INST Committee Meeting

37th PARLIAMENT, 2nd SESSION

Standing Committee on Industry, Science and Technology

EVIDENCE

CONTENTS

Monday, March 31, 2003

¹

1530

The Chair (Mr. Walt Lastewka (St. Catharines, Lib.))

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.)

¹

1535

The Chair

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance)

Mr. Dan McTeague

¹

1540

Mr. James Rajotte

Mr. Dan McTeague

¹

1545

The Chair

Mr. Geoffrey Kieley (Committee Researcher)

The Chair

Mr. Serge Marcil (Beauharnois—Salaberry, Lib.)

M. Dan McTeague

Mr. Serge Marcil

M. Dan McTeague

¹

1550

Mr. Serge Marcil

The Chair

Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ)

¹

1555

M. Dan McTeague

The Chair

Mr. Stéphane Bergeron

M. Dan McTeague

Mr. Stéphane Bergeron

M. Dan McTeague

Mr. Stéphane Bergeron

Mr. Dan McTeague

The Chair

Mr. Larry Bagnell (Yukon, Lib.)

Mr. Dan McTeague

º

1600

The Chair

Mr. Dan McTeague

Mr. Larry Bagnell

Mr. Dan McTeague

Mr. Larry Bagnell

Mr. Dan McTeague

Mr. Larry Bagnell

Mr. Dan McTeague

Mr. Larry Bagnell

Mr. Dan McTeague

Mr. Larry Bagnell

Mr. Dan McTeague

The Chair

Mr. Brian Masse (Windsor West, NDP)

Mr. Dan McTeague

º

1605

Mr. Brian Masse

The Chair

Mr. Brent St. Denis (Algoma—Manitoulin, Lib.)

Mr. Dan McTeague

Mr. Brent St. Denis

Mr. Dan McTeague

º

1610

Mr. Brent St. Denis

The Chair

Mr. Brent St. Denis

The Chair

Mr. Brent St. Denis

The Chair

Mr. Brent St. Denis

Mr. Dan McTeague

The Chair

Mr. André Bachand (Richmond—Arthabaska)

M. Dan McTeague

º

1615

Mr. André Bachand

M. Dan McTeague

Mr. André Bachand

M. Dan McTeague

Mr. André Bachand

M. Dan McTeague

The Chair

M. Dan McTeague

The Chair

Ms. Paddy Torsney (Burlington, Lib.)

The Chair

Ms. Paddy Torsney

The Chair

Mme Paddy Torsney

The Chair

Mr. Konrad von Finckenstein (Commissioner of Competition, Competition Bureau, Department of Industry)

º

1620

º

1625

º

1630

The Chair

Mr. Brian Fitzpatrick (Prince Albert, Canadian Alliance)

º

1635

Mr. Konrad von Finckenstein

Mr. Brian Fitzpatrick

The Chair

Mr. Larry Bagnell

Mr. Konrad von Finckenstein

º

1640

Mr. Larry Bagnell

Mr. Konrad von Finckenstein

Mr. Larry Bagnell

Mr. Konrad von Finckenstein

Mr. Larry Bagnell

The Chair

Mr. Brian Fitzpatrick

Mr. Konrad von Finckenstein

º

1645

The Chair

Mr. Brian Fitzpatrick

Mr. Konrad von Finckenstein

The Chair

Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.)

The Chair

Mr. Serge Marcil

M. Konrad von Finckenstein

Mr. Serge Marcil

The Chair

Mr. Dan McTeague

Mr. Konrad von Finckenstein

Mr. Gaston Jorré (Senior Deputy Commissioner of Competition, Mergers Branch, Competition Bureau, Department of Industry)

º

1650

Mr. Dan McTeague

Mr. Gaston Jorré

Mr. Dan McTeague

Mr. Konrad von Finckenstein

Mr. Dan McTeague

Mr. Konrad von Finckenstein

Mr. Dan McTeague

The Chair

Mr. Serge Marcil

º

1655

Mr. Gaston Jorré

Mr. Serge Marcil

The Chair

Mr. Brian Masse

Mr. Konrad von Finckenstein

Mr. Brian Masse

Mr. Konrad von Finckenstein

The Chair

Mr. André Bachand

The Chair

Ms. Judy Sgro (York West, Lib.)

Mr. Konrad von Finckenstein

Ms. Judy Sgro

Mr. Konrad von Finckenstein

»

1700

Ms. Judy Sgro

Mr. Peter Sagar (Deputy Commissioner of Competition, Competition Policy Branch, Department of Industry)

Ms. Judy Sgro

Mr. Peter Sagar

The Chair

Ms. Judy Sgro

The Chair

Ms. Judy Sgro

The Chair

Mr. Geoffrey Kieley

Mr. Konrad von Finckenstein

The Chair

Mr. Konrad von Finckenstein

The Chair

Mr. Dan McTeague

The Chair

Mr. Dan McTeague

»

1705

The Chair

Mr. Dan McTeague

Mr. Stéphane Bergeron

The Chair

Mr. Stéphane Bergeron

The Chair

Mr. Stéphane Bergeron

Mr. Dan McTeague

The Chair

Mr. James Rajotte

The Chair

Mr. Dan McTeague

The Chair

Mr. Stéphane Bergeron

The Chair

Mr. André Bachand

The Chair

Mr. Dan McTeague

Mr. André Bachand

The Chair

Mr. Dan McTeague

The Chair

Mr. Dan McTeague

The Chair

Mr. Serge Marcil

The Chair

Mr. Larry Bagnell

The Chair

»

1710

Mr. Serge Marcil

The Chair

Mr. Serge Marcil

The Chair

Mr. Stéphane Bergeron

The Chair

Mr. Serge Marcil

Mr. Stéphane Bergeron

Mr. Serge Marcil

The Chair

Mr. James Rajotte

Mr. Serge Marcil

The Chair

»

1715

The Chair

---

CANADA

Standing Committee on Industry, Science and Technology

---

NUMBER 033

l

2nd SESSION

l

37th PARLIAMENT

---

EVIDENCE

Monday, March 31, 2003

[Recorded by Electronic Apparatus]

¹  (1530)  

[English]

    The Chair (Mr. Walt Lastewka (St. Catharines, Lib.)): I call this meeting to order. Pursuant to Standing Order 108(2), we are meeting to consider Bill C-249, an act to amend the Competition Act.

    Although the time shows 3:30 to 4:30, we have two motions, which we'll deal with at 5 o'clock. I'm cutting out 15 minutes in each of the two segments in order to be fair to the two witnesses, Mr. McTeague, from 3:30 until 4:15, and then Mr. Konrad von Finckenstein, Commissioner of Competition, from 4:15 to 5 o'clock.

    We'll begin with a presentation by Mr. McTeague.

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

    Merci mes collègues sur le comité.

