Mr. Speaker, I want to say a few words on Bill C-248, an act to amend the Competition Act.
The bill has a couple of very important sections that we should talk about and highlight, one being proposed subsection 96(4), which states:
--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.
That is a very important subsection.
Also, proposed subsection 96(5) states:
This section does not apply where, after the transaction has been completed, the merger or proposed merger, will result or is likely to result in the creation or strengthening of a dominant market position.
In layman's terms, proposed subsection 96(4) stresses that mergers resulting in a monopoly or near monopoly must ultimately be of benefit to the consumer. Proposed subsection 96(5) states that we should not approve a merger that in addition to creating the position of market dominance provides economic efficiencies to only the merged companies. In other words, monopolies can only be tolerated, and rightly so, if they are in the public interest.
My colleague from Fraser Valley spoke on this bill on October 24 and pointed out that one of the incidents that provoked the drafting of the bill was a merger in the propane industry in 1998, giving Superior Propane control over 70% of the Canadian propane market. The competition commissioner opposed the merger on behalf of consumers but the competition tribunal approved the merger because of efficiencies that would amount to roughly $29 million over a 10 year period and would accrue to the merged companies.
The purpose of Bill C-248 is to force the tribunal to give more weight to consumer protection when making these decisions. Efficiencies, as we all know, are fine, but they have to play second fiddle to the right of consumers to enjoy the benefits of a highly competitive marketplace.
In North America we have mainly a private enterprise economy. We have a North American free trade agreement among Canada, the U.S. and Mexico. Monopolies are not something favoured in such an economic climate. There are those who feel free enterprise is based exclusively on self-interest, and to some extent that may be true, however, self-interest on the part of more than one person or company also breeds competition and competition is good for the consumer by decreasing prices for goods and services.
Monopolies may involve greater internal efficiencies but in the long run a monopoly that is well established has the tendency to keep prices for goods and services very high. The self-interest is still there and when it is unfettered by competition the consumer is almost always the one who will lose in that particular case.
Let us look at a more recent case. I remember that when I came here in 1997 my constituency was served by a two airline industry made up of Air Canada and Canadian Airlines International. As we are all very much aware, there was lively competition between the two airlines. The traveller benefited a great deal by getting better service, better frequency of service and much cheaper fares.
In short, the travelling public was serviced by an airline industry that actively sought out business. It is not 1997 any more; it is now 2002 and I know my constituency in St. John's is no longer serviced by an airline industry. It is now serviced by Air Canada, which has a virtual monopoly in the Atlantic region. Gone is the lively competition that we had in the airline industry. Up went the prices, down went the frequency of service and down went service, period.
A few years ago the Liberal government was faced with a tremendous upheaval in the airline industry. The nation's second largest airline, Canadian Airlines International, was in a great deal of trouble and the questions were these. Should Canadian be allowed to go bankrupt with the hope that someone would pick up the pieces? Can we find someone or some company that would build another national airline to operate in competition with Air Canada?
In the end, of course, the powers that be decided that Air Canada would be allowed to absorb Canadian, with the attendant pain in terms of job losses and service reduction. Canada now has one national airline. Yes, WestJet may still be alive, but the other newcomers have been chased off the block.
We need at least two national airlines in order to have a real airline industry. Instead, we are served, and I have to use that term served quite loosely, by a monopoly. Herein lies a role for the Government of Canada. It has to develop economic and transportation policies that are in the public interest, policies that encourage entrepreneurship in the airline industry. It has to develop competition laws that actually foster competition in the marketplace and discourage the formation of monopolies.
Bill C-248 helps in that it turns thumbs down on the creation of a monopoly that does not pass on its efficiencies to the customer. Bill C-248 should have been in force when Air Canada was trying to take over Canadian Airlines. It might have prevented the takeover altogether. The evidence so far certainly shows that air travellers have not received better service or lower fares as a result of any efficiencies arising from the merger of these two airlines.
I support the free enterprise system. I support a competitive marketplace. I support the thrust of the hon. member's bill. I request that it be forwarded to the appropriate standing committee for study and action.