Debates of May 27th, 1998

Budget Implementation Act, 1998

[The Acting Speaker (Ms. Thibeault)]

I must interrupt the hon. member but his time has expired.

I must also inform the hon. member for Kamouraska—Rivière-du-Loup—Témiscouata—Les Basques that his amendment is in order.

[Nelson Riis, NDP, Kamloops, BC]

Madam Speaker, I want to say from the very start that I am so bloody mad I could spit at the moment. If we are very quiet we can hear the jackboots of the Liberals trampling over the democratic rights of the citizens of this country. We can hear them in the hallways. A dark fascist cloud hangs over this institution today as the Liberal government has brought in closure on this bill and the representatives of 30% of the voters of Canada will not be heard. They will be muzzled. The 30% of the people who voted Conservative and the 30% of the people who voted New Democrat will not be heard on this multibillion dollar budget bill. We say that is wrong. It is disgusting. It is anti-democratic. It is simply wrong and it is unparliamentary.

That is not where it ends. This is the final stage of an anti-democratic sweep by the government.

After the legislation was introduced, after post-budget considerations that were essentially ignored, we heard 88 representatives who came before the finance committee with a whole set of very positive recommendations for change. There were 88 interventions. Amendments were brought forward. Did government members listen to a single one of those 88 interveners who proposed changes? Not a single period was changed. Not a comma was changed in the legislation. It makes a mockery of the system. It is a slap in the face to all of those witnesses who appeared before the committee. I say that is wrong and undemocratic.

I have to be careful because I could get worked up. I have a whole speech that I am supposed to read on behalf of my caucus. The Conservatives had a representative who wanted to make a speech today, but we are unable to do that. We are not allowed to. There is something wrong with a system which says that 30% of the electorate is simply cut out of a discussion on this budget legislation. It is wrong and it is something the government has to change.

I thought the Tories were bad under Mulroney. We were up here day after day saying what a bunch of scumbags they were because they were introducing closure, introducing time allocation, cutting off democracy and making a mockery out of this place. The Liberals are actually worse. It is unbelievable.

I have a couple of comments about the legislation. To start with I want to talk about the millennium scholarship fund. Let us acknowledge that this millennium scholarship fund, at best, is going to help about 7% of students who need help today. As a matter of fact, it is a lot less than that. About 7% of college and university students may get assistance. Ninety-some per cent will never see the benefit of this.

Does the government take its commitment to education seriously by reinstating transfers to the provinces for education? No it does not. Does it take its position seriously by doing what every OECD country does by providing federal leadership on access to education? Does it do that? No, it does not. It brings in this little flashy millennium scholarship fund. I can see it now. All the cheques will be signed by the Prime Minister and sent out to all of the students as a good public relations gesture.

Yes, it will help a handful of people in need, but will it help provincial governments in terms of their tuition fees? No, it will not. Will it help the thousands and thousands of young people today who are indebted up to their eyeballs, the average debt load being $25,000? Will it help them? No it will not.

Then it refers to the employment insurance fund. We find out today that the employment insurance fund will have a surplus this year of about $16 billion or $17 billion. By the end of the year it will be about $19 billion. By next year there will be a surplus of about $25 billion.

That is stealing money out of the hands and pockets of employees and employers across this country. No wonder we have the deficit under control. Money has been taken out of the pockets of the hardest working people in the country. It is wrong.

The government says that it is going to provide an incentive to encourage employers to hire young people. That is going to help 1% of the hundreds of thousands of young people who are out of work today. One per cent may benefit from this initiative. That is hypocrisy. By saying that they are going to do something, that they are going to help 1%, is like taking a slap in the face for every unemployed young person. That is wrong.

I could go on. I have a whole speech I could give, and I have not even started yet, but I cannot because the government has brought in closure and says that certain MPs—

[The Acting Speaker (Ms. Thibeault)]

I am afraid that at this point I have to interrupt the hon. member.

It being 5:15 p.m., pursuant to order made Monday, May 25, 1998, it is my duty to interrupt the proceedings and put forthwith every question necessary to dispose of third reading of the bill now before the House.

The question is on the amendment. Is it the pleasure of the House to adopt the amendment?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Ms. Thibeault)]

All those in favour of the amendment will please say yea.

[Some hon. members]

Yea.

[The Acting Speaker (Ms. Thibeault)]

All those opposed will please say nay.

