INDY Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Monday, May 25, 1998

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order. Pursuant to an order of reference of the House dated Tuesday, March 17, we're undertaking consideration of Bill C-20, an act to amend the Competition Act and to make consequential and related amendments to other acts.

We have before us today Professor Jacob Ziegel, professor of law emeritus from the University of Toronto, who will discuss the Competition Act with us. We are going to have his opening statement, and then we are going to open it up for questions. We have about an hour for this discussion.

I welcome Professor Ziegel, and I ask him to begin with his opening comment.

[Translation]

Mr. Jacob S. Ziegel (Professor of Law Emeritus, University of Toronto; Individual Presentation): Thank you, Madam Chair. Thank you very much for giving me this opportunity to appear before the committee this afternoon and submit a few observations concerning Bill C-20. My written comments are very brief. Unfortunately, a few errors of substance did slip in because of time constraints so I'll try to correct them as I go along in my presentation.

[English]

Madam Chair, my written and oral remarks fall into four parts.

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First, I express some strong reservations about what I call the great decriminalization of false or misleading representations as a result of proposed subsection 52(1) of the act.

Second, I support the new telemarketing offence in proposed section 52.1, but I recommend an amendment.

Third, I support the new regulatory approach in part VII.1, which deals with reviewable marketing practices, but recommend substantial improvements in the remedial provisions where a reviewable conduct has been proven.

Finally, I urge much more vigorous efforts to enforce the trade marketing laws at the federal and provincial levels.

I turn to my first point, which is the effect of proposed section 52. That proposed section will restrict future criminal prosecutions to cases in which the accused has been shown to have a guilty intention or has been reckless in making the alleged representations.

I say in my written submission this is objectionable on several grounds, and I apologize, Madam Chair, if I have to be a little technical at this point. For a long time it has been standard practice for regulatory offences to dispense with the requirement of a guilty mind or even recklessness, because of the nature of the offence. The regulatory offences are not traditional crimes.

Now, this approach in fact has been upheld by the Supreme Court of Canada in a number of leading cases. Most recently it was upheld on constitutional grounds in a very important case called R. v. Wholesale Travel Group Ltd., decided in 1989. I find it anomalous that since the federal government went to all the trouble of taking the case to the Supreme Court to test the constitutionality of what I call the traditional approach, the strict liability approach, to regulatory offences, the same federal government is now busy undoing what it so successfully achieved in the litigation before the Supreme Court.

I say also that if it seems philosophically or conceptually objectionable to subject corporations and individuals to strict liability for regulatory offences, it should be done across the board for the many hundreds of regulatory offences we have on the parliamentary statute book. It shouldn't be limited to this bill, and it shouldn't be limited to the offence of false or misleading advertising.

I also point out, Madam Chair—and this seems to be an important point—that this bill itself is inconsistent. When we move to proposed section 52.1, which establishes the new telemarketing offence, what do we find? We find it is a strict liability offence. It's not restricted to cases in which the crown can prove that the accused had a guilty mind or acted recklessly. This seems to be a case of the left hand not knowing what the right hand is doing.

I also point out that limiting the new misleading advertising criminal offences to cases of guilty mind and recklessness will create unfairness. In the case of small enterprises it is relatively easy to show that there was the guilty mind or that there was an individual within the small enterprise with a guilty mind who acted recklessly. In the case of large corporations it's next to impossible, because there are too many individuals involved in the creation of representations. Besides, this is precisely one of the reasons we have regulatory offences, to take account of the realities of modern corporate structures.

One of two results will ensue because of proposed section 52. Either proposed section 52 will be largely a dead letter—I suspect it will be, because the crown will say it's too difficult to prove the guilty mind or recklessness—or it will be limited to small enterprises, where the necessary proof can be introduced without too much difficulty.

Neither result, in my view, will be satisfactory. It's unfair to single out small enterprises because the requisite intent can be more easily proven. Conversely, it's equally unsatisfactory that the practical effect of the proposed section 52 is to make the criminal sanctions and the criminal approach a dead letter.

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Now I don't wish to suggest we should go haywire in prosecuting people criminally whenever we suspect misleading or false advertising or similar deceptive marketing practices, but that's hardly the danger we face. The annual report of the director of research investigation for the Competition Act shows that the number of prosecutions under the Competition Act has dropped dramatically over the past 10 years.

Nevertheless, the criminal sanction does have a very symbolic significance. It suggests society's strong disapproval of false and misleading marketing practices, not only because they upset the market in that they are inequitable and result in distortions in the market but also because they are morally reprehensible. In my view some of the most reprehensible offences are the blue collar crimes familiar to us.

I have another objection to proposed section 52, just to round out my objections. It is so skimpy in its scope. It's been essentially denuded of the detail the existing section 52 provides with respect to clear warranty claims, performance claims, pricing claims. Its very vagueness is going to be an additional difficulty in proving an offence under proposed section 52.

If indeed the draftsperson intended to substantially eliminate criminal prosecutions in the future, I think the draftsperson has succeeded. For my part I would regret this. I think as a residual sanction the criminal prosecution still has an important role to play.

Let me by way of comparison point, Madam Chair, to the British position. In England there is only one sanction for false or misleading advertising, and that's the criminal sanction under the Trade Descriptions Act of 1968. It seems to have worked quite satisfactorily since the act was introduced 30 years ago, and I am at a loss to understand why it is thought that in the Canadian context the circumstances are so different we essentially have to abandon the criminal sanction even as a meaningful residual recourse.

Let me change my course and point out that one of the important offences being totally eliminated from the revision of this aspect of part VI of the bill is section 56, which deals with referral selling. Referral selling is what I might call the poor man's pyramidic selling technique; that is, he persuades someone that if they can round up 20 friends and each of them will agree to buy a product, you, the soliciting person, will receive the product free of charge. This is the essential character of what we call a referral selling technique; it's very objectionable and keeps recurring intermittently. I think it remains objectionable. I don't understand why it's being totally eliminated from the revision of the Competition Act.

Let me turn thirdly to the new telemarketing offence in proposed section 52.1. I say I support it. These provisions are unquestionably very necessary, although I point out that telemarketing abuses only represent long familiar techniques in a new garb, by which I mean this attempt to swindle people out of money by making false representation about good things that will happen to them if only they will open up the bank account to the fraudulent party.

I note, however, Madam Chair, that the committee might want to take a closer look at proposed paragraph 52.1(3)(d). In my written brief I incorrectly refer to it as 52.1(2)(d). This paragraph says it is objectionable to use telemarketing techniques to sell a product at a price grossly in excess of its fair marketing value if the purchaser is required to pay the price prior to delivery of the product.

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This seems to suggest that if the price is payable only at the time or after delivery of the product, it's all right to gouge the consumer by charging an exorbitant price. I don't understand the rationale for this distinction. The provincial trade practices acts, Madam Chair, at least most of the ones I am familiar with, regularly single out the gouging of consumers through exorbitant prices as unfair trade practices. Regardless of when the price is payable, I do not see why the distinction should be made in proposed section 52.1.

A provincial comparison appears in paragraph 2(2)(d) of the Alberta Fair Trading Act, 1998, which was only very recently adopted by the Alberta legislature. I think the Alberta members on the committee might be particularly interested in taking a look at it.

Let me turn next, Madam Chair, to new part VII.1 of Bill C-20, which deals with reviewable transactions.

