INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Wednesday, May 17, 2000

• 1535

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I call the meeting to order pursuant to the committee's mandate, under Standing Order 108(2), a review of the Competition Act.

We're very pleased to welcome here today Mr. Tom Kent. Mr. Kent has much expertise in the area we're looking at.

Mr. Kent, we would welcome your opening statements, and I'm sure we'll have a number of questions for you afterwards.

Mr. Tom Kent (Individual Presentation): Thank you, Madam Chairman. I would like to thank you and the committee for asking me to talk about the, what shall we say, possible relevance of competition law to the current situation in the newspaper industry.

It's important to realize that we've been here before. In early 1980, there was a massive sell-off of newspapers, the FP chain that owned the Globe and Mail, the Winnipeg Free Press, the Vancouver Sun, the Montreal Star, the Ottawa Journal, and other papers. Its downfall, however, did not produce greater diversity of ownership. On the contrary, it produced yet more concentration. Subject to some side deals with Southam, Thomson acquired all the FP properties, so that instead of three chains, what we got was two larger chains.

The after-the-event response from the government was the appointment of a royal commission, which reached the obvious conclusion that the concentration of Canada's press, which was already uniquely high for a democratic country, would become greater still unless Parliament took preventive action. It didn't, and the inevitable followed, with Mr. Black as the conspicuous agent. However, now, with his troubles and Thomson's changed business strategy, there is a new opportunity for some deconcentration.

As I'm sure the Competition Bureau has pointed out to you already, newspapers are primarily media of advertising, and for advertising, there are alternative means to the point that newspaper concentration can't be regarded as a significant detriment to the public's commercial interests. However, the distinctive role of newspapers, which is as a medium of information and opinion on public affairs, is a very different matter.

It's true that again there, there are other sources. Increasingly, anyone with time and resources can ferret out almost anything, but that's very little help to most of us. For information on public affairs, we rely chiefly on the daily and hourly media, which means that from all the ever-greater volume and complexity of information—not to mention speculation, opinion, spins, falsehood, and all that—just a little is selected, filtered, and interpreted for us, and that's the distinctive task of journalism. It's a task that's central to democratic politics.

Within it, of course, the role of newspapers isn't what it was. TV is now the direct source of most news for most people, but the sincerest followers of the daily press are the TV and radio journalists. It's still the newspapers that provide relatively more detail and more lasting evidence. You might say that they're the medium of middle opinion leaders, and they will therefore remain the most formative of the media influences on political discussion.

I think it's important to recognize, even very briefly, how it was that so important an influence came to be so concentrated.

• 1540

Daily newspapers were local family businesses. Many cities had two of them, until head-to-head competition of that kind was largely destroyed by the economics of the inter-war years. Once that destruction had happened, newspapers became very profitable, but also, for their owners, no longer very exciting. By the third or fourth generation, family interest was dispersed and diminished. Sons and daughters, nieces and nephews, took back capital and went on to other things, and that opened the way for change, even though there are no great economies of scale inherent in the operation of newspapers.

In fact, the common apologia for change is that they made very little difference to anything. Their chiefs usually claim that they don't abuse their power; they don't interfere in news and opinion.

In a day-to-day sense, that's largely true. The chiefs are too busy. But they do choose the people who do manage. In fact, within a chain, the type is set. It may allow a little licensed dissent by a columnist or two, but essentially one viewpoint rules throughout papers. I think no one would accuse Mr. Black of being any less than ideological master of his papers, not any less so than was the Canadian who did become Lord Beaverbrook.

In fairness, I do want to say that the least directive of major media organizations was the old Southam group, before Black. In fact, I believe in one election one Southam paper advised its readers to vote NDP. The Liberal Party also did a little better. But outside Ottawa, even Southam almost always meant firmly partisan Conservative.

In short, press concentration does cramp the expression of diverse political views. I don't suggest that editorials have great influence—I can say that having been an editorialist—but the very great detriment to the public interest is that one set of attitudes colours the presentation of news and views, not in one but in many newspapers. The level base that people need in order to build their own opinions is, in truth, tilted in the same direction for many readers in numerous communities.

In short, the virtues of competition are not economic only. They apply to the means of information, the food of the mind, quite as much as to the means of production. Indeed, I would say that competition within the media is even more important for the health of a free democratic society than anything hitherto achieved through competition law.

The 1980 royal commission had to contend with the argument that media concentration was a matter outside federal jurisdiction and, therefore, competition law. The 1982 Constitution, however, came soon afterwards, and now the charter surely makes it clearly the business of Parliament to preserve Canadians from infringement of their freedom of information and expression.

Although the Competition Act as it stands doesn't deal with this, on that basis of the new charter position, the Competition Act could be broadened to make media acquisitions or mergers subject to review. In my view, a reasonable provision would be that if the expanded business, merger or acquisition, would have more than, say, 10% of the total circulation of daily newspapers in either official language, then the acquisition or merger would be permitted only if the Competition Tribunal was satisfied that no commercially viable alternative would provide more diversified ownership.

For the sake of brevity in my notes, I didn't refer to cross-media ownership, because it could be dealt with by the CRTC. However, the recent report of CanWest's interest in acquiring Thomson's western Canadian papers does compel me to say that common ownership of print and electronic media in the same community is a particularly gross affront to freedom of information and opinion. I think it should be intolerable to the parliament of a democracy.

• 1545

However, having said that, then, in this sort of proposal there is a practical problem. With Thomson and Hollinger papers on the market together, demand is likely to be weak in relation to supply. The business response to that, of course, is pressure to open newspapers to the fate of so much else—that is to say, American takeover—and indeed, that could be the lesser evil if the only alternative is domination by a new Canadian media giant. But it would be a poor second to restoring the diversified Canadian ownership that there used to be, perhaps likely to be practical only if broadening of the Competition Act is supplemented by an incentive to Canadian ownership, such as the kind of tax sheltering that has been given for some less important purposes.