    I don't know if I've ever been in this kind of position before where I've brought a bill before the committee on which I sit, but I know I'm in very good stead. Over the years members here will not be surprised that this is another bill dealing with the change to the Competition Act.

    Obviously, the bill has been around for some time. In the previous Parliament it was Bill C-248. It is now Bill C-249, introduced away back in February 2001.

    Colleagues, the bill was one of many areas that a group of Liberals have worked on, dealing not only with the gas industry but with competition in general. It was also timed with the Superior Propane case, which of course in August 2000 began meandering--I should say even before that, as early as summer of 1998--and making its way through all sorts of questions on subjects dealing with and pertaining to questions of market power and exclusivity.

    I will speak very specifically to the bill, and as you know, Chair, I have submitted an amendment to the bill. It's been some time, and I will speak to that in just a moment.

    Bill C-249 seeks to prevent the use of the efficiency defence as a means to obtain approval for a merger that in effect creates a monopoly or a near monopoly at the expense of consumers and at the expense of competition.

    In the case of the Superior/ICG Propane--a division of Petro-Canada--merger, the Competition Tribunal should never have accepted the use of the efficiency defence by the parties. It clearly was inappropriate for the tribunal to approve a merger that gives one company as much as 70% to 80% national dominance over the propane industries and, by all accounts, a virtual monopoly with anti-competitive harms in a number of regions of the country.

    My sense, Mr. Chair, is that we need to modernize and strengthen the Competition Act concerning efficiencies by amending the conditions by which the defence can be used to obtain a merger approval. Guidelines for the use of this defence must be clear and concise in order to ensure that any merger approved using the efficiency defence is not--and I emphasize should not--be detrimental to the level of competition in the marketplace and to consumers. The efficiency defence cannot be used to obtain approval for a merger that would provide a new entity with complete market dominance or that would otherwise severely restrict competition or place smaller competitors at the mercy of a new dominant entity. Consumers, of course, would have no recognizable benefit.

    To this, I point out to all of you the intent and the purpose of the Competition Act, which is found in section 1.1:

The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices.

    It is with this in mind, Chair, that Bill C-249 has, as its source, the understanding that certainly in light of the Superior Propane case that test has been seriously and very credibly challenged.

    As the Federal Court of Appeal eventually upheld the Competition Tribunal's initial ruling in favour of the Superior merger based on efficiencies, it is now more important than ever to clarify the use of the defence and to set out clear guidelines to prevent it from being used simply as a tool to acquire merger approval.

    I want to point out, Chair, that in terms of what I'm suggesting as far as an amendment, which I believe the clerk has provided to all sitting members of the standing committee, and which I will read in just a moment, the bill as amended ensures that the Competition Tribunal will determine if the proposed merger prevents or lessens or is likely to prevent or lessen competition substantially. The tribunal may consider as well the factors outlined in section 93 of the Competition Act and determine if the gains in efficiency will provide benefits to consumers, including competitive prices or product choices that would not be obtained if the merger did not take place.

    Chair, in consideration of this, I wish also to table the amendment to Bill C-249, consideration in gains of efficiency.

¹  (1535)  

    As opposed to changing subsections 96(3) and 96(4), as the original bill had intended, it in fact changes within the same area subsection 96(1), and it reads as follows:

96.(1) In determining for the purpose of section 92, whether or not a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially, the Tribunal shall, together with the factors that may be considered by the Tribunal under section 93, have regard to whether the merger or proposed merger has brought about or is likely to bring about gains in efficiency that will provide benefits to consumers, including competitive prices or product choices, that would not likely be attained in the absence of the merger or proposed merger.

    Mr. Chair, I know that many of us have spent a considerable amount of time on the issue of competition. We have certainly spent time in the areas of activities that we would find loathsome. The honourable member for the Bloc Québécois

[Translation]

the Member for Verchères--Les-Patriotes, Mr. Bergeron, is well aware of the shortcomings of the Competition Act when it comes to collusion; we were preparing to take a closer look at these issues. But in the meantime, we should not be putting ourselves in a position where for the first time, we would come up against case law, with the Superior Propane case, a very well known case, where the efficiency defence could be used to seriously lessen competition or harm consumers.

[English]

    If we are so concerned about section 45, and so many other sections of competition as they eclipse the likelihood and the ability for people to have effective choices that are consistent with the purpose of the act, then it is my belief and my intention to see that the efficiencies defence in this legislation and through this legislation as amended is qualified sufficiently to provide the tests that have been set out in the act.

    Chair, I have only a few brief comments that I could add to this, and I would certainly appreciate doing this with colleagues here. I think most have had ample time to at least look at the bill. If there are any questions with respect to the amendment after this, that's sufficient. I am basically seeking the guidance of all members in terms of ensuring that we have it right and that we do not subject consumers or the competitive process in this country to a very nimble yet very dangerous precedent in terms of establishing a merger or defence in a merger that can bring us to a near monopoly, which runs contrary to the public interest.

    With that, I thank you, Mr. Chair.

    The Chair: Okay.

    Mr. Rajotte.

    Mr. James Rajotte (Edmonton Southwest, Canadian Alliance): Thank you, Mr. Chairman, and thank you, Mr. McTeague, for your presentation.

    It's funny, I didn't know you were interested in competition after all these years.

    I have received your amendment to your bill, and I would like to touch upon the Superior Propane case, because obviously that's the most prominent one you're mentioning here. But I think all of us as parliamentarians certainly find the efficiency defence complicated, and it is certainly a complicated one to prove.

    In this particular case it took four years to sort out, and there were different decisions from different courts. There were certainly different viewpoints expressed by you and I think the competition commissioner and at least one of the courts. I guess my first question would be with respect to the current regulations and law. Has the merger review process itself become dysfunctional?

    Mr. Dan McTeague: It's a very good question, Mr. Rajotte.

    I don't think we've had enough time to assess the impacts that now lie in the future in the wake of the Superior Propane case, but I think it's fairly clear that when the tribunal set aside and said they had no concerns, or that even if an efficiency defence would lead to a merger--admitting, of course, by a two to one decision in both the original decision in 2000 and the redetermination that efficiencies could be used to justify using the total surplus standard--we now have a very serious problem on our hands in terms of how the tribunal defines efficiency, notwithstanding what the Federal Court of Appeal had to say and notwithstanding what appeared to me long before the tribunal or the case was brought before the tribunal by evidence of the fact that I brought this bill before the House on February 7, 2000.

    It seemed to me striking that in fact that section of the act appeared a whole lot more like a blueprint for the monopolization of the country based merely on a request. And I'm not being trite or simplistic, but it appears to me that the concerns I originally raised, Mr. Rajotte, in that timeframe, well before the first decision of the tribunal, and which I've stated in public areas, certainly on CTV or Canada A.M., take your pick, have now, and certainly in light of this decision, become very real.