[Some hon. members]

Nay.

[The Acting Speaker (Ms. Thibeault)]

In my opinion the nays have it.

And more than five members having risen:

[The Acting Speaker (Ms. Thibeault)]

Call in the members.

(The House divided on the amendment, which was negatived on the following division:)

Division No. 179

[The Speaker]

I declare the amendment defeated.

The next question is on the main motion.

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I believe you might find unanimous consent in the House to apply the results of the vote just taken to the motion now before the House in reverse order.

[The Speaker]

Is there agreement to proceed in this fashion?

[Some hon. members]

Agreed.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 180

[The Speaker]

I declare the motion carried.

(Bill read the third time and passed)

[The Acting Speaker (Ms. Thibeault)]

It being 5.50 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

Competition Act

[Dan McTeague, Liberal, Pickering—Ajax—Uxbridge, ON]

moved that Bill C-235, an act to amend the Competition Act (protection of those who purchase products from vertically integrated suppliers who compete with them at retail), be read the second time and referred to a committee.

Madam Speaker, I am very pleased to be here to speak to this bill. The bill was initially introduced in the House of Commons last year but, because of the election and time constraints, we did not have an opportunity to get back to it. on the order paper, but Bill C-235 is from the 36th Parliament.

This bill becomes even more important when we consider the recent tactics by a number of industries but specifically the gas industry. We have witnessed across the country some very disturbing trends occurring with respect to retailing of gasoline products.

The problem is really something I think we can see occurring in other areas such as the travel industry with respect to reservations. A number of travel agents have spoken to members of parliament about the problems there. We have also heard rumours recently about the impending actions taken by the U.S. government perhaps at some point down the road with respect to Microsoft.

The problem that exists here is really one of predatory pricing and price discrimination. For the purpose of this bill we want to deal specifically with what it does. It would provide for the enforcement of fair pricing between a manufacturer who sells a product at retail, either directly or through an affiliate, and who also supplies product to a customer who competes with the supplier at the retail level. This bill provides a supplier's customer with a fair opportunity to make a similar profit as the supplier at the retail level in a given market area.

Just last week in Toronto and in many regions across the country a number of independent gasoline retailers told me and expressed to other members of parliament how difficult it really is to stay in business when the supplier you are competing against is the very person who is determining the cost at which you are going to receive the supply. If that supplier deems it is important to increase market share at your expense, then it will not be very long before predictably you will be out of business.

The Liberal committee on gasoline pricing has crisscrossed the country. It has come up with a number of ideas that it will eventually bring forward.

The bill speaks for itself. In the view of many in this House, there is a very clear indication that there is a shortcoming in the act.

In 1986 the restrictive trade practices commission came to the conclusion that there was a need far from what the provinces are doing today to enforce and to strengthen legislation in the Competition Act as it relates to section 50.

We realize this is the first hour of debate and I am honoured we have had an opportunity to look at this. I am equally delighted that the Subcommittee on Private Members' Business had the fortitude and the quite common quite sense to deem this bill votable.

Current measures in the federal Competition Act dealing with predatory pricing and price discrimination clearly have proven to be insufficient in combating these activities and in providing adequate protection for those in the industry. It is fair to say that the cumulative effect of legislation is not to bring about restriction in price or governance of price. The idea is to ensure that legislation exists so that there are effective ground rules and more important, that legislation in this country ensures and fosters a free market and at the end of the day adequate supply and demand. When it comes to predatory pricing, it is clear to many that we need change and that change should happen as soon as possible.

Thousands of mom and pop type gas station owners across this country are watching this bill very intently. It is not because it is something that would allow them to line their pockets, not because it would allow them to make a profit at the expense of the consumer, but it is because their survival hinges on our ability here this evening to provide legislation that adequately protects them against the practice of below cost selling. This is occurring at an alarming rate. We only have to go to the major centres across the country to know that.

When we tear away at this country's small businesses, or through neglect of our obligation here in terms of legislation we allow these people to die on the vine by a thousand cuts, we effectively have surrendered our obligation to protect people who want nothing more than to be competitive and to be efficient and at the end of the day to provide a product that every consumer needs. This bill is designed to protect certain people who have to compete against their own suppliers, but at the end of the day this bill is designed to protect consumers.

