Debates of Sept. 22nd, 1998

Competition Act

[The Acting Speaker (Mr. McClelland)]

The amendment is in order. The debate is on the amendment.

[Gurbax Malhi, Liberal, Bramalea—Gore—Malton, ON]

Mr. Speaker, today I am addressing the House on the subject of private member's Bill C-235, an act to amend the Competition Act.

I am pleased to state my full support for this much needed bill. I wish to congratulate my colleague, the member for Pickering—Ajax—Uxbridge, for seeing this bill to second reading and for the work of his committee on behalf of all Canadians, especially our small and medium size businesses.

In essence, this bill would provide for the enforcement of fair pricing between a manufacturer that 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 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.

A supplier who tries to force a customer to set a certain retail price on marketing policy may under this bill face a fine, imprisonment or both. Bill C-235 would establish a clear legislative basis for the enforcement of industry wide fair pricing policies. That is why I believe the proposed legislation would go a long way toward repairing the industry's battered image among the general public.

The reason I am so concerned about gas prices today is there can only be one winner or loser at the gas pump and that is the consumer. Unfortunately a summer's worth of rapidly changing prices at the pumps has only served to frustrate and anger consumer in my riding of Bramalea—Gore—Malton—Springdale as well as those living both in Ontario and across the country.

Without a doubt gasoline pricing is a politically sensitive issue and will remain so until certain problems within the system are addressed. After all, gasoline prices are probably the most advertised prices in Canada. Every citizen sees them every day and often is shocked when they suddenly go up. Unfortunately normal supply and demand economics cannot account for the large price swings that Canadians see at the pumps.

Though the committee on gas pricing's report concluded that price fixing and collusion do not occur, it added that it does not occur because it does not have to. All a station manager has to do is look at his competitor's sign and match his price. Indeed price signs on retail outlets can be an easy way for market participants to achieve the same results without having the resort to any illegal activity.

Still, I would like to make it clear that there remains too much mystery surrounding the relationship between the refining and the retail operations of integrated companies such as Shell and Imperial Oil.

What is needed is greater transparency within the industry since as things stand now very few Canadians have any idea how much these big companies charge their own stations. There is still a lot of smoke and mirrors within the industry.

I again acknowledge the tremendous initiative and leadership demonstrated on this matter by our colleague, the member for Pickering—Ajax—Uxbridge. This member not only helped to create the caucus committee on gasoline pricing, he also agreed to be our chair.

Bill C-235 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 unfair pricing. Since that is what the bill aims to resolve I wish to call on my fellow members of parliament to join me in support of Bill C-235.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, I am very pleased to have an opportunity to discuss the gas pricing issue in the House yet one more time.

I am pleased to stand and support the referral to committee of Bill C-235 sponsored by the member for Pickering—Ajax—Uxbridge. It is a bill which has merit. It is a bill which will provide some competition seriously lacking now in the gasoline pricing industry.

The purpose of the bill is to provide a much needed first step to implementing a predatory pricing definition in the Competition Act.

This is a definition that makes sense to non-integrated or what we like to call independent gasoline retailers who compete against the vertically integrated or the large corporate marketers. It is the first step in re-establishing some retail competition which, at this moment, is on the verge of breakdown.

The Competition Act was watered down significantly by the Conservative government of Mr. Brian Mulroney. We used to have a bill called the Combines Investigation Act. That bill gave regulators the power to investigate if they suspected predatory pricing or price fixing in the marketplace in gasoline or other commodities. They had the power to go into a company suspected of price fixing or predatory pricing and take the files for investigative purposes.

What happened was that Mr. Mulroney wanted to change that because the large corporations made huge contributions to his party. In response he said “I am going to let you fix prices, so I will repeal the Combines Investigation Act and set up what we will call the Competition Act”. I call it, and many of my constituents call it, the “lack of competition act”.