    I note the comments by McFetridge to suggest that the defence itself, as a result of the Superior Propane case, will now in effect become standard, and that one would expect that as a result of this precedent there may very well be others who will be asking for the same kind of efficiencies defence, which is harmful to consumers and will raise the price to those who use the product, customers or consumers, and this may also have the unenviable outcome of reducing competition, for instance in Atlantic Canada, to the point where it will prevent competition. There will be no opportunity to re-enter the market.

    So do I believe the decision, or the section itself, is dysfunctional? Yes. Will the decisions in the future fall or stand based on Superior? I think they will. And I'm not looking to throw the baby out with the bathwater. This is why the amendment tries to capture and direct the tribunal, in the absence of what they've not been able to do so far, to consider all the factors listed in section 93.

    Mr. Rajotte, I know you have more questions. I'll list those a little later on with another question perhaps.

¹  (1540)  

    Mr. James Rajotte: One of our precautionary notes about this bill, and the amendment, would be a concern that we are setting up the competition commissioner and we are giving him in a sense too much authority and purview in this area. Particularly when you have words such as “social benefits” and “costs of a merger”, and you're weighing this versus the efficiency, and you're redefining efficiency, I think some people would certainly be concerned as to who is defining, and how they are defining, the social benefits and the costs of a merger. Do you think the competition commissioner should be the one--I suspect you would say yes, but is this one person, or is a small group of people, well enough equipped to interpret the balance of social benefits and costs of a merger, and then how do we weight that versus obvious certain economic efficiencies that would happen, which Superior was obviously arguing in their case?

    Mr. Dan McTeague: I think before we get to that point, Mr. Rajotte, we should look at some of the comments back in 1986 when the bill was amended. Some of the comments did suggest that in order for Canada to bulk up, in order for us to get a larger slice of the pie, Canada should accept a degree, a modicum, of competitive harm in exchange for allowing companies to bulk up so that they could compete internationally. That was an idea very much based, on my recollection, on the reading of the Macdonald commission, but that too was 17 years ago and the economy has changed.

    More important, though, before the commissioner has an opportunity to give an opinion on how to interpret--and I submit that the discretion is still left with the tribunal within the confines of what we say is good merger policy--Parliament should also give its definition. I doubt Parliament would ever have considered yielding to someone a claim as spurious, and I don't say this with any malice or forethought, and I say so respectfully.... But if you are going to give to a particular constituency massive powers that make it almost impossible to recover competitive forces, or juices, that once existed, the first thing we ought to consider is whether it is in the broader public interest. I don't mean social public interest. Defining the public interest, in my view, is very much eminently within the capacity of Parliament to act.

    It's one thing to say we were concerned about section 96 as it related several months ago, or several years ago, but we now have proof that it will be used in a certain way, with certain criteria, to negatively impact consumers. By all accounts, the trade-off that was used in terms of the tribunal's own methodology suggested a $29 million net gain of efficiencies over 10 years, but a $48 million loss to consumers--$48 million a year. That's not chump change, and I suspect that, as parliamentarians, we have to make sure there is a balance, on the one hand, to ensure that there is a promotion of efficiencies, but not at the expense of the competitive process or consumers. Unfortunately, the case with Superior is a textbook example of what happens when Parliament doesn't provide enough oversight over a period of time over a very important piece of legislation.

¹  (1545)  

    The Chair: Thank you, Mr. Rajotte.

    I apologize, I meant to ask our lawyer, just for clarity, what the amendment does to the motion, and I forgot to do that.

    Mr. Kieley.

    Mr. Geoffrey Kieley (Committee Researcher): I'm sure Mr. McTeague will correct me if I've misinterpreted his amendments.

    Briefly, the way the efficiencies defence works now under section 96, for the committee's information, is if a merger is determined by the tribunal to result in a substantial lessening of competition and it is an anti-competitive merger, normally that merger would be blocked. The efficiencies defence dictates that where you have efficiencies that outweigh the anti-competitive effect of the merger, the merger is allowed to go ahead. That is the way the efficiency defence currently works.

    Mr. McTeague's amendment, as I understand it, will take out the consideration of efficiencies. It will basically remove the full efficiencies defence from the act so that efficiencies will now be just another factor that the tribunal will consider when it's determining the competitive effects of a merger.

    The Chair: Mr. Marcil

[Translation]

    Mr. Serge Marcil (Beauharnois—Salaberry, Lib.): Thank you very much, Mr. Chairman. First of all, it is pretty clear that our colleague, Mr. McTeague, has done some pretty bold work here, which required many hours of research, to say the least.

    I have two questions. First of all, when you proposed this amendment to the Department of Industry, in the form of Bill C-249, did you have any discussion with the Department as to how this would apply?

    M. Dan McTeague: No. I did not have an opportunity to discuss this with the Department. However, this is clearly an issue I have commented on a number of times, and over a period of two years, there have been two, even three ministers in that portfolio. I believe this began when Minister Manley was still responsible for the Department, before Mr. Tobin took his place.

    I think that for us, as Members of Parliament, the timing of this is advantageous in that a ruling has already been handed down in this area. Over time, we have developed an understanding of this issue. I relied on the comments and resources that were available.

    Of course, there is a lot to be done. There are two specific areas. First, the legislation itself and, of course, the position taken by lawyers, consumers and economists as well. This is a very difficult issue, but I should draw your attention to the fact that this defence, in its present form, does not exist anywhere else in the world. In other countries we have researched--and I do hope that Mr. Ross will be able to appear before the Committee--we have found many examples of exceptions to the efficiency defence, and those exceptions generally favour consumers or are intended to ensure that illegal mergers cannot occur, but that at the same time, this argument can be used to obtain something indirectly. That is why we are having so much trouble getting a clear understanding of the situation. The fact is this is not really an issue anywhere else.

    Mr. Serge Marcil: And in the Superior Propane case, how would the amendment in Bill C-249 have applied?

    M. Dan McTeague: In the Superior Propane case, the amendment would have forced the Tribunal to consider other existing conditions, fairly important conditions, and to have regard to the impact on the economy as a whole. The barriers could be there initially in the market as defined at the outset, in order to remove… If the merger was expected to result in the removal of a vigourous and effective competitor, the Tribunal would be forced to consider that before looking at it in economic terms. Basically there are ten or more factors to consider, but the most important thing is that any factor should be considered that relates to competition in a given market or that will be affected by a “de-merger”.

    So, I think the amendment will obviously result in these factors being considered, rather than saying that there are efficiency gains exist and that they exist as an exception to competition. The two have to be considered together, and that is really the basic purpose of my amendment.

¹  (1550)  

    Mr. Serge Marcil: Thank you, Mr. Chairman.

[English]

    The Chair: Mr. Bergeron, welcome back to the committee.

[Translation]

    Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ): Thank you, Mr. Chairman. I want to say right off the bat that I am very pleased to be with you again. I find myself in the company of many colleagues who have been opponents on certain issues but have, for the most part, been excellent collaborators on other issues and who, in any case, have always been, and always will be, friends. So, I am extremely pleased to be back here again.

