Debates of Sept. 21st, 1998

Competition Act

[Jim Jones, Progressive Conservative, Markham, ON]

Mr. Speaker, the Internet is very important but in this particular case it deserves special discussion and more public consultation with the people involved in it.

My party will not support Motions Nos. 4, 5, 7 and 8. These are very troubling amendments in that they seek to put a certain level of regulation on the Internet in what can only be referred to as a haphazard attempt. There are questions to be answered and maybe we should be looking at ways to protect consumers on the Internet. It needs to be done in a thoughtful manner with greater public involvement. To do so in a reckless manner would be a disservice to the legislation and to all Internet users. We only need to look at our southern neighbours and their unsuccessful attempts at regulation of the Internet.

This is an issue where the public demands to be heard. No matter how well intentioned this amendment may be, we have not as parliamentarians had an opportunity to study all the potential impacts. Let us not deviate from our primary purpose with this Bill C-20. It is designed to deliver a crushing blow to fraudulent telemarketing.

While it is true that electronic commerce via the Internet is growing in an exponential fashion, it does not constitute the same insidious risk that telemarketing does. Professional telefraud artists know how to seek out the most vulnerable in our society. These slick individuals are more adept at defrauding the aged and the lonely merely by building a degree of empathy over the telephone. In this type of situation the victims, like most Canadians, do not wish to be rude and hang up on the caller.

No such situation exists on the Internet because one always has the opportunity to delete or to back page or just turn off the computer. The Internet is necessarily a colder, more impersonal means of communication. It lacks the necessary characteristics to create trust and empathetic relations.

While I respect the intention of my hon. colleague's amendment, let us seize this opportunity to handle one situation at a time. At this time our priority must be telemarketing fraud.

[Gurmant Grewal, Reform, Surrey Central, BC]

Madam Speaker, earlier I addressed the four groups together. Now we are on Group No. 2 of Bill C-20.

Industry Canada deserves our support for this particular initiative. We recognize that Bill C-20 is very important and some of the amendments are pretty good. The thing here is we are fighting against a timeframe and while we are against a timeframe, fraudulent telemarketing is hurting the most vulnerable and very poor in our society. It hurts people who cannot defend themselves against these marketing scams.

For example, our senior citizens are the hardest hit category in this particular scam. We all know that deceptive telemarketing hurts honest people and those telemarketers mar the whole industry. Senior citizens are less reliant on the Internet at this time. We know that Internet is coming up very fast. We know therefore it is not pressing at this time. The amendments in this bill should have been passed yesterday because every day telemarketing scams are hurting vulnerable seniors.

Canada's high tech economy will become Internet dependent one day. The time will come when we have to address this issue. I agree 100% the Internet must be regulated. It must be regulated in a way that allows commerce to flourish and consumers to be protected. This matter will be addressed at a ministerial conference in October, and the industry committee will be addressing this particular issue. This issue should be studied at the steering committee.

The second group of amendments will expand Bill C-20 to include Internet communications. Bill C-20 is aimed at addressing the whole telemarketing industry itself. This bill will address the potential for psychological coercion during personal telephone communications. High pressure telemarketing sales people try to sell their programs and services. It is difficult for senior citizens to hang up sometimes.

The Bloc amendments do not account for the fact that the same level of coercion recognized in telephone communications is not present in Internet communications. Internet communication allows one to simply point and click with the mouse in order to delete and put an end to the solicitation.

Person to person voice communication is not as easy to terminate because it is more interactive. No doubt there is a need for some rules to be applied to Internet communication, but, as I said, this issue should be resolved later so that we can give adequate protection to our senior citizens who are vulnerable to these telemarketing scams.

I will therefore oppose the particular set of motions in group 2. I do not think there is a member in this House who does not support this bill. We should get on with passing this bill so that those people can be protected.

[The Acting Speaker (Ms. Thibeault)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Ms. Thibeault)]

The question is on Motion No. 4. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[Some hon. members]

No.

[The Acting Speaker (Ms. Thibeault)]

All those in favour of the motion 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)]

The recorded division on Motion No. 4 stands deferred.

The recorded division will also apply to Motions Nos. 5 and 7.