I support it in principle for very good reason. Twenty years ago I was retained by the then Department of Consumer and Corporate Affairs, together with a colleague, Ronald Cohen, to prepare a report for the federal government on the constitutional aspects of a civil administrative approach to deceptive practices. Another colleague of mine, Professor Michael Trebilcock, of the same faculty of law as mine, prepared a report with other colleagues on the substantive aspects of the civil approaches.

All of us were unanimous in recommending the adoption of a civil administrative approach, but, I emphasize, not to the exclusion of the criminal approach. Also importantly, our recommendations were in favour of a much more comprehensive administrative and civil approach than the one that appears in VII.1. The one that appears in VII.1 is a very lean and, in my view, totally inadequate remedial approach, if you're going to adopt the civil and administrative approach to dealing with objectionable marketing practices.

Why are the part part VII.1 remedies inadequate? They are inadequate for the following reasons:

First, they do not allow the court or the competition tribunal to make restitutionary orders. If you have a case in which an advertiser can be shown to have made an unfair profit of $1 million because of false claims with respect to the product or the price of the product, there are no provisions in part VII.1 allowing the court to make a restitutionary order. This is anomalous, because in a straight criminal offence under the Criminal Code the court has powers to make a restitutionary order. One would assume therefore the court should have the same powers with respect to a consumer event, but it does not appear in part VII.1.

I would direct the committee's attention to the fact that your predecessors, almost exactly 10 years ago, in a report entitled Misleading Advertising, published in June 1988— The report I am referring to is the report of the Standing Committee on Consumer and Corporate Affairs on the subject of misleading advertising. It was a very fine report, and I strongly commend it for the committee's close attention. That report deals comprehensively with the civil and administrative approach and highlights what I now characterize as a serious shortcoming in the remedial aspects of part VII.1. So far as restitutionary remedies are concerned, the 1988 report unhesitatingly recommended the insertion of this power. You'll find it at pages 35 to 41 of the report.

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The part VII.1 provisions are also seriously inadequate in failing to confer private rights of action on aggrieved individuals. Now this is an even more striking anomaly, because section 36 of the existing Competition Act confers a private right of action for part VI infractions. Part VI is the part that deals with conduct that is criminally actionable. We're dealing here with part VII.1 misconduct, which doesn't fall under section 36. You therefore have this anomaly: if there is alleged criminal conduct, an individual is entitled to bring a civilian action pursuant to section 36, but if the conduct does not qualify under proposed section 52, the same individual is limited to such rights as may exist under provincial law. Certainly they will not be rights that exist under the proposed act. Again, this may have been an oversight on the part of the drafters, but there may have been a more subtle reason. If there is, I'm not aware of what it is.

Similarly, part VII.1 is totally inadequate because it fails to create a class action type of remedy where a large number of individual consumers have suffered damages as a result of the misconduct on the part of the respondent and where the damages suffered by the individual consumers are too small to encourage individual actions. Again, this aspect of the remedial problem has been addressed on numerous occasions. It is fully addressed in the report of your predecessors, on page 35, and it is addressed in the Alberta act and many other provincial acts.

In the Alberta act you will find that the class action-type remedy is dealt with in sections 15 and 17. The Alberta act doesn't go the whole way in creating an open-ended class action type of remedy, but it does empower consumer organization to bring an action on behalf of aggrieved consumers. It also entitles the director under the Alberta act to bring what we call a substitutional action.

Let me also draw to your attention, and I apologize for taking so long, that the monetary penalties created in proposed paragraph 74.1(1)(c) are too rigid to address marketplace realities. They are too rigid, because they limit the amount of the monetary penalty that can be imposed by the court. The amounts are relatively small; even in the case of a corporation, they cannot exceed $100,000 for the first infraction.

Now the existing paragraph 52.1(a) provides that on conviction on indictment the amount of the fine is at the complete discretion of the court. I think that should also be the approach to be adopted in the case of part VII.1 infractions, for this reason: there are well-documented cases in which very serious forms of misleading advertising have been engaged in by those individuals and corporations, and let me give you examples of both.

In the recent case of The Bay, The Bay agreed to a guilty plea and to a fine of $600,000 for a series of misleading advertising representations alleged to have occurred over a number of years. If this had occurred under part VII.1, it would not have been open to the court to impose such a high fine.

There was another case in Alberta, close to 10 years ago, involving the president of the Principal Group of companies. He also pleaded guilty to false or misleading advertising. If my recollection is correct, he was fined $500,000. Again, that would not be possible today under a part VII.1 proceeding.

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This is why I say it seems that proposed paragraph 74.1(1)(c) is too rigid in limiting the amount of the fine that can be imposed by the court.

I conclude, Madam Chair, with these observations.

There has been a tendency in the last few years to discount the importance of deceptive advertising and other unfair market practices as being largely irrelevant in our more market-oriented society. In my view that's a serious mistake. There has been no reduction in the number of objectionable practices in the marketplace; if anything, in my personal observation, they continue to grow because of the lack of effective prosecution of this type of conduct.

I think the recent annual report of the director of investigation and research under the Competition Act for the year ending March 31, 1996, tells its own story. I turn to page 36 of that report.

I find the number of complaints received by the misleading advertising and deceptive marketing practices section dropped from 15,130 in 1991-92 to 6,751 in 1995-96, and I can't believe this is because consumers are happier than they were before. I think it's clearly a reflection of the major reductions in staff that have occurred in the interval.

If you look at the number of convictions secured, again we find a striking reduction. There were 43 convictions, and that was small enough, heaven knows, in the year 1991-92, and bear in mind this is for all of Canada, with a population of 30 million. There were 43 convictions in that year, and only 14 in the year 1995-96.

I think these statistics, compiled by the government itself, are a very telling demonstration of the profound reduction that has occurred in the enforcement even of the existing legislation. So it seems to me that regardless of what legislation we have—good, bad, or indifferent, more detailed or less detailed—it remains largely a dead letter unless there is a commitment on the part of governments, federal as well as provincial, to invest in the necessary resources to make these provisions meaningful.

I know, Madam Chair, that in earlier proceedings one or two of the committee members raised questions about the relationship between the federal and provincial law in this area and wondered whether it was really necessary for the federal government to duplicate what appeared to be comparable provisions at the provincial level.

There is an answer, and that is, unhappily, the provinces have done even less, much less in recent years, to enforce the legislation they have than has the federal government. In fact, the federal government compares very favourably with the totally inadequate record of the provincial government. Frankly, both have a role to play, but the overriding lesson I would wish to convey to today is that both levels of government need to intensify their efforts significantly over the coming years if protection of the consumer in the marketplace is to become a reality and not merely a concept.

Thank you, Madam Chair.

The Chair: Thank you very much, Professor Ziegel. We appreciate those opening comments. They are very thorough.

We are now going to turn to questions. I'll begin with Mr. Schmidt.

Mr. Werner Schmidt (Kelowna, Ref.): Thank you, Professor Ziegel, for appearing before us this afternoon.

I have a couple of questions. The first is a very simple one. Were you part of the consultation panel that was consulted about the legislation before us?

Prof. Jacob Ziegel: No, I was not.

Mr. Werner Schmidt: You were not. So you appear as an after-the-fact sort of thing.

Prof. Jacob Ziegel: I would not say after the fact. I appear as a wholly detached, independent observer.