It is really a monopoly act. It provides large corporations with the unfettered ability to do whatever they want in terms of pricing goods and services in this country. The reason I say that is because I have worked with the oil industry for a number of years, in particular on the issue of gas pricing.

The bill which is before the House is a very important. It tries to change the lack of competition in the current act to make it a more competitive act by providing a definition of predatory pricing.

In the act there is a very small section outlining predatory pricing. None of the people who have been charged under this clause have been found guilty by the courts. The reason is that the definition is so narrow and so precise that it really does not provide any flexibility to gather evidence to prove the charges laid.

Compare that to the United States of America, the most capitalistic society and economy in our world. They have pages and pages in their legislation on predatory pricing and other anti-competitive acts.

Twenty-eight states in the United States of America have predatory pricing practice protection for their consumers. What do we have in Canada? Zippo. We have nothing here for our consumers. That is a very worrisome development.

I see that the member for Pickering—Ajax—Uxbridge has recognized this and has gathered some support in terms of having the committee review it.

I want to point out a few things about the independent retail gasoline marketers who are shrinking in numbers. They are the people who market gasoline or heating oil. They retail under their own brand and do not own a refinery. They operate under a type of joint venture agreement with a refiner marketer who is a vertically integrated company, such as Imperial Oil, Irving Oil or Shell.

Defined in this way, independents refer to the group that includes large retailers, such as Canadian Tire or the Olco Petroleum Group, Sunny's Petroleum, as well as a number of smaller businesses that operate only one or a few gasoline outlets.

The past eight years have seen increasingly difficult times for independent marketers who are attempting to remain viable in a market controlled by the major refiner marketers, the companies I referred to earlier.

As a result, several retailers have either sold all or parts of their chains, or they have entered into partnerships with a major oil company, for example, Pioneer or United Cooperative Ontario, or they have left the business voluntarily or through bankruptcy. Some examples are Safeway, Payrite, Gas Rite and Mohawk.

As a result, the non-affiliated independents' market share has dropped dramatically in most provinces across Canada. During this time all major refiner marketers have increased direct market share and control over the market.

I want to use some statistics which are quite illustrative of what I have just said.

In 1992, in the province of Alberta, the independent market share was 27.8%. In 1997 it was 20.1%, a decline of 25% in five years.

Indeed, with the recent sale of Mohawk to Husky Oil, Alberta will see a further decline of 6.3%, down to 13.8%, which from 1992 to 1999 will mean a 55% drop in market share of independents in Alberta. In those five years alone this lack of competition has cost Alberta consumers about $80 million.

In Saskatchewan, in 1992, the independent market share was 20.6%. That is now down to 15.1% of the market, or a decline of 25% in five years. Where has the market share gone? To the major multinational corporations.

That is very alarming because once that market share gets to a point where it is not relevant, these independent retailers will cease to exist.

I am a small business person by profession. I see these people as small or medium enterprises trying to make a living, but also providing competition and some price options for consumers and businesses. But as the market share declines with respect to the independents, we no longer have competition. We have monopoly pricing. It is pretty much the same in Manitoba in terms of the decline.

What we are seeing are independents who have to buy wholesale price gasoline at the pumps. Of course when there is a bit of a war on, when the major retailers want to get rid of the independents, they drop the price below what the independents purchase at the pumps. The independents carry on for as long as they can, but eventually they go bankrupt or they sell out to larger companies in the marketplace.

I want to say to the people who are listening that what we have here is a bill which is very supportable. It is something that will enhance and improve the Competition Act as we know it. It will indeed provide some competition. But why has the Liberal Party or the Conservative Party not supported this kind of initiative? Many Liberal members support it, but the majority will vote it down. I hope I am wrong, but that is my suspicion. I think it is because the major oil companies provide huge, substantial political contributions to the Liberal Party and to the Conservative Party. One can only conclude that if those parties are getting huge contributions they will allow the oil companies to do as they see fit.