For example, fairly wide ownership could be encouraged by providing that investments of up to, say, a 10% share of the equity required to buy a newspaper would be eligible for accelerated capital cost allowances. That concession could be balanced with a requirement that for the same period, profits above a defined level would be plowed back into improving the newspaper, which in many cases is badly needed.

Any proposal of that kind, of course, would require refinement by people with more access to recent research resources, and so on, than I now have. What I'm trying to do is simply illustrate the intent.

As people increasingly feel themselves in the grip of globalization, their lives dominated by ever-larger corporations and more remote forces, there is a growing sense of need for an offset, for stronger local institutions open to local influence. I think enthusiasm to recapture newspapers as local, as far as possible, as community institutions, could be very readily generated now in many Canadian cities. It would cost the treasury very little, it would be broadly popular, and above all, the current newspaper situation does provide an opportunity to strengthen and diversify responsible influences on Canadian public opinion and politics.

However, as a final remark, it is necessary to emphasize that this opportunity will be short. In the public interest and in fairness to the business community generally, as well as to the shareholders of Thomson and Hollinger, a clear policy needs to be defined and announced very soon. I hope this won't be one more occasion when a decision is too long delayed.

Thank you, Chairman.

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

I would just let members know that the bells are ringing for a quorum call, not for a vote.

We're going to start with questions. Mr. Penson, please.

Mr. Charlie Penson (Peace River, Canadian Alliance): Thank you, Madam Chair.

I would like to welcome our guest, Mr. Kent, here today. I know you have quite a history in this area, and you have provided the committee with important background from the years you were involved in the debate.

But I'm more than a little curious as to why the interest now with the newspaper concentration, which seems to me not much different from what it was when Southam was the owner of the big newspaper chain. Now that Conrad Black has got involved, there seems to be a lot of interest in new competition law, some ways to limit the investment potential for these people, to break them up.

I suggest it might have more to do with politics than anything else, as you yourself have suggested, sir, that these owners do have a perspective that is reflected through their newspapers. All of a sudden, it's a different perspective these days, and maybe some people don't like it that much.

But in any respect, I think you've also suggested that a number of these big chains are in the process of disposing of papers. It seems to me there's an opportunity for individuals or companies to buy them. But there is a move away from that kind of technology into the new information technology, such as Internet and the convergence that's happening there.

So I gather from your comments that you had placed just as much emphasis on competition review of all aspects of it, not just the newspapers themselves, because that seems to be almost an historical thing that's being dealt with in its own way by the public choosing different instruments to get their information. Is that accurate?

• 1550

Mr. Tom Kent: Unfortunately, most of the public does not have very much time or resources to devote to following public affairs. Therefore, it is the mass media—radio, TV, and newspapers—that provide most people with their world view, so to speak, their view on what's happening that's important to them as citizens. The Internet and so on doesn't change that.

It is still the position and will remain the position in this... Eventually other media and the Internet and so on will grow considerably. More and more people will take advantage of it. But it will still be true that the information has to come from a journalistic process. There's that mass of information, and somebody has to bring it into a very digested form for it to mean anything to the ordinary person. That journalism is going to continue to be done primarily in the print media. It will be circulated in all sorts of ways.

The TV reporters bleed the print media every day. The news meetings at a television program are a discussion of what they should cover today in light of the stories in the morning's papers. That is how the process works.

I don't think the importance of newspapers and the importance of diversity in newspapers has gotten any less. In fact I think there's a sense in which... The importance of public interest in public affairs becomes more important in some ways all the time. I think the importance of newspapers and their diversity, as much as possible, has also gotten greater.

Mr. Charlie Penson: Mr. Kent, given that and given that these newspaper chains are looking to dispose of some of their holdings, you have suggested one constructive solution through tax policy where Canadians may be able to buy them, but you seem to dismiss the foreign content aspect or foreign investment out of hand.

I noticed the Minister of Canadian Heritage speculating that maybe there's room to change our investment rules, if you like, or our tax policy or whatever is stopping that investment from taking place, so that it wouldn't necessarily have to be a dominant position. You know, Canadian Airlines had 25% ownership limits. Is that not a vehicle that could be used? Otherwise, who's going to buy these newspapers, or how are they going to raise the money that's needed to accomplish what you're hoping to have happen?

Mr. Tom Kent: I think there are quite a lot of people who, on the sorts of terms I've suggested and with a powerful tax incentive, would be very anxious to purchase the papers as a group, and not necessarily even as individuals in that sense. They could be credit unions, labour funds, all sorts of things, purchasing shares in the local paper. The desire to have the local paper has been rekindled.

The foreign investment would be like the big company. It would be remote from the community interest. My thesis is that we really do need to rebuild our community institutions as much as possible. Therefore, foreign ownership would be a very poor second-best. First, we should be doing all we can to have local ownership. If we fail in that, if that doesn't work very well, then I would certainly agree that to have some foreign ownership could be preferable to everything falling into the hands of one great big corporation just because it was Canadian.

More than acquiring papers that are up for sale, if I were Ms. Copps, what I might be interested in at this point is encouraging a foreign enterprise to start a new paper, if anyone were interested. A bit more competition in that sense would be very good for the Canadian industry. I'd put much more emphasis on that than on the purchase of existing papers.

Mr. Charlie Penson: That's an interesting concept.

• 1555

As you know, Mr. Kent, Canadians have had a history of owning newspapers in other countries. I just wonder how you view that in relation to foreign ownership in Canada. It seems to me that Canadians who have owned newspapers in Britain, for example, have not had any inverse detriment to the British public by owning newspapers. They were served pretty well. It seems to me that might be a model we could look at as well.