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Mr. Werner Schmidt: The other question I have is this. The bill separates non-criminal offences from Criminal Code offences, and this is a major distinction from what we had before. Your comments with regard to proposed section 74.1 and what follows, if I read the bill correctly, refer to criminal offences. Is that correct?

Prof. Jacob Ziegel: No, I think there's some confusion here, Mr. Schmidt. What I pointed out is that the proposed section 52 will limit the criminal sanction to cases in which the accused can be shown to have had a guilty mind or acted recklessly. We're not concerned with Criminal Code offences at all. We're concerned with the type of conduct that is susceptible to criminal prosecutions under the revised act and the type of conduct that can only be dealt with administratively under part VII.1.

Mr. Werner Schmidt: Part VII.1 deals with proposed section 74 and that is only administrative, in your opinion.

Prof. Jacob Ziegel: Well, it's not really administrative in the sense— It's not entirely an accurate phrase. “Administrative” usually connotes something that takes place at an administrative level, whereas these proceedings actually will be before a court or the competition tribunal. They're really more in the nature of regular, juridical proceedings. They really have very little of the administrative component to them. I think it was just a convenient phrase the drafter seized upon in order to distinguish these types of proceedings from the criminal proceedings under section 52.

Mr. Werner Schmidt: Yes. According to the wording, at least as I have it here, proposed section 74.09, which precedes proposed section 74.1, says:

In sections 74.1 to 74.14 and 74.18, “court” means the Tribunal, the Federal Court—Trial Division or the superior court of a province.

It's hardly administrative.

Prof. Jacob Ziegel: Absolutely.

Mr. Werner Schmidt: This is very much in the court. I found what is being contemplated here pretty significant juridical action, and I think the powers these courts have are rather far-reaching.

I think you made the observation that you didn't like the limitation on the monetary fines that were placed on people who offended under this section. Would you suggest this be left open to the courts, or that the top limit be removed? I think it's $50,000, $100,000, and then on second offence it's $200,000. Should they be larger or—

Prof. Jacob Ziegel: The answer is yes, Mr. Schmidt. I draw attention to the fact that paragraph 52(5)(a) of the act does leave it at large in the case of conviction on indictment, and I said I see no reason to distinguish between the two situations. You do want the court to be able to take the full circumstances into account. If you have a major offence or a repeated offence involving a large national or international corporation, if it's involved thousands of consumers, there's every reason why the monetary penalty should reflect the gravity of the misconduct.

Mr. Werner Schmidt: I agree entirely. Would you suggest that proposed subparagraphs 74.1(1)(c)(i) and 74.1(1)(c)(ii) be amended so that you have a non-fixed amount?

Prof. Jacob Ziegel: Basically yes, I would leave it to the discretion of the court. The court is already directed in determining the monetary penalty to take a variety of factors into consideration, and that's fine. Given the court's requirement to consider all these factors, I don't see the rationale in limiting the fine to be imposed by the courts. I think the courts have common sense, and a court is unlikely to impose a huge fine unless there are very good reasons for it, particularly since there's always the right of appeal.

In the past the courts have been extremely conservative in the size of the fine. The courts have become rather more generous in recent years, but, even so, a fine over $100,000 is still very much the exception. There is no justification for the apprehension that if the level of the monetary penalty is left to the court's discretion, somehow the courts would go haywire.

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Mr. Werner Schmidt: From my experience at least, I certainly wouldn't read that the courts would go haywire. I don't think that's the point here. I think the concern, if I read it correctly, is that you believe these amounts are not sufficiently large. I think that's what I heard you reply.

Prof. Jacob Ziegel: No; I think you misconstrue me. What I said was there may be circumstances where a larger fine than the limits imposed under paragraph 74(c) are justified.

Mr. Werner Schmidt: It seems to me I tried to say exactly the same thing—that the limits here are not high enough.

Prof. Jacob Ziegel: But I'm saying that we shouldn't have any limits, for the reasons I've explained. I'm not trying to guess what will be an appropriate limit. Just as we've done in similar proceedings, we don't impose a limit on the amount of damages a court can impose, for the very good reason that the damages will vary enormously, depending on the nature of the case and the nature of the conduct in question.

Likewise, I say that in considering what is an appropriate penalty, the court must also take into consideration a great variety of factors. If you concede that, then the rationale for imposing a ceiling on the fine likewise goes by the board.

The Chair: Thank you.

Mr. Harb.

Mr. Mac Harb (Ottawa Centre, Lib.): I was quite interested in your presentation. You are of the view that we should not be putting two options before the court. In one case, for example, we can tell the court that it has the leeway, if the crime is a big one, say for example by a multinational corporation, to then go ahead and penalize in a big way. But if the crime is what we call a summary conviction, shouldn't we give the court some sort of a direction, as parliamentarians, to say if the crime is small, then here is what you can do, in a way—charge $200,000 or $100,000, or jail the person for a year or two?

We don't want to find ourselves in a position where the courts come back saying it is not their responsibility to determine the fine, and that it's the role of Parliament to provide guidance. Wouldn't you agree that what we should do is to provide the court with two options, A and B? In option A, we say if the crime is big, then punish, and if the crime is small, these are the guidelines.

Prof. Jacob Ziegel: No. I think there's some misunderstanding here, Mr. Harb. I was addressing solely the monetary penalties under paragraph 74(c). That deals not with crimes, but with reviewable conduct. It's a non-criminal matter.

What I pointed out was that it's anomalous that where there is a criminal conviction under section 52, there is no limit on the size of the fine the court can impose in the case of a conviction on indictment. But there is a limit in the case of reviewable transactions, and I said I don't understand the rationale for the distinction.

And I said what is sauce for the goose should be sauce for the gander. If it's appropriate to allow the court to determine the appropriate level of the fine in criminal proceedings under paragraph 52(5)(a), then the same discretion should be given to the court under paragraph 74(c).

Mr. Mac Harb: But this is precisely the point. Shouldn't you give that action to the court and give them two options?

Prof. Jacob Ziegel: No, because you can't— With respect, Mr. Harb, if there are proceedings under part VII.1, the court cannot simply convert it into criminal proceedings. The court does not have that option, for a variety of reasons.

The Chair: Thank you.

[Translation]

Mr. Dubé, you have a question?

Mr. Antoine Dubé (Lévis, BQ): Yes. Good afternoon, Mr. Ziegel. At the end of your brief you say:

I urge the committee, in its report, to draw the attention of the House to this chronic negligence and emphasize that the new provisions contained in Bill C-20 will not attain their objective unless the federal government is ready to invest more resources to enforce the act and encourage provincial governments to play their role.

Your conclusion includes at least two dimensions. On the one hand, you seem a bit pessimistic as to the enforceability of the act with present resources. Could you clarify your thoughts on that subject and tell me if you've evaluated what resources would be necessary?

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I'd also like to hear you clarify the role provincial governments should play to improve the present situation.

[English]

Prof. Jacob Ziegel: Thank you, Mr. Dubé.

No, I have not conducted an investigation of what kinds of resources will be necessary, but I did read recently that at the present time there are only 57 or 59 people available altogether in Industry Canada for the policing and enforcement of the deceptive marketing provisions in the existing Competition Act. I think it's reasonable to assume this is a much smaller number than was true even 10 years ago. Given the size of Canada, obviously a larger number of bodies is necessary.

