Mr. Speaker, I would like to examine today the changes proposed to the Competition Act that are now before Parliament.
These changes reinforce the Competition Act. For almost 20 years, this act has been an excellent tool supporting an equitable, efficient and competitive market in Canada. The changes proposed in Bill C-19 take into account today's circumstances as well as comments made by consumers, businesses and parliamentarians, including the House Standing Committee on Industry. Quite simply, these changes will make this law better.
A certain amount of aspects of this legislation deserve our attention. Today, however, I will address only one of them: the proposal to repeal the provisions of the act which concern specifically the airlines. I am convinced that these changes are appropriate at this point in time and that they will improve this important instrument of economic legislation.
The changes apply to four sections of the act, which that apply specifically to the Canadian of domestic airline industry.
First, the changes eliminate the definitions of anticompetitive acts pertaining to air transport.
Secondly, the changes eliminate a series of provisions that allowed travel agents to collectively negotiate commissions with the dominant airline without the risk of being prosecuted under the provisions regarding conspiracies and price fixing.
Third, the amendments eliminate a provision allowing the Commissioner of Competition to issue cease and desist orders during an investigation on the possible abuse of dominant position in the airline industry.
Fourth, the amendments eliminate the administrative monetary penalties, or AMPs, that may be imposed on an air carrier that uses its dominant position abusively, since the proposed changes include AMPs that apply generally to all industries.
In order to understand why the government is introducing these amendments now, we must remember the conditions that initially led to the enactment of the provisions aimed specifically at the air sector.
These provisions were adopted in the wake of a series of major and unusual changes in the air transport's domestic market. First, the merging of Air Canada and Canadian International resulted in the creation of a very dominant company that generated 90% of all domestic revenues, while handling over 80% of domestic air traffic.
Later, the market was deeply affected by the September 11 terrorist attacks. All over the world, the air transport industry suffered major financial losses, because many people were afraid to fly.
That slowdown accelerated the upheaval that had already begun in the Canadian air transport industry. Canada 3000 declared bankruptcy, leaving WestJet as Air Canada's sole domestic competitor. Many experts were of the opinion that the business environment at the time was too great an obstacle to allow the establishment of new domestic discount airlines. It was felt that this was the case not only in Canada, but also in other major markets.
Now, the situation is a very different one. First, competition in domestic air transport has significantly improved. The power of dominant carriers to use their market position was offset by the efficiency and low overhead costs of discount airlines. Moreover, Air Canada's share of the market is no longer as dominant as it was at one time. In fact, in western Canada, Air Canada accounts for less than half of all domestic flights. The eastern triangle of Toronto, Ottawa and Montreal is now one of the most competitive markets in Canada.
In light of this change of circumstances, the government believes that it is no longer necessary that the Competition Act specifically target the air transport industry. The act can now revert back to being a piece of legislation that applies generally to all types of industries, as recommended by the Standing Committee on Industry. However, as was pointed out by some parliamentarians, eliminating these provisions is not enough. We must also provide incentives that will have a real deterrent effect on anti-competitive practices.
AMPs in respect of cases of abuse of dominant position were and remain a good idea. So much so, that it seems logical to apply them not only to the airline industry but to all industries. This is precisely what the new legislation would do.
The role of AMPs is to prevent a company from convincing the public or its shareholders that it is competing fairly when, in fact, it is not. This logic applies to dominant companies in all industries. This is why, under this bill, AMPs would apply across the board.
Along the same line, it is logical to repeal anti-competitive conduct definitions relating specifically to airline industry. Airline industry conduct will be treated like the conduct of any other industry.
Specific provisions applying to relations between a dominant carrier and travel agencies have become obsolete by force of circumstances. Travel agencies now earn their income from service fees they charge to their customers, rather than from commissions on the sale of tickets. Also, customers are increasingly using the Internet to buy their tickets directly from airliners.
Finally, provisions relating to the power of the Commissioner of Competitions to issue prohibition orders under Section 104.1 have been successfully challenged by Air Canada and have been rendered inoperative by a court decision. Therefore we have to repeal those provisions.
In summary, what do we have on the table? Under this bill, the legislation would become an act of general application providing for new incentives. It repeals two aspects of the act which are no longer necessary. It also repeals another provision which has been rendered ineffective by a court challenge.
If we keep in mind that the abrogation of the provisions relating specifically to the airline industry is accompanied by a general application of AMPs, the choice is very clear. We can update the provisions relating to the airline industry while strengthening the whole act it in a more general way. Besides, my colleagues will have the opportunity to talk about other legislative improvements introduced in the House which will allow for a balanced approach where stakeholders and parliamentarians interests are concerned.
Finally, I ask the House to pass this bill quickly.