[Antoine Dubé, Bloc, for Mrs. Francine Lalonde]

moved:

Motion No. 6

That Bill C-20, in Clause 13, be amended by adding after line 4 on page 11 the following:

“(a.1) make a representation to the public in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test thereof, the proof of which lies on the person making the representation;

(a.2) make a representation to the public in a form that purports to be

(i) a warranty or guarantee of a product, or

(ii) a promise to replace, maintain or repair an article of any part thereof or to repeat or continue a service until it has achieved a specified result if the form of purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that it will be carried out; or

(a.3) make a materially misleading representation to the public concerning the price at which a product or like products have been, are or will be ordinarily sold, and for the purposes of this paragraph a representation as to price is deemed to refer to the price at which the product has been sold by sellers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold by the person by whom or on whose behalf the representation is made.”

Madam Speaker, with this motion we are introducing some clarifications. Clause 13 provides:

(a) make a representation that is false or misleading in a material respect;

However, the important points are not indicated.

It continues:

(b) conduct or purport to conduct a contest, lottery or game of chance, skill or mixed chance and skill, where—

(i) the delivery of a prize or other benefit to a participant in the contest, lottery or game is, or is represented to be, conditional on the prior payment of any amount by the participant, or

(ii) adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the person's knowledge, that affects materially the chances of winning;

(c) offer a product at no cost, or at a price less than the fair market value of the product, in consideration of the supply or use of another product, unless fair, reasonable and timely disclosure is made of the fair market value of the first product and of any restrictions, terms or conditions applicable to its supply to the purchaser; or

(d) offer a product for sale at a price grossly in excess of its fair market value, where delivery of the product is, or is represented to be, conditional on prior payment by the purchaser.

We consider these important points. This clarifies much of the bill which remains imprecise. I point out the particular context of this bill, which will give greater powers to the director of the competition bureau, to be known in future as the commissioner. This individual will be able to make decisions alone, whereas in the past there were other commissioners.

If these points are not spelled out, this person will have a difficult task. More importantly, I think that the victims of deceptive telemarketing should know when such action is considered fraudulent so they may lodge a complaint.

Our aim in making these proposals is to improve the legislation.

[Walt Lastewka, Liberal, Parliamentary Secretary to Minister of Industry]

Madam Speaker, I have difficulty supporting this motion.

As I indicated earlier when referring to the motions affecting a general criminal provision in subsection 52(1) against misleading representation, the wording of the proposed subclause 13(a) would in most cases be broad enough to capture the matters specifically detailed in the suggested paragraphs, namely: performance claims, warranties and ordinary price claims.

I also note that the wording suggested by paragraph (a.3) of this motion does not take account of the proposed new tests dealing with ordinary price claims in section 74.01, which were thoroughly canvassed, accepted and debated by the committee.

[Rahim Jaffer, Reform, Edmonton Strathcona, AB]

Madam Speaker, I will take a few brief moments to rehash my thoughts on Motion No. 6 to amend Bill C-20 presented by the hon. member for Mercier.

This motion stands alone in Group No. 3 and, if supported, would expand the guidelines provided for telemarketers to include fraudulent claims regarding warranties and the overall performance and efficacy of a product.

My immediate concern is that this amendment would wrongly place the onus on the telemarketer to ensure that the manufacturer's product claims are accurate. While I strongly believe that telemarketers must act with due diligence in their relationship with manufacturers, the quality and efficacy of the product as supported by the manufacturer's claim should be the responsibility of the manufacturer. Furthermore, section 52 of the act, as amended by Bill C-20, is sufficiently broad so as to include false claims concerning warranties and the overall quality of products.

For these two reasons I would recommend that Motion No. 6 be opposed.

On a final note, it is not in the best interests of consumers to create legislation that will be unduly costly and cumbersome for business. My colleagues in the Reform Party have constantly argued that we need to try to create opportunities by putting less obstacles in the way of business. Being a small businessman, I know that the biggest obstacles which are usually faced are government red tape and bureaucracy. Let us look at ways to try to eliminate that and make it easier.

Motion No. 6 unfortunately goes down the road of putting obstacles in front of business. We need a balance between the protection of consumers and the freedom of business. As I mentioned earlier, I commend Industry Canada for this initiative. We are starting to see more of a direction toward eliminating bureaucracy and red tape for business. I wish that the government would follow that direction and that we would see more of this type of direction in legislation on other bills. We need to try to create more opportunities in our economy and we should all work together to try to do that.

As I mentioned, I believe it would be in the best interests of the House to oppose Motion No. 6.

