oblivious to issues which are addressed by the bill. The Competition Act, implemented by the previous Conservative government to replace the Anti-Combines Act, deals with the inherent issues of Bill C-235 without making any amendments. The issues of price discrimination, price maintenance and abuse of dominance are already addressed by the act.
Let us deal with the issue of fair pricing first. The problem with the legislation is that it would create an artificial profit margin. By guaranteeing pricing to competitors based on any formula which includes retail pricing, the bill would be creating a floor price below which no one could go. The elimination of the ability to engage in discounting would be a peculiar approach to addressing fair pricing. The result would in fact be higher prices which certainly is not in the best interest of the Canadian consumer.
The Liberal government has already overburdened small and medium size businesses across the country with outrageous reporting requirements either in the area of sales tax, payroll taxes, Statistics Canada or any other number of government bureaus or agencies which enforce different degrees of compliance.
Legislators must begin searching for ways to ease the paperwork burden and let Canadian businesses get back to their core services, and this would not happen under Bill C-235. Quite the opposite would be the case.
Let us imagine how the government could possibly begin tackling the issue of what constitutes proper wholesale prices, profit margins and marketing expenses of firms. Quite simply it could not be done. We would be creating another level of bureaucracy, an extra burden of government and an enormous enforcement cost.
I realize the bill is generic in its wording but it is clear that it will have a great impact on the retail gas industry. The result would be to abandon market based forces as the proper determinant of gasoline prices and instead move to a cost based formula.
In effect we would be shackling the marketplace with a central command approach to economic questions. The reality is that the Competition Act must above all else focus on achieving desirable results for consumers. It should not be used to undermine the legitimate outcome of competition such as low prices. We believe this would be the result of Bill C-235.
The M. J. Ervin report, the Canadian retail petroleum marketing study, produced many issues of note on this subject. For instance, since 1994 Canada has enjoyed retail gasoline prices which on a pre-tax basis are among the lowest in the world. Between 1986 and 1995 gasoline jumped by 4 cents a litre and over the last six years operating margins have declined by 7 cents a litre.
All these outcomes are a result of having dynamic change and innovation in our gasoline industry, dynamic change which has benefited many Canadian consumers. The reality is that healthy competition exists in the industry.
One of the unique aspects is known as corner competition or the tub thumping effect where prices will get knocked down for a brief period of time but a correction will come about and prices will increase again.
If the House were to pass Bill C-235 we would in effect be tying the hands of suppliers from all affected industries. They would be unable to change prices in response to market forces. This could lead to vertically integrated suppliers making the decision that the burden of compliance is too great and therefore they would cease supplying competitors. This would result in less competition and higher prices.
For all these reasons we have to say that the Progressive Conservative Party will not be supporting the bill.