Mr. Tom Kent: Unfortunately, our newspaper situation is very different from the British situation. In England you have six or seven nationally circulating newspapers in competition with each other. I forget the number. It may be more than that nowadays. There are local papers as well, but they are relatively very unimportant. Sure, if two or three of the national newspapers are owned by foreigners, so what? There's lots of English ownership as well, or Scottish.

We have much more reason to look at the difficulties of large-scale ownership. The point is that we don't have much in the way of national newspapers. What most people read are and will remain local newspapers, so to speak, regional newspapers. It's the association of those with their community. To me, the issue isn't really whether the big corporation is Canadian or foreign. Frankly, I don't think that makes very much difference. What is important is diversified local ownership as far as possible rather than any big ownership.

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

I would just remind members that we're really here to discuss the Competition Act and its abilities or limits or how it affects the newspaper industry. If you could try to direct those types of questions to Mr. Kent, that would be helpful. Also, just to clarify for the record, we agreed to undertake a review of the Competition Act long before anyone decided to sell newspapers.

Mr. McTeague.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): Thank you, Madam Chair.

Mr. Kent, it's an honour to have you here today. I'm one of the budding students of a colleague of yours, Paul Rutherford, from the University of Toronto. I wish I had the old book of the Victorian authority here, because it seems to me that concern over political representations made either by the owners or at the owners' choice, as you quite rightly pointed out, has not been new to the Canadian political landscape. One only has to look at the ownership of the Globe and Mail and so on and so forth.

In the context of the Competition Act, however, I have a couple of very simple questions. The National Post, as an example, offers what is considered a fairly diverse, comprehensive, and very involved number of articles reaching from business to sports. One would probably make the argument that it would cost a significant amount of money, not to mention a tremendous amount of sunk costs, in order to provide your paper with the ability to at least compete with the other mainstream national papers.

It's become clear to shareholders and to other observers alike that the cost of 50¢ a pop, while it may be similar to another chain, the Sun chain, is not similar to the Globe and Mail or the Toronto Star. That's from my own background. I suspect the same may be true of other members here. In your view, would this constitute a form of predatory pricing or simply an entrant trying to come into the market, to muscle their way in, so that once in they can raise the price? How can you have a paper that's not profitable, and stay in if there isn't another purpose for which you're there?

Mr. Tom Kent: It's clear that in the case of the National Post, there is another purpose very dear to its proprietor's heart, for which, as long as he can persuade his minority shareholders to go along, he is prepared to spend a lot of money. In the interests of diversity of opinion, I would regret it if that were regarded as predatory pricing.

The essence of what I'm trying to suggest is that newspapers are a business different from other businesses. The issue is not commercial interest, which is the essence of the present Competition Act. We can only look at the newspaper problem if the act is broadened to allow for the importance of diversity of content in the sort of way I suggested.

I apologize if my tax proposal has diverted attention. I put that in only in order to show that I was aware that merely to broaden the act is not enough in itself. But what I'm concerned to suggest to this committee is that the act should be broadened in some such way, as I suggested, to require a review of a merger or acquisition that increased the proprietor's ownership to more than 10% of the circulation.

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Mr. Dan McTeague: Mr. Kent, you're proposing something of a hybrid for this committee, and I perhaps understand the shortcomings of the committee dealing only specifically with commercial issues. If we are to make an exception or to create something totally different—taxes outside of the mandate of the committee, CRTC being outside of the mandate of the committee—but somehow we're to add, in a perfect world, changes to the Competition Act that were industry specific, it would probably be laughed out every court in this country. If not for the fact that you cannot create a set of guidelines for one industry, whether that's in mergers or whether that's in recognition of a de facto monopoly or oligopoly, whatever the case may be...you cannot do it for one and not for the other. So it would have to apply in other areas obviously.

That being the case, if we were to create something along that line, do you see other industries that might be able to benefit from going beyond the commercial trappings of why we have a Competition Act to the more cultural imperatives, which I think you're speaking to, the national imperatives you're speaking to?

Mr. Tom Kent: We do, after all, distinguish between industries to quite an extent. We have a Bank Act, for example, and so on. The commission suggested a newspaper act recognizing these difficulties, which at that time seemed overwhelming because of the doubt as to whether anything that was done federally was in fact in federal jurisdiction in this matter.

What I believe—I'm advised by, I think, good legal people—is that the 1982 Constitution Act and the charter have changed that. It is now clearly possible in federal jurisdiction to make a special provision. It could still be done outside the Competition Act. I agree. But it would seem to me that precisely in order that it not get too broad—why should these things get broad?—why not deal with the particular problem? There is a particular problem affecting the media that doesn't apply to any other industry in the same sense. Being the basic medium of the mind and public affairs, it is therefore a special case, so let's make a special provision for it, either in the act or not.

Mr. Dan McTeague: Mr. Kent, my final question, because I know there are others interested in asking equally important questions to you in the short time you're here, is do you have any concern with concentration in terms of news providers such as the Canadian Press, those who might on occasion, from time to time, support the other papers? I respect what you said with regard to television getting a lot of its information from the papers. But I also know firsthand, severally, that Canadian Press also has a very important role to play in providing overnight information, not just to radio and television but also to the print media. Would you have any comment on that? Is this something you have taken into consideration at all in your deliberations?

Mr. Tom Kent: One must take it into consideration. The Canadian Press was a very important nation-building institution in this country in its formation. It was formed as a cooperative by the community newspapers, the diverse newspapers that I was talking about. They strengthened themselves by that cooperative arrangement. It was very important to them. It was important to the country.

Frankly, since the change developed, the role of the Canadian Press has shrunk, and rather pitifully I think. But still the Canadian Press certainly would, in the sort of world I'm suggesting, play an enlarged role. That's fine as long as it is a cooperative of community newspapers.