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

Madam Speaker, the provisions which have been recommended under Motion No. 6 are pretty standard provisions of most competition legislation and, in particular, of all legislation dealing with warranties and guarantees, basically dealing with representations made not only by someone who makes a product but also by someone who sells a product.

The warranty is a larger legal term than just the type of guarantee you get from a manufacturer for a product that is being sold, statements made about the efficacy of a product, about the standard and quality of a product and indeed about the prices at which products are traditionally being sold are not only made by the person manufacturing the product, who in this day and age is probably in another country altogether, but also by the importer, the wholesaler and the retailer.

Therefore, it is important to include a provision of this sort for greater specificity, for greater protection for consumers and for greater protection for businesses which are honest and forthright because they are being penalized by the deceptive practices of other businesses.

It is important to add this kind of provision. It is a common practice amongst most legislation of this sort. It would add extra specificity to the section dealing with telemarketing practices. It would provide an extra person, who might be responsible, to be pursued legally for damages above and beyond the manufacturer, the importer, the wholesaler and any other retailer. It seems to widen the net a bit to bring in more deceptive practices perpetrated by those businesses which are dishonest and out to cheat Canadians.

I would like to emphasize a point made by last the speaker. It is odd to suggest that a provision such as this, which would prohibit misleading representations to the public concerning the price at which things are sold, which would prohibit representations which are untrue as to the performance, efficacy or length of life of a product, with respect to a warranty or guarantee of a product with regards to repair, replacement and so on, could be damaging to business, at least damaging to legitimate business. If the member wants to protect illegitimate business that is another matter. It would be damaging to those illegitimate businesses which are out to cheat consumers and their competitors in the marketplace.

Surely we are here to present a level playing field for businesses and protection for consumers. If the hon. member looked back at other consumer protection legislation, not only in other parts of the world but throughout Canada, he would have seen that this is a very normal provision and one which would add to the protection of consumers and to the protection of legitimate businesses. It seems to me that it is in everyone's interest.

[Jim Jones, Progressive Conservative, Markham, ON]

Madam Speaker, the Conservative Party will be opposing Motion No. 6 put forward by the Bloc.

I am pleased to have the opportunity to speak to Bill C-20, a bill that we had hoped would be expedited so as to provide our law enforcement officials with more tools in their ongoing battle with telemarketing fraud.

Recent estimates have put telemarketing fraud figures at $50 billion annually in Canada and the U.S. A quick calculation tells me that this equates to over $137 million each and every day. I ask that members pardon my frustration, but I have to wonder why we are allowing even one more day of delay on this issue.

Perhaps these amendments are reasonable. However, I believe that deceptive telemarketing provisions are already adequately addressed by legislation.

I must add that perhaps if this motion, as well as the preceding ones, had been introduced at the committee stage we would have had the opportunity to study them in an in-depth fashion. That is the purpose of our parliamentary committee work. Once again I feel that we would be slipping into an indiscriminate approach to legislation if we were to pass this motion. This could only lead to shoddy legislation, and the PC Party will not be supporting it.

Let us stop battling semantics and let us get on with the job of battling crime.

[Mike Scott, Reform, Skeena, BC]

Madam Speaker, when I was preparing to come to the House today to speak to the bill and to speak to the amendments, it caused me to reflect on the proper role of government in a free market economy. Reformers for the most part see this role as very limited in terms of the economy itself. We see it limited to the rule of law, freedom of contract, the enforcement of contract, the ability of Canadian companies to rely on the law to ensure that the contracts they enter into are going to be observed and that the rule of law will see that happen, and of course for the protection of consumers to ensure that no criminal or untoward actions of businesses and enterprises in the free market would be countenanced.

What we have here is a series or a successive number of governments, both federally and provincially, that have practised intervention more and more over a long period of time. In Canada we have as a result of this a distorted market at times, very much distorted when we take into account the grants and subsidies and other false inducements that government provides to the free market to try to influence it to do one thing or the other, the government's desire of the day, whatever that may be.

The other thing we see in this country is punitive taxation rates. I recently did a comparison. Take a person working in the United States and earning a salary of $60,000 a year. If that same person were in Canada and had a comparable take home pay, they would have to earn $134,000 a year when the difference in the dollar and the difference in taxation rates are factored in.

It is easy to see that Canadians and Canadian businesses are very much disadvantaged by that. The government's response typically is not to go to the heart of the matter, which is taxation and regulation. The government's response is regulate it. If it moves, regulate it, then regulate the regulations and then regulate the regulators. This seems to be the Canadian way, regulate everything in sight.