It is very clear in regions of this country where there has been the ultimate demise of many independent retailers of gasoline product, where they have been eliminated, such as in Newfoundland or New Brunswick, there has been a corresponding trebling in the cost of gasoline. It has nothing to do with taxes. It has nothing to do with competition. It has to do with the fact that we are seeing in this industry the emergence of an oligopoly which is dangerous in its very essence and is certainly dangerous to the interests of consumers.

I encourage members of parliament to look at the legislation, to look at what the Competition Bureau said in 1986 in the Bertrand report.

I want to thank each and every colleague for making this a votable bill. Let us not fail small business in this country. Let us make sure we continue to make competition viable in Canada.

[Werner Schmidt, Reform, Kelowna, BC]

Madam Speaker, I rise with a lot of interest in this bill. I think the hon. member when he first started on his crusade with regard to gasoline prices undertook something that had an awful lot of appeal. What has happened in the process of the bill is quite different from where the hon. member started. We would have to look at this from the point of view that I personally and the Reform Party that I represent in the House clearly support vigorous and open competition in the marketplace. We encourage that and we want to make sure there is competitive pricing, competitive promotion and that we enforce competition law as it exists at the present time.

We also recognize there is a perception on the part of certain independent gas retailers that the competition that exists is not fair and that there is a lack of competition in some cases and the very same thing exists in the minds of some customers and consumers.

I would like to advance to the hon. member that his intention was great but Bill C-235 fails to resolve that issue. It stops short of looking at the real issue behind the lack of competition in the marketplace. The issue is not the Competition Act as has been proposed because the Competition Act lays out very clearly provisions preventing predatory pricing, abuse of dominant position or unfair practices.

It is necessary for us to know to what the Competition Act says. Section 78 in part (a) refers specifically to what anti-competition really means. It includes any of the following acts. Part (a) says it is squeezing by a vertically integrated supplier which is exactly what Bill C-235 addresses: “squeezing of the margin available to an unintegrated customer” which in the example is the independent gasoline retailer “who competes with a supplier for the purpose of impeding or preventing the customers entry into or expansion in a particular market”.

That is precisely the issue the hon. member is trying to address. He is suggesting the Competition Act does not cover this issue. I submit it does. Part (i) reads: “selling articles at a price lower than the acquisition cost for the purpose of disciplining or eliminating a competitor”.

It does not take a genius to figure out what that really means. The intention of the hon. member is certainly commendable but the current legislation provides for exactly the kind of thing he wants to prevent. I agree that we should not have that and that is why section 78 exists.

Under section 50 of the Competition Act we have very serious consequences for a company or individual engaging in anti-competitive behaviour. The hon. member in his initial comments made the observation that the Competition Act needs to be enforced and must be efficient in its application. I could not agree with him more.

If the issue is one of enforcement it seems that is exactly what it is. The current provisions under sections 50 and 78 have comprehensive enough coverage that they can deal with all the things the hon. member wants to deal with in Bill C-235. The issue becomes one of the willingness to enforce that legislation, to actually say if this is done then there is a consequence. Part of the reason for the perception that competition does not exist is the act is not being enforced.

The member suggested this has nothing to do with taxation. It has a lot to do with taxation.

Before I go into the taxation part I would like to suggest one other issue. That has to do with the most recent article that columnist Diane Francis wrote for the May 26 issue of the Financial Post . She suggests that one of the reasons Canada has some of the difficulties it has with regard to the Competition Act is in Canada there is not the kind of anti-trust legislation that exists in the United States. I agree with that.

I believe the time has come for us to examine very seriously whether we ought to be looking at the issue of whether industries and certain players in the marketplace are becoming too large. If we allow an oligopoly to develop where an industry becomes so big, a player in a particular sector becomes so big that it virtually dominates the marketplace and dictates the prices of services and product in that sector, we ought to look very seriously at whether that oligopoly ought to continue.

I alert the Minister of Finance in this connection when he considers later this year the proposed merger of the banks. It seems to me we ought to look at that as well.

I want to come back to the taxation issue. The hon. member told us very clearly that it has nothing to do with taxation. Let me suggest that the excise tax on gasoline can be blamed for higher prices at the pumps more effectively than anything else. I will cite some facts. More than 50% of the average price of gasoline at the pumps actually is excise tax. The residual effect is that the profit margin for suppliers and retailers is reduced. If we are looking for negative forces on the marketplace then we need look no further than on the effective of excessive taxes on industry, the business person and the consumer.