There is an alternative, and that is to rely on the provinces to enforce the federal legislation. However, long experience has shown us that this is not realistic. Most of the provinces don't enforce their own legislation in this area, and are even less interested in enforcing the federal legislation. That is why it's necessary for the federal government to create its own body of public servants to enforce the legislation. I think, with respect, that it's a matter of political will. It depends on the kind of importance we attach to this legislation.

There's also an alternative. A number of class actions have been started over the last five years or so with the introduction of class action legislation in several of the provinces—in Quebec, in Ontario, and in British Columbia. This has given a strong incentive to entrepreneurial lawyers to bring class actions on behalf of aggrieved consumers. So far those class actions haven't involved misleading advertising or deceptive marketing practices. Conceivably they could in the future.

This, it seems to me, is another reason why Bill C-20 is inadequate—because it doesn't make provision for class actions. It is anomalous that someone who complains about violation of an important federal legislation is forced to rely on provincial law to provide the appropriate remedial mechanism. I don't object to the provinces supporting indirectly the enforcement of federal legislation, but it is my submission that it is more logical and there is a greater need for the federal government to provide the remedial mechanisms than to rely on the provincial laws to make good the shortcoming.

The Chair: Thank you.

Mr. Bryden.

Mr. John Bryden (Wentworth—Burlington, Lib.): Thank you, Madam Chair.

I must say, in looking at your comments about section 52 and the effect of inserting the words “knowingly or recklessly”, I'm not very convinced by the arguments that I see before me, to be quite truthful with you. And I can't resist the comment that citing the Supreme Court's current philosophy as a reason for adjusting legislation I think has the cart before the horse. I've always believed that legislators are supposed to lead the Supreme Court, rather than the reverse. Anyway, that's just a comment.

You suggest that this change in section 52 is going to make it harder to convict or prosecute large organizations. Can I ask you what evidence you have for that observation, seeing that we have not had the provision of recklessly and wilfully in the Competition Act prior to this? How do you know it's not going to work with large organizations as well as small?

Prof. Jacob Ziegel: Well, we know it in terms of the precedents. We know it in terms of the required degree of proof. How do you show guilty intent in the case of a corporation where there are many individuals involved in making the decisions with respect to advertising and the establishment of prices?

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We have had a great deal of experience in Canada with respect to prosecuting corporations for criminal activity, not just in this area but in many other areas. It has proven to be enormously difficult to identify the specific individuals involved in the commission of the offences. And unless you can do so, you cannot secure a conviction.

So I am not speculating; I am basing my judgment on a very considerable body of experience.

Mr. John Bryden: And that's what I just can't quite understand. If this provision hasn't been in the act before, how do you know—

Prof. Jacob Ziegel: But you have it in the Criminal Code. We also have other provisions of the Competition Act that do require the guilty mind. For example, the offence of conspiring to fix prices does require a guilty mind.

A major case was another Supreme Court of Canada decision involving the dredging company in Hamilton. There is a good deal of other litigation involved. There was the question of whether the crown had been able to show satisfactorily who the individuals involved were who were alleged to have conspired to fix the prices.

So in my view these and many other cases like them are an excellent indicator of the difficulties the crown will have in applying section 52 to alleged offences by large corporations.

It's also significant, for example, that when The Bay pleaded guilty in the recent proceedings in Toronto, counsel for The Bay drew much satisfaction from the fact that had these facts occurred after the coming into force of Bill C-20, the crown would have had to proceed under subsection 7(1). It would not have been able to proceed under section 52.

I don't know what made him so confident that the crown wouldn't have been able to proceed under section 52, but I suspect he was probably right. Not only do I suspect that he was right, because the court wouldn't have succeeded in proving the necessary guilty mind, but I think the crown wouldn't even have made the attempt. It would have said this is like attempting to scale the Himalayas, so why make the effort if we can make do with proceedings under subsection 7(1).

Mr. John Bryden: I thank the witness for his observations, but I have to add one of my own.

I was a young reporter at the Spectator at the time of the harbour dredging scandal, which involved the Hamilton Harbour commissioners. I have to make the observation that a public body like the Hamilton Harbour Commission is not quite the type of organization the Competition Act is aimed at.

Thank you.

[Translation]

The Vice-Chair (Mr. Eugène Bellemare (Carleton-Gloucester, Lib.)): Do you have a comment?

[English]

Prof. Jacob Ziegel: Well, I'm delighted that we have a living witness here to what went on in the dredging company case, but I think, with all respect, that the gentleman misunderstood the point I was making.

It wasn't the Hamilton Harbour that was being charged with conspiracy; it was the parties who had sought the contract to provide the dredging activities. They were the ones who were being charged with a conspiracy offence under the Competition Act.

Mr. John Bryden: I stand corrected, Mr. Chairman.

The Vice-Chairman (Mr. Eugène Bellemare): Thank you, Mr. Bryden. Now we'll pass on to Mr. Schmidt.

Mr. Werner Schmidt: I had another question I wanted to ask. That has to do with the division of the act into the non-criminal and the sort of ordinary procedure—if I can use that colloquial term—to facilitate the speed with which prosecutions can take place. What is your observation with regard to that?

Prof. Jacob Ziegel: There are two parts. First, as I said both in my brief and my opening remarks, I support the general thrust of proposed subsection 7(1) for the reasons I give in my brief. But that's not the issue.

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If you're asking me that in terms of practical outcomes, I note that the various government representatives who appeared before the committee held out large hopes that proposed subsection 7(1) is going to be the cure to all the problems of the past, the past problems being the difficulty of securing convictions. My suspicion is that they're much too optimistic.

I apprehend that in important cases respondents—I use the word “respondent” rather than “accused” because they're not accused persons under subsection 7(1)—are going to fight just as hard as they do in the case of a criminal procedure. This is partly because they don't want the stigma of being labelled as engaging in false or misleading advertising, and partly because they know that there is the threat of a substantial monetary penalty.

So large corporations will have nearly as much incentive under proposed subsection 7(1) to fight hard as they do under the present provisions of the act. So I'm not as optimistic about the future course of action as some of the government officials are.

Mr. Werner Schmidt: But do you believe that it could be an improvement over what there is now?

Prof. Jacob Ziegel: Unquestionably. I hope it is.

Mr. Werner Schmidt: Yes, well I hope so too.

Prof. Jacob Ziegel: What I'm questioning is the degree of improvement.

Mr. Werner Schmidt: The future will tell, won't it?

I'd like to switch to a totally different area, and that has to do with wiretapping. About two weeks ago the Chamber of Commerce representation before the committee was that they took rather strong exception to the intervention of communications under the provisions of the act, in particular with regard to telemarketing. Do you have an opinion that you'd like to express on that matter?

Prof. Jacob Ziegel: Well, I suppose it was a case of fools come rushing in where angels fear to tread. My response, Mr. Schmidt, would be that if it can be as justifiable to a successful prosecution of a telemarketing offence, then I support it.

On the evidence given before the committee, I think it is a necessary power. Telemarketing is a major evil. I think we have an obligation to do everything we reasonably can to suppress it. If the only way of suppressing it is by being able to intercept conversations, then although though I dislike wiretapping per se, nevertheless I would accept it as a necessary means for this type of offence.

Mr. Werner Schmidt: Thank you very much. I appreciate your candour in addressing that particular question.

