Debates of Sept. 22nd, 1998

Competition Act

[Some hon. members]

Agreed.

[Chuck Strahl, Reform, Fraser Valley, BC]

Mr. Speaker, Reform Party members present vote no on this motion.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, Bloc Quebecois members are in favour of the motion.

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

Mr. Speaker, NDP members present this evening vote no on this motion.

[André Harvey, Progressive Conservative, Chicoutimi, QC]

Mr. Speaker, members of our party are opposed to this motion.

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

Mr. Speaker, I rise on a point of order. I would like to be recognized as being in the House and as voting with the Liberal Party on this vote. I am voting no.

(The House divided on Motion No. 1, which was negatived on the following division:)

Division No. 226

[The Speaker]

I declare Motion No. 1 defeated. I therefore declare Motion No. 3 defeated.

The next question is on Motion No. 2.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, I believe that if you were to seek consent, it would be granted to apply the results of the vote just taken to the following motions: Motions Nos. 2, 4, 8, 6, 9 and 10.

[The Speaker]

Is there agreement to proceed in such a fashion?

[Some hon. members]

Agreed.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, my apologies but I wonder if I could have the opportunity to correct the proceedings of the vote just taken. It was my error in not picking up the fact that our colleagues from the New Democratic Party should be shown as having voted in favour of Motion No. 2. As I applied the votes, I regrettably did not take note of the fact that the preceding vote on which I asked for the application I misread their party's voting intention. To correct the record, members of the New Democratic Party of course on the Competition Act would continue to have voted nay, but then when we go to Motions Nos. 2, 4, 8, 6, 9 and 10, they voted yea.

I apologize for that error, in particular to my colleagues from the New Democratic Party.

[The Speaker]

Is there consent to make the changes indicated by the chief government whip?

[Some hon. members]

Agreed.

(The House divided on Motion No. 2, which was negatived on the following division:)

Division No. 227

[The Speaker]

I declare Motions 2, 4, 8, 6, 9 and 10 defeated. Motions Nos. 5, 7 and 11 are therefore defeated.

[John Manley, Liberal, Minister of Industry]

moved that the bill, as amended, be concurred in.

[Bob Kilger, Liberal, Stormont—Dundas, ON]

Mr. Speaker, if the House would agree, I would propose that you seek unanimous consent that members who voted on the previous motion be recorded as having voted on the motion now before the House with Liberal members voting yea.

[The Speaker]

Is there agreement to proceed in such a fashion?

[Some hon. members]

Agreed.

[Chuck Strahl, Reform, Fraser Valley, BC]

Mr. Speaker, Reform Party members present vote yes to this motion.

[Stéphane Bergeron, Bloc, Verchères, QC]

Mr. Speaker, Bloc Quebecois members are opposed to this motion.

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

Mr. Speaker, NDP members present vote no on this motion.

[André Harvey, Progressive Conservative, Chicoutimi, QC]

Mr. Speaker, members of our party will be voting in favour of this motion.

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

Division No. 228

[The Speaker]

I declare the motion carried.

It being 6.10 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

The House resumed from May 27 consideration of the motion 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.

Competition Act

[Dave Chatters, Reform, Athabasca, AB]

Mr. Speaker, I am pleased to have the opportunity to speak to this private members' bill.

I believe this bill was well intended. The bill proposes to change the Competition Act which would prevent unfair pricing practices by vertically integrated suppliers, especially in the oil and gas industry.

I can understand the hon. member's reasons for bringing forth this legislation. In my five years as a member of parliament I have received countless letters, phone calls and petitions from Canadians living both within and outside my riding, all concerning gas prices and competition between retailers.

Both independent retailers and individual consumers have expressed concern over what they believe to be unfair pricing practices. I believe it is the concerns of the first group, the independent retailers, that the hon. member for Pickering—Ajax—Uxbridge wished to address. Unfortunately I have serious concerns about the bill as it may not be effective in serving the intended purpose.

The proposed changes to the Competition Act are intended to prevent vertically integrated suppliers from practising below cost selling when their own gas stations are competing with the independent retailers they also supply. This is very important to ensure fair competition. However, the Competition Act already prohibits this.

Section 78(a) of the Competition Act specifically prohibits anti-competitive acts including “squeezing by a vertically integrated supplier of the margin available to an unintegrated customer who competes with the supplier for the purpose of impeding or preventing the customer's entry into or expansion in a market”.

The Competition Act also prohibits selling articles at a price lower than the acquisition cost for the purpose of discipline or eliminating a competitor. Section 50 of the Competition Act outlines severe consequences for those companies guilty of anti-competitive acts.

Like the hon. member, I am strongly opposed to predatory pricing. However, I believe the Competition Act already addresses this issue as is. The problem does not rest with the provisions or wording of the Competition Act but with the lack of vigour and enthusiasm with which it is enforced by the government and its regulators. If large oil companies are in fact engaging in unfair pricing practices, a fact of which I am not convinced, then the fault lies with the federal government for not being more vigorous in enforcing existing legislation.