The issue of gasoline pricing is quite phenomenal. I want to make one reference to my home province, Saskatchewan. We have seen the price of oil at the wellhead decline by approximately 50% year over year. It has been sustained for six or seven months now in this country. It is down to $11 to $13 a barrel, depending on which day you are looking at. It used to be $25 about a year ago.

What we have seen in this country is that in some areas the price of gasoline does not go down. The refiners keep the price high. They are making huge margins on their sales and everybody else pays the fare. What we have seen is that in Saskatchewan the price of gasoline has been inordinately high throughout the last six months of this low oil price.

I have travelled across the country and I have talked to people across this country. Saskatchewan has the same provincial sales tax as British Columbia, Manitoba, Ontario and the Maritimes. We pay between 3 cents and 9 cents a litre more in Saskatchewan.

I have been raising this issue in my province. I had a visit from Petro-Canada, my good friends, and they showed me all these graphs and told me how they are hard done by. They said “The reason it is lower in other provinces is because of volume”. I said “Why do the prices go up in the springtime in Saskatchewan when the farmers need the fuel for seeding? That is more volume and the prices go up. Why does that happen?” They cannot answer that. It is the same in the fall with the harvest. It is just pure price gouging.

It is my sense that we need some competition in this country. It is my sense that we need this amendment to the Competition Act. It is my sense as well that we need support for my private member's bill, to be coming before this House hopefully before long, which calls for the establishment of an energy price review commission. That will assist the member for Pickering—Ajax—Uxbridge in his efforts to make sure that oil companies are charging consumers fair prices.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to rise today to support Bill C-235, a bill that would mandate that major oil companies selling gasoline to independents would have to sell it to independents at the same price that they sell it to their own branded dealers.

I have had the good pleasure of working with the member of parliament for Pickering—Ajax—Uxbridge on this initiative and I would like to commend him for his leadership on gasoline pricing and for chairing a task force that he put together. I was fortunate enough to work with him on that initiative.

Some might ask “What is the concern? If independents are charged for gasoline at a different price they can go to someone else. Instead of buying from Esso they could go to Shell or Petro-Canada”. The problem is that the wholesale market is very much a homogeneous market. It is controlled by three or four major companies: Petro-Canada, Shell, Esso and Ultramar. There is really one wholesale price that is driven by what they call the rack price. I will touch on that briefly later.

There really are not many choices, so it is imperative that the independents are charged the same price as the branded dealers.

When we set up this task force we met with Canadians all across Canada. In my own riding of Etobicoke North we had a meeting on January 23. There were representatives from the Etobicoke Chamber of Commerce, the gas dealers, trucking companies and others.

What we consistently heard across Canada is that Canadians want fair gasoline pricing. They are concerned also about the long weekend pricing and the volatility of pricing, but they really want a competitive and open market for gasoline pricing to ensure that prices are fair.

In fact, looking at gasoline prices right now, they really are not that bad. But the problem is that if the independent gasoline dealer is eliminated in Canada, then prices in the short run might be low but we will be burdened later with higher prices through this sort of oligopolistic market.

To achieve the goal of allowing independents the room to operate, to make a fair profit and to survive in a very competitive industry is a very challenging and daunting task. The independent gasoline dealers are really squeezed by the major oil companies.

In the oil industry there is a high level of concentration. There are now only 18 refineries in Canada, down from about 44 in 1960.

[The Acting Speaker (Mr. McClelland)]

If I may beg the indulgence of the hon. member for Etobicoke North, a little earlier the hon. member for Athabasca moved an amendment and I did not bring it to the attention of the House appropriately.

I am now asking for the unanimous consent of the House to revert to where we were before I erroneously read the motion. Does the Chair have the unanimous consent of the House to revisit the motion?

[Some hon. members]

Agreed.

[The Acting Speaker (Mr. McClelland)]

It has been moved by the hon. member for Athabasca that Bill C-235, an act to amend the Competition Act, be not now read the second time, but that the order be discharged, the bill withdrawn and the subject matter thereof referred to the Standing Committee on Industry.