    To begin with, I would like to extend a warm welcome to our witness, the Vice-Chairman of the Industry, Science and Technology Committee. I want to thank you for your very kind words, but I do think you have been modest about your own accomplishments, because of the 301 current Members of the House of Commons, you, who appear before us today as a witness, are the one with the greatest expertise on all things involving competition. I want to thank you for all the work you have done over many years on issues related to competition.

    Having said that, my colleagues, Mr. Marcil and Ms. Jennings, won't, I hope, be too upset with me--since this really has nothing to do with me--if we talk briefly today about de-mergers. I would like to make one comment and then ask a question.

    As for the comment, my colleagues here on the Committee will certainly not be surprised to hear me make it. This is a side of me--my pickiness about French translations--for which they have particular fondness. I just would like to draw the Vice-Chairman's attention to the fact that in the summary of his Bill, the French translation is grammatically incorrect in the last line, where it states : “... si une position dominante dans un marché serait créée ou renforcée. » As they used to tell us in grade school, the word “si“ should never be found anywhere near a word ending in “rais”. So, it should read instead “ ... si une position dominante dans un marché était créée ou renforcée“. There will obviously be a need to make that change at the appropriate time and inform the appropriate authorities.  

    Now, to my question. Having read the amendment you have tabled which, I presume, will be part of the clause-by-clause consideration of this Bill, although I am not too sure when it will be considered, my understanding is that consideration of efficiency gains for the purposes of an order by the Competition Tribunal can occur either at the time the merger takes place or after the fact.

    I refer here to sub-section 1(5) of the Bill :

(5) This section does not apply where, after the transaction has been completed, the merger or proposed merger, will result or is likely to result in the creation or strengthening of a dominant market position.

    Clearly, the purpose of this Bill is to ensure that efficiency gains do not affect competition and particularly do not affect what I would call consumer rights.

    Having said that, if we were to realize after the fact that efficiency gains had had a negative impact on the Competition Act or, rather, on competition itself, or on the benefits for consumers, what kind of corrective action would be possible, other than a “de-merger“ order, in the absence of what might be called a preemptive order? Let's just use that term for the sake of argument. Since we've been talking about “preemptive attacks“ in the current debate on Iraq, let's call this a “preemptive order“.

¹  (1555)  

    M. Dan McTeague: When the subject turns to international affairs, something on which I generally prefer not to comment, then I am forced to depart the familiar territory of the Competition Act. In any case, Mr. Bergeron, I want to thank you for those comments and for drawing my attention to a grammatical error. Although my French is not that good, I did understand the essential point you were raising. Thank you very much.

    The reason for including Sub-clause 1(5) has to do not only with issues in other sections of the legislation but also a legal matter. If, by some chance, a transaction were to be completed that created a monopoly, or if one party had tremendous power in a given market, it would be extremely difficult, without actually asking Parliament to legislate, to go back in time to remove that monopoly or divide up the affected market.

    So, I do not believe that if we end up in a situation such as the one I explained here… Let me read it to you:

[English]

This section does not apply where, after the transaction has been completed, the merger or proposed merger, will result or is likely to result in the creation or strengthening of a dominant market position.

[Translation]

    What that means is that such a situation could arise under certain conditions, but I have removed it. That amendment, that would be desirable in such a context, no longer needs to be examined, because it is not part of the new amendment I brought forward today.

[English]

    The Chair: You have less than one minute, so be short on the question and be short on the answer.

[Translation]

    Mr. Stéphane Bergeron: I'm sorry, Mr. McTeague, but I am not sure I really understood your answer to my question, in the sense that you simply read the relevant wording in English, where it states that this section does not apply to a merger that has already been completed. Is that right?

    M. Dan McTeague: Yes.

    Mr. Stéphane Bergeron: And yet, if I look at your amendment to Sub-section 96(1) you say : “In determining for the purpose of Section 92, whether or not a merger or a proposed merger…“, and then in Sub-clause 1(5), you say : “This section does not apply where, after the transaction has been completed, the merger…“

    So, that means that an assessment has to be made after the merger transaction has been completed.

    M. Dan McTeague: It's important to understand, Mr. Bergeron--and I will give you a very quick explanation--that the merger has, for one reason or another, already been approved. It exists, it is acceptable, and it is legal. It just isn't possible, two, three, four or five years after the fact, to say : well, we realize we made a mistake, and now we have to go back. That would be unfair to the company. It is clear that this has to be done when someone requests approval of a merger. That's why we say that the time to do that is when the application is filed. That forces the parties--both the Competition Bureau and the Tribunal--to review the situation when the application comes forward, rather than four or five years later, when they suddenly realize that there are too many monopolies.

    Mr. Stéphane Bergeron: At that point, nothing can be done about them.

    Mr. Dan McTeague: Yes, exactly.

[English]

    The Chair: Thank you very much.

    Mr. Bagnell, you have six minutes.

    Mr. Larry Bagnell (Yukon, Lib.): Thank you, Mr. Chair.

    I'm delighted to be able to grill my colleague as he has grilled other witnesses who have come before us, and I want to add my confidence in his expertise as the member of Parliament who has the most expertise in this area. I have some questions.

    I want to make sure that the three things that will be added are all still there: subsection 96(1) and then proposed subsections (4) and (5). So 96(1) doesn't take away anything from the bill?

    Mr. Dan McTeague: Let me be very clear on this. In this section, the current wording under Bill C-249 has been replaced entirely with a new consideration of gains in efficiency, which is only what I've read in determining for the purpose of section 92, whether or not a merger...and it ends with “merger or proposed merger”, which I believe was sent to your office Friday. So we are only dealing with section 96(1).

    The other previous sections I was dealing with in section 96, that is (4) and (5), are no longer applicable. There is no need for those, because I replaced it with a different model.

º  (1600)  

    The Chair: We are dealing with the amended motion.

    Mr. Dan McTeague: Correct. I'm quite willing to speak on why I've done that, or more importantly, Mr. Bagnell, if what we're looking for here is to understand why I introduced those under Bill C-248 two years ago, it was done in a rather hurried fashion, but it was there to respond to what was a dramatic event with respect to Superior Propane.

    Mr. Larry Bagnell: I just want to make sure I am right about what we're considering. In Bill C-249 we have proposed subsections 96(4) and (5).

    Mr. Dan McTeague: You should put aside all of Bill C-249, which I have proposed, and deal with my proposed amendment.

    Mr. Larry Bagnell: Okay.

    Mr. Dan McTeague: Mr. Bagnell, if I could, we've learned a lot in the past two years. It's taken me awhile to come down and craft this, but we've come up with something that would provide more of scope to what I'm trying to achieve.

    Mr. Larry Bagnell: Okay. So my reading of the amendment is that it appears, on the surface, to be less strong than proposed subsections 96(4) and (5). Is that your reading?

