House of Commons Hansard #123 of the 37th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was yukon.


Business of the House

11 a.m.

The Speaker

It is my duty pursuant to Standing Order 81(14) to inform the House that the motion to be considered tomorrow during consideration of the business of supply is as follows:

That, in the opinion of this House, the upcoming budget should: (a) reallocate financial resources from low and falling priorities into higher need areas such as national security; (b) reverse the unbudgeted spending increases to a maximum growth rate of inflation plus population; (c) increase national security and defence spending by $3 billion; (d) reduce employment insurance premiums by at least 15 cents for next year and continue reducing EI premiums to the break-even rate as soon as possible; (e) commit to enhancing job creation by eliminating the capital tax over a maximum of three years beginning with a minimum 25% cut this year; and (f) sell non-core government assets and use the proceeds to accelerate debt reduction.

I should state that the motion standing in the name of the Leader of the Opposition is not votable. Copies of the motion are available at the table for those who wish to peruse further.

It being 11.07 a.m. the House will now proceed to the consideration of private members' business as listed on today's order paper .

The House resumed from October 24 consideration of the motion that Bill C-248, an act to amend the Competition Act, be read the second time and referred to a committee.

Competition ActPrivate Members' Business

11:05 a.m.

Canadian Alliance

Rob Anders Canadian Alliance Calgary West, AB

Mr. Speaker, I would like to talk about the amendments being proposed to the Competition Act. Section 96 of the act would be amended by adding the following after subsection (3):

(4) For the purpose of subsection (1), gains in efficiency cannot offset the effects of a lessening or prevention of competition unless the majority of the benefits derived or to be derived from such gains in efficiency are being or are likely to be passed on to customers within a reasonable time in the form of lower prices.

It goes on to talk about mergers and strengthening of dominant marketing positions. I would like to establish that as the basis upon which we will talk about this issue. It is funny that people within government are bringing forward ideas about competition and the Competition Act. I would like to mention some areas in which the government needs a little more competition. It directly pertains to gains in efficiency, prevention of competition, doing the right thing for the customers within a reasonable timeframe, lowering prices, and the whole idea of dominant market position. All these things factor into some of the stories I will tell.

We have the Canadian Wheat Board in western Canada. The government does not like competition with the wheat board and as a result it puts farmers like Andy McMechan in shackles. Rather than allowing farmers to sell their wheat of their own volition to whom they see fit, to operate outside the Canadian Wheat Board and thereby gain greater profits and seek higher prices for the grain they produce by the sweat of their brows, the government puts them in jail. That is ludicrous.

When the Canadian Wheat Board was initially set up it was ostensibly supposed to help farmer. Many farmers in western Canada are now asking to be cut free from this top down, bureaucratic and authoritarian institution. They want to be allowed to sell their grain as they see fit. They feel they can make more money and put more food on the table for their families. There are a lot of farmers in western Canada who might have been able to hang on to their farms despite the fact that wheat prices are not significantly higher today than they were during the great depression.

Many of these people would have been out of business a long time ago if it were not for economies of scale. They are losing their farms despite the fact that they produce wheat with modern farming machinery and wonderful tools at one of the more cost effective rates in the world. It is partly due to the Canadian Wheat Board.

Many farmers would be happy to grow wheat but they do not because they want to operate outside the totalitarian, top down institution that would jail them if they choose to grow wheat and sell it outside the wheat board. We should allow for some competition with regard to the wheat board.

The government across the way does not seem to be paying much attention but that is okay. I will go on to discuss Canada Post and maybe members will perk up.

In my home city of Calgary we used to have a service called T2P Overnight. T2P is the prefix of the postal code for downtown Calgary. T2P Overnight which was sometimes outside the public system for mail delivery used to deliver a standard letter overnight for 19 cents. That is quite a cost savings over what Canada Post charges. If it did not deliver the letter overnight it was free of charge. Can you imagine that, Mr. Speaker? I notice even you are nodding your head. You are quite impressed with that.

Businesses in downtown Calgary thought that was a great idea. They were saving money and they were guaranteed overnight delivery. If T2P Overnight did not get the mail there the next day, it was delivered free. No one could ask for much better than that. Maybe if we had allowed more competition to T2P Overnight we would have had less charges and better service.

However Canada Post and the government saw fit to enforce its monopoly on mail delivery. As a result, T2P Overnight was interfered with by the federal government. This local Calgary, Alberta, business, which was providing something more cheaply and more effectively than the federal government, was basically told that it had to shut its doors, that it was not allowed to do that.