Is there unanimous consent of the House for this motion?

[Some hon. members]

No.

[The Acting Speaker (Mr. McClelland)]

There is not unanimous consent.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I was describing the large degree of concentration in the oil industry. In Toronto, for example, 75% to 85% of all retail gasoline sold is priced by the major oil companies through controlled operations.

The major oil companies say that at the retail level the competition is very fierce and intensive and the economics are very poor.

The independents are certainly struggling and fighting for market share against the majors. The independents do not have some of the opportunities which some of the major companies have. They are unable to develop the ancillary services that a lot of the major oil companies are doing today: car washes, convenience stores, et cetera. They cannot access the capital to do these types of things.

The banks will not touch the independent retailer of gasoline because they are concerned about how long they will be in business and what they call site remediation or environmental problems with sites. The small independents cannot get capital from the banks. The banks have said categorically that they will not look at them.

What about the majors? Are they making money at the retail level? They say they are not, but if we look at their annual statements we could not tell because that information is just not provided. Even if we could decipher that from their annual statements, the fact is that major oil companies price the product right through the whole chain. They are integrated oil companies so they explore, drill, extract, refine, market and retail. These are big oil companies such as ESSO and Shell. They control the price at the wholesale level which they call the rack price.

They say they have to charge the rack price at a certain level because they are concerned about product substitution from the United States. In other words, if they price their product too high, independent retailers and others would import gasoline from the United States.

In our consultations we discovered that in theory that is interesting but in actual fact there are the problems of importing gasoline, particularly in eastern Ontario and other parts of Ontario. They are faced with transportation costs, a lack of storage and terminal infrastructure, and a lot of red tape and bureaucracy. In my view one would need at least an 8 cent per litre spread to make it worth while to import gas from the United States. I think the argument of product substitution is a little weak.

Since 1991 many independents have unfortunately left the Ontario market. There could be a short term benefit for Ontario consumers because of the kind of pricing that goes on in the marketplace. What about the medium and long term? We have some evidence to show what happens in cases like that.

In New Brunswick and Newfoundland where there are very few independents the prices at the pump are among the highest in Canada. What my colleague's bill addresses is referred to as predatory pricing, in other words pricing designed to put others out of business.

There are industry experts who believe that major oil companies are trying to squeeze out the independents. I would just like to cite a study by Bloomberg's which reads:

—major oil companies were going to use price wars, new credit terms, and the strategic closure of service stations and refineries to squeeze independent gasoline retailers out of the market in central Canada.

Another study by ScotiaMcLeod suggested:

To set the stage for a better downstream environment beginning in 1993, it is our opinion that Imperial Oil Ltd. has put a strategy in place in 1992 to discipline the retail markets, with the aim directed at the independents.

Likewise Wood Gundy stated:

Imperial, Shell Canada Ltd. and Petro-Canada Inc. have targeted the country's independent marketers as being their most effective competition and with the current wave of rationalization, are trying to get their cost structure down to the same level as independents, who enjoy a two to four cent per litre advantage over the majors.

That is because of their lower cost structure. They do not have all the overheads to support. I think my colleague's bill addresses very well the question of predatory pricing.

I would now like to talk very briefly about the Competition Act and the competition bureau. Many Canadians have complained to the bureau and the bureau because of the legislation conducts its investigations by seeking meetings among the majors, and even at the local level, where they sit around at Tim Horton's and set prices. That does not have to happen because there are few at that level. They are price leaders and price followers. They do not have to sit around and discuss and decide on prices.

We need some beefing up of the Competition Act and to change the criminal burden to more of a civil burden.

In conclusion I sum up by saying Bill C-235 if passed would protect the independents we need to ensure a competitive marketplace. By ensuring that the integrated oil companies priced their product to independents at the same price they charge their own dealers we would ensure good prices for gasoline in Canada and for Canadians.

