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.