I'd like to go one step further also, and that has to do with the definition of telemarketing. We had a presentation by both the chamber and the Canadian Bar Association that suggested that the definition perhaps should be changed.

The current definition, as proposed, states that telemarketing means the practice of using interactive telephone communications. They suggested that the word “live” be inserted. From your experience and your study of the law, what difference would it make to include the word “live?”

Prof. Jacob Ziegel: Mr. Schmidt, I have not had occasion to consider this specific issue before. For what it's worth, my offhand reaction is that I'd say it won't make any difference.

I don't know what the concern is, because the substance of the offence is failing to make adequate disclosure about the circumstances at the call. Surely there can be no objections to that, whether the telemarketing is live or whether it is recorded.

The second part is not making false representations. Again, I don't see why the liveness or deadness of the telemarketing should make any difference.

Mr. Werner Schmidt: Thank you, Madam Chair.

The Chair: Thank you very much.

Mr. Lastewka.

Mr. Walt Lastewka (St. Catharines, Lib.): Thank you, Madam Chair.

I wanted to get the reaction from the professor along the same lines that Mr. Schmidt has brought forward. I think my concern on section 52 has been answered, so I don't think I'm going to ask any questions. I don't want to repeat.

The Chair: Sure. Thank you, Mr. Lastewka.

Ms. Carroll.

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Ms. Aileen Carroll (Barrie—Simcoe—Bradford, Lib.): Professor Ziegel, I was just listening carefully to your rather grave concerns about telemarketing per se.

So just in conclusion, do you believe that the amendments proposed in Bill C-20 have sufficient teeth to countermand telemarketing if indeed the will exists to enforce them?

Prof. Jacob Ziegel: I think they're a vast improvement on what we have now. From everything I've seen and heard, the federal and provincial governments appear to be serious about coming to grips with this malignancy, this economic malignancy in the body politic. I think they have every incentive to come to grips with it. It's an international problem. It's not limited to Canada or the United States. There's great pressure, political and otherwise, on the governments to take action.

So yes, I can't predict the level of success, but it will be a vast improvement over what we have now.

Ms. Aileen Carroll: Thank you, professor.

The Chair: Thank you very much.

Mr. Bellemare.

[Translation]

Mr. Eugène Bellemare: Thank you, Madam Chair.

[English]

On page 5 of your report you state that in your view:

—it is not objectionable to use telemarketing to sell a product “at a price grossly in excess of its fair market value” so long as the purchaser is not required to pay the price prior to delivery of the product.

And you go on:

In my view, in the case of consumer transactions, the time of payment for the product should be irrelevant if the consumer is unlikely to appreciate that he or she is being gouged.

I tend to agree with you, and I wonder if you could expand on that. Is our proposal really that weak in that area?

Prof. Jacob Ziegel: Yes, I think it is. As the provision reads, it says that the price must not be exorbitant only when payment is required before the product is delivered.

But the converse applies. I point out that an astute telemarketer will so arange the terms of the contract that payment will not be required until the time of delivery. Alternatively, for example, the contract may provide that the consumer is to send in a cheque or give instructions to the bank that the payment is not deemed to be made until a future date.

These telemarketers are not stupid, and they do have access to legal advice. I'm sure that an astute lawyer will quickly be able to work his way around this particular restriction.

That's why I say that if the price is exorbitant then it shouldn't make a difference what the time of payment is. It's the exorbitancy that is offensive, not the time of payment.

[Translation]

Mr. Eugène Bellemare: Madam Chair, I have a question for you. When one thinks that kind of change should be made, what process should be followed in a committee context?

[English]

The Chair: We have clause-by-clause scheduled for tomorrow, Mr. Bellemare. You can circulate proposed amendments before, or you can do it at the committee tomorrow when we get to the clause that relates to the section Professor Ziegel is putting forward.

Mr. Eugène Bellemare: Okay.

The Chair: It's preferable if you have it ready when we begin clause-by-clause tomorrow at 3.30.

Mr. Eugène Bellemare: Madame Chairman, another question relates to the fact that the witness opposes the decriminalization of false and misleading representation, and proposed a new section 52.1. I wonder if you could expand on that.

Prof. Jacob Ziegel: Thank you. I think the section I'm referring to, Mr. Bellemare, is section 52, not section 52.1, as that is for telemarketing.

I said that under the new section 52 criminal proceedings will only be available where the crown can prove a guilty mind or recklessness on the part of the accused. I said that this marks a fundamental shift in regulatory philosophy.

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I said in my view it could not be adequately justified, and I tried to give reasons for this, reasons that I hope are as broad in their conceptual, philosophical, and practical approach as is the government's reason for wishing to restrict the scope of section 52. But in my view it does raise some fairly fundamental considerations, and I hope the committee will be able to address them.

Mr. Eugène Bellemare: Thank you.

Prof. Jacob Ziegel: But I point out, if you'll allow me to complete, that one of the many anomalies is that in proposed section 52.1, dealing with telemarketing, it remains what we call a strict liability offence. So the question arises: Why do you regard strict liability so important for telemarketing offences but unimportant for the other types of deceptive marketing conduct? I don't know an adequate explanation for what otherwise appears to be a very striking anomaly.

The Chair: Thank you.

I have no further questioners on my list.

Professor Ziegel, I want to thank you very much for both your thorough presentation and the answers to the questions. As you can see, it definitely struck a note with several committee members. We appreciate your taking time out of your busy schedule to not only prepare the testimony in advance but be with us today.

I am now going to suspend the sittings for five minutes while we change witnesses.

• 1631

• 1637

The Chair: I'll reconvene the hearings.

We have before us now, from the Competition Bureau, Mr. Don Mercer, the head of the amendments unit, and Mr. Harry Chandler, the deputy director of investigation and research, criminal matters branch.

We were originally scheduled to have former Justice Dubin with us today. However, due to illness, he was unable to attend. I'm sure Mr. Mercer and Mr. Chandler can handle the topic of whistle-blowing.

Mr. Harb has presented amendments before the committee already. He will officially present them at clause-by-clause, but he has circulated them, which allowed us the opportunity to have this discussion with the departmental officials. Hopefully it will allow us a chance to understand why Mr. Harb has done this and allow the department to comment on whistle-blowing.

I was going to begin with Mr. Mercer and Mr. Chandler. Is that all right with you, Mr. Harb? Okay.

Mr. Harry Chandler (Deputy Director, Investigation and Research, Criminal Matters Branch, Competition Bureau): Thank you, Madam Chair.

We've circulated a brief statement, and I would propose to go through that very quickly and introduce Mr. Mercer to speak on the Dubin recommendations.

[Translation]

Thank you, Madam Chair and members of the committee for giving us the opportunity to appear before you in your consideration of Bill C-20, a bill to amend the Competition Act. We welcome this opportunity to discuss with you today how individuals may report in confidence, to the Competition Bureau, violations to the Competition Act (whistle blowers).

The Bureau conducts investigations in private and keeps confidential the identity of the source and the information provided. However, if someone has important evidence about an offence under the act, that person may be asked to testify in court.

Another safeguard which protects the confidentiality of individuals providing information is informer privilege. The courts have recognized that in certain cases the effective enforcement of the law requires the cooperation of individuals who, when they become aware of suspicious conduct, come forward and inform authorities under assurances of confidentiality. In such cases, the courts will protect the identity of the person who comes forward by keeping their name, as well as any information that could reveal their identity, confidential.