It is not only the fact that the federal government goes ahead and tramples on the competition that is provided by the private sector, it even tramples on the competition that is provided by other levels of government.

Rather than pay Canada Post to deliver all its utility bills, the city of Calgary thought that if it were innovative and entrepreneurial it could save money for the taxpayers by hiring people to walk around eight hours a day as a flyer force of sorts to deliver the bills to the residents of the city of Calgary. It made some pretty good sense for the city to have its own delivery force. It would not have to be regulated or controlled by the federal government or, for that matter, by the Canadian Union of Postal Workers. It probably would not have the same level of strike problems, which happen every two years, as we are all familiar with in this place. It would have saved the taxpayers a lot of money. It made sense on so many levels.

However the city of Calgary was challenged by the federal government, by the people across the way who read their newspapers today and try to ignore these things. As a result the city of Calgary had to pay out probably triple the amount of money to have the bills delivered through Canada Post when the other method would have been more effective.

It is interesting that the city of Calgary found that it actually had less problems with non-delivery of the mail by having it done by people for the city of Calgary. Nonetheless, the government did not see fit to allow for competition in Calgary.

It is not just that the federal government tramples on other levels of government. It is not just that it disallows private sector businesses to start up. The government goes even further than that. It will take something that already exists, for example, Federal Express or United Parcel Service, which provides perfectly fine private sector service to deliver courier packages across the country. The government saw fit, in what I will not even call its wisdom because it was frankly evil, to have Purolator Courier, an arm of Canada Post, compete with these private sector alternatives. Can anyone believe that?

Federal Express and United Parcel Service, and I could list all sorts of private sector couriers, do not have to compete with just the other private sector couriers, they have to compete with the federal government. The federal government uses Purolator Courier to compete against the other, already existing, private sector couriers in this country. It is crazy when we think about what the government does and yet the people across the way talk about competition.

I have even heard that the government uses the profits from Canada Post in terms of regular mail delivery to subsidize Purolator Courier to rob from Peter to pay Paul. It takes money out of taxes that UPS, FedEx, et cetera, pay to subsidize their competitor, Purolator Courier. It is crazy.

Air Canada is another example of where the government tinkered with the foreign ownership rules only after Canadian Airlines was basically allowed to collapse.

The final example is that of Petro-Canada. The government is so embarrassed about its size of market share in Alberta that it actually has Bronco Gas sell its gasoline in outlets that are other than Petro-Canada. It has 20% of taxpayer money propping up its crown corporation.

If the government really believes in competition, let it talk about the wheat board, Canada Post, Air Canada, Petro-Canada, and the list goes on.

Let freedom reign.

Competition ActPrivate Members' Business

11:15 a.m.


Mario Laframboise Bloc Argenteuil—Papineau—Mirabel, QC

Mr. Speaker, it is my pleasure to rise today and speak to Bill C-248, an act to amend the Competition Act.

Obviously one must always be careful when studying amendments to the Competition Act; however, the proposed amendments in this bill are in line with Bloc Quebecois philosophy on this matter.

The Bloc Quebecois will support these amendments since they refer to gains in efficiency that would lead to an increase in competition, unless clients would benefit from lower prices, the result of such an gain in efficiency.

However, it is important to remember and I give as an example the airline industry, that the Liberal government, through the transport minister, has already announced on several occasions that the problems in the airline industry will be solved by amendments to the Competition Act. This is somewhat worrisome.

Recently Air Canada representatives appeared before a number of House committees, including the Standing Committee on Transport, where, in a brilliant presentation, they told us that Quebecers and Canadians would have to prepare themselves because in the future competition would no longer consist of several airlines operating on the same routes. We would have to get used to the idea that competition would mean competition with one single airline.

Clearly, when we hear the government tell us, through the transport minister, that we have to deal with the issue of competition by amending the Competition Act in order to avoid unfair competition, including in the airline industry, it is hard for users to understand whether or not competition is becoming a monopoly.

This is what we need to be careful about when studying or looking at the Competition Act to try to solve all of the problems with competition in every sector throughout Quebec and Canada. We must always guarantee the best service at the best price. Obviously the only way to guarantee the best service at the best price is to promote healthy competition in Quebec and in Canada.

Changes are therefore needed, and recommendations must be made, such as the one proposed in Bill C-248, in order to clarify this gain in efficiency. Obviously everyone hopes that this gain will not favour monopolies, but it is clear that the proposal contained in Bill C-248 still encourages competition.

Returning to the matter of air transportation, once again the Minister of Transport has said clearly, week after week, that the best way of guaranteeing the best air travel prices at all times everywhere in Quebec and in Canada is to amend the Competition Act. Although I may be repeating myself a bit, there must be two carriers in order to guarantee competition and ensure that the market will endeavour to provide the best services at the best price.

