Mr. Speaker, I am pleased to rise today to discuss Bill C-56. This affordability bill has two important parts: the temporary removal of the goods and services tax, the GST, from new purpose-built rental housing, and a significant improvement to the Competition Act. On September 14, the government announced that the GST would be temporarily removed from new purpose-built rental housing to encourage an increase in the construction of rental housing. This removal would be in effect until the end of 2035.
That being said, I would like to spend the rest of my speech today on the second part of this bill, which is about enhancing the Competition Act. Bill C-56 would make three targeted improvements to the Competition Act. It would stop big-business mergers with anti-competitive effects, would enable the Competition Bureau to conduct precise market studies and would stop anti-competitive collaboration that stifles small businesses, specifically small grocers.
Canada's current Competition Act was first passed in 1985. It is an understatement to say that since then, our market has evolved. For this reason, the government launched a wide-ranging consultation on competition legislation and what ought to be done to modernize it and make sure it serves the best interests of Canadians. One thing we know for sure is that over the years, there has been an increase in mergers and market concentration in many Canadian industries, such as retail grocery. Canadian consumers have made it very clear that they have concerns about how the competitive landscape has changed in these markets and that they believe the law needs to be changed to that ensure the marketplace is fair.
Business collaboration can take all sorts of forms, from innocuous dealings to the problematic anti-competitive agreements. In this latter category, we have the sorts of practices that are always considered harmful under our competition law, such as cartels to fix prices, allocate markets or restrict production. Rigging bids in response to a call for tenders is also treated in this manner, as now are wage-fixing and no-poaching agreements between employers, because of changes we introduced in 2022. These forms of agreements are criminal offences. They are the most direct and straightforward way to undermine marketplace competition and are illegal, no matter their results.
There are other sorts of collaboration, however, that are not so clear-cut. One might think of joint ventures involving two competitors, or an agreement to share certain information or jointly conduct research. These agreements are not cartels but may, nevertheless, still lessen competition because they involve co-operation between parties that are meant to compete. The Competition Bureau may examine these kinds of collaborations, and if it finds that they harm competition, the bureau may apply for a court order to remedy that. There is one hitch, however. The bureau can look to remedy these agreements only if they are struck between real or potential competitors in the same market.
Most other countries have a more straightforward rule, which is that an agreement made to restrain competition can be remedied. It is as simple as that, because there are cases where we should be concerned by an agreement made between two companies that are not direct competitors. Imagine, if we will, that a large grocery retailer opens a store in the only shopping plaza in the community and that, as part of its agreement with the landlord, it indicates that it does not want another supermarket or maybe even a specialty food store to open in the same plaza. The supermarket does not want a competitor eating into its profits. The landlord agrees because it wants the big grocery retailer to come to the plaza and generate traffic. The landlord is still free to rent other spaces to hardware stores, furniture stores or even pet shops. It is a win-win between them, right? It is not really. The end consumer is actually the one who loses.
First and foremost, the consumer misses out on the benefits of competition. The supermarket can raise prices because of its territorial exclusivity. How about a local entrepreneur who would like to open a butcher shop or a bakery? Unfortunately, they will be cut out of the list of potential tenants because the landlord made a promise.
What I have shared is not just a hypothetical scenario. Earlier this year, the Competition Bureau conducted a retail grocery market study. In its report, the bureau shared that it heard from Canadian businesses that said they have been unable to open stores in places they wanted to set up shop, because of property controls. As the bureau would conclude, these property controls limit entry by new grocers and deny consumers all of the benefits from added competition, like lower prices and more choice.
The Canadian Federation of Independent Grocers, or CFIG, raised an even more worrisome version of property control in its submission to the government consultation. CFIG raised the topic of restrictive covenants, which arise when a retail store is sold but the vendor wants to protect the land it is leaving from any rivals. When the chain sells its space, it may negotiate a covenant into its sale agreement with the purchaser, preventing any future owners from ever using the property to operate a grocery store. This can happen with lease agreements too, shielding the plot of land from new entrants even after the original supermarket has left.
CFIG and the Public Interest Advocacy Centre both point to this practice as contributing to so-called food deserts in many communities. This is not a good outcome, and it is the result of restraints on competition. It is time for Canada to update our legislation and ensure that we catch up to our international counterparts at the forefront of promoting fair competition. Amendments to the Competition Act would ensure that the Competition Bureau can review agreements like these where their very purpose is to restrict competition, even when they are made between non-competing parties like landlords and tenants. If the collaboration would substantially lessen or prevent competition, then the bureau would be able to seek a remedy, including an order to shut down the activity.
I wish to highlight that our office places great importance on proactive community engagement. To this end, we have established five community councils, among which the Affordability Council stands as one of the most actively engaged. It is with eager anticipation that I intend to present the affordability bill to my local Richmond Hill Community Council.
The matter of affordable housing and access to essential groceries stands as a paramount concern for constituents, and we are committed to addressing these critical issues through this affordability bill. I look forward to working with members of the House on passing this important piece of legislation.