• 1640

[English]

I was going to move away from the historical review, which the next few bullets talk about.

Starting in the middle of page 3 we say that since basically 1994 the bureau has engaged in a number of initiatives. It has created a 1-800 number, which is included in a variety of information packages available to the public. It has prepared a public information pamphlet answering common questions about gasoline pricing and outlining the kind of activity that would be illegal.

We released in 1997 a bulletin on corporate compliance programs providing guidance about measures that all businesses can take, through the implementation of internal corporate compliance programs to prevent or minimize the risk of violations of the act. This bulletin recommends that companies develop internal reporting procedures to encourage employees to provide information on possible violations of the act or concerns to their employers.

We also published in February of this year a fact sheet on the Industry Canada strategic web site on the issue of whistle-blowing entitled Reporting Possible Anti-Competitive Practices to the Competition Bureau (“Whistleblowing”). We've distributed this colourful brochure that has that fact sheet. It is also available in pamphlet form.

The fact sheet informs individuals in businesses of the desirability of disclosing information about anti-competitive conduct; the existing toll-free line; the confidentially provisions now in place; the statutory and common law protections for employees; the immunity program that exists with the Competition Bureau; and the internal complaints mechanisms in corporate compliance programs.

Let me just add that after seeking and considering various submissions on programs to encourage people to come forward with information on illegal conduct—sometimes referred to as “whistle-blowing”—the bureau asked Mr. Charles Dubin, Q.C., to study whether whistle-blowing legislation would be a feasible and cost-effective means to encourage complainants to assist in bureau investigations.

He recommended a non-legislative approach to deal with the protection of whistle-blowers that includes more public education on the presently available protections for informants under the Competition Act. He was later asked to provide an addendum containing his views on the appropriate legislative approach should the government decide, notwithstanding his recommendation, to pass legislation to protect whistle-blowers.

Don Mercer can summarize those recommendations.

Mr. Don Mercer (Head, Amendments Unit, Competition Bureau): Thanks, Harry.

I will go through them quickly because I know time is limited. For the purposes of Mr. Dubin's study, the Competition Bureau defined “whistle-blowing” as:

—where an employee of a business enterprise informs investigative authorities of suspected wrongdoing by his or her employer or by other firms in the same industry; and where any member of the public (for example, a customer of a firm participating in the specific industry) seeks to inform authorities of wrongdoing.

In his report Mr. Dubin summarizes the protections currently available to whistle-blowers under both the competition law and in other contexts such as health and safety or the environment in Canada, particularly in Ontario, and the United States. It emerges from his review that existing whistle-blowing legislation in the United States has neither encouraged whistle-blowing nor encouraged employees to seek protection under particular statutes.

Mr. Dubin looked at two options. The first option was a legislative model, an expressed statutory protection for whistle-blowers. This option that he put forward would amend the Competition Act to specifically protect employees and others who disclose information about a corporation's suspected violation of the act.

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He used and made reference to a previous model that had been before Parliament, Bill C-266, which was presented previously by Mr. Bonin in 1996.

In his study Mr. Dubin examines the details of that bill as a basis for discussing the kinds of legislative protections that might be included. He saw a number of advantages to the legislative model:

—It provides expressed, clear statutory protection for employees who blow the whistle.

—Such a model can allow for reinstatement and it can also allow for punitive damages, not just for compensatory damages.

—Such a model could create a criminal offence for employers who take reprisals against an employee who blows the whistle.

—It could encourage employees to report wrongdoing to the appropriate authorities.

—If drafted to protect internal whistle-blowing, the legislation could encourage employees to raise complaints within the firms before disclosing them to the director of investigation and research.

However, he also saw some disadvantages to the model:

—Employees who blow the whistle about their employer's alleged anti-competitive conduct are already protected under the statute, the Competition Act in common law. Although legislation may specifically authorize the courts to order a reinstatement, it's unlikely to be an appropriate remedy for whistle-blowing employees. He again underlined the American experience that suggests that specific legislative protections for whistle-blowers have not been particularly effective, especially if employers can already rely on common-law remedies.

—The public interest in whistle-blowing in the competition law context may not be as strong as in areas such as the environment or occupational health and safety, where the health and life of the public is at stake.

The option B for him, the non-legislative model, that is to say, where no legislation would be put forward, would involve a non-legislative package of policies and initiatives. It would educate employees about protections they already have and it would encourage employers to adopt internal compliance programs.

Many of the elements of this model, to some extent, are already in place in the Competition Bureau policy. One would be an immunity program for corporations that report evidence of wrongdoing before the director has begun an investigation or early on in an investigation.

Another element would be the reduction in sentencing for corporations that have internal compliance programs and would have to include an internal disclosure program for employees. Where a corporation has fired or disciplined an employee who has disclosed evidence of a violation, the fact would be considered as an aggravating factor by the director or Attorney General in deciding how to proceed against a corporation and in making submissions on sentencing.

The model would also include an education initiative to inform employers and other members of the public about the bureau's complaint hotline, the confidentiality provisions of the Competition Act, plus police informer privilege and the statutory and common-law protections for employees who have been disciplined for blowing the whistle.

He found that there were some advantages of this non-legislative model. It builds on what is already available and it does not require new legislation. It avoids unnecessary duplication or inconsistent remedies relying on existing provisions protecting confidentiality and employment rights. It relies on internal disclosure, which American studies certainly have suggested is the most effective way to encourage employees to disclose information. The combination of compliance and immunity programs has been used successfully by the anti-trust division of the U.S. Department of Justice.

He found, however, some disadvantages to the non-legislative model, in that it offers little new incentive for employees who would rather not disclose wrongdoing to their employers. It will only encourage companies to adopt internal disclosure programs; it will not require them to do so. And because this approach relies on internal disclosure, it may allow serious Competition Act offences to remain hidden forever. The non-legislative approach may not be viewed as strong or effective enough to respond to the concerns of consumers and the public.

At the end of his report Mr. Dubin does conclude that although there's much in favour of legislation in the manner of that proposed in Bill C-266 and as also enacted in various statutes in the States, he was not satisfied that whistle-blowing legislation would really provide significant benefit to the Competition Bureau. It would not encourage whistle-blowers to cooperate with the bureau more than they do now.

• 1650

Therefore, his study recommended a non-legislative approach to build upon what is already available in the bureau. He recommended an education program to inform employees and employers about the public duty to disclose information. He recommended such a program to inform employees and members of the public about the existing Competition Bureau hotline and the confidentiality provisions now in place and the statutory and common-law protectives for employers who have disciplined for blowing the whistle. Such programs should stress to employers the importance of immunity in internal complaints.

However, knowing there was a lot of interest in this subject, we did at the same time go back to Mr. Dubin. We said to him: that's your recommendation, but if somebody wanted to implement such a program, what should the legislation look like? He then provided an annex, which has also been provided to members here.

He recommended that if such a bill were passed, it should contain the following four elements:

(1) a provision that clearly sets an employee conduct that is protected—that is to say, a whistle-blower's rights;

(2) a broadly worded provision prohibiting employers from retaliating against employees for exercising these rights;

(3) a provision that enables employees to apply to a labour relations tribunal or similar body for reinstatement damages or punitive damages when their employer has retaliated against them for exercising their whistle-blower's rights;

(4) a provision that states that employers who violate the prohibition in (2) above, that is to say, prohibiting employers from retaliating against employees, are guilty of a criminal offence that would have appropriate penalties.