This is where attention must be focused in discussing the Competition Act and in trying to use it to solve all the problems of our society, including, as I have said, those in the airline industry.

A solution to the airline problem understandable by all those listening to us in Quebec and in Canada might have been found. After September 11, the decision was made in certain countries, the U.S. and Switzerland among them, to use public funds to guarantee the survival of the airlines in their country.

The Americans, let us keep in mind, have invested $15 billion directly into support for their airline industry. Switzerland has purchased or has promised to purchase, with public funds, 38% of the shares in the new company that will replace Swissair, which is under the protection of bankruptcy legislation. These countries have chosen to come forward and support the airline industry to guarantee at least to some extent a variety of carriers on routes and services in all regions of the country, something that Canada has yet to do.

No investment or support for air carriers leads to defeat. The government has before it already one unfortunate case of defeat, the bankruptcy of Canada 3000.

The government had announced in the House $75 million in loan guarantees for Canada 3000, knowing full well that the company could not survive with the requirements it had imposed on it. The government knew this full well two weeks in advance when management rejected a program of time sharing with employees, which would have cost the company nothing. This refusal was already an indication that the company would not survive the crisis it was facing.

So the government announced loan guarantees for a company it knew would not survive. When we ask the government in the House to offer these guarantees to any new purchaser of some or all of Canada 3000 shares, the answer is no. When we ask the government in the House whether it will offer loan guarantees to regional carriers struggling in a number of regions of Canada, we are told the government will now help the four major companies still operational in this country.The other smaller companies and regional carriers will survive if the big companies do. They will keep the small companies going.

That is not how things work in the regions. Cities in the regions need services. Some are served at the moment by only one carrier, Air Canada, which has cut its services and even cut its meal service. This is the harsh reality. For regional passengers and cities the service is poor.

All of this makes it clear that regional development in Quebec and Canada is at risk if cities in the regions do not get quality service and appropriate schedules for the business people in these cities. The solution proposed by the government, through the Minister of Transport, is to amend the Competition Act.

The Bloc Quebecois agrees with Bill C-248, which clarifies the gains in efficiency that could be achieved in the case of a merger or other measure. However, we want to caution the government. In order to have competition, there has to be a minimum of two businesses providing the service across Quebec and Canada. This is not currently the case in the airline industry.

The Canadian Liberal government must take its responsibilities, considering that the Americans have invested $15 billion to support their airline industry. There are 300 million Americans. Here, with a population of 30 million, the government is currently only offering $160 million. This is proportionally ten times less than what the Americans invested. It is not true that Canada's economy is ten times smaller or weaker than that of the United States. The government is acting in bad faith when it tries to tell us that things will get back to normal in the air transportation industry when our neighbours are investing to support their industry.

I hope that the government will realize today that amending the Competition Act will not solve the problems of the airline and aviation industries. We just suffered a setback with Canada 3000 going bankrupt. There has to be at least two carriers on each route to guarantee the best possible fare to all Quebecers and Canadians who are listening to us.

Competition ActPrivate Members' Business

11:25 a.m.


Marcel Proulx Liberal Hull—Aylmer, QC

Mr. Speaker, I am pleased to take this opportunity to speak to Bill C-248, an act to amend the Competition Act.

Before going any further, I would like to point out to the hon. member who just spoke that on November 20, The New York Times reported Air Canada president Robert Milton as saying that he did not need any money. The member should perhaps read The New York Times , instead of limiting himself to Le Devoir .

Competition ActPrivate Members' Business

11:25 a.m.

An hon. member

Oh, oh.

Competition ActPrivate Members' Business

11:25 a.m.


Marcel Proulx Liberal Hull—Aylmer, QC

First of all, I would like to thank the member for Pickering—Ajax—Uxbridge for working so hard on behalf of Canadians in order to ensure that the purpose of the Competition Act is fully achieved.

Competition ActPrivate Members' Business

11:25 a.m.

An hon. member


Competition ActPrivate Members' Business

11:25 a.m.


Marcel Proulx Liberal Hull—Aylmer, QC

Mr. Speaker, I am hearing some unparliamentary language, but I will continue. During his speech on October 24, the Parliamentary Secretary to the Minister of Industry commented—

Competition ActPrivate Members' Business

11:25 a.m.

The Acting Speaker (Mr. Bélair)

Order, please. I did indeed hear a word which was unparliamentary. I would ask the member to take his seat and withdraw his words, please.