I suggest what we need is less regulation. If hon. members do not think government is intent on regulating, just consider what we are doing here today. What are we talking about? We are talking about regulating competition. While we are at it, why do we not start regulating the laws of gravity? Why not repeal Newton's laws? Why not repeal the laws of supply and demand? Government can do it. Obviously it has the power to do it. That is what the government is intent on doing.

Imagine if we tried to regulate Donovan Bailey or Wayne Gretzky and said we want you to run fast but not too fast, we do not want it to be unfair, we do not want your competition to be unduly disadvantaged. We cannot do that. Competition is competition. By the way, competition is good for the consumer. It is healthy. It sparks innovation. It causes people to look for the best way to accomplish something, whether it is building a house or a ballpoint pen. It causes anybody who is in that market scenario or that situation to look at the best way for them to participate and to draw customers to them.

What we talked about here in the House is regulating competition. I submit that the best thing this or any government can do in terms of competition is reduce regulations, stop interfering in the marketplace and abandon this punitive taxation system we have in Canada so that Canadians and Canadian businesses have more money to take home and more incentive to do what we all know needs to be done, which is create a viable, healthy economy.

[Gurmant Grewal, Reform, Surrey Central, BC]

Madam Speaker, we are debating Bill C-20, an act to amend the Competition Act and to make consequent and related amendments to others acts.

There are four groups of amendments put forward by the hon. member for Mercier. We already debated two groups of amendments and in the third group of amendments we are talking about various aspects of businesses, as the hon. member for Skeena has said.

In the third group, Motion No. 6 would include a prohibition against offering a statement or a warranty or a guarantee for performance or efficacy or the life of the product without adequate and proper tests thereof.

This amendment would wrongly place the onus on the telemarketer to ensure that the claims by manufacturers or service providers are accurate. Telemarketers must act with due diligence in their relationship with the manufacturer or the service provider regarding the quality and efficacy of the product or service as claimed by the manufacturer.

So it should be the responsibility of the manufacturer and not that of the telemarketer. The legal framework in the bill offers enforceable guidelines for professional conduct among telemarketers. Furthermore section 52 of the act, as amended by Bill C-20, is reasonably broad. It is sufficiently broad so as to include false claims concerning the warranty.

As the hon. member for Skeena has mentioned, we are talking about businesses. On the other side we are talking about consumers. The official opposition supports small businesses. We understand that small businesses need more opportunities because they are the ones that create 96% of the jobs in the country. But we know the red tape is too much for them. Government is always on the back of small businesses. The cost of doing business in this country is going up. Taxes are going up.

We have to create a balance between the protection of the consumer and freedom of business. It is not in the best interest of consumers to create legislation that will be unduly costly, cumbersome for business and not be hurting the fraudulent businesses.

I will be supporting Bill C-20 but opposing Motion No. 6 because senior citizens, the most vulnerable in our society, are damaged more and more by fraudulent telemarketing scams. We have to protect them immediately against telemarketing fraud.

[Eric C. Lowther, Reform, Calgary Centre, AB]

Madam Speaker, I had the pleasure of being part of the industry committee that reviewed Bill C-20 at some length and had some input into our party's actually deciding to support this bill and go behind the bill. We are in agreement that it should be passed through the House as quickly as possible.

Why would our party support this bill? I am looking at some of the statements we put together in recommending that our caucus support this bill. With respect to this bill the industry staff has made sure that telemarketers give fair and reasonable disclosure of information at the beginning of each call. This is an important point. It must include the identity of the company, the purpose of the communication, the nature or product of the business interests, price, material restrictions and any terms or conditions that apply to delivery. Those are the kinds of things my party and I support, fair and reasonable disclosure of information and accountability throughout.

The one issue we have with this motion is that it places the responsibility in the wrong place. It is calling for the telemarketer to be responsible for the manufacturer's product claims. We are suggesting that is going a little too far. The responsibility should be in the correct place and left with the manufacturer. If the manufacturer is giving certain guarantees and warranties, that is where the responsibility should lie.

Along with this bill I encourage the House to consider some of the principles behind it. It is the desire of my party that we see the principles for the open, complete and reasonable disclosure of information, as we see in the bill and as addressed in Motion No. 6, exercised by the government.