    Mr. Dan McTeague: Proposed subsections 96(4) and (5) will no longer be there, Mr. Bagnell.

    Mr. Larry Bagnell: No, I'm saying this is a less strong option.

    Mr. Dan McTeague: What this does, because we've had the advantage of the Superior case.... A lot of the material has suggested that one of the things we should try to zero in on is to ensure that the tribunal be confined, corralled, or directed towards a series of factors that it must consider, as opposed to finding its own reasons for making a determination. For instance, it must consider competitive prices at the end. You can't just have a merger that will create a monopoly, increasing prices for people, and say, “Gee, that's efficient”. It may be efficient in the hypothetical sense: “I'm two companies. We're the only ones in business. I've shut your bottling operation down”--or whatever the case may be--“and made $60 million. But I pass on price increases of $80 million to consumers. Obviously, my shareholders are going to be happy.” It's a transfer of wealth from consumers to shareholders by the use of monopoly power, which was never Parliament's intention.

    It also suggests that they should consider what impact this will have on product choices. And it also suggests that this will actually provide a true benefit, or some form of benefit, to consumers. The amendment gives consideration to a measured benefit, which is what I've tried to do with it--to give light as to why you'd use an efficiency defence. This is consistent with all of our trading partners.

    Mr. Larry Bagnell: I'm in 100% agreement with what you're doing. I'm just wondering if it's strong enough. How is anyone going to police the fact that...? You're likely to have lower prices, but once you get into this more monopolistic position, are you really going to? If you've passed the test--which you are likely to do--set by some independent board, which has no control over your company, and you now have more of a monopoly, what's to stop you in the future from just raising prices or eliminating products?

    Mr. Dan McTeague: That's exactly it. I'm confined by what I can do in 1996. I can't go to 1992 and change that, even though I think there are some considerations there.

    I don't want Mr. Rajotte or anybody else to be upset with me that I'm going to try to do another sortie into competition. I think many of us are happy to move on to the next line of recommendations.

    But where the bureau determines that there has been a substantial lessening of competition.... As you saw in the Superior case, where an anti-competitive decision was made or harm was recognized, they said, “Look, we recognize that this is going to be damaging to competition”--and in some parts of the country the competition will never come back, such as in Atlantic Canada--“and notwithstanding the fact that consumers are going to face higher prices, we found this model or very important economic abstract going back to 1968, the Kaldor-Hicks model, and all of these other wonderful ideas....”

    I can see Dan Shaw, the researcher, rolling his eyes and thinking, “I'm going to get you”.

    The bottom line, Mr. Bagnell, is that we've tried to find a solution that makes everybody happy while bringing us into line with our international competitors.

    The Chair: Thank you, Mr. Bagnell.

    Mr. Masse, please be specific in your questions.

    Mr. Brian Masse (Windsor West, NDP): Thank you, Mr. Chairman.

    I would like to expand upon replacing proposed subsections 96(4) and (5) with this subsection. I don't have the history of those subsections and what their changes do.

    Second, do you have an example of another country where similar amendments have been made, and whether or not they are specifically related to an improvement for consumers?

    Mr. Dan McTeague: First of all, proposed subsection 96(4) of the old bill basically said that any gain in efficiency could not offset the effects. To read subsection 96(1), it says basically, and I quote:

The Tribunal shall not make an order under section 92 if it finds that the merger or proposed merger in respect of which the application is made has brought about or is likely to bring about gains in efficiency that will be greater than, and will offset, the effects of any prevention or lessening of competition that will result or is likely to result from the merger or proposed merger and that the gains in efficiency would not likely be attained if the order were made.

    All I said is that's not fair. You're basically saying if you can find some form of efficiency, why not tell consumers you're going to pay higher prices? No one wants monopoly prices. We all know the effect of that. In effect, this gives a pass.

    Although it had not been tested for almost 15 years, by the time it came into effect, when it did get tested it had ironically the predictable effect that a lot of people thought it would. Consumers would not enjoy the benefits, but the company was able to make an argument purely on what they knew was the total surplus standard. Setting certain things aside, the effects would be minimal, compared to the amount of efficiency within the companies.

    When you have two companies that have 40%, 50% of the market each coming together and you create this monolith, then you have a very serious problem.

    As for international examples, there are plenty. Some of these are identified here. Although there are talks of change, the Australian and U.K. examples are still based on...and I will in fact quote directly from the white paper, that the “consumer benefits” are “lower prices, or greater innovation, choice or quality of products or services” that materialize within a certain period of time.

    In the United States, if no efficiencies or benefits to the consumer can be found and competition is harmed, the agreement will be challenged as a per se illegal.... On that point, Mr. Pitofsky will have probably more to say if he's invited, because you must establish a certain test. Benefits to consumers arising in such agreements can include the reduction in prices, expanding output, enhanced quality. And it must be of course verifiable.

    In other words, you have to be able to prove, if you're going to do this efficiency, and notwithstanding the fact that it's harmful, that it's going to affect consumers positively. You can't find some hypothetical argument or debate that you would have in some Socratic institution and say, well, on paper this should work, when in fact I think the common view on the street is that it would not work. It's certainly punitive to consumers.

    Admittedly, the tribunal did right in suggesting as it did in this case.

    Mr. Chair, I will leave off with this. It would be likely, as a result of the Superior Propane case, to raise prices by 8% or more, or at least $43 million per year, primarily to small business and to lower income and rural Canadians whose demand for natural gas to heat and cool their homes is relatively inelastic.

º  (1605)  

    Mr. Brian Masse: Thank you.

    That's all my questions, Mr. Chair.

    The Chair: Thank you.

    Mr. St. Denis.

    Mr. Brent St. Denis (Algoma—Manitoulin, Lib.): Thank you, Mr. Chair.

    Thank you, Dan, for your initiative. As all members are, I am a fan of private members bills. That is not to suggest that every one should be passed or that this one shouldn't be.

    Mr. Dan McTeague: I've been down that road.

    Mr. Brent St. Denis: Very few of them get to the end of the road.

    My question, Dan, is for those members of the committee who haven't been here going back to the beginnings of this, including myself. I understand in your answer to Larry Bagnell that basically we're to substitute this amendment for the bill. Did I hear that correctly?

    Mr. Dan McTeague: Correct.

    Mr. Brent St. Denis: How big an adjustment in our thinking are you asking us to make?

    In all the previous thinking about the way it was, how big of a turn is this?

    Start with that, in as common language as you can manage, because I have another couple of questions.

    Mr. Dan McTeague: That's a good question. There was a turn, and it was a turn towards some balancing of both sides. In my first version it said you couldn't have an efficiency unless consumers were the only ones who benefited. It basically said there would be no efficiency. There have been several comments by people who were in this business who understood that.

    I've had the benefit of the Superior Propane case and the analysis that was provided, thanks to this committee. Recommendation 8, I believe, Mr. Chair, that you presided over looked at efficiencies and it gave us a relative comparison on what's going on around the world.