Competition ActPrivate Members' Business

11:25 a.m.

An hon. member

Which word?

Competition ActPrivate Members' Business

11:25 a.m.

The Acting Speaker (Mr. Bélair)

Must I repeat it?

Competition ActPrivate Members' Business

11:25 a.m.

An hon. member


Competition ActPrivate Members' Business

11:25 a.m.

The Acting Speaker (Mr. Bélair)


Competition ActPrivate Members' Business

11:25 a.m.


Richard Marceau Bloc Charlesbourg—Jacques-Cartier, QC

I did not say that.

Competition ActPrivate Members' Business

11:25 a.m.

An hon. member

It was not him. It came from the other side.

Competition ActPrivate Members' Business

11:25 a.m.


Richard Marceau Bloc Charlesbourg—Jacques-Cartier, QC

Mr. Speaker, the word you claim I said I did not use at all. I never said that.

Competition ActPrivate Members' Business

11:30 a.m.

The Acting Speaker (Mr. Bélair)

I accept the statement of the member for Charlesbourg. I am still certain, however, that I heard the word sellout.

We do not know who uttered this word, but I call on everyone to be courteous and polite to their colleagues.

Competition ActPrivate Members' Business

11:30 a.m.


Marcel Proulx Liberal Hull—Aylmer, QC

Mr. Speaker, when he spoke on October 24, the Parliamentary Secretary to the Minister of Industry voiced his comments and concerns on Bill C-248 which proposes modifying the exception based on gains in efficiency, i.e. section 96, in connection with mergers The hon. member for Pickering—Uxbridge—Ajax also explained the circumstances leading up to the introduction of this bill. I would not repeat what has already been said in these presentations, except to identify the points I believe to be important.

I understand that Bill C-248 proposes the addition of two subsections to section 96 of the Competition Act in order to clarify situations which would give rise to the use of the gain in efficiency defence. Briefly, the first one addresses the effects of gains in efficiency on the price of products sold to consumers. The second addresses a situation in which a merger would create or reinforce a dominant position in a given market.

On the latter point, my hon. colleague for Pickering—Ajax—Uxbridge spoke of a situation in which a merger creating a monopoly would be authorized on the basis of gained efficiency. I presume he was referring to the Competition Tribunal decision in the Superior Propane case, in which this situation occurred in a large number of local markets.

I will spare you the details on this case and the legal proceedings, because the Parliamentary Secretary to the Minister of Industry spoke very eloquently of this on October 23. A few points are worth raising, however.

The federal appeal court refused to prescribe the method to be considered in order to determine the extent of the anti-competition effects of a merger. Instead, it referred the case to the Competition Tribunal so that it might assess the effects of the merger on competition for the purposes of application of section 96.

The tribunal recently heard the Superior Propane case and a decision will soon be forthcoming. The outcome is being anxiously awaited because its consequences will go far beyond the Canadian propane market.

Having heard the comments by my colleagues on Bill C-248, I believe that everyone agrees on the importance of the Canadian policy on competition and gains in efficiency. I do not believe it would be in the interest of Canadians to proceed with Bill C-248 at this time and amend section 96 of the Competition Act when the Competition Tribunal is on the verge of providing us with clarifications on this both complex and controversial matter.

Accordingly, in my opinion, it is inappropriate to speculate at the moment on a defence of gains in efficiency. All debate will have to be put off until later, if necessary, when the legal process has run its course.

I would like to thank the member for Pickering—Ajax—Uxbridge for bringing this matter before the House. I take this opportunity to point out the excellent results of the government's expanded and improved policy on private members' business.

We will recall that the process has been improved since 1993 and is much more regularly used by members of the opposition, as it is by Liberal backbenchers. The backbenchers can have their say, get laws changed and improve the way our country works.

We will also remember that my colleague from the riding of Pickering—Ajax—Uxbridge has succeeded twice now in getting changes made. The first change concerned the criminal code and the question of escape, that is, people who flee police. Second, thanks to my colleague, the organ donor program was introduced in Canada and was adopted and refined by the provinces.

In conclusion, this process really helps Liberal backbenchers fill in gaps in the opposition parties and make major changes to the lives of Canadians.

I thank the House for the opportunity to speak on this.

Competition ActPrivate Members' Business

11:35 a.m.


Dick Proctor NDP Palliser, SK

Mr. Speaker, I am pleased to rise on this bill and to congratulate the member for Pickering--Ajax--Uxbridge on the initiative in the matter of the Competition Act. I want to take the few moments I have today to talk about what I think is of primary importance in the need for more competition, and that is the wholesale sellout of the country, particularly to our neighbours to the south.

