Mr. Speaker, it is with great pleasure that I rise today to speak to Bill C-235, an act to amend the Competition Act, the protection of those who purchase products from vertically integrated suppliers who compete with them at retail.
That is a long way of saying let us go after the gasoline companies and try to score some easy political points. The problem is that it is not that simple. It is not that easy.
I want to deal with the bill in a thoughtful manner and outline the many serious concerns my party has with it. Canada has been oblivious to the issues 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 gearing pricing to competitors based on any formula that 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 tax, Statistics Canada or any other number of government bureaucracies or agencies that 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. This would not happen under Bill C-235. In fact 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, an enormous enforcement cost.
I am concerned about another implication of the bill. If a vertically integrated company sells only a small portion of its product to independent outlets, what would happen? Will it submit to the burdensome review process it is required to go through in order to change its prices? I suspect it would not. In fact it would be my guess that it would cease selling to competitors at all. This would lead to a very negative impact on the independent retailers that my hon. colleague seeks to champion.
Fundamentally this comes down to whether or not governments should be trying to interfere in those affected industries or allowing market forces to prevail. The fact is that price regulations work well when prices are on the rise, but they do not work well when they are coming down. We would in effect be artificially skewering the marketplace to favour small independent companies over the interest of consumers.
I would like to address something that was raised the last time the bill came before the House on May 27 of this year. At that time the hon. member for Palliser rose to give his support to the bill. In so doing the spectre was raised of the Irving Oil Company. It was as if the mere mention of this bogeyman should be enough to rally support for the bill. While I understand the rabid hatred the NDP harbours toward successful Canadian companies, Irving Oil Company Limited does not sell gasoline to its competitors so it would not be affected by this legislation. That is why facts get in the way of good speeches.
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 determinate of gasoline prices and instead move to a cost based formula.
The hon. member who sponsored the bill is well known for his tendency to do battle with oil companies. Motivations aside, I am fearful that the implications to other industries have not been fully thought through. He would not want to inadvertently undermine another industry out of some sort of zealous drive to take on the oil companies.
The final issue I wish to discuss is that of alternatives to the bill. During the last session of debate it was mentioned over and over again that many of the provisions of Bill C-235 already exist in the present Competition Act. They are sections of the Competition Act which relate to abusive 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 issues raised by Bill C-235.
Predatory pricing, which is defined as selling products at prices unreasonably low, has the effect of substantially lessening competition or pricing aimed at eliminating or impeding the expansion of a competitor, is a criminal offence under the act as it now stands.
In addition, abusive 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 dominance of vertically integrated firms squeezing the profit margin available to non-integrated customers and competing with the suppliers for the purpose of impeding or preventing the customers' entry into or expansion in the market.
Even without the reassurance that comes from these provisions my hon. colleague should take comfort in the M. J. Ervin report which shows that since 1994 Canada has enjoyed retail gasoline prices that on a pre-tax basis are among the lowest in the world. Whereas the pump price of gasoline is made up of more than 50% excise taxes, maybe the member's time would be better spent lobbying his own government to reduce these if he wants to see a real benefit.
I do not wish to appear to be advocating a laissez-faire approach to industry. However, I prefer to see legislation that creates an environment where businesses can operate and flourish under normal marketing conditions. This is not a component of Bill C-235. In effect it would be shackling the marketplace with a central command approach to economic questions.
The reality is that the Competition Act must be above all else focused on achieving desirable results for our consumers. It should not be used to undermine the legitimate outcome of competition such as low prices.