    And there is an argument for efficiencies. If the product of efficiencies can be better innovation, better product choice, or even demonstrate that perhaps in some way, because of the nature of the market in which the efficiency is being claimed, it's very easy to become a new entrant into the market, there's no doubt that we had to find a balance. Rather than reinventing the wheel, I went to the factors that already existed that the tribunal appeared to set aside in the Superior Propane case that exist in section 93. But there's an easier argument as well.

    Propane in your riding, Mr. St. Denis, is extremely important. Despite the decision that there are other alternatives of fuel by which people could heat their homes or farmers in the prairies could dry their crops, the reality is that burning wood isn't exactly a very environmental let alone practical way of keeping your operation going.

    This has tried to give some balance. I'm looking to the committee also to make its comments. I certainly don't etch these in stone, and I believe there is perhaps an opportunity for us, if we're going to look at what is existing in the act, to work out the wording. The direction I'm taking, I think, is the correct one, which is to prod that balance.

º  (1610)  

    Mr. Brent St. Denis: Lest we confuse things, is the committee being asked to look at three ultimate options, the amendment, the original bill, or doing nothing, a choice among three things? Or, in your mind, are we dropping the bill itself? We have a choice among the two of doing nothing or doing the amendment.

    The Chair: Well, for clarification, we're working on the amendment.

    Mr. Brent St. Denis: Suppose the amendment does not find favour with the committee. Are we going back to the bill?

    The Chair: No.

    Mr. Brent St. Denis: So the committee has to decide between doing nothing or doing the amendment.

    The Chair: It's exactly what Mr. McTeague explained earlier.

    Mr. Brent St. Denis: Okay. I want to clarify that. I ask this quite naively and innocently for your own protection. If it's a big change, then is it in order? If it's a small change, then presumably it's in order. I was wondering whether it has been tested for it being in order.

    I tried to change a motion once and they said, no way, you can't, because it wasn't in order. So for your own protection, I want to know about that.

    Mr. Dan McTeague: Mr. St. Denis, I've been down this road before with bills that were not in order. I've passed a few with the help of other members here, Madam Jennings and others.

    The section that is opened up by the bill is in fact section 96. As long as it's within the bill, and it does purposely deal with the same notional change to efficiencies, it is certainly in keeping...and I don't think there would be a challenge.

    My simple and very humble response to this is to provide you with the context for a problem that in two years has become eminently obvious to all and for which a solution must be found. Or the defence, or in this case the precedent of Superior Propane, as McFetridge and the others have pointed out, may very well be used in the not too distant future to obtain monopolies that are dangerous or otherwise illegal and that could have harmful impacts on the bottom line of the productivity of our nation.

    The Chair: Thank you very much.

    Mr. Bachand.

[Translation]

    Mr. André Bachand (Richmond—Arthabaska): Thank you very much, Mr. Chairman.

    As my colleague from the Bloc québécois was saying, you are indeed the expert on this, something which I definitely am not. So, I'm learning.

    I have two very quick questions for you. Since I do not have the good fortune to be a lawyer, I do not necessarily understand the wording of the amendment, or even of certain sections of the Act. A little while ago, we were joking about Air Canada; I'll come back to that later. So, once a merger has taken place, you can't go back in time. Because of legal constraints, it is impossible to make an act apply retroactively.

    What does “the merger“ refer to in relation to the amendment?

    M. Dan McTeague: A merger that has already taken place will not be affected by the amendment in any way. Neither the Bill nor this particular section contains a clause that would make them retroactive. I believe there is also a matter of constitutionality involved here. I don't think anyone would like to be subject to that.

    It's just that someone applying for approval of a merger has to go through the Competition Bureau, unless the value is below a certain threshold. If we're talking about two companies that build houses whose business is worth less than $100,000 per year, for example, then that is not considered to be a merger. That is simply seen as a business agreement. But when a proposed merger affects 35 per cent of the market, generally the guidelines established under the Competition Act, which appear in the summary, set out a number of steps where, if something can be considered anti-competitive, the Competition Bureau gets involved. If the Competition Bureau finds that the proposed merger would have a negative impact on competition and on the competition process in general, then it can file an objection with the Competition Tribunal, which can then get involved under Sections 100 to 110 of the Act, if I'm not mistaken.

º  (1615)  

    Mr. André Bachand: So, in actual fact, the merger referred to here is not something that occurred a number of years ago; it is still in the process of being approved, if I understand the wording here.

    M. Dan McTeague: Yes, that's correct.

    Mr. André Bachand : But this doesn't apply. And yet, this a very serious matter. Air Canada, for example, with your amendment…

    M. Dan McTeague: …would not be affected by it.

    Mr. André Bachand: No, but I would like to know what would have happened. Let's go back in time. I'm a visual person, and I want to try and understand what is at issue here. We're not talking about a catch-22 situation. I'm not expert on competition, but what do you think the impact of this amendment would have been on Air Canada or even another industry, just so that we can get a clear understanding of what this means?

    M. Dan McTeague: If it is a regulated industry, it is not affected by the Competition Act. Section 94 does create an exception for mergers under a specific section of the Canada Transportation Act. So, that is an exception to the rule.

    You may recall that in 1998 or 1999, if I'm not mistaken, when there was discussion of a potential merger of Canadian Airlines and Air Canada, the Competition Bureau did not become directly involved. Instead, it was up to the Minister of Transport to monitor competition in his specific area of responsibility. This is something that is regulated and that we cannot touch. The same applies to pharmaceutical patents; that is another example.

[English]

    The Chair: We're going beyond the limit.

[Translation]

    M. Dan McTeague: This Bill cannot apply to issues that are beyond the scope of what is provided for in the legislation. Thank you.

[English]

    The Chair: Thank you very much.

    We'll now take a 30-second recess to change witnesses. Then we'll go on to the second part.

    Ms. Paddy Torsney (Burlington, Lib.): Before you break, could we deal with the motions Mr. McTeague has brought before this committee to change what this committee agreed to last Wednesday? Some of us have other meetings to get to. Since this is his issue and he's brought forward these amendments, it seems only fair to take time out of his agenda.

    It's the normal practice to do the motions at the beginning of the meeting. Some of us came here to do that.

    The Chair: Do I have unanimous consent?

    Ms. Paddy Torsney: The witness was originally scheduled for 4:30, so we can get the motion done by 4:30.

    The Chair: Yes? No?

[Translation]

    Mme Paddy Torsney: Mr. Bergeron, the witness was scheduled for 4 :30.

[English]

    The Chair: Mr. von Finckenstein, we'd ask you to begin your presentation.

    Mr. Konrad von Finckenstein (Commissioner of Competition, Competition Bureau, Department of Industry): Thank you, Mr. Chairman.

    I have with me two of my colleagues. Gaston Jorré is a senior deputy on mergers and Peter Sagar is a deputy commissioner of policy.