Just before I get into the substance of my remarks, I want to refute the Alliance Party member who led off this debate and point out to him, and anyone else who might be interested, that, yes, mail could probably be delivered in the city of Calgary for 19 cents a letter as opposed to 50 cents a letter. What would that do for the people in Drinkwater, Saskatchewan, or Pense, or Avonlea, or Mossbank or some of the other places where it costs a heck of a lot more money to deliver services. Part of the rationale of Canada is to have companies that provide services which are standard and not to cherry-pick, which is essentially what the member for Calgary was suggesting.

Since the free trade agreement was signed, 13,000 Canadian companies have been sold to foreigners, the majority to people in the United States. The pace is quickening. The dollar volume of sales last year was double that of the year before, which was itself a record. Recently, some of the largest companies in the oil patch have been taken over: Anderson Exploration Ltd., West Coast Transmission; and now Canadian Hunter Exploration Ltd.

We are soon to be a shell of our former selves. We are witnessing a hollowing out of this country. I predict the day will not be far off, as the oil and gas sector is sold to all of the folks in Texas and Colorado, that Calgary will become hollowed out itself as the head offices of companies move south to the United States because that is where the good jobs are. Young Canadians will be forced to leave Canada to take part and to try to compete for those good jobs. That will put additional pressure on programs of which we are proud and for which we continue to fight, such as our health care system, education, the post office and other essential public services.

Today we have seen another example at the border in Windsor. We are talking about greater integration of our immigration, customs and other laws with those of the United States. I submit that this intrusion into Canadian affairs is totally unwarranted. We can co-operate with the U.S., as we should, but as others have pointed out, there is no reason to capitulate, give up our sovereignty and become the 51st state of the union. However that is the way things are going with our devalued dollar. We are selling off our resources at fire sale prices. We have to stop and consider what the future will be.

I want to talk specifically about competition and mergers in the food industry because there has been a dramatic market power imbalance among agrifood, the multinational corporations and the family farms.

Let us consider the input side of agriculture. We have the oil industry, the fertilizer industry, the seed companies, the chemical companies and the major machinery manufacturing companies. On the downstream side, we have the grain companies, the railways, the packing houses, the processors, the retailers and the restaurant chains. Almost every one of those 10 or 12 areas that I have mentioned is dominated by between 2 and 10 multibillion dollar multinationals.

For example, three companies retail and distribute the bulk of gasoline and diesel. Three companies produce most of the nitrogen fertilizers. Nine companies produce all of the pesticides. Three are major farm machinery companies.

To put it more graphically, in 1998 farm revenue in Canada grossed $29 billion while Cargill grossed $75 billion. The return on equity was 0.3% for farmers in 1998 but between 5% and 50% for agribusiness.

While farmers grow cereal grains such as wheat, oats and corn and earn negative returns, Kellogg's, Quaker Oats and General Mills get a return on equity of between 56% and 222%. To put it another way, a bushel of corn sells for about $4 but a bushel of cornflakes sells for $133.

The corporations that make the product, transport it, package it, process it and sell the food are making billions of dollars along with the corporations that make the tractors, fertilizers and pesticides, but it is not coming down to the farm level. Unless and until that happens the country is in a bad way.

We see it with oil and gas, as I mentioned earlier. The Americans will take all that. They will not take the softwood lumber. They will not agree to that. They seem to be dumping steel products in Canada. We have a dispute going in that direction so in Canada we need to sit down and have a major look at where it is headed, because it is headed to the United States. That is where we will end up if we do not take action and take it quickly.

Competition ActPrivate Members' Business

11:40 a.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, it is with pleasure today that I rise to speak to Bill C-248. The need to strengthen the Competition Act has never been greater in Canada. I congratulate the member for Pickering—Ajax—Uxbridge for his continued hard work and vigilance in defending the underdog, in many cases smaller companies, and consumers in the long run.

A competitive marketplace is a requirement and a requisite for an effective market in Canada. We in my party are supportive of a free market economy, more consistently perhaps than members on the other side. However, a free market economy can be successful and functional only if we ensure the continuation of a competitive marketplace. Clearly we need to strengthen and amend the Competition Act to provide for that.

The rules need to be strengthened. I will focus on one particular area, the Canadian airline industry. The Competition Bureau needs to be given the teeth to ensure monopolists pursuing predatory policies are stopped in their tracks before they destroy smaller competitors.

We have seen many examples in the last couple of years, particularly with Air Canada. We have seen the Competition Bureau not take immediate actions to order Air Canada to cease and desist the predatory trade policies that have ultimately destroyed competition.