In the case of gasoline pricing and profit margins for both big and small players everyone is being hurt by excessive taxes. The only player who comes out unscathed in the entire process is the tax grabbing Liberal government.

That tax grabbing hurts the consumer by raising the prices at the pumps and by cutting into the profit margins of big and small business. That is the issue. The typical gasoline retailer realized an average gross profit margin of three and a half cents on the sale of a litre of regular gasoline in 1996. That amounts to 6% of the average pump price. The taxes meanwhile averaged 28.6 cents a litre more than 50% of the average pump price at that time. Both refiners and gasoline marketers have seen profit margins fall as a result of price competition despite rising crude oil prices since 1991.

There is a very practical issue here that we need to look at as well. Average consumers will ask how on long weekends and during vacation periods can prices go up.

Crude oil prices can rise and the lag between the rise in world prices and the price at the pump has a very short time span. But when the price drops on the world market it takes a long time before the price falls at the pumps. These are the issues we want to look at in a very serious way.

I commend what the hon. member is trying to do, but I submit that it is the wrong way to go at the issue. I encourage him first to suggest to his colleagues to reduce taxes and get the money back to the taxpayers so that they can afford to buy gasoline and that the margin for the businessman increases rather than decreases.

[Francine Lalonde, Bloc, Mercier, QC]

Madam Speaker, I am pleased to tell the hon. member that, in principle, his bill is a step in the right direction.

Since debate on the proposed reform of the Competition Act appeared to be headed toward a weakening of the existing provisions of the act and not their strengthening, it is refreshing to see a member across the way introduce a bill to strengthen those provisions.

However, there are still a number of unresolved issues. For instance, clause 50.1(2)( a ) of the bill states: a ) the supplier's own retail price in the same market area as that in which the purchaser customarily sells the product or offers it for sale, less

(i) the supplier's own cost of marketing at retail, and

(ii) the supplier's reasonable return on the retail sale,

What is “reasonable”? What is the “cost of marketing at retail”? This remains vague. I do not know how to address this problem, but it is nonetheless important.

Incidentally, I would like to point out that this bill does not completely solve the retailers' problem. I think it is also the opinion of the Association of Independent Distributors of Petroleum Products that this bill does not completely solve the problem.

In Quebec, to address the overall problem, we have established the Régie de l'énergie, which, more than a year and a half ago already, set for gasoline in Quebec a floor price that takes into account the wholesale price in the Montreal area, transportation, taxes, and so on.

This way, to help independent retailers, oil companies cannot sell their gasoline for less than a set minimum price. I realize we can also discuss that principle, but the idea is to listen, each year, to the stakeholders and see how the market is evolving.

If we agree that we cannot allow a monopolistic or oligopolistic market, we must take measures so that independent retailers can thrive and not merely survive. Times are very hard for many of them right now. I know that a number of them are desperately trying to survive and are counting on a review of the floor price that will be conducted by Quebec's energy board. After all, we have to define a guaranteed margin of profit, otherwise independent distributors will not survive.

I did hear arguments such as “we have to think about consumers”. It is true. But at the same time, let us not forget that consumers also include the producers who need revenues. If we only think about reducing prices, regardless of the impact on employment, economic development and small and medium size businesses, then we can have lower prices, but we will also have growing income gaps, as well as major social and economic problems.

Therefore, I support in principle the bill introduced by the hon. member for Pickering—Ajax—Uxbridge. I wish him luck. But I do want to discuss the issues raised by his bill. I congratulate him on his work, because—and I agree on this with the hon. member to my right, no pun intended—we really need to look at how small and medium size businesses in the oil and other industries can survive.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I congratulate the member for Pickering—Ajax—Uxbridge on this bill and for the opportunity to say a few words about the subject of gas pricing in Ottawa.

As the hon. member noted in his opening remarks, Bill C-235 is directed at ending predatory pricing practices of the oil companies which also own refineries and retail outlets, the so-called vertically integrated companies. We think particularly of near monopolistic practices such as the Irvings in the Atlantic region.

I note a recent letter from David Collins who is with the Wilson Fuel Company Limited to our caucus to support the upcoming introduction of this bill or amendments to the Competition Act. About these amendments he says in part:

—amendments provide some much-needed definition to the concept of predatory pricing. As local independent marketers of petroleum products, we have found ourselves singled out to face retail prices which are below those made available at wholesale. The result has been to discipline our company into retail price conformance. (This) bill would provide firms such as ours some form of legal recourse to remedy such a situation.

