Mr. Speaker, I am pleased to speak to Bill C-393, an act to amend the Competition Act with respect to the prohibition of negative option billing.
I would like to recognize the work of my colleague from Sarnia—Lambton on this issue. I know that he has worked tirelessly in the interests of consumers. I respect any member of the House who is prepared to champion an issue despite pressure coming from within his own caucus to be a quiet and dutiful backbencher.
This bill is designed to prohibit the practice of implied consent billing by federally regulated businesses such as banks, cable and telephone companies. It would restore the traditional buyer-seller relationship that relies on the consumer's explicit consent before they can be billed for a product or service that will prohibit default billing of consumers who do not expressly decline a product or service. In other words, it would put an end to what has been called negative option billing.
Before making a decision about supporting this legislation, I considered the views of many Canadians about this billing practice. It is clear that this bill has broad support among consumers who are frustrated by negative option billing.
In particular, there is frustration with cable providers that bill for new programs automatically unless the consumer expressly rejects the service. Consumer groups have cited senior citizens as an example of a group who are often unaware that they have the choice of opting out of the new service and are consequently billed for a program they do not want and cannot afford. This is a source of frustration not simply because of the financial costs, but because it is deemed to be a violation of an age old relationship between buyers and sellers.
It is clear that consumers are looking for protection from negative option billing. The question is simply how do we provide that protection? Should it come in the form of Bill C-393 or can this be achieved through market based reforms? I think a balance must be struck.
Bill C-393 had its origins as Bill C-288 which would have amended the Broadcasting Act to restrict negative option billing by cable companies. These companies can currently act with relative impunity as they are federally regulated regional monopolies which are free from the normal constraints of the competitive market. This new version of the bill is broader and instead amends competition laws that apply to all federally regulated industries.
The decision by the hon. member for Sarnia—Lambton to use the Competition Act as a means by which to prohibit negative option billing instead of making changes to the legislation which deals directly with the perpetrators of this practice is troubling. Competition laws can profoundly restrict economic freedom and market efficiency and a general move toward strengthening these laws should be approached with caution.
This bill should not be seen as a mechanism by which to restrict attempts by companies wishing to expand their market share. We must not allow our competition laws to grow steadily more intrusive. We must act vigilantly to create competition through deregulation of our industries in the interest of every Canadian consumer.
The original purpose of this draft legislation in the form of Bill C-288 was to amend the Broadcasting Act. This dealt much more directly with the source of the problem and would be the preferable course by which to protect consumers against negative option billing.
Negative option billing is a practice common to federally regulated industries because they enjoy market protection such that they restrict or limit the consumer's ability to seek out alternate providers of a product or a service. Therefore the deregulation of federally legislated industries should be the first step to eliminating negative option billing and other practices that do not properly serve consumers.
I would have been much more supportive of an initiative that worked to limit government and increase consumer choice rather than an initiative which extends the scope of government further into the private sector.
The Reform Party supports limited government and free enterprise but recognizes the important role of government in creating an economic environment with fair and transparent rules which protect both consumers and businesses. However we differ from the governing party in that we believe that markets serve consumers well as long as competition is permitted.
Bill C-393 is a band-aid solution made necessary by the Liberals' resolve to maintain protectionist policies and regional monopolies in federally regulated industries such as cable, telecommunications and banking despite the fact that these policies hurt consumers. But sometimes a band-aid is needed until a disinfectant can be found.
Before I conclude I want to provide an example that illustrates the power of competition to end negative option billing in case my colleagues across the way have their doubts. I am sure we are all familiar with Columbia House Records. This is a company that makes its money through negative option billing. After signing up with the bulk music distributor, consumers are sent cassettes and CDs on a monthly basis. If they do not send the selections back to the company, they are billed for the merchandise.
This is not a pure example of negative option billing because the consumer agreed to these billing terms by signing up with the company. However the point that is relevant is that consumers were so hostile to this form of billing that Columbia House sales began to decline. Soon a competitor entered the market and advertised that it would not engage in negative option billing at all. When faced with this competition, Columbia House very quickly reversed its negative option billing practices.
In other words, the drive for profits in a competitive and deregulated industry will give more power to consumers to seek favourable terms. It is the invisible hand of capitalism at work.
To conclude, it is clear that the Liberal mismanagement of federally regulated industries has created an economic environment in which consumers suffer the ill effects of limited competition. While this bill regrettably increases the power and scope of the Competition Act and restricts private sector decision making, it should receive the qualified support of the Reform caucus until such time as these industries can be deregulated. After this deregulation, competition itself will ferret out those businesses that conduct their affairs in a manner inconsistent with consumer interests.