By the time the Competition Bureau has done something we have seen companies like CanJet, a Nova Scotian company, destroyed. In more recent weeks we have seen Canada 3000 destroyed by the predatory trade and pricing practices of Air Canada. Historically we could go back even further.

Instead of using business practices to strengthen its profitability, Air Canada has focused on market domination not just to the detriment of the Canadian air traveller and individual Canadians but ultimately to the detriment of its own company. Air Canada has not focused on strengthening its profit position. It has focused on market domination to the detriment of both the Canadian traveller and ultimately Air Canada's shareholders.

Clearly we need to strengthen and amend the Competition Act to ensure that cease and desist orders can be placed and enforced immediately. We need to impose multi-million dollar fines on companies like Air Canada that choose to pursue predatory pricing practices and destroy competition unfairly.

An interesting poll was done recently of Canadian corporate leaders. Rarely have we seen Canadian corporate leaders supporting greater levels of government intervention.

When polled about the need to have a more functional Competition Bureau and more functional policies under the Competition Act, Canadian corporate leaders pointed to Air Canada and said clearly that government must have a more active role in Canadian airlines if we are to ultimately have competition that will benefit individual Canadian travellers and Canadian business.

I assume part of that comes from the fact that many Canadian corporate leaders are frequent travellers. They can attest to the near toxic levels of arrogance emanating from the CEO of Air Canada, the boardrooms of Air Canada and the policies of Air Canada, as can any of us. Its policies effectively say that if any company anywhere in Canada has the gumption to stand up against Air Canada it has the God given right to run that company into the ground.

The government has failed to create a more competitive environment. It has failed to give Canadians the security in air travel that they deserve.

Clearly we need to radically improve our Competition Act. We need strong amendments. The best place to find the impact of weak competition laws and a virtually unenforceable Competition Act is the airline industry. For years the government has claimed to be trying to deliver a more competitive environment for air travel in Canada. It has failed not because it has not put enough money into the airline industry. It has failed because it did not address issues in the Competition Act and amend it far earlier, as it should have done.

If the government had acted earlier to amend the Competition Act and give the Competition Bureau teeth to make the rules enforceable we would still have companies like CanJet providing a wider range of services at more competitive rates between Atlantic Canadian destinations and other parts of the country.

In Canada we have seen companies like WestJet survive and do fairly well against all odds. It is a miracle for an independent airline in Canada to compete against Air Canada and succeed. WestJet is the exception to the rule. I commend WestJet on the fact that it has remained competitive with Air Canada.

However where WestJet has succeeded against Air Canada many others have failed. They have done so not because they were poorly run airlines. If poorly run airlines failed in Canada, Air Canada would have failed a long time ago. They have failed because Air Canada has continued to abuse the principles of the Competition Act and dodge the bullet every time. They have failed because we have not given the Competition Bureau the teeth to enforce the rules that would have protected competitors and ultimately provided a better, more competitive and value oriented marketplace for Canadian air travellers.

I commend the hon. member for Pickering--Ajax--Uxbridge for his continued attention to some of the deficits in our competition policy. He should realize there is a great deal of support on this side of the House for strengthening competition policy in Canada such that our marketplace continues to be a vibrant one that ultimately delivers the best possible services on an ongoing basis to Canadian consumers whether they are airline travellers, purchasers or consumers of petroleum products.

I have not always supported every initiative the hon. member has promoted in terms of competition policy, but I agree with the general thrust and direction of his initiative in terms of creating a greater level of competition and, ultimately, better goods and services at more competitive prices for all Canadians.

Competition ActPrivate Members' Business

11:50 a.m.


Peter Adams Liberal Peterborough, ON

Mr. Speaker, I am pleased to have this opportunity to address Bill C-248, an act to amend the Competition Act. It does my heart good to be engaged in one of these quieter debates when members on both sides of the House who disagree on some of the fundamentals of this legislation add different things to the subject matter and add examples of the dangers of concentrating too much power and too many resources in too few hands, as was stated by the member for Kings—Hants just now and, before him, my colleague from Hull—Aylmer.

I would like to repeat, if I may, one phrase of the member for Palliser which I think people should bear in mind. It has to do with the agrifood industry in his case. He stated that it is $4 a bushel for corn and $133 a bushel for cornflakes. I think everyone should think on that in the context of the bill and also, by the way, in the context of our daily lives.

Like the others, I would like to thank the member for Pickering—Ajax—Uxbridge for his tireless efforts to ensure that the Competition Act serves Canadians to the greatest possible extent. I would particularly like to thank him for his work on behalf of all consumers during the very difficult time when gas prices rose to such an extraordinary and unjustified extent.