[Jim Jones, Progressive Conservative, Markham, ON]

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.

[Joe Jordan, Liberal, Leeds—Grenville, ON]

Mr. Speaker, I just want to make mention of a point for my hon. colleague from Markham. Unless I am wrong or unless he wants to prove me wrong, absolutely no part of the Competition Act addresses the definition or standard of what constitutes predation or predatory activity. Therefore the act is deficient. That is what we are trying to address in the debate and with the bill.

I also want to congratulate the member for Pickering—Ajax—Uxbridge. I suggest again to the member for Markham that he is not known for fighting oil companies. He is known for fighting for consumers. I think his track record in that regard is extremely admirable.

During the last sitting I had the very informative experience of participating in the Liberal caucus committee on gasoline pricing. Members will notice a lot of the speakers from this side shared that experience. Many of the opinions that I have in support of the bill were developed through that process. It was a long and laborious process.

In fact the focus of the bill would seem to be the petroleum industry. I must say that one of the most emotional components of the gasoline pricing committee was the testimonials from independents who were at the brink of collapse or who had collapsed because of declining margins.

In all fairness we are seeing the downside of consolidation in a number of retail sectors. The corner hardware store comes to mind. I honestly felt at the time, as I do now, that something was not working in the case of gasoline retailing. Although this bill has its roots in the petroleum industry, it is a timely debate to have as the forces of globalization and centralization begin to impact virtually any economic sector with high levels of vertical integration combined with oligopolistic market structure, which what we have in the gasoline-petroleum industry in Canada. We are not only talking about the petroleum industry because deregulation will cause us to have similar concerns and similar debates in the telecommunications industry, the information technology industry, the travel industry, utilities and the financial services sector, just to name a few.

My hon. colleagues talk about the role that taxes have in reducing margins. Taxes in this country are based on per litre, not price. They are a fixed cost. The debate over taxes may be valid but it is not a reason or it is not a contributing factor to forcing independents out of business.

On the surface this discussion obviously seems to be a classic debate between those who advocate free market and those who advocate government regulation. There are larger issues here that need to be examined.

As hon. members across the way point out, the current federal Competition Act provides for criminal sanctions against persons involved in agreements or actions that unduly lessen competition. The burden of proof in the Competition Act is that predatory pricing and price discrimination must be proven beyond a reasonable doubt. In large part because of this burden of proof, very few cases make it through the courts.

The paradox is that although we recognize the seriousness of anti-competitive behaviour by enshrining the offence in the Criminal Code, that high standard as opposed to, as was suggested, a civil code standard make enforcement of the regulations very difficult. It is not always easy to distinguish competitive from anti-competitive practices. There is nothing wrong with tough competition even from a dominant firm, but when its intention is to eliminate competition or prevent entry into or expansion in a market, there could be an abuse of that dominant position.

Why is this bill necessary? Traditional approaches to defining predatory pricing use costs as a measure of intent. In most cases pricing above total average costs results in non-predatory practices. Pricing below average variable cost is likely to be treated as predatory in the absence of some clear justification. If a company is selling off inventory that is perishable, then it is justified in doing that. But it is prices between average variable and average total costs that are the grey area. They do not even get looked at because of the high standard in the Competition Act.

The problem with vertically integrated companies is that the seamless nature of their operations, the womb to tomb continuum that they enjoy makes it very difficult to clearly define and allocate costs at specific points.

What this amendment does is it takes the focus away from the allusive and historically futile endeavour of trying to prove predation based on costs and puts it on price, the wholesale and retail prices of the supplier in relation to an independent that purchases product from that supplier. What could be clearer? My hon. colleague says that would be impossible. It is hanging on the street. Price we know; price is public.

Why the focus on the petroleum industry? First of all gasoline is not a discretionary purchase for most Canadians. It is a cost of living. We all know that. When the price spikes up, we get the calls. There are few substitutes for gasoline powered automobiles in the market today. Putting my environmental sentiments aside for a moment, the price of gas is an economic issue to most Canadians.