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

[Translation]

Mr. Dubé, do you have any questions?

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): Yes.

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Good morning Mr. Kent. It's my turn to welcome you and I hope that you have the french translation.

[English]

Mr. Tom Kent: I lived too long in Nova Scotia. The second language where I lived was the Gaelic.

[Translation]

Mr. Antoine Dubé: I'm used to the reverse situation, and I understand what you mean.

Listening to what you said I have the feeling that you would like to have an separate act to deal specifically with the ownership concentration in the medias.

I share Mr. McTeague's point of view: it's quite difficult to draw an act stating all sorts of exceptions right from the onset. It would be better to have a legislation covering all possibilities. Don't you think that the best would be, for instance—and other witnesses think like that—to bring about an act such that CRTC would deal with newspapers the same way it does with electronic medias, and radio and TV stations? The CBC have to appear before CRTC every 3 years about the delivery of licenses based on some conditions, some criteria for its regional stations, for instance. Would you be in favour of a similar measure?

[English]

Mr. Tom Kent: I think it would widely regarded as very draconian. The CRTC's control over the electronic media is very detailed. Whether it's entirely good or bad we could dispute, but it is very detailed. I think most of us would be concerned about asserting that degree of control in relation to the media as a whole.

I think we might think there should be less control in some respects—that's content control—in the electronic media. Certainly I would be sorry to see us moving further in that direction in all the media. And therefore, while I fully recognize that there is a sense in which it is important to have separate legislation for the print media, for newspapers, and while I would like that to be done within the Competition Act if it can be, because one does not make more exceptions than are necessary, the essential role of the media is something different—as I said, food to the mind for public opinion. It has to be recognized one way or the other. I once said that if the Fathers of Confederation had recognized the importance of public opinion in an emerging society, compared with what it was nationally in 1867, there would have been a newspaper act as well as a banking act then—I mean provision for it.

But now I think we could catch up reasonably well, if you as a committee and so on should so think, by a provision that the Competition Act is not entirely restricted to commercial considerations in the case of so important and distinctive a matter as competition in matters of information and opinion, then the act could be broadened to make a special provision for that. I think that would be better than getting the CRTC involved. The history of CRTC regulation is not a very happy one.

[Translation]

Mr. Antoine Dubé: My colleagues may ask you different questions but I intend to keep on the same line of thoughts. Thinking about what you just said I wonder why newspapers and print media in general should benefit this kind of total freedom of expression. At the present time this is the way things work. On the other hand one has to admit that electronic medias are picking up in importance, like the Internet. It is because we are nostalgic that we are biased towards the print media rather than the electronic ones?

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Nowadays, and the politicians know that, making the headlines in the newspapers is not enough. You must also be present in the electronic media if you want to be able to shape the public opinion. Otherwise, it doesn't work.

We could go on and on, but in the end it boils down to one thing: how do you account for that difference? With all due respect, I'm now pushing you a little further to help us out in our thinking.

[English]

Mr. Tom Kent: I recognize that the basic difference is historic. Newspapers grew up at a time of, shall we say, less legislation of any kind. When the electronic media came, then the airwaves were a public good in the way the print media have never been, so the access to them had to be subject to some sort of process of licensing. None of us would want that for the media.

My drawing of a distinction is that in the process of licensing we have got into a regulation of content as well in the electronic media; not a regulation of the information content of the news and so on, but of how much of various things they do, how much Canadian programming, etc. I think there's a lot to be said against that as a trend. Certainly I wouldn't want to incorporate it in the print media. That's all I'm saying.

[Translation]

The Chair: Thank you, Mr. Dubé.

[English]

Mr. Murray, please.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thank you, Madam Chair.

Mr. Kent, thank you for joining us today.

You mentioned in your opening comments that in Canada the level of concentration is high for a democratic country. I'm assuming you must have looked at other countries where the concentration is not so high. Is that a result of serendipity, or careful planning, or a very demanding newspaper-reading public in those countries?

Mr. Tom Kent: Certainly in the European countries it's the result of smaller geographical areas where papers can circulate, so to speak, nationally much more. Even in a small country like, say, Denmark, there is vigorous newspaper competition among quite a diversity of papers. I think perhaps the habit of reading is also continued more vigorously.

Obviously we're talking only about the democracies. Where there have been dictatorships, we're talking about a different situation. I think it is true to say that there's no other country where there has been so much concentration as we've lately had in Canada, certainly not in any of the European countries—as I say, even the small ones.

Of course, reference was made to Canadians owning newspapers in England and so on, and of course they do in the United States too. But all that even Thompson and so on, and Black through Hollinger, have earned in the U.S. is tiny in the U.S. market. A holding of that kind would be enormous in Canada, but it's tiny in that market, which is ten to twelve times the size of ours.

Mr. Ian Murray: It appears that this is really only a potential public policy issue in Canada.

[Editor's Note: Technical Difficulty]

Mr. Tom Kent: The electronic media are getting jealous.

• 1615

The Chair: Shall we try again?

Mr. Ian Murray: Okay, I think we're fine.

The point I was making is that it appears this is only a public policy issue in Canada, as opposed to any other democracy you're aware of. With the European examples, perhaps it's because they have a demanding reading public and people read more newspapers. What other country has put into place a legislative regime to encourage diversity in the newspaper business?

Mr. Tom Kent: I apologize that because the royal commission was 20 years ago, both my memory and events have changed quite a bit since then. But certainly quite a number of European countries have deliberately—under very careful rules to prevent there being any prejudice as a result—subsidized the continuation of a diversified press. That's true.

I'm going to look to a friend who was the research director of the commission. Tim, would I be right in saying this was true of Sweden and the Netherlands?

A voice: Yes. Britain has rules regarding competition.