There is an area where we have failed in reasonable disclosure of information. For a fleeting instant there was a surplus at the end of the last budget year. That surplus was applied quickly and before anyone knew what had happened to a millennium fund, billions of dollars. It is interesting that the auditor general picked up that this was not in keeping with the kinds of principles we see in this bill. The auditor general said that it is not right to expense to a millennium fund in which you have not actually spent the money but are going to spend it some years hence so you will not have a surplus today. The thrust of his comments was that it was not a fair and reasonable disclosure of information.

This is doubly tragic when we look at some of the red book promises of the Liberal Party. It said it would apply some of the surplus to debt and tax relief. Yet it took that surplus and expensed it for some future fund that is intruding on provincial jurisdiction and is going to benefit only a very small number of students. It did this so there would be no surplus and Canadians would not see debt and taxes reduced as this party has long been calling for. This debt is sucking the lifeblood out of our country.

We see the Liberals talking a little about debt and tax relief. Yet when I heard the throne speech and when I read the red book there were between 25 and 30 new spending initiatives. It is pretty hard to reduce debt and give Canadians the long needed tax break they have been crying for. Canadian taxes are the highest of the G-8 countries. In a comparison of Canada and the United States, my hon. colleague from Skeena pointed out the gross taxation in this country and what it is doing to us.

We may hear more in the House about some of the things that happened at the APEC summit which I would say are not at all in keeping with the principles in this bill. This bill tries to make sure the purpose of communication is clear. There was a situation at the APEC summit where it seemed the prime minister's office was more concerned with protecting the rights of a known harsh regime as far as human rights go. It was more concerned with protecting him and putting some of our own quiet and reasonable protesters under abuse.

These kinds of things fly directly in the face of the intent and the kind of principles upheld by Bill C-20.

We see the good in this bill and that is why we support its principles and precepts. Our hope would be that someday there will be a government, and I suggest it would be a Reform government, upholding these principles and precepts.

Once again for hon. members opposite, we would hope that there be fair and reasonable disclosure of information, making sure that the purpose of communication is clear, that the nature of the product or business interests, the price and material restrictions are there for all to see. That is what we call accountable government and that is what we have been calling for.

[Leon Benoit, Reform, Lakeland, AB]

Madam Speaker, I appreciate the opportunity to have a very short intervention in the report stage debate of Bill C-20.

Bill C-20 is an act to amend the Competition Act. The Competition Act is an extremely important act in terms of providing responsible regulation to business. Regulation is needed.

We heard the member for Skeena talk about what an acceptable role for government is in the marketplace. I certainly share his concerns.

What happens with this Group No. 3 amendment, Motion No. 6 in particular which was brought forth by the Bloc is that it really confuses this legislation beyond what is necessary.

Already the Competition Act is complex. This legislation amending the act is complex. Motion No. 6 not only would complicate it more should it pass but it also really would make it more confusing. That is the key here. It would provide improper emphasis in the Competition Act.

This amendment would provide a prohibition against offering a statement, warranty, guarantee of performance, efficacy of length of life and that type of thing about a product unless there is adequate testing done. Should this Bloc amendment pass, it would put the onus on telemarketers to provide testing that of course is the responsibility of the manufacturer. Putting this amendment forth would provide the wrong direction for this legislation.

As well, I would like to point out that section 52 of the act as amended by Bill C-20 is sufficiently broad in order to deal with and include false claims concerning warranties, et cetera. That has been dealt with already.

I believe that this motion is out of place here. It is important to consider the proper role of government. In many cases governments over the past 30 years and probably longer have tried to play an improper role and have become too involved in the marketplace in trying to unreasonably protect consumers.

I have talked to several people who have been suckered in by telemarketing fraud, in some cases by blatantly fraudulent telemarketers. The RCMP in two cases I know of dealt with this. Charges were pressed and the issue was cleared up as well as it could be cleared up. I really feel for the people who have been taken advantage of and I refer to the very elderly.

This is a concern. This is not the way to deal with it. That is important to note.

I will close by saying that I certainly cannot support this group. I believe that the Reform members by and large will not support this amendment, but I would like to add that we will support the bill itself.

[The Acting Speaker (Ms. Thibeault)]

Is the House ready for the question?

[Some hon. members]

Question.

[The Acting Speaker (Ms. Thibeault)]

The question is on Motion No. 6. Is it the pleasure of the House to adopt the motion?