Mr. Speaker, I am pleased to join in the debate today, especially when we look at some of the excitement and enthusiasm around the Hill today. I do not know if that has been directed at the anticipation of my colleague and the opposition critic's intervention on this legislation or more so for maybe something that will take place a little later on in the day.
The legislation before us is something that has been around in a previous Parliament. It is fairly similar to that one in a previous Parliament. The legislation has been refined. Consultations have been held with the various stakeholders and we believe it is stronger legislation.
The bill is an act to amend the Canada Transportation Act, the Railway Safety Act, to enact the VIA Rail Canada Act and to make consequential amendments to other acts. I believe it strikes some balance between the various transportation sector interests. When we talk about mergers and various aspects of the transportation industry, I believe it goes a long way to address many concerns from that sector.
In this era of rapid economic change, technological revolution and globalization, mergers and acquisitions can be considered a legitimate and necessary business strategy. Mergers allow corporations to gain efficiencies from economies of scale. Increased efficiency means more competitive businesses which in turn means a more vibrant economy.
Larger corporations can also mean a concentration of power and possibly reduced competition, but that is why we have merger provisions in the Competition Act. These provisions can stop a merger or restructure a merger to ensure there is no lessening of competition. However, there may be other reasons to stop a restructure merger, as we have seen in the case of banks and airlines.
The government believes mergers can be a viable business strategy, but each merger proposal must be assessed on its own merits. The Canada Transportation Act contains a merger review process for air carriers that came into force in July 2000. This process was established in response to Air Canada's acquisition of Canadian Airlines as part of a series of measures to foster competition in the airline industry while the industry experienced a radical restructuring. The government took these measures to ensure that consumers were protected from anti-competitive behaviour that could arise from a dominant carrier situation. The government now recognizes that we also need a merger review process for other major transportation services.
In 1999 the Canadian National Railway and the Burlington Northern Sante Fe Railway proposed to combine their businesses. CN and BNSF are two of the largest railways on the continent. In the United States, a moratorium was put on all railway mergers following the receipt of the merger proposal as it was felt that if the merger were permitted under current rules, more mergers would follow until only one or two transcontinental railways were left. After a year long review of the relevance of the existing merger rules, the U.S. released new rules that set higher standards for the approval of any large railway mergers.
At that time we heard from many interested parties in Canada that wanted to express their concerns regarding the proposed business combination. Under the applicable process at the time, these Canadian interests had to go to the U.S. authorities to get information and express their concerns as there was no public process available to them in Canada.
It is clear that Canadians should have access to a Canadian process to review significant transactions and these transactions should include any component of the transportation sector, not just air carriers. This process should apply to the review of both domestic and transnational mergers.
The Canada Transportation Act review panel heard from stakeholders all across the country and noted that the scope of the review process under the Competition Act is limited to competition issues and provides no opportunity to consider broad, national or public interest issues.
The panel noted the growing pressure toward integration in the North American rail industry and as a result its recommendations included a proposal that a transportation specific review process be established to review the national and public interest issues that may arise from merger proposals.
Given the clear need for a process for other transportation services, Bill C-44 would ensure that a merger review process similar to the one applicable to air carriers is available for all transportation undertakings under federal jurisdiction. The bill would introduce a formal and transparent transportation merger review process that builds on the existing processes and experience gained from the airline merger review process.
The government proposes that competition issues continue to be addressed by the Commissioner of Competition. The Minister of Transport will have the power to appoint a person or the Canadian Transportation Agency to review public interest issues that may arise from the proposed merger transaction. These issues can range from the integrity of the transportation network to service to small communities.
As we all know, the pace of business can be very rapid. Lengthy reviews can mean lost opportunities. The bill sets a predictable timeframe and process that should not unduly harm the normal course of business. The Minister of Transport must decide within 42 days whether there are public interest issues that may need to be addressed. Should a review process be initiated, it must be completed within 150 days.
However, we recognize there are always exceptions. While the government is proposing that reviews be completed within 150 days, the Minister of Transport will be given discretion to extend this timeframe if needed. We also know that businesses need to have a predictable framework. The government will provide for the minister to issue guidelines on the merger review process including setting out general public interest issues that would need to be addressed by the parties to the proposed merger.
This would allow the parties to consider these issues and determine whether a merger could continue to be pursued. Should the parties decide to continue, the merger proposal would include an assessment by the parties of the public interest issues and possible remedies.
A strong, efficient and vibrant transportation sector is vital to Canada's economic success. The transportation industry is not only important to the everyday lives of Canadians, it is an important contributor to the economic growth in job creation of this country. Because of the importance of this sector to the economy and society, the policy framework must support its potential for growth and provide the flexibility for the sector to adapt to increasing pressures from globalization.
However, the transportation sector is characterized by a small number of dominant carriers in the air and rail modes. In North America, mergers and acquisitions have been normal business practices in these modes to consolidate operations, reduce surplus capacity, and to improve cost efficiency and profitability.
The review provisions in the bill will help to ensure that we continue to have a healthy transportation sector operating in a competitive global environment, yet responsive to the needs of Canadian shippers and Canadian travellers.