Mr. Tom Kent: Yes, but that's different. A number of countries have in fact done the equivalent of the sort of thing I am suggesting by my tax measure—however, recognizing that's outside competition law as such.

Mr. Ian Murray: If the Hollinger papers were less obviously on a mission as opposed to a stated point of view, do you think we'd be having this discussion today? As someone who receives both the National Post and the Ottawa Citizen every morning and lives just outside of Ottawa, I think there's obviously an agenda there.

I'm one who believes anybody who owns a newspaper can do what they like with that newspaper, other than the fact that the truth is often twisted. I was questioning a different witness yesterday who mentioned just some simple things, like having the headline on a story totally misrepresent what the story says. The story may be accurate, but the headline is totally inaccurate and unfair—the placement of an article in the newspaper on the front page, page 18, whatever.

That may upset some of us who, as politicians, are always willing to blame the press for our problems, but I think most of us realize there is nothing to gain in doing that. As I said, I think people should be free to essentially write what—

The Chair: Mr. Murray, in...

[Editor's Note: Technical Difficulty]

Mr. Ian Murray: ...Mr. Kent, I understand I'm close to being ruled out of order in asking questions that relate to content. But that's not really what I meant to say.

Mr. Tom Kent: May I just comment?

The point was raised, though, that all this discussion took place originally—there was a great concern about concentration—when all Mr. Black owned in Canada were four to five very small papers. So I think it would be wrong to identify this issue with the particular politics of Mr. Black, significant though they may be. It's an issue anyway.

Mr. Ian Murray: Thank you.

The Chair: Thanks, Mr. Murray.

Ms. Lill.

Ms. Wendy Lill (Dartmouth, NDP): Thank you very much.

I'm really honoured to meet you.

As you know, I called you maybe 18 months ago, bothered you in your country home, and asked you what possibilities we had for media concentration legislation at that time. You said a lot of things to me, but the bottom line was you didn't see any possibilities of divestiture at that point. We had a very locked-up media, and basically there was no hope at that point of seeing too much movement.

Now, lo and behold, we have seen a huge change in things. We now have, as you say, a very small window where we may be able to do something.

I've been sitting on the heritage committee, where we have been doing a review of the book publishing industry in Canada. That is an industry the Canadian government has subsidized heavily. We talk about media concentration legislation because we need a diversity of voices and protection of that. We're now seeing some very huge chains. We are seeing the destruction of all of the ground, the foliage, which is the publishing companies, the small bookstores.

• 1620

I only mention that because you say we now need to really reinvent the newspaper industry in this country. The ground has been damaged very deeply. We need to fertilize it. We somehow have to change this act, add a clause that will give a breather for newspapers, allow for some kind of community ownership and possibly some tax breaks. At this time, this committee is very important in this process.

Can you think of any really dramatic acts that could be attempted right now? There's this small window of opportunity. We have a committee that wants to do the right thing here in terms of increasing newspaper competition and Canadian voices and diversity. Are we talking about a certain moratorium? I'm just wondering if you could brainstorm in that way for us.

Mr. Tom Kent: I think a moratorium would really be very unfair to Hollinger and Thomson. The difficulty we faced in the royal commission is still very real. The Canadian Parliament has allowed a highly undesirable degree of concentration to occur, but it has occurred legally under the law as it is. I think you have to be very careful about changing the law after the event, in a way that hurts people.

That is why, in conversations you referred to, I felt at that point there was very little that could be done in terms of ownership. It had happened and was there, perfectly legally. It was too late, once again. As I said at the end, we have been too late in making the decision. It happens so often. At that time I felt the only thing and the most effective thing that could be done was to greatly strengthen the news and information side of the CBC, as a counterweight.

Now economic circumstances have changed. There is an opportunity to undo—because the proprietors want to do it—some of this concentration. My feeling is we should find a way to do it that restores diversity of ownership. That, I believe, could now be done by a provision in the Competition Act—the kind I've suggested.

Give the Competition Tribunal the power to hold a hearing on any purchase. If it found it was intensifying concentration in a way that could be avoided, it would have the power to forbid that merger or acquisition. That would not be different, in fundamental nature, from the sort of provision that exists in regard to commercial interests under there, as a whole. But it would be applying the same fundamental principle that competition is in the public interest, to an area where the competition that matters is the competition of the mind, not the competition of advertising, or whatever.

I think the opportunity is there. Whether it's done through the Competition Act or separate legislation is really not, from my point of view, a major issue. But the Competition Act is under review. You have the opportunity. I'm suggesting it is an opportunity that, if you wished, could be used to modify considerably the nature of the media in this country.

Ms. Wendy Lill: You make the point that you think cross-ownership is a gross affront to free society. I would like you to elaborate on that, because obviously cross-ownership is really what a lot of this is all about. We're probably seeing information businesses that are trying to diversify and move into different areas of information. How do we tackle that, in your estimation, at this point?

• 1625

Mr. Tom Kent: We should make the point that there are two different types of activity involved. A lot of what is often talked about as the information industry is in fact the carrier industry. It's not the provision of information, it's carrying information that comes from other sources. Considerations there are very different, but I don't know that they need any special legislation.

What I'm saying is that where there are two sources of information, two organizations that are sources of information from the point of view of the public—TV and newspapers—then it is, as I said, really an affront that those voices... There's a reason they should be together, but there's every reason that it's better, if we believe in freedom and competition, that they should be different, that they should be separately owned. To let them be put together, which I'm afraid we've done in quite a number of communities, seems to me to be a betrayal, really, of the basic principle of a free society. It happens, you know; these things do. But for heaven's sake, let's not let it get any worse.

Ms. Wendy Lill: I have just one more.

It seems to me that you're arguing for something almost like a media diversification act, where we would be able to look at all of those different ownership problems around cultural issues and diverse voices issues.