    It's always a pleasure to come to talk to you about competition policy. I'm pleased to be here to comment on Bill C-249.

º  (1620)  

[Translation]

    I would like to take this opportunity to thank the Committee for its excellent work in studying competition policy in Canada, and especially for its recent report on modernizing Canada's competition regime. The next round of competition law amendments will follow closely on the Committee's recommendations and ensure that the Bureau has the tools to effectively enforce and administer the Act.

    As you know, the Competition Bureau promotes and maintains fair competition so that Canadians can benefit from lower prices, product choice and quality services. Our work benefits consumers and contributes to a healthy and robust economy. The Competition Act plays a vital role in this process.

[English]

     Bill C-249 is consistent with these objectives. The bill seeks to ensure that consumers are not left out of the equation when considering mergers involving efficiency claims. It would also safeguard competition to the benefit of consumers and the economy.

    Before addressing the bill itself, I would like to provide some brief context on merger review in Canada.

    I apologize, Mr. Chairman, that my remarks are somewhat long, but this is a complicated subject, and I really can't do it more quickly.

    In general, mergers are viewed positively as one of the core business strategies to increased competitiveness. However, the bureau pays close attention to mergers that would substantially prevent or lessen competition in the relevant markets.

    In reviewing mergers, we consider many different elements, including the level of economic concentration in the relevant industry and the market shares of the merging parties. The bureau also considers such factors as whether foreign competition will provide effective competition in the relevant market; whether one of the merging parties is a failing firm; the extent to which acceptable substitute products or services are available; the existence and effects of any barriers to entry; the extent of remaining competition in the relevant markets; whether the merger would remove a vigorous and effective competitor; and the role of innovation in the relevant market. We look at all of these factors.

    After considering such factors, the bureau decides if it will challenge the merger or allow it to proceed. We do not prohibit mergers; we actually go to court and ask the court to stop the merger.

    In most cases, when we have a competition concern regarding a transaction, we're able to remedy the problem by working with the parties. Merging parties will often present a modified proposal. If they choose to proceed with the merger despite our objection, we will then challenge it before the Competition Tribunal. It's then up to the Competition Tribunal to decide the matter.

    During tribunal proceedings, merging parties may then raise the so-called efficiency defence under section 96 of the Competition Act. To successfully argue such a defence, the parties must persuade the tribunal that the merger will generate efficiencies that are greater than and offset the anti-competitive effects of the merger. The key words are “greater than and offset”.

    Since 1998, the Competition Bureau has reviewed over 1,300 proposals. In most of the cases where we had concerns, we were able to resolve the issues without the need for litigation. Only a handful of transactions led to fully litigated proceedings. One such case was the merger between Superior Propane and ICG Propane.

[Translation]

    We challenged the proposed merger because it would result in a substantial lessening and prevention of competition in numerous markets across the country. As well, it would lead to the creation of monopolies or near monopolies in 16 local markets, and would give Superior a national market share of 70 per cent. The Tribunal unanimously agreed with our assessment. However, the merger was allowed to proceed because the Tribunal concluded that the efficiencies outweighed the anti-competitive effects.

[English]

    As an aside, it is really timely that we're discussing efficiencies today, because the bureau has decided not to appeal the Federal Court's latest decision in the propane case. As I speak, an information notice will be issued today. After extensive litigation--four litigated cases or proceedings--we are of the view that further litigation would not have clarified sufficiently the defence. Only a legislative solution is workable.

    It's not my intention to go into the details of the propane case. However, I will say that the outcome is unacceptable from a policy point of view, for two reasons. One, an anti-competitive merger will survive if it generates sufficient efficiencies--even if it results in substantial harm to consumers. Take, for example, rural households in the Yukon. These households will now be hostage to a monopoly supplier to heat their homes. Natural gas and heating oil are not acceptable alternatives for these propane customers.

    My second objection is that the interpretation given to section 96 means that the Competition Act condones the creation of monopolies. In our view, it is a perverse result if the application of the Competition Act results in the sanctioning of the creation of a monopoly. Clearly, the act is there to create competition, not to create monopolies.

    However, efficiencies are always an important element of a successful economy. They are best realized through a competitive market, which achieves not just efficiencies but also provides choice and innovation. We must favour a competitive economy that expands opportunities for Canadian participation in world markets.

    As for Bill C-249, when the act was amended in 1986, Parliament was seized by the report of the Royal Commission on the Economic Union and Development Prospects for Canada, the Macdonald Commission, which, among other things, noted the urgency of opening up Canadian markets and freeing up Canadian industry to compete internationally. At that time, there was widespread recognition that Canadian firms faced a daunting challenge in adapting to a new competitive world, and the Competition Act discussions reflected this view. You can see this clearly in section 96, which not only speaks of efficiency but also emphasizes in subsection 96(2) the importance of gains in exports and import substitution.

º  (1625)  

[Translation]

    But Canada's economy has changed significantly since 1986, due to globalization, the FTA and NAFTA. Today's economy is knowledge-driven and dynamic. We have a vastly different perspective on the importance of competition as the driving force behind development.

    But we have a law that has not changed and which is leading to results that are inconsistent with the new reality.

    Bill C-249 would limit the application of the efficiency exception to ensure that consumers benefit from gains in efficiency. This means that efficiencies could never be used to save a merger that resulted in the elimination of competition altogether.

[English]

    I'm aware that an amendment to Bill C-249 was recently proposed by the sponsoring member. As I understand it, this amendment would replace existing subsection 96(1) by the following wording:

In determining for the purpose of section 92 whether or not a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially, the Tribunal shall, together with the factors that may be considered by the Tribunal under section 93, have regard to whether the merger or proposed merger has brought about or is likely to bring about gains in efficiency that will provide benefits to consumers, including competitive prices or product choices, that would not likely be attained in the absence of the merger or proposed merger.

    As you can see, clearly, in lieu of having a trade-off between efficiencies and anti-competitive effects, efficiencies would be considered as part of the overall assessment of the merger. The amendment would ensure that the Competition Tribunal will have regard to efficiencies only when there's a net benefit to consumers through competitive prices or product choices and only when such efficiencies would not likely be attained in the absence of the merger.

    Bill C-249 in its present form and the proposed amendment are consistent with the treatment of efficiencies in other jurisdictions. This is particularly important in a multi-jurisdictional context because divergence in merger review can adversely affect the ability of firms to compete internationally. In the U.S., competition policy serves the interest of consumers. Therefore, claims of efficiencies may only be taken into account if they do not result in higher prices to consumers. In the U.K., a new law, which will come into force shortly, will allow the Office of Fair Trading to take into account clear and quantifiable claims of efficiencies only in mergers where the consumer will benefit from lower prices, greater innovation, and greater choice. These two countries consider efficiencies as part of the lessening of competition test, which would also be the case in Canada with the proposed changes to Bill C-249.