I should point out that the problem with the third point, a provision that enables employees to apply to a labour relations tribunal or similar body, is that labour relations are generally issues that fall under provincial jurisdiction, except for federal companies or federal undertakings, which is the term used.

Mr. Dubin stated that in order to encourage employees to disclose information concerning their employer's wrongdoing to the director of investigation and research, there must be some assurance that their identity will be protected.

Given some of the current provisions of the act that specifically deal with this issue, there would appear to be no need to have confidentiality provisions in any whistle-blowing legislation at this stage because there are guarantees found under subsection 10(3) and section 29 of the Competition Act.

That completes my summary of Mr. Dubin's report and our submissions.

Mr. Harry Chandler: Could I just add the final word? It's near the end of our statement where it says “reason for amendment”. The bureau is of the view that the law currently offers some protection for employees and others who blow the whistle on those who are contravening the Competition Act. However, such an amendment would be an express clarification by Parliament, and as such may raise public awareness of this issue and may provide some further comfort and protection for those who speak out about possible violations of the act.

In closing, I thank the committee for the opportunity to make these statements. Don and I would be more than happy to respond to questions.

The Chair: Thank you very much. I'm going to begin the questions with Mr. Schmidt.

Mr. Werner Schmidt: Thank you, Madam Chair.

Thank you very much, gentlemen, for appearing before the committee. I find it very helpful. I want to commend you for reviewing the Dubin report here this afternoon, because I think it was good.

How much of a change would including the amendment that is before us give to the Competition Act? How much would actually be different in terms of the way things function and the way employees act with regard to current provisions and with regard to an infraction, let's say, by someone in the company, an employer or a related company about which they might have some information? What would really change if this amendment were in place?

Mr. Harry Chandler: There are a number of protections that are already in place, both by statute and by practice, for ensuring the confidentiality of people who wish to come forward. Don referred to those provisions. In addition, the courts have, as recently as last year, in the Supreme Court of Canada, upheld the importance of the crown and of investigative agencies maintaining the confidentiality of those who provide evidence.

• 1655

Those procedures and the statute that identifies those protections are well established and well known. In addition, of course there is a policy in the bureau that's been in existence for some years to in a sense reward those who come forward and provide evidence of an infraction under the law, the so-called favourable treatment or immunity policy. So all that web and framework of protections of ensuring confidentiality of those who come forward are in place.

What is not explicitly in the Competition Act is a mechanism to protect those who may be subject to sanction after the fact by their employers. That, of course, is dealt with in the common law through the opportunity to sue the employer and in some particular statutes, but the issue is not addressed in the Competition Act, and in a sense that part of it is new.

Mr. Werner Schmidt: From those comments, then, it strikes me that not very much would change. In fact, I almost hear that nothing would change. It seems to me that you've really said nothing that isn't already provided for either in the existing legislation or in the existing regulation or in common law. So what really is the effect of this proposed amendment?

Mr. Harry Chandler: The effect is the higher profile that this kind of provision would provide. The enactment would result in a public statement that would perhaps reach a broader audience, and what I said with respect to the sanctioning and protection of individuals.

Mr. Werner Schmidt: But could you then explain to me where this proposed amendment does in fact protect subsequent action by an employer against an employee? Where is that in this amendment?

Mr. Don Mercer: As I understand the amendment, the key thing in it is the issue of the sanction, which is a fine or imprisonment. The sanction is the only thing that would really have an impact as to whether or not it would provide some deterrence for employers in their relationship with whistle-blowers or potential whistle-blowers.

I don't know that there are going to be other great impacts of this amendment on the way in which the bureau does its work. We have, as already noted, the protections available that encourage people to come forward in terms of confidentiality, and if they're coming forward with evidence, immunity. So we're not saying in this context that this amendment would have a big impact on the way the bureau does its work.

Mr. Werner Schmidt: From what I can tell, it's not going to have any impact at all. I really can't see any impact here at all that isn't currently provided for in one way or another. I always believe that the best legislation is the least legislation, not the most legislation, and I think this adds another dimension that is already covered.

I'm struggling, trying to figure out what's so good about this that it should be done.

Mr. Harry Chandler: I think you should draw your own conclusions. Members should draw their own conclusions. We're here to answer your questions and to facilitate the discussion.

• 1700

The Chair: Thank you.

Mr. Harb.

Mr. Mac Harb: I want to thank you for your presentation and commend you for the excellent work you have done over the years on this and many other issues.

With reference to the comment of my colleague, that's quite true. We don't need any part of this legislation before us to be amended, because if we were to shop around in Canadian laws, whether federal, provincial, or even municipal, we would always find a mechanism that we can enforce. We can deal with crimes and offences of all types and so on. But the bottom line is that we are legislators, and what we have to do when we identify a problem is take action. We have to provide protections.

I would say to my colleagues that as the presenter indicated— What we are saying in this amendment is that should an employer or a contractor take an action against a retailer or an employee, we want to make sure that a severe fine or imprisonment takes place. If the employer or contractor is doing nothing wrong, no one should fear. No one should be concerned about anything.

I don't have a problem with the element of confidentiality here in the amendment. As the witnesses indicated, there is an element of confidentiality already, and I'm encouraged that the courts have upheld the fact that you have to maintain the confidentiality of a witness. But it isn't going to take anything away from the fact that if it is explicitly in the act it isn't taking anything away from anyone.

In terms of the third component, the reinstatement provision clause that the witness indicated, it's not in the proposed amendment before us because, as the witness has indicated, it is a provincial responsibility.

My question to the witness is as follows. Is it your view that the amendment as presented before the committee meets the three or four statements indicated by Dr. Dubin, with the exception of the reinstatement provision?

Mr. Harry Chandler: I think our view is that it does.

Mr. Mac Harb: Do you think that by adopting this amendment it would be an express clarification by the House of Commons that this issue of violation of the act will not be tolerated as it relates to the question of sanction against employees or contractors, and that this is something explicit in the act?

Mr. Harry Chandler: Yes. I would agree that those were exactly the words we used, Mr. Harb. It is an express clarification.

Mr. Mac Harb: Would this amendment take anything away from the work of the Competition Bureau, or would it further enhance it?

Mr. Harry Chandler: My only concern is the extent to which, under the provisions dealing with sanctions, resources would be drawn into investigating those matters, and that goes to the issue of whether someone was let go or disciplined because of whistle-blowing, or for some other issue. In some other dimension, were they a difficult employee?

As you appreciate, that can be a difficult issue to resolve, so there would be a requirement for the bureau to come to some finding on that and make a recommendation. To the extent that these are difficult issues to investigate and come to a clear view on, you're drawn away from the main thrust of the Competition Act, which is dealing with anti-competitive offences.

Mr. Mac Harb: Okay.

The Chair: Thank you, Mr. Harb.

[Translation]

Mr. Dubé, do you have any questions?

Mr. Antoine Dubé: Yes, two questions, one having to do with that and another more general one.

First, I'm a bit surprised at the kind of amendments suggested. Maybe it's because I'm not as much aware of what goes on in reality while you're in a better position than I to validate the situation.