Mr. Tom Kent: There would be a great deal to be said for that, but it's dangerous to make the ideal the enemy of the good. There is an opportunity to do something in the Competition Act, whereas frankly I doubt very much whether Parliament is going, in the foreseeable or early future, to produce an entirely new media diversification act.

I say again, in fairness to the interests involved, interests that have been established legally, I think there is an obligation that the public policy, whatever it is, should be made plain reasonably soon.

The Chair: Thank you.

Thank you very much, Ms. Lill.

Madam Jennings.

Ms. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Thank you.

Thank you very much for your presentation, Mr. Kent. I found it very interesting, and I do have to say I agree wholeheartedly with your point that having one lens to look through all public affairs events can be a very dangerous thing.

I believe that it's not for no reason that when we look at totalitarian states or coups d'état... Look at Pakistan right now. One of the first things that happen when a democratically elected government is overthrown is that the holders of the power take over complete control of the media—the print media and the electronic media. So there's clear reason that in media, the content is just as important as the form.

The issue, as you have so well stated, is how does one ensure that a diversity of views is presented in the print media? Creating a whole legislative system may not be the best way to do it, although we've done that for the electronic telecommunications, CRTC, etc.

Right now, if we look at the issue of mergers, there already is a carve-out where, while the commissioner of competition has the authority to say yes or no to mergers, in at least one instance, that of the banks, regardless of what the competition commissioner said about the mergers, the Minister of Finance had final authority. Would you think that would be sufficient, if we had that kind of carve-out that would allow a minister to approve or disapprove on the basis of public interest and the interest of having a diversity of content?

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The Chair: Just for clarification, it's not a carve-out. It's actually another act that supersedes the act that gives the Minister of Finance that authority.

Ms. Marlene Jennings: Yes.

The Chair: That's just a point of clarification.

Mr. Tom Kent: I think the chair has in effect answered the question to a large extent.

I was going to say there is a specific banking act, which is why I would be very worried if the process I'm suggesting, or any process of any other kind that I'm suggesting, were not a due process through the Competition Tribunal rather than a straightforward ministerial decision, because there would be no avoidance of the appearance or suspicion that a dislike of Mr. Black or dislike of somebody or something would influence the decision. That clearly is not what we want.

The strength of the Competition Act from this point of view, as I see it, is that there is a process, a quasi-judicial process. It's very important to have that kind of process if we're dealing with the media. So if we could use it, that would be far simpler than setting up an entirely new process, which I admit is what we proposed at the royal commission, because we couldn't then feel that the Competition Act could possibly be applied, because of these jurisdictional issues and so on.

Ms. Marlene Jennings: So in that case, then, the issue would be to include a provision where diversity of content would be one of the factors that the competition commissioner would need to take into account when determining whether or not that merger is in the public interest or not, or provides too much concentration. If there is disagreement, it would then go before the Competition Tribunal.

Mr. Tom Kent: Yes. Under the act as it stands, if I may put it in layman's words, essentially detriment to the public interest is detriment to the public's commercial interest, in the lowest possible prices, etc. What I'm saying is that in the case of the media, the detriment to the public interest is the loss of diversity in information and opinion; therefore we need some way—and I would say the simplest way is through the Competition Act—to set the same quasi-judicial process in motion to secure diversity of competition in the media.

The Chair: Thank you very much, Madam Jennings.

Mr. Riis.

Mr. Nelson Riis (Kamloops, Thompson and Highland Valleys, NDP): Thank you very much, Madam Chair. This is a most interesting question-and-comment session.

Mr. Kent, one of the problems we face as a country like Canada when it comes to concentration of the media is our geography, the fact that we are so large and the population is so small and spread out that it requires very deep pockets to have a national chain in place. Going back to the nostalgic days of local community papers is one thing, but national papers are another. I think you made the point, particularly in the European context, where it's much easier to launch a national newspaper.

But could you share with us some of your views of how countries similar to Canada—I'm thinking of Australia, perhaps Brazil, or other large political jurisdictions—have dealt with this? Do they experience the same kinds of problems we have in our rather geographically unique country?

Mr. Tom Kent: I think our problems are in some respect greater even than those of Australia, where the big cities are much more concentrated geographically than they are in our case. Melbourne, Adelaide, and so on are not anywhere nearly as far from Sydney as Vancouver is from Toronto.

I'm not going to pretend to be an expert on Australian newspapers. I'm not. But my impression is that there is much more cross-circulation. The Sydney Morning Herald is read more in Melbourne than the Winnipeg Free Press nowadays is read outside Winnipeg.

• 1635

Obviously the more national papers we have, expensive though they are, the better. While I obviously am far from its politics, I was glad to see the National Post. It's good to have competition, and I think the Globe and Mail has been improved somewhat in consequence. But whether it will ever be economically viable to have more than one national paper is perhaps doubtful.

So what I would say is, let us put as much strength as possible into a paper in Vancouver, a paper in Winnipeg, and so on, and a paper in smaller communities—a paper in Kingston. If I may take that community for the sake of argument, which did have quite a good locally owned paper until 15 years or so ago—I think it's less than that; I forget exactly when it was sold—I think there you could get very considerable enthusiasm and investment for the restoration of a community newspaper.

To borrow a phrase, let's be a community of communities. It's very important in this country that we get as much strength as possible in our diverse communities. That's what really has been lost to a very considerable extent through the concentration of ownership in the media, so let's get that diversity back if we possibly can.

Mr. Nelson Riis: You've mentioned that the moment provides perhaps a unique opportunity to take some initiative in this area. Also, the whole issue of social capital, which has become rather dominant in the discussions in the last few weeks in terms of a new approach in developing communities, would complement the points you're making.

Could you elaborate on the point you make that the charter now gives us an opportunity that didn't exist when you were doing your original work in terms of jurisdiction? Can you clarify that a bit for me?