At that time he truly did work tirelessly for all of us and for all consumers, drawing our attention to the fact that we are overly dependent on oil, one source of fuel, that within that we are overly dependent on a few sources of that oil, and that within that, and I remember him saying it in the House, we in Canada are particularly overly dependent on a few refineries. That is an interesting example of the focusing of power in one area. Some people have the oil, some transport it and some refine it, but in the end we buy it from the people who refine it. If there is a concentration or a monopoly situation at that level, that is when Canadians suffer most directly.

I share the concern of the member for Pickering—Ajax—Uxbridge about these matters. I would like to point out that I am not surprised that he has been so effective, because, after all, he was born and brought up in my riding and educated there. I will tell you, Mr. Speaker, that my riding is full of young, well trained, intelligent people like him and they are all waiting to join him in the Liberal Party of Canada.

I share his concern that the recent merger between Superior Propane and ICG Propane may have revealed a weakness in the act. The Competition Tribunal ruling that the efficiencies resulting from the merger would more than compensate for the creation of a monopoly or near monopoly in many local markets and for national account customers was not the ruling that many people expected. That includes me. I hasten to remind the House that this was the first significant test of this legal defence based on efficiencies, so-called efficiencies, I would say, and it was the subject of considerable debate in the competition community.

My concerns were eased somewhat by the ruling of the Federal Court of Appeal, which overturned the tribunal's ruling. The federal court considered the matter, determined that the tribunal had not interpreted the so-called efficiency defence contained in section 96 of the act correctly and returned the matter to the tribunal for redetermination. I was very relieved at that, Mr. Speaker, and I know that you were. Superior Propane sought leave to appeal the federal court ruling to the Supreme Court of Canada, which refused to hear the matter. The federal court ruling stands.

The federal court, in its reasons for judgment, has provided guidance on the interpretation of the so-called efficiency defence. The tribunal's new ruling will be watched with great interest from many quarters because it will have implications far beyond today's propane industry in Canada.

Bill C-248 would impose two new conditions on the use of the efficiency defence in mergers to ensure consistency. The first condition is that any merger for which efficiencies are claimed must pass a price test, that is to say, the savings to the company realized through efficiencies must also be realized by consumers through lower prices. Those efficiencies must arise purely as a result of the merger and not for any other reason. If that were not the case, the company would not be required to pass on savings from other types of efficiencies. The second condition Bill C-248 would impose would be that the efficiency defence would not apply at all if the merger would result in, or would likely result in, the creation or strengthening of a dominant market position. The extreme case would be a merger to the condition of monopoly.

While these are interesting approaches to providing clarity to the Competition Act and may be worth considering in detail at some time in the future, it is not clear to me at this moment that this is the time to introduce such amendments. The tribunal has just finished rehearing the propane case and we are awaiting its decision. It is not appropriate to speculate on what the tribunal's decision will be, but it is safe to say that its ruling will say much about whether further clarification of this aspect of the Competition Act is needed beyond that provided by the federal court's reasons for judgment.

Consistent interpretation of the efficiency defence would be a welcome thing and we may already have it thanks to the Federal Court of Appeal and the Supreme Court of Canada. It is premature to involve ourselves further in this matter until we can see a clear need to do so. I urge the members of the House to vote against the bill for that reason.

In conclusion, I would like to again thank the member for Pickering—Ajax—Uxbridge for bringing this important issue to the attention of the House. Often in this Chamber we seek simple ways of doing things because each day we are faced with the complexities of society out there, in this case with the competition bill. We often wish that we could wave a wand and the problem would be solved or that we could pass a new law which of its own accord would solve the problem that triggered it.

However the fact of the matter is that society is very complicated. For example, our market economy is an extraordinarily complicated thing. We want it on the one hand to be as free as is humanly possible and, on the other hand, to have controls in it to safeguard individual consumers in particular. That balance is always just that, a balance. At the present time we do have through the federal court an opportunity to see whether the balance is right in this case with regard to this defence before moving toward the legislative stage. On that basis I would encourage members not to vote for this legislation but to wait, see what the future holds and then return to the matter if it is absolutely necessary.

Competition ActPrivate Members' Business

11:55 a.m.

Parkdale—High Park Ontario


Sarmite Bulte LiberalParliamentary Secretary to the Minister of Canadian Heritage

Mr. Speaker, I too am pleased to take this opportunity to speak to Bill C-248, which is an act to amend the Competition Act. First I would like to join with the rest of my colleagues in thanking the hon. member for Pickering--Ajax--Uxbridge for his efforts on behalf of Canadians to ensure that the Competition Act achieves its objectives. We must remember that our colleague has been a tireless advocate on behalf of consumers and has served as a watchdog for our caucus, watching for a dominant position to happen or watching for where gouging was likely to happen.

