Mr. Speaker, I am pleased to speak to Bill C-248, an act to amend the Competition Act with respect to the efficiency defence for merger proposals.
The official opposition's chief critic for industry, the hon. member for Peace River, unfortunately cannot speak to this bill due to some urgency, but he has done quite a bit of work on this issue and is very interested in it.
This bill was introduced in the last session of parliament but as the member said, it died on the order paper.
Bill C-248 is a deceptively short bill with only one clause and two subclauses. However there is more to the bill than meets the eye.
The purpose of the private member's bill seems to be that the enactment amends the Competition Act to clarify the competition tribunal's power to make or not make an order in the case of a merger when gains in efficiency are expected or when the merger would create or strengthen a dominant market position.
Section 96 of the Competition Act specifies that a merger may be approved by the competition tribunal even if it substantially lessens or is likely to prevent competition within a specific market, trade or industry as long as those advocating the merger can prove that such a move would bring about or would likely bring about gains in efficiency that would be greater than and would offset the effects of any prevention or lessening of competition.
I appreciate the intent of the hon. member in bringing forward this bill but when we look at the details, we find that this is mere tinkering.
Section 96 further instructs the tribunal to consider whether such gains in efficiency will result in a significant increase in the real value of exports or a significant substitution of domestic products for imported products. The Competition Act is clear that a redistribution of income between two or more persons or groups cannot be considered an efficiency. In other words, if a proposed merger will benefit one person or group to the equal detriment of others, that cannot be considered an efficiency.
Bill C-248 would create two new subsections for section 96, subsections (4) and (5), to further instruct the tribunal on the consideration of efficiencies in a merger case. I would argue that these instructions would muddy the waters and quite possibly stand merger review on its head.
The motivation behind Bill C-248 was the competition tribunal's decision to allow the merger of Superior Propane and ICG Propane against the wishes of the competition commissioner. I agree with the commissioner that the merger probably should not have gone ahead. I was pleased to hear that the competition bureau won its appeal at the federal court and that this case will be heard again by the tribunal. I would like to see the process run its course.
The hon. member from Pickering has crafted a private member's bill that he thinks will fix the problem. I commend his initiative and efforts. However, I have trouble with reactionary law or amendments tinkering with existing laws that are designed to resolve a specific situation. This is not the way to make coherent legislation that will stand the test of time.
Currently when considering gains in efficiency, the tribunal does not discriminate between groups as long as one group does not benefit at the expense of another group, which is considered merely a redistribution of income.
Overall efficiency gains are the main issue. The distribution is not important. However proposed subsection (4) would require that the majority of benefits derived from gains in efficiency will be passed on to customers and consumers. The amendment proposed by the member from Pickering would require the tribunal to favour consumer interests over producer interests. This is a serious change in tone and direction. I am not convinced it would benefit the economy as a whole.
Subsection (5) would disallow the efficiency defence entirely should the merger result in the creation or even the strengthening of a dominant market position. This amendment would require the tribunal to discriminate against dominant players. In a country with a domestic market as small as Canada's, it may not make economic sense in a number of sectors.
Unlike the member from Pickering, I do not believe that dominant players in the market automatically are abusing their dominant market positions. This is presuming guilt before innocence. I also do not see much merit in enshrining outright discrimination against dominant players in the Competition Act. It is not fair. There is nothing inherently wrong with a dominant player in a market but subsection (5) could have the effect of preventing dominant players from emerging even if that is the best thing for the market.
I would argue that this might not be a good strategy in a global economy. We should not allow the tribunal's hands to be tied by proposed subsection (5). That is what it will do. It will tie its hands. The tribunal must be able to make decisions on a case by case basis.
The bill talks about a specific scenario but it has a broad spectrum of implications. It implies that the bill does not want real competition but a regulated competition. That is the difference. We want real competition in the market, not a regulated competition of a few industries under strict conditions. It should be the market forces that dictate free and fair competition in the market, not artificially unfair conditions. It is only tinkering.
To further make my point, I will quote a recent article in the Globe and Mail which discusses a draft report by the Organisation for Economic Co-operation and Development:
Canada's Competition Bureau is plagued by an inconsistent policy framework, hampered by national monopolies, undercut by a lack of resources and tainted with a reputation for having no independence.
The competition bureau should be independent.
The bureau should be turned into a stand-alone agency, reporting to parliament through the industry minister...Such independence would help change the perception that the bureau's decisions are subject to political influence. However, the onus is on the Prime Minister...to make changes required to give the bureau more independence.
The report also states that laws that require Canadian ownership and control in several sectors, especially airlines, banks and bookstores, have prevented competition policy from dealing adequately with issues such as market power and monopoly.
Of course there are other issues such as enforcement and other things but I will not go there. In a nutshell, important decisions should not be subjected to political pressures to protect national competition interests.
I will support sending the bill to the industry committee, but I will not support the contents of the bill and the effect it will have on the market.