    You will find additional information on the treatment of efficiencies in other jurisdictions in the independent study the government commissioned for you as part of its response to the committee's eighth report. That study is also available on our website.

    In principle, Bill C-249 as is, subject to some refinement in language, is a workable alternative to the status quo. I enclose as annex 1 a possible revision of Bill C-249 reflecting such necessary refinements. So you have the option of basically sticking to Bill C-249 as is with the language slightly refined as set out in annex 1. However, while this is a workable model, I prefer the approach presented in the amendment to Bill C-249 proposed by the sponsoring member, which I just read out to you, because it strikes a better balance between protecting the interest of consumers and the importance of efficiencies in a merger review. As such it is complementary to the evaluative criteria of section 93 and is fully consistent with the objectives of the Competition Act. It also brings the treatment of efficiencies in Canada closer to that of our international counterparts.

    If the committee would permit, I would propose two very technical changes to the amendment to Bill C-249 as proposed by the sponsoring member to make it more consistent with the language of section 93 and so that the French and English versions say the same thing. I would suggest that in the English version you change the word “shall” in line 3 to “may” and add the word “and” in line 6 before the word “that”. That makes the English and French versions similar. Similarly, in the French version I would suggest that you change the word “doit” to “peut” in line 3.

º  (1630)  

[Translation]

    In closing, I would reiterate that Section 96 of the Competition Act needs to be fixed to bring about clarity on how efficiency should be considered, to provide Canadians with merger review provisions comparable to the provisions observed at an international level, and to safeguard consumers from non competitive price increases, loss of choice and quality that result from monopolies.

[English]

    Thank you, Mr. Chairman. I'm ready to answer your questions.

    The Chair: Mr. Fitzpatrick, you have five minutes.

    Mr. Brian Fitzpatrick (Prince Albert, Canadian Alliance): I have a couple of preliminary comments. It seems that only in a country like Canada do we see a lot of value in monopolies and concentration of power and can come up with arguments of efficiency and social value from these things. I guess Karl Marx and some of his ideas are still alive and well in this world in 2003.

    The efficiency games argument...I guess I'm not an economist and I have difficulty with it--

    A voice: I think Karl Marx was one.

    Mr. Brian Fitzpatrick: --but in the market it seems to me the best argument for the efficient use of capital and all the other factors is a competitive marketplace, where if you do it wrong and you're inefficient, you're going out of business and your competitor is going to do very well.

    Given that background, I'm wondering, with the tribunal and your merger approach and so on, aren't you in a way trying to divide up the market and decide who the winners and losers are in the marketplace, getting into things of fairness?

    My own view is that in the market system, if you get too big you become inefficient, you become bloated, and somebody is going to knock you down. If you think of GM, IBM, Xerox, there's a whole list of them that were in that category, and it wasn't competition bureaus that knocked them down; it was the market that eventually brought them down a notch or two.

    I'm wondering if that's right, if that's the proper role of the Competition Bureau on mergers, trying to figure out how the pie is divided.

    A second question, given this Superior Propane process, is this. Has this whole process become dysfunctional anyway, based on this Superior Propane outcome and four years of proceedings?

º  (1635)  

    Mr. Konrad von Finckenstein: First of all, nobody has the kind of efficiency test that we have in section 96. The theoretical basis of it is quite logical. If you put two companies together and you create efficiencies, it may be that the unit price of your product becomes so low it actually makes sense for you to lower your prices because you soon will sell more and increase your profit.

    Technically, logically, you can see there could be cases where the idea of putting two companies together could lead to lower prices. I say technically and hypothetically, but practically, I think you put your finger on it. What happens is whenever you allow the creation of a monopoly or a near monopoly, there is no longer a push to be efficient and companies grow slack and become inefficient, etc.

    You characterize our job as dividing the pie. That's not at all our job. Our job is to make sure there is a competitive market and let the market decide who are winners and who are losers. That's exactly what we are trying to do. That's why when two companies try to merge and they have too much market power, they get a dominant position, and then we step in and say no, that cannot or may not happen.

    That's what we tried to do in Superior. We succeeded in convincing the court and everybody that, yes, this case would result in a substantial lessening of competition. That normally would be the end, because this was one of the rare cases where they invoked the efficiency defence. We fought it and we argued about how to calculate it and whether the efficiencies outweighed and offset the anti-competitive effect. In our view, it clearly did not. In the view of the tribunal it did, so they won.

    We then went on appeal. The court said they were the wrong tests and suggested the tests should be differently applied. We went back and they were applied differently. It came up with the same result. We thought they had misinterpreted. We went to the court of appeal. The court of appeal again said no, that's the right way.

    I'm just saying, let's stop litigating this. This is so difficult to apply, and it's conceptually, in our view, wrong. It's much better to have a test, as Bill C-249 suggests, where it says you will only allow it where there is a net benefit to the consumer, where the benefits flow through. And the second part of C-249 says, where you don't create a monopoly.

    Mr. Brian Fitzpatrick: How would you police that?

    The Chair: Thanks very much, Mr. Fitzpatrick.

    Mr. Bagnell.

    Mr. Larry Bagnell: It's nice to see you again, Konrad. We've been working together for 20 years or so, and I'm delighted that you support this bill. I just have a couple of questions.

    First of all, I'm delighted you brought up the Yukon example because it shows you exactly what's wrong with the present act. Because of Superior Propane we now have a monopoly in the Yukon. There are many off-road cabins and places that obviously don't have access to natural gas or even oil. They don't have many choices, and now they're held hostage by a monopoly. There's nothing to stop exceptionally high prices. They've had large increases in price, so obviously they are victims of this. I know you and we fought against that and we lost. So as you said, we need a legislative change.

    Would the present amended procedure by Mr. Dan McTeague and/or the one before the amendment, the first proposal, have led to a different result in the Superior Propane case, or at least helped the situation?

    Mr. Konrad von Finckenstein: Absolutely. The act as originally proposed in proposed subsection 96(5) clearly does not allow for the creation of a monopoly or a near monopoly, so in the Yukon you would not have been able to complete this merger.

    The revised amendments say don't do it, which is don't do it after you've found a substantial lessening of competition. Do it when you do the original analysis and look at everything, which will determine the efficiencies and the sorts of positive things they throw into the mix. Taking your example of the Yukon, where this merger would have resulted in a complete monopoly, the fact that there were some efficiencies would not have been enough to allow the merger to proceed in the Yukon. Either solution wouldn't work.

º  (1640)  

    Mr. Larry Bagnell: Great. So you can actually break it down. If companies are national in scope, you can actually prohibit them from joining in one small section of the country like the Yukon.

    Mr. Konrad von Finckenstein: The last decision of the Federal Court had a vigorous dissent. The judge there made exactly this point and said you should have gone market by market, and in those markets where there was a monopoly or near monopoly you should have said no. In the others where there was competition left, albeit relatively small competition, you might have let it go