• 1705

First, I had thought until today, during consideration of the bill, that the companies engaged in fraudulent marketing and telemarketing were generally smaller businesses with a boss and a few employees who knew that they were engaged in fraudulent activities from A to Z. That was more like the perception I had.

Although I've unfortunately not had time to read the Dubin report in its entirety, if that has happened, that would lead us to believe that there's another kind of fraudulent practice engaged in within businesses that I'd called normal where sometimes, some employees might engage in a bit of negative zeal and use telemarketing to mislead clients. In dealing with so-called normal businesses, do you actually witness behaviour that would justify going that far?

Mr. Harry Chandler: The proposed change doesn't have to do only with telemarketing. It has to do with all provisions of the act as well as those concerning coalitions, plots and so forth. This kind of behaviour is often hidden and not easily detectable by the general public or even by agencies like ours. That's why we've suggested this change. The objective is really campaigns that are trying to eliminate competition and set prices, among other things.

Mr. Antoine Dubé: That's interesting. So it goes beyond the whole aspect of competition.

Mr. Harry Chandler: All provisions of the Competition Act.

Mr. Antoine Dubé: I'll take this opportunity of your being here to ask about your opinion on the statements made by the preceding witness who addressed certain clauses more particularly. He said that the present act, as well as the proposed amendments are difficult to apply. One of the reasons he gave was that the Bureau doesn't have enough resources to enforce them. I know you didn't come here today to talk about that, but I'd like to know what you think about that. He said your Bureau had 57 or 58 investigators. In your opinion, do you have enough staff?

Mr. Harry Chandler: As all government agencies, we're under pressure and we're always looking for extra resources. But we're here and it's working.

Mr. Antoine Dubé: And can you carry on like that?

Mr. Harry Chandler: We can carry on like that. That's it.

Mr. Antoine Dubé: That's an honest answer. I find it interesting. That's all.

[English]

The Chair: Thank you, Mr. Dubé.

Are there any other questions on this? Mr. Schmidt.

Mr. Werner Schmidt: My comment is with regard to my colleague across the way, Mr. Harb.

I'm not suggesting that I'm opposed to the whistle-blowing protection—not at all. I am in favour of people being protected. I want to make sure the record shows that, because that's not the issue here. The issue is to have maximum protection to make sure it works, and if this is better than what we have, fine, let's do it. But if it won't change anything, why do it? That's my concern.

Thank you, Madam Chair.

Mr. Mac Harb: This is why I wanted to clarify that it will change something, that it will not just be part of the status quo, it will be a step further. I appreciate your comment and your support.

The Chair: Thank you.

Mr. Harb, we appreciate your experience in this area and the fact that you've been working on this for many years.

Mr. Lastewka, you had a final comment?

Mr. Walt Lastewka: I heard from the witnesses earlier that the amendment would add to the education and profile of the problem. Earlier the question was asked whether the amendment fulfilled the provisions of the four guidelines that Justice Dubin had requested. Could you enlarge a little bit on the discussion about the penalties and fines and so forth?

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Mr. Don Mercer: This is a balancing act kind of exercise. This goes to Mr. Dubin's point. Is what we have now sufficient to do the job, or do we need this kind of deterrence against employers who may intimidate employees who may wish to whistle-blow?

I guess one could argue on both sides of the coin here. One side of the coin is that this kind of deterrence will send a very strong message to employers that if they do anything to discourage whistle-blowing, they risk this kind of penalty. The other side of the coin was the point Mr. Dubin made when he made his recommendation: Do you need the law? Is what is there already sufficient? I leave it up to the committee to make that balancing act. But that's really what I think what the issue is here.

The Chair: Thank you.

We'll have one final question, which will come from Mr. Shepherd.

Mr. Alex Shepherd (Durham, Lib.): You referred to the issue of resources being drawn into possibly further investigative procedures. I'm not quite sure what that means. Are you telling me that there would be more people coming forward, and therefore it would be effective, or are you insinuating that you're going to be dealing with a lot of nuisance cases?

Mr. Harry Chandler: Well, it's a new area to look at. It's a new area of responsibility to determine under the proposed amendment whether a dismissal or some kind of disciplinary action was the result. It's drawing that link from a whistle-blowing act to the discipline. I believe that the litigation in these cases demonstrates that it's not an easy question to answer. That's what I meant. So this would be an entirely new area for us to look into. It's one that is not something that's part of our operation now.

Mr. Alex Shepherd: So have you done any analysis of possible incremental costs to administering these changes?

Mr. Harry Chandler: No, I'm not aware that we have. I merely draw that to your attention as an implication.

Mr. Don Mercer: I think one of the aspects of this is that, as with under other experiences under the act, when a provision is in the statute, we will receive complaints about it. Now, it's not in the statute, so we don't receive complaints about whistle-blowing. So it's a new area of complaint that we would have to set ourselves up to deal with.

Whether or not those complaints have validity is something we would have to review in each instance, just as we do in current cases. Therefore it's difficult to predict exactly how many we would get or under what circumstances this would be, but we would have to thoroughly investigate them in the context of the nature of the complaint or with what evidence could be brought to bear, and we'd have to use resources to do that. We don't have that possibility or obligation now.

I guess the balancing act there is: are those resources for that purpose merited in terms of what benefits you'd get out of having this section? The balancing act would go there: could those resources be better used on enforcing the act?

There was an earlier question asked about what resources we have available to do our job, because resources, as we always know, are scarce these days in the public service context, and I guess everywhere, and therefore, there is that balancing act also to make.

Mr. Alex Shepherd: But you don't see that flowing back into this analysis that whistle-blowing would actually help you to better enforce the act?

Mr. Don Mercer: Well, if you accept the recommendation of Mr. Dubin, the bottom line is that the impact would not be significant in having this amendment if the protections are deemed to be appropriate at the present time.

The question would be would the deterrence add to and facilitate people's willingness to come forward and at the same time provide protections since employers would now be on guard? There's a criminal offence here. That's the other aspect of this.

• 1715

It's not clear to us—it wasn't clear to Mr. Dubin, more importantly—that based on the American experience such legislation would have any impact.

We have to remember that in the American context there's something quite different in terms of attitudes toward employees and employee loyalty in corporations. We have what's deemed to be better protection for employees in this country vis-à-vis employers. There's no such protection in the United States unless it's provided in such a law. It's a different kind of context. In the United States, employee loyalty is an absolute kind of concept, whereas in this country, there are some obligations already on behalf of employees and employers, as found in the common law protections.

The Chair: Thank you very much, Mr. Shepherd.

I want to thank you, Mr. Mercer and Mr. Chandler, for being with us this afternoon.

I want to remind committee members before we adjourn that we're scheduled to commence clause-by-clause at 3.30 tomorrow afternoon in room 237-C. The department and bureau officials will be with us at the beginning to review the recommendations that have been proposed by several of the witnesses before we commence clause-by-clause. We do have several amendments that have been proposed by a number of members on the committee. I anticipate that there will be others during clause-by-clause.

We have reserved time, from 3.30 p.m. to approximately 8.30 p.m., if it takes that long. However, I'm optimistic that we will, based on the number of amendments we have before us right now, not be there that late. However, if we do, we will have to adjourn for a bit of time or recess for a bit of time, if people want, or people can accommodate themselves in the cafeteria upstairs because we have not ordered a meal for the committee on the basis that the clerk and I have decided that we're being optimistic and will not be there that late.

The meeting is adjourned.