Apart from octane level and a few product variations such as ethanol, there is little if any opportunity for independent retailers to differentiate the product once they purchase it wholesale. They are at the mercy of low brand loyalty. And there are significant barriers to entry.

The notion that the loss of an independent gas retailer is only a slight temporary adjustment and that any attempts by the dominant firms to increase margins will be offset by new entrants, classical economic theory, goes out the window here. The classic self-policing concept of competition does not apply. The current players are simply too big. We need to recognize this concentration and ensure that we protect fair competition at the retail level.

Other countries are also trying to come to grips with these changing market forces. The French government amended its law in 1996 to make predatory pricing an infringement on its own regardless of any issue of dominance. The Americans, the keepers of the capitalist faith, have recognized this risk and have put in place statutory variations of divorce legislation that limit the percentage of retail operations a vertically integrated supplier can own. It is not because they see this as an intervention of the government into a free and competitive market, but as a necessary action to ensure the long term viability of a free and competitive market.

As the pressures of globalization put pressure on companies to grow through mergers, the accompanying concentration makes vertical integration a viable and sensible strategy. In order to protect consumers and promote effective competition, federal legislation must not simply prevent companies from pursuing growth strategies. That growth must come from the effective implementation of a solid marketing strategy and not simply disadvantaging competitors by exploiting proprietary control over essential components of the distribution channel.

In conclusion, this bill will allow the intent of the Competition Act to be enforced by setting a benchmark for predatory practices that is both public and workable.

[The Acting Speaker (Mr. McClelland)]

The hon. member for Cambridge will have six minutes and will be able to carry over another four minutes, but he has six minutes at this time.

[Janko Peric, Liberal, Cambridge, ON]

Mr. Speaker, I am honoured to have the opportunity to debate this important bill which was introduced by the member for Pickering—Ajax—Uxbridge.

The Competition Act was designed to promote competition and efficiency in the Canadian marketplace. It sets out a basic code of conduct for businesses in this country and covers criminal offences such as conspiracy, discriminatory and predatory pricing, price maintenance, misleading advertising and deceptive marketing practices.

However based on what I have been hearing from my constituents in Cambridge, the Competition Act is not protecting consumers in the case of the gas industry. Very real concerns remain about what has been happening in this sector. In fact these concerns have been growing. There has been much debate over the issue of gasoline pricing. Independent gas retailers and many consumers believe that the major oil companies are using their dominant position in the marketplace to set out prices which adversely affect competition.

During a town hall meeting in my riding of Cambridge, consumers, trucking companies and independent retailers all expressed frustration over fluctuating gas prices. We know that across the country gas prices prior to long weekends and during summer vacations go up and in midweek they go down. Sometimes retail outlets owned by the major companies charge less for their gas than the independent retailers purchase it for but the price mysteriously goes up again.

The major companies say that this practice is because of the low supply of gasoline, production problems and of course the refinery shutdowns. I do not believe that Canadians, including myself, buy that argument. When there is a frost in Florida the price of oranges does not go up only over the weekend.

I was a member of the Liberal committee on gasoline pricing which travelled throughout Canada. Time and time again we heard from independent gasoline retailers how truly difficult it is to stay in business when the supplier they are competing against is the same person who sets the cost at which they are going to receive the supply.

Mr. Speaker, if a supplier wants to increase his market share at your expense or the Canadian taxpayers' expense, it is not hard to predict that the independent retailer will be out of business in a very short time. This is the story of the bully on the block who is bigger and stronger.

Many complaints have been filed with the Competition Bureau about unfair practices. Unfortunately we hear from the Competition Bureau that it does not have the tools to resolve these ongoing complaints. We must give the bureau those tools and this bill is doing exactly that.