Mr. Collins goes on to say:

It is interesting to note that the U.S. market is far more “regulated” when it comes to the marketing of petroleum products than it is in Canada. The Americans also enjoy lower prices on average.

He concludes by saying:

(The) bill goes only part of the way toward bringing Canada's regulations in harmony with those afforded to the U.S. consumers.

I also recognize and applaud the work of some folk in Atlantic Canada who have been fighting this stranglehold on the market to which I referred a moment ago. I will particularly single out Elizabeth Weir, the leader of our party in the province of New Brunswick, and John Holm, the house leader in Nova Scotia, for the work they have done in the recent past on the whole matter of predatory pricing.

The bill that is before us would provide for the enforcement of fair pricing between a manufacturer that sells a product at retail either directly or through an affiliate and supplies a product to a customer that competes with the supplier at the retail level. This provides a supplier's customer with a fair opportunity to make a similar profit as the supplier at the retail level in a given market area.

I note in passing that we have a member in our caucus, the member for Regina—Lumsden—Lake Centre, who has also done a lot of work on the unfair pricing of gasoline in Canada generally but specifically in the province of Saskatchewan. He has been arguing for some time that what we need is a commission to regulate the wholesale and retail prices of gasoline, taking into account both the public interest in having reasonable and consistent pricing and the need for manufacturers, distributors and wholesalers to have reasonable costs covered. The commission could also conduct hearings on competition in the oil industry referred to it by the competition tribunal.

In Canada we accept that some prices of goods or services which are central to our well-being and to the economy in general and often controlled by monopolies or near monopolies should be regulated in the public interest. I am thinking, for example, of telephone and cable television costs.

Naturally the oil companies do not agree. They recently launched an ad campaign, as I understand it, in Ontario and in eastern Canada to explain some of the things that drive Canadians crazy on an annual basis about the oil and pricing regime as it has existed ever since I can remember.

I will give three examples. Why do prices go up just before seeding season or the harvest season in my part of the world on the prairies? Why do they go up across the country just before summer long weekends? Why, when Saskatchewan is clearly a net exporter of oil products, do we end up paying a higher price than we do in Ottawa when the tax regime is exactly the same in both provinces? Today in Regina the price at the pump is 56.9 cents as compared with 49.9 cents in Ottawa.

It is interesting to note that these ads that are running in eastern Canada are not running in the west. I would offer it is because the oil companies simply cannot answer that last one, that Saskatchewan is a net exporter yet ends up paying 7 cents a litre higher than is currently being paid in Ottawa.

As the agriculture critic for our caucus one of the things that is a real bugaboo for people on the prairies, especially at this time of the year—and it is nice to see some of the other members of the standing committee on agriculture here tonight—is the high input costs being paid out as we speak, as farmers are out on the land putting their crops in the ground. Among the highest are the costs for fossil fuels.

We in this caucus believe that the bill introduced by the member for Pickering—Ajax—Uxbridge is a good bill. It is worthy of support. We commend him for the work he has done and for encouraging us as a parliament to continue to work on this very important issue.

[Norman E. Doyle, Progressive Conservative, St. John's East, NL]

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.

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

Madam Speaker, today I am addressing the House on the subject of private members' Bill C-235, an act to amend the Competition Act. Unfortunately I cannot support the bill.

I wish to congratulate my colleague, the member for Pickering—Ajax—Uxbridge, for his work in preparing this bill and for his laudable efforts to find solutions to the problems facing many of our small and medium size businesses. While his efforts were well intentioned, the proposed means to resolve this issue will not bring about the results he seeks and will most certainly have serious adverse consequences on the Canadian economy in general and on a number of specific industries which I will explain shortly.

Bill C-235 seeks to prohibit vertically integrated companies from selling their products to retailers competing against them in the same market at prices which would inhibit the retailer's ability to make a profit similar to that enjoyed by the vertically integrated supplier.

The bill also seeks to prohibit vertically integrated suppliers, by virtue of their dominant position, from coercing retailers into adopting a specific pricing policy.

According to the bill, both of these proposals would be effected by amending sections 50 and 78, respectively, of the Competition Act.