Mr. Tom Kent: I don't want to pose as a lawyer. I'm really sort of taking what I believe to be good legal opinions, but they seem to be common sense.

Earlier, the argument was that property and civil rights were entirely a provincial matter, and therefore you couldn't interfere with the newspapers, because where were they in the division of powers or jurisdictions? Obviously they came under property and civil rights. That was the argument. It was the argument that many good lawyers and judges had rejected in the case of the Alberta Press Act back in the 1930s, and so on. But still, it was there, and it was quite powerful.

We on the commission didn't feel then... The legal advice to us was that that was not decisive, but something could be done. But certainly it could not be done clearly and simply on the authority of the Constitution directly. But the Charter of Rights and Freedoms makes it a national responsibility, a federal responsibility, for the freedom of information and opinion. Therefore, as I say, I am advised that now it would be a very clear-cut case to proceed, on the basis of the charter, to federal and to parliamentary action.

Mr. Nelson Riis: I'd like to ask one tiny question more, Madam Chair.

In terms of the incentives you suggested, the accelerated capital cost allowance would be one way to approach encouraging Canadians to purchase a local newspaper. You have the benefit of having your researcher with you. Are there other suggestions you might provide to us that other jurisdictions have used successfully in terms of encouraging national investment in their newspapers?

Mr. Tom Kent: I think Sweden and the Netherlands have an arrangement whereby papers get a direct subsidy, administered by an independent commission, not in any way by the government, in order to maintain the local diversity. But I think that would be a more dubious alternative.

I think the tax device for ordinary investment would be much safer than a tax incentive, but of course, to the extent that it can be diversified by encouraging cooperative ownership... After all, there is in effect a good deal of tax encouragement to cooperatives at present under the law. If you could get cooperatives established, that would be in some respects perhaps even better.

• 1640

But let's face it; that is much more difficult. If we are going to get quick action, then having 10 investors get together in Winnipeg or Kingston or somewhere is much more likely than a cooperative.

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

Mr. McTeague, you have a final question.

Mr. Dan McTeague: Yes, and I'll try to be brief, Madam Chair.

I was interested in your concerns with respect to the Competition Act—broadening it, of course. With respect to concentration in newspapers and the concerns that have been addressed severally by my colleagues as well as witnesses before you about the crossover into different industries, I want to ask you if, in your view, the definitions of relevant market; of substitution; within the merger provisions, of enforcement of the Competition Act, are very, if you'll pardon the expression, liberal and have been interpreted as such.

The heritage committee, for instance, is looking at the whole issue of the book industry with respect to the takeover by Chapters and their dominant position as it relates to their wholesale divisions.

In your mind, is there an effective substitute to newspapers that would allow the Competition Bureau to approve further mergers, should they occur, or consolidation in the industry such that they could say, well, newsprint isn't all that important; radio takes up 5% or 10% of the listening time of the average individual? Those qualifiers are in the act right now and will no doubt be used again unless there are some substantial changes.

Do you have any comment on how we can tighten up mergers in view of the importance you attach to—and I think we all agree—the whole issue of concentration in the wider media, particularly the print media?

Mr. Tom Kent: Perhaps I didn't say this very well, but I think it is important to draw a distinction between the means by which information is put before people and the sources of the information. While there is now considerable diversity, compared with how it was in my early years, in the ways information is put forward, the work of getting the information, which really is a matter of the journalist selecting a little bit out of all the flow of information, opinions, and so on, is still highly concentrated and in fact is still done predominantly by the daily newspapers. It is they who really set the agenda for public discussion.

Most of us nowadays—perhaps not I, in fact, but many people—watch the news more on television than anything else, but sources of the information on television have still been conditioned by the print media, and therefore I would argue that if we are going to have diversity, it is, above all, essential to have diversity in the print media.

Mr. Dan McTeague: That's an excellent point, Madam Chair and Mr. Kent, with respect to the enforcement guidelines, and I suspect that might be an area where we may be able to look at that.

Thank you to both of you.

The Chair: Mr. Kent, on behalf of the committee, I want to thank you for being here, and I want to ask you a couple of very quick questions.

What we're grappling with, the issue of an overhaul of the Competition Act and some of the suggestions you've made today, which are industry-specific, kind of turns the act on its head a little bit, and we grappled with this when we had a private member's bill before us last year. We really couldn't bring in changes to the Competition Act that were industry-specific. I'm not sure how we can get around that, or if we can, because the Competition Act is supposed to have a much wider and broader application to all industries.

From your perspective, in some of the things you're talking about when you talk about the public interest, right now when they look at the issue of newspaper mergers, it's the issue of concentration, the issue of advertising, what the efficiency is in the market, and whether there was one newspaper before or if there's one newspaper after. As long as there's still a vehicle for advertising, the concentration level hasn't changed.

I wonder if you have thought a little bit further as to why or how you think we could suggest something industry-specific to the Competition Act.

I know Madam Jennings had asked about this other avenue, and you didn't seem to think that was probably the way to go.

That's what we had yesterday from a couple of other witnesses, and we kind of turned it back to them and said, when we look at the finance situation, at bank mergers, the Competition Act and the Competition Bureau plays a role, but then there's another say, and that's done by the banking legislation. Madam Jennings' suggestion to you was, could not Heritage have the same role?

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I'd just like some further comments on that.

Mr. Tom Kent: I suppose what I'm suggesting in a sense is that you've become very ambitious. Competition is a fundamental good of our kind of society. That is important in economic terms. In terms of the means of production and the whole economic system, competition is very important. It has all sorts of implications. Some of its implications, in my opinion, are wrongly drawn and are exaggerated. They produce false doctrines of non-government, to keep government out of things. But that's beside the point.