The holes in the Competition Act have been identified by others. We know that in 1986 the Restrictive Trade Practices Commission recommended that the federal government take steps to determine the limits of appropriate pricing in the specific dual distribution context of the petroleum industry.

The New Brunswick all-party committee also looked into the operation of the petroleum industry. In 1997 it issued a report which stated that the Competition Act has little effect in preventing discriminatory pricing or predatory pricing.

We know from the committee when it was travelling that consumers and independents in New Brunswick and Newfoundland have been squeezed out. Surprise, surprise.

Mr. Speaker, I am aware that I have another minute but I could go on and on.

I would urge all members of the House to support this bill.

Again I congratulate the member for Pickering—Ajax—Uxbridge for his tireless work in this area. I urge the House and members to be responsible to their constituents.

[The Acting Speaker (Mr. McClelland)]

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.

[Yvon Godin, NDP, Acadie—Bathurst, NB]

Mr. Speaker, on March 27, 1998, I rose in my place to ask the government to review its practices concerning disability benefits. In Bill C-2 introduced at the beginning of this Parliament, the Liberals turned their backs on those living with a disability.

In their program-slashing frenzy, this government attacked our society's most vulnerable members, those living with a disability. The government expects to cut $1 billion in disability benefits between now and 2005.

I would like to address the appeal process. It takes three to four months for the first-level appeal to be heard. The second stage, the appeal to the review tribunal, takes six months. The third level of appeal, to the appeal board, takes one year.

Let us take the example of one of my constituents, Jean-Marie Doiron. An accident when he was 21 left him in a wheelchair. That was 40 years ago. Jean-Marie worked throughout this period. He did what he could. During the last 14 years, he repaired school textbooks. On turning 60, Jean-Marie decided to apply for the Canada Pension Plan. His doctor decided he should leave the work force because of his handicap eight months after his 60th birthday.

But, because more than six months had elapsed since he had applied to the CPP for disability benefits, he was turned down. Jean-Marie took his appeal to the first level and won. But the government told him it would go to the appeal board.

Jean-Marie has already been waiting one year, and will have to wait one more before his case is heard. There are already several cases like his in the works. It is unbelievable that people are treated this way by the Government of Canada. It is unbelievable that the government goes after the most vulnerable citizens, those who have worked for our country, people like Jean-Marie Doiron, who has been in a wheelchair for the last 40 years and who cannot get CPP benefits, despite all the legislation governing the plan.

I call on the Government of Canada to amend the disability benefit eligibility criteria. In addition, this government should do something about the appeal process so that it does not take Canadians three years to get disability benefits. It is high time that this government demonstrated its commitment to those living with a handicap.

Not content with robbing workers of over $20 billion, now the federal government is going after the disabled. I would like the government to amend the Canada Pension Plan.

[Bonnie Brown, Liberal, Parliamentary Secretary to Minister of Human Resources Development]

Mr. Speaker, the government is very concerned about all issues involving persons with disabilities. We are equally concerned about client service because timely service is one of the fundamental responsibilities of Human Resources Development Canada.

With regard to the length of time to process CPP disability applications, it is important to point out that over the last decade there has been a dramatic increase in the number of applications. This rise was due to a number of factors, including changes in eligibility rules, referral of cases to us by private insurance companies, as well as some provincial social service departments.

This put a tremendous strain on departmental resources as well as on the CPP review tribunal and the pensions appeals board.

In his 1996 report the auditor general raised concerns about the rapid increase in CPP disability expenditures. As a result, changes to the administration of disability benefits were introduced to ensure that the benefits were granted only to those for whom they were originally intended.

Let me be clear. We are attacking the problem. We have already taken action. We have recruited and trained new staff and we have taken staff from other areas to address the workload. We have moved the first level of appeal to regional centres. This will reduce the time required to obtain correct information from clients.

We are also working with the administration of the CPP review tribunal and the pensions appeals board to improve service. For example, we have increased the number of judges and panel members in order to enable us to hold more hearings and to use a better scheduling system.