The bill as it is currently worded will potentially apply to every vertically integrated supplier no matter what industry it is in. My colleague across the way also explained that earlier.

While many of us are aware of our colleague's interest in providing assistance to independent gasoline retailers, we should ask ourselves if tying the hands of all integrated players in the Canadian economy is not unlike using a bomb instead of a fire cracker. Do we really wish to see our selection of tires, auto parts, jeans, electronics products, computers or green plants diminished by overbearing government regulation? Do we wish to push some firms out of the Canadian economy because they find our laws burdensome? I think not. Indeed, we wish to encourage Canadians to open and expand their businesses and create jobs. We wish to welcome foreign investment as a further stimulus to job creation and to the Canadian economy.

Furthermore, did we not adopt a policy of deregulation in the 1980s? We have been furthering that agenda for some time with the specific purpose of cutting down the costs of doing business in Canada in a attempt to provide Canadian businesses with an equal chance to compete in foreign markets and to meet import competition here at home. To be more specific, experience has shown us that in markets where similar legislation has been enacted prices for the products covered by the legislation have risen. Higher prices of inputs to major manufacturing in Canada would harm the overall competitiveness of the economy and inhibit Canadian firms from competing on a level playing field with foreign firms not subject to the same constraints.

Allegations that vertically integrated suppliers have retailed their product below cost have rarely, if ever, proven supportable upon close analysis. Forcing these suppliers to underwrite the return expected by competing retailers could easily lead to the supplier's legitimate refusal to sell their products through independent retailers. In a nutshell, there is little good to come out of these proposals.

In addition, these amendments would discourage price wars which can be of benefit to customers. The resulting price inflexibility would introduce price rigidities, impeding the ability of businesses to quickly react to changing market conditions—and we all know that market conditions change continuously—and set their prices accordingly.

The amendments would force companies to check with their accountants and financial controllers to determine whether a new price offering would cover all their market costs and mandated rate of return even if short term requirements to sell off product or meet competition in the marketplace was urgently needed.

Looking specifically at how regulators would administer such a law, I draw the attention of members to the following scenario.

The competition bureau would be expected to act upon any complaints arising from each and every price increase at the retail level of products covered by these proposed sections of the act. Just looking at price changes at the pump, which happen as often as three times a week, in the 20,000 markets across Canada, we can expect the annual administration costs of investigating and pursuing such complaints to be easily in the billions of dollars.

Add to that the price increases for tires, car batteries, computers or plants, or the myriad products sold at stores like Price Club, and the costs could soar. I doubt very much that this is what was intended by the proposal.

Furthermore, I have studied the sections of the Competition Act which relate to abuse of dominance and price maintenance. Sections 50(1)(c) and 78 on their own, without any amendments, are currently drafted in a manner which addresses the concerns of the hon. member for Pickering—Ajax—Uxbridge. Predatory pricing, which is defined as selling products at prices unreasonably low, having the effect of substantially lessening competition, or pricing which is aimed at eliminating or impeding the expansion of a competitor is a criminal offence under the act as it now stands.

In addition, abuse of dominance in situations where substantial lessening of competition results is a civil provision. One of the subsections of that provision deals specifically with the issue of dominant vertically integrated firms squeezing the margin available to non-integrated customers and competing with the suppliers for the purpose of impeding or preventing the customer's entry into or expansion in the market.

Since these provisions already respond to the issues raised in the proposed amendments, I ask why we need to add redundant provisions to an existing law.

Finally, the Competition Act already has a provision which deals with coercive pressure to resale a product at a price dictated by the supplier. This provision, known as price maintenance, is criminal in nature, allowing for greater use of the provision when warranted by the director of the competition bureau and the Attorney General of Canada to deal with competitive problems in gasoline markets.

As a matter of fact, on January 26, 1996, Mr. Justice David Dempsey imposed a fine of $50,000 against Mr. Gas Limited, a local Ottawa gasoline retailer, for having influenced upwards, by use of a threat, the prices charged by one of its competitors in Ottawa, Caltex Petroleum Inc. Since this prosecution Ottawa has become a very competitive gasoline market which last year had the lowest average gasoline prices in Ontario. I give this example to show that there is already a very effective provision in the Competition Act to deal with gasoline suppliers attempting to coerce their competitors with respect to prices.