As mentioned by the hon. member for Peterborough, one thing my colleague from Pickering--Ajax--Uxbridge worked very hard on was the issue of gas prices. When gas prices were increasing he took a task force across the province before the province ever got involved. Our caucus truly owes our colleague a great debt of gratitude. My thanks are nothing compared to the thanks the member got from the Minister of Finance in the last budget. At that time, the government looked at how best to assist consumers with rising gas prices when the world price hit record highs. It was felt that something had to be done about the oil companies. In fact, it was through consultations and the work done by our colleague from Pickering--Ajax--Uxbridge that the government looked at giving the rebate to consumers, to ensure that money went back to the consumers and was not hidden somewhere by the government or gouged by the oil companies. I would again like to thank our colleague very much for his efforts.

At issue today is Bill C-248. The bill would specifically amend section 96 of the Competition Act which addresses an issue known as the efficiency defence. This defence comes into play when mergers occur. This defence was not previously applied in practice until Superior Propane proposed to acquire ICG Propane in 1998. Prior to that date, the interpretation of that section of the act was untested. Now, with the bill before us, it turns out that the interpretation is very contentious indeed.

Bill C-248 is an attempt to clarify and impose limitations on the efficiency defence by adding two new subsections to section 96. The new subsection (4) states that:

--gains in efficiency cannot offset the effects of a lessening or prevention of competition unless the majority of the benefits derived or to be derived from such gains in efficiency are being or are likely to be passed on to customers within a reasonable time in the form of lower prices.

The second amendment which is being proposed by the bill is a new subsection (5), which would make the defence of inefficiency unavailable and inapplicable if it resulted “in the creation or the strengthening of a dominant market position”.

When there is a concern about lower prices, benefits being passed on to consumers and when I hear the words dominant position, I again have to thank our colleague for teaching our caucus and members of the House that those are the terms and things we should be looking for.

Before I discuss what I feel we should or should not be doing at this point, I think it is important to return to what happened in the Superior Propane case and what has transpired since Superior Propane proposed to acquire ICG in 1998. It was always the position of Superior Propane that efficiency gains would offset any anti-competitive effects and would justify permitting the transaction to proceed. Unfortunately for Superior Propane, the commissioner of competition disagreed with Superior Propane's view of efficiencies and filed an application with the Competition Tribunal challenging the transaction. What transpired then was that the tribunal agreed with the commissioner that the transaction had significant anti-competitive effects.

However, it accepted the argument of Superior regarding the efficiency defence and ruled that efficiencies would outweigh the anti-competitive effectives of the transaction.

That was not the end of it. The commissioner then appealed the tribunal's ruling on efficiencies to the Federal Court of Appeal which sided with the commissioner and instructed the tribunal to redetermine the propane case. That is still not the end.

Superior Propane then sought leave to appeal to the Supreme Court of Canada. The supreme court refused to hear the matter and, in fact, upheld the ruling of Federal Court of Appeal.

The Competition Tribunal recommenced hearings on the Superior Propane-ICG Propane merger on October 9, 2001. It was required to do this because it had been so ordered. We are anticipating that a decision will be made very shortly. We hope such a decision will appear in January.

I would recommend at this particular time, and I stress the words to my hon. colleague, at this particular time and only at this time, it would be unseemly to amend the law while the matter is being reconsidered by the tribunal with the benefit of these court rulings. Perhaps there will be things in that tribunal ruling which may take my colleague's position or there may be things in that ruling which may assist my colleague enhancing the amendments to the act.

We should also remember the federal court's reasons for judgment gave direction to the tribunal in the form of parameters, but not explicit direction.

At this time I would ask colleagues on both sides of the House to perhaps await a decision. I also encourage my hon. colleague to continue his great work on behalf of all consumers in Canada.

Competition ActPrivate Members' Business

12:05 p.m.

The Acting Speaker (Mr. Bélair)

It being 12.07, the hour 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.

The House proceeded to the consideration of Bill C-37, an act to facilitate the implementation of those provisions of first nations' claim settlements in the Provinces of Alberta and Saskatchewan that relate to the creation of reserves or the addition of land to existing reserves, and to make related amendments to the Manitoba Claim Settlements Implementation Act and the Saskatchewan Treaty Land Entitlement Act, as reported (without amendment) from the committee.