As I have stated before, I believe the hon. member had good intentions in bringing Bill C-235 to the House. When the committee began looking at this issue it wanted to unveil unfair practices including price fixing and collusion, which was a noble goal. However, when the hon. member found no evidence of this, he switched his focus to protecting the interests of a small group of independent retailers, some 20% of the retail market.

Somewhere in this process the interests of individual consumers, the very group that the hon. member set out to represent, were forgotten. Therefore, believing the hon. member to be an individual of good conscience, I encourage him to be vigilant, especially with regard to the bill's potential impact on individual consumers. I would implore him to give greater consideration to the millions of Canadians who will suffer as a result of government intervention and excessive regulation.

I am a firm believer in fair competition in the marketplace. However, I am also a firm believer in the market system whereby market values are determined by supply, demand and corner competition.

I am concerned that this bill if passed would result in the abandonment of the market system and the adoption of a floor price that would hinder rather than strengthen competition among retailers.

Canadian gasoline prices are among the lowest in the world and have been falling for two decades. Conversely, taxes on gasoline have been rising, now accounting for more than 50% of pump prices. This in itself is one very good reason why independent retailers are suffering

Both refiners and marketers of gasoline have seen their profit margins shrink as a result of normal competition in the marketplace but have also suffered the burden of government tax grabbing.

When gasoline prices are considered in isolation from taxation, however, it is abundantly clear that the individual consumer benefits from the current competition among retailers. Pretax prices are lower than they have been in two decades. The market system is working exceptionally well for the consumers in this way. Not only have gasoline prices fallen, but gasoline retailers have found it necessary to improve services in order to remain competitive.

Vertically integrated suppliers and independent retailers alike have diversified operations by building car washes, convenience stores and restaurants on site. These benefits to consumers are on top of low gasoline prices as determined by the market forces.

I believe this bill would protect the most vulnerable, the independent retailer, but I fear that it would also establish a floor price for gasoline much higher than the price determined by market forces.

Currently the province of Quebec is considering establishing a floor price for gasoline in that province. Quebec Professor Alain Lapointe has been studying the issue of gas pricing and estimates that the floor price would cost Quebec consumers anywhere from $140 million to $280 million.

So far I have discussed the negative implications of this bill. In fairness to the bill and to the hon. member from Pickering—Ajax—Uxbridge, however, I think it is equally as important to consider the long term impacts should independent retailers be forced out of the market. This is one of the hon. member's concerns and I share that concern.

Even so, I am concerned about the effects the proposed legislation will have on other industries. To this point, changes to the Competition Act have been discussed almost exclusively in terms of their impact on gasoline prices. This is primarily because the hon. member for Pickering—Ajax—Uxbridge has targeted major oil companies in his argument. However, if accepted by the members of this House, the changes proposed by this legislation would reach much further in their application.

This means Canadians would not only face higher prices for gasoline but could face higher prices for electronic equipment, cars and a multitude of other products. Canadians would also face the inefficiencies of further government intervention and control in their lives. The successful operation of the market requires that market forces be allowed to run their course. The successful operation of the market also requires fair competition whereby predatory pricing and abuse of dominant position are prohibited by law and this law is vigorously enforced. The market system has operated well thus far, resulting in the declining pretax gasoline price for consumers.

The Competition Act explicitly prohibits predatory pricing below cost selling and abuse of dominant position. By my estimates this means that the conditions necessary for successful operation of the market should already be in place. Unfortunately, it appears as though the market is not operating successfully.

I encourage the hon. member opposite to take a hard look at the influence of his own party on market prices. Federal and provincial taxes average 28.6 cents per litre which is more than 50% of the pump price. That is 28.6 cents per litre less for the retailer. The lower the retailer's profit margin, the greater the difficulty to survive.

If the government is truly committed to protecting the independent retailer taxes should be reduced. With lower taxes and greater profit margins the independent retailers would be better positioned to compete with the large oil companies and to diversify their operations in order to meet the ever changing needs of their consumer base.

I conclude by commending the hon. member for Pickering—Ajax—Uxbridge for his efforts. I appreciate his vigour and determination. I encourage him to continue his struggle, albeit in a somewhat different direction. Instead of pursuing a solution that would potentially hurt the consumer, I suggest he try to encourage his Liberal colleagues for more vigorous enforcement of existing laws and clearer definitions within those laws.

Although I have concerns with this bill I see the merit in highlighting this issue and hope that in the future the hon. member and I will be able to study this issue from the same side of the fence.

To this effect, Mr. Speaker, I think you will find unanimous consent for the following motion.

I move:

That Bill C-235, an act to amend the Competition Act, not be read a second time, but that the order be discharged, the bill withdrawn, and the subject matter thereof referred to the Standing Committee on Industry.