Historically the competition bureau has undertaken 11 prosecutions under the price maintenance provision in gasoline markets and has been successful in obtaining 9 convictions. This is obviously an effective provision in the Competition Act. Canadian business does not need new duplicate regulations.

The price maintenance provision has also been used successfully in literally hundreds of prosecutions. The business community, in general, knows its content and what conduct is expected of them to stay within the law. A new, similar provision to price maintenance, which one of these amendments contains, only complicates the life of business persons and adds no additional benefit for the economy, consumers or small gasoline retailers.

We are not here to determine for our citizens what a reasonable rate of profit is today. The market does that. Economies which have tried to establish so-called planned economies have recently lived through the utter failure of their efforts.

We need to find solutions that encourage innovation, new and efficient entrants, consumer choice, new jobs and economic growth. Let us work together toward that end and not adopt the proposals before us today.

In conclusion, I would like to again congratulate the member for Pickering—Ajax—Uxbridge for his hard work in studying gasoline prices. I am sure he will continue to do good work in that area.

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

Madam Speaker, I rise today to address a matter that has again and again been brought to the attention of the members of this place, a matter that seems to have induced public anger as only a few other issues have been able to do.

Perhaps it would be more appropriate for me to say that I am on my feet today as a result of the constant public and media attention afforded to this topic.

The issue to which I refer is the matter of gasoline pricing and the factors that affect petroleum price setting in Canada.

I am pleased to lend my personal support to private member's Bill C-235 which is currently before us. On an historical note, this is not the first time this particular piece of legislation has been placed on the Order Paper. Bill C-235 was first introduced in the 35th Parliament in 1997 as Bill C-238. Unfortunately, the bill had not been fully considered when the House dissolved for last summer's election. As a continuation of that process, last October the member for Pickering—Ajax—Uxbridge reintroduced the aforementioned measures with the hope that we would now have the opportunity to fully debate them.

It would be inappropriate if I failed to acknowledge the tremendous initiative and leadership demonstrated on this matter by our colleague, the member for Pickering—Ajax—Uxbridge. Not only did this member commit to the establishment of the caucus committee on gasoline pricing, he also agreed to act as our chair.

As chair he was guaranteed long and irregular hours, a hectic travel schedule and an endless barrage of what was at times a hostile media assault. Without his determination and guidance I know that the so-called gas caucus would never have come to fruition.

Bill C-235 would establish a legislative basis for the enforcement of industry-wide fair pricing policies. I submit that the proposed measures would go a long way toward improving the industry's rapidly emerging anti-competitive atmosphere. However, these concrete and long overdue alterations also promise to have a profound trickle down effect at the pumps, a result that, especially with summer looming, I believe we can all applaud.

In an effort to promote fair pricing rather than just cheap pricing, Bill C-235 clearly establishes regulations for a manufacturer who sells a product at the retail level and one who sells either directly or through an affiliate while at the same time supplying the product to a customer who competes with the supplier at the retail level.

To simplify it, this bill would give the customer a fair opportunity to make a profit similar to that of the supplier, hence ending the practice known throughout the industry as predatory pricing.

In addition, this bill would also establish a policy of governance which would label any supplier who attempts to bully or coerce a customer in the establishment of retail marketing policy as one who has committed an anti-competitive act. That in a nutshell is what this bill aims to resolve.

Over the course of the past several months the Liberal caucus committee on gasoline pricing has extensively toured the country. During that time we conducted a comprehensive series of public hearings. Further to that, when in Ottawa we devoted a considerable portion of our efforts and time to direct consultations aimed at providing us with access to a wide cross-section of the opinions held by consumers, retailers, wholesalers and specialized interest groups.

Although the formal results of the aforementioned study will soon be put forward in a report, at this time I can say that one of the most common sentiments expressed to us was a sense of fear resulting from the rapidly depleting pool of competition within this industry.

The Department of Industry holds the primary responsibility for ensuring that the provisions of the Competition Act are enforced. Even though the department has in good faith conducted numerous investigations into specific case violations of the Competition Act, I fear that this would be similar to arming our currently active duty military personnel with only black powder muskets. In essence, the musket was at one time the most effective tool available to the police and military, however, that is no longer the case. It is not that the musket operates any differently today than it did 100 years ago, but because the situation around us has evolved so dramatically we need to develop new and innovative ways to deal with the new and innovative problems we are faced with today.