[Greg Thompson, Progressive Conservative, Charlotte, NB]

Mr. Speaker, I congratulate the member for Thornhill, our new parliamentary secretary to the health minister. As a former minister of the crown in the province of Ontario, I am sure she will do a good job. I am glad to see her there.

There are a few points I want to make in relation to a question I asked the minister before the House rose in June. It had to deal with the 1994 decision by the Government of Canada to reduce taxes on cigarettes. This was the biggest capitulation by the Government of Canada in the history of Canada and led to the largest increase in the number of new smokers in the history of this country.

Why I am concerned about it is that 40,000 Canadians a year die as a direct result of smoking. That is a statistic that can be proven by any measure. It is not an exaggeration. We know 40,000 Canadians a year die from it.

What I suggested the government do, which it has not, is have a three pronged approach to attacking smoking, especially with young Canadians. It has to attack pricing, that is taxation. It has to attack advertising and, most important, there has to be education out there so that young smokers know what is happening.

One of the interesting things happening and one of the most interesting bills introduced in parliament in recent history is a bill introduced by none other than Senator Colin Kenny, an example of how much the Senate can contribute to the Parliament of Canada when decides to do so.

What he is suggesting is that we should have a levy of 50 cents per pack on cigarettes. He is calling this a levy because technically he cannot call it a taxation measure. Normally a senator cannot introduce a taxation measure. That 50 cent levy would bring in revenues to the tune of over $100 million a year.

That $100 million would be broken down to be spent in the following ways. Some would be used to assist farmers moving out of tobacco crop. Millions would be used to educate young Canadians as to why they should not start smoking. Some of it would be used for the arts and sports programs that now depend on funding from the cigarette manufacturers, which I think is absolutely wrong.

We are asking the government to do something and take some strong measures to combat smoking. It is a big problem. I would love to get into the details of Senator Kenny's bill but I do not have the time now to do that. However, I think it is a positive example of how the government can do something with no cost to the taxpayers.

We are talking about hepatitis C victims and the cost to the taxpayers because of mistakes by the government but here is an example of where the government can do something right at no cost to the taxpayers and it is time it acted and acted very quickly.

[Elinor Caplan, Liberal, Parliamentary Secretary to Minister of Health]

Mr. Speaker, Canada has had an enviable record in smoking cessation and in its smoking cessation policy. This government is committed to public education. We realize that public support is essential in a civil society if we are to make progress toward our goal of a smoke free society.

Specific to the member's point in question regarding the 1994 tobacco tax reduction, it is important to remember that at that time, as the Prime Minister explained on February 8, 1994, we were dealing with an enormous problem of law enforcement and organized crime.

The problem had become a deep rooted and far reaching national issue of smuggling of contraband tobacco. Action was necessary. The four point national action plan on smuggling was an enforcement crackdown, a reduction in consumer taxes on tobacco; a special surtax on tobacco manufacturer profits and, most significantly, the tobacco demand reduction strategy which was the most ambitious tobacco control initiative in Canada's history. It was designed to counter the impact of the tax reductions.

Further, the reduction in Canadian tobacco taxes was clearly stated as a temporary measure. Because of the government's actions since that time in the area of anti-smuggling efforts, the contraband situation has improved.

The Minister of Finance in collaboration with the provinces has introduced three tax increases in provinces where taxes were cut in 1994. In addition, the 40% surtax on the profits of tobacco manufacturers was instituted in 1994 and will remain in place until March 2000.

These tax measures are consistent with the government's desire to increase taxes in a gradual manner to meet our health objectives without creating renewed contraband activity.

Yes, public education, particularly to our young, is important. Pricing is important. Advertising policy is also important. As the member opposite knows, we are moving toward an absolute ban on advertising tobacco products.

[The Acting Speaker (Mr. McClelland)]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until tomorrow at 2 p.m., pursuant to Standing Order 24(1).

(The House adjourned at 7.24 p.m.)