Competition is a fundamental good. Competition as it has been applied in the existing competition legislation relates entirely to the economics of competition in the narrowest sense. In terms of those economics, there's no question that newspapers are essentially advertising media. They're not information media, if you look at them from a commercial point of view, because most of their revenue comes from advertising. What I'm saying is that in fact advertising is a sort of pack horse that carries on its back something enormously more important in the media, that is to say, information above all, diversity of expression, and so on.

It is therefore, I would say, entirely logical in the interests of that competition, which is the subject of the act, to say most of this is economic competition. Fine, but there are special situations—and there may be others besides the media, though I don't see them—where the important competition is not the means of sale, so to speak, the advertising, the means of financing, but the competition is in terms of what this medium does for people's thoughts and minds and opportunities to have views on public affairs and so on, the very guts of democracy. If we believe in competition, then it is entirely logical that the assurance of that diversity, as great as is practicable, should be done through something called the Competition Act.

I'm seizing the opportunity, I admit. Twenty years ago I thought it would have to be some separate legislation, but now you have an opportunity where it could be done through the Competition Act. If it isn't done through the Competition Act, then what will happen now is what happened in 1980, that is to say, these papers will be sold to other major corporations, and there won't be any improvement in competition and diversity.

The Competition Act is an instrument ready to hand that could be used here and now, quickly—with what really, I would say, is quite a minor modification, broadening—to take advantage of a window of opportunity to get back to more diversity. I stress that what I'm talking about there is, above all, community. It's the importance of ownership in the community rather than ownership of one more thing by big, remote corporations, of which people are as suspicious as they are of many other things.

The Chair: Lastly, there's another thing we're grappling with as a committee. When we take a look at how we're moving toward the Internet and e-commerce, we ask, where does the Competition Act fit, and does it still fit? Is it going to be outdated as we make these changes through the different mediums we use, or is it still going to be applicable in the sense that it exists? I don't know if you've thought about that into the future.

Mr. Tom Kent: I don't feel very confident to have an opinion on the net type of issues, so to speak, except to emphasize again that I think what we're concerned about as special cases are the sources of information, not the means by which the information is actually transmitted, and what is the information that gets onto the net is the issue, rather than how you regulate the net.

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So I'm really saying, I'm afraid, sorry, but I don't feel competent to have any positive views on this.

Certainly any complete policy has to recognize the diversity of the information industries. But I would still say that it is quite clear, in my view, that the print media could be brought quite logically within the scope of the competition provisions. So there is an opportunity to do that. What else could be done doesn't have the same urgency, I think, is what I'm saying. What's impressing me at the moment is that we have a chance, and it would be a great pity if it weren't taken.

I'm sorry, that's not a very good answer.

The Chair: We appreciate your comments.

I don't have any further questions. I'm not sure if any other members of the committee do.

Do you have any parting comments you'd like to leave with us, Mr. Kent?

Mr. Tom Kent: No, except to thank you for, from my point of view, a very interesting discussion with a lot of, I'm afraid, all-too-penetrating questions.

The Chair: I want to thank you, on behalf of the committee, for being with us. We know you have to catch a train. While you leave, we're just going to suspend for about two minutes. We have a motion we're going to take care of.

• 1652

• 1654

The Chair: I'll call the meeting back to order.

We have two motions in front of us. Mr. McTeague.

Mr. Dan McTeague: Madam Chair, I'd like to move that the main estimates under Industry for fiscal year ending March 31, 2001, be concurred in.

INDUSTRY DEPARTMENT

Vote 1—Operating expenditures ...... $493,846,000

Vote 5—Grants and contributions ...... $549,132,000

Vote L10—Payments pursuant to subsection 14(2) of the Department of Industry Act ...... $300,000

Vote L15—Loans pursuant to paragraph 14(1)(a) of the Department of Industry Act ...... $500,000

Atlantic Canada Opportunities Agency

Vote 20—Operating expenditures ...... $50,309,000

Vote 25—Grants and contributions ...... $264,625,000

Canadian Space Agency

Vote 30—Operating expenditures ...... $114,212,000

Vote 35—Capital expenditures ...... $188,239,000

Vote 40—Grants and contributions ...... $32,224,000

Competition Tribunal

Vote 45—Program expenditures ...... $1,365,000

Copyright Board

Vote 50—Program expenditures ...... $751,000

Economic Development Agency of Canada for the Regions of Quebec

Vote 55—Operating expenditures ...... $30,036,000

Vote 60—Grants and contributions ...... $169,833,000

Enterprise Cape Breton Corporation

Vote 65—Payments to the Enterprise Cape Breton Corporation ...... $10,536,000

National Research Council of Canada

Vote 70—Operating expenditures ...... $264,139,000

Vote 75—Capital expenditures ...... $38,776,000

Vote 80—Grants and contributions ...... $136,302,000

Natural Sciences and Engineering Research Council

Vote 85—Operating expenditures ...... $19,786,000

Vote 90—Grants ...... $527,573,000

Social Sciences and Humanities Research Council

Vote 95—Operating expenditures ...... $8,542,000

Vote 100—Grants ...... $112,042,000

Standards Council of Canada

Vote 105—Payments to the Standards Council of Canada ...... $5,266,000

Statistics Canada

Vote 110—Program expenditures ...... $351,691,000

Western Economic Diversification

Vote 115—Operating expenditures ...... $36,778,000

Vote 120—Grants and contributions ...... $130,612,000

(Votes 1 to 120 inclusive agreed to on division)

The Chair: Mr. McTeague, you have a second motion.

Mr. Dan McTeague: I further move that the chair be instructed to report to the House of Commons the main estimates on Industry for the fiscal year ending March 31, 2001, at the earliest convenience.

(Motion agreed to on division)

The Chair: Thank you.

The meeting is adjourned.