This analogy applies to the Competition Act more than most of us would care to admit. The Canadian oil industry looks very different today than it did only a few short years ago. This has occurred in part as a result of the aggressive tactics and the predatory pricing policies of the industry majors. The resulting instability has placed the smaller independently owned dealers in serious jeopardy of becoming a thing of the past.

One might wonder why parliament should concern itself with the loss of a private, small and independently owned business. The loss of one outlet, although not preferable, does not impact tremendously when viewed in the context of the grand scheme of things. However, when we start experiencing the loss of hundreds or even thousands of them, alarm bells should start ringing. The industry majors will freely admit that the little guy is their best single source of competition, the most effective method of keeping them honest. With that in mind would it not stand to reason that each time the market loses an independent that safeguard is weakened?

It is regretful that over the course of the last 20 years a disturbing trend has emerged within the industry. We are losing independently owned establishments left, right and centre. Some would argue this is a result of the reduced access to capital or any number of other factors that small businesses routinely face. I say the banks will not lend money because of the increasing risks involved, risks that are skyrocketing because of unfair competition within the market. The point is if we do not act immediately to rectify the problem, we run the risk of missing the boat on this issue. When the independents are gone they will be gone forever.

My point is very basic. The Competition Act as it exists today is not properly equipped to deal with the complicated issues being generated by this sector of our economy.

The oil industry is unlike any other area of commerce. As such, it requires highly specialized rules of governance, rules such as those contained in Bill C-235. Bill C-235 is not a blanket solution for all the regulatory problems that face us as legislators. However, it is an important first step. Later this month the committee will be formally releasing a comprehensive report that will include a synopsis of the problems that exist within the oil industry along with a series of potential solutions. We need to take the initiative and move forward with this step now if we are to prove to the public that we are committed to resolving this matter.

I recall the gas prices of last summer and how my constituency office was flooded with angry calls demanding that I do something to deal with the exorbitant and rapidly fluctuating pump price of gasoline. I could unfortunately do little to ease the concerns of my constituents as the Competition Act applies only in instances where there is collusion. It is an act that represents only a very small part of a much larger problem.

Since that time I have taken an active role as a member of the committee. In January I hosted a well attended public consultation session in my riding with the gasoline pricing committee. Further to that I have been on my feet in the House on several occasions to present constituent petitions asking the government to enact legislation that would require the oil companies to justify in writing to the Minister of Natural Resources the reasons for any substantial fluctuation in the pump price per litre.

I have said it before and I will say it again. If we opt for inaction then we opt for a continuation of the unfair, anti-competitive and highly unjustifiable pricing policies of this country's major oil companies. That is totally unacceptable to me and it is totally unacceptable to the constituents I represent. I want to clarify that I am not attempting to paint the majors as evil villains. I want to ensure adequate statutes are in place to ensure they are accountable to individuals who rely on them and their products.

In rural Canada as in many other sectors of this nation, public transportation is simply not available. Services are miles apart and therefore personal transportation is a necessity rather than a luxury. We would not stand for unwarranted and unexplained vacillation in the price of food, home rental costs, medicine or other basic essentials. Why have we accepted it with gasoline? We need to establish accountability.

I urge each of my colleagues to support Bill C-235. It is a good bill deserving of our support. I understand that pump prices are low right now, as low as they have been in months, but that is not the point. This bill is not demanding bargain basement prices. It is calling for fair prices. High or low is not necessarily the issue. Often as a result of predatory pricing extremely low prices cause the most difficulty for the aforementioned independents. Selling at less than the rack price allows the majors to undercut their competition, hence eliminating any recognizable profit margin. We are all aware of what profit loss means to a business.

A continuation of predatory prices is a prime example of short term gain for long term pain. Right now parliament has the ability to prevent a looming disaster. If we wait for all the competition to be eliminated from the market then what we have remaining is an uncontrollable monopoly that has the ability to unilaterally dictate the price and availability of one of the country's most essential commodities.

I reiterate my support and gratitude for the actions taken and proposed by the member for Pickering—Ajax—Uxbridge. I will be supporting this bill. I sincerely hope that each of my colleagues will be doing likewise.

[The Acting Speaker (Ms. Thibeault)]

It being 6.50 p.m., the time provided for the consideration of Private Members' Business has now expired and the order is dropped to the bottom of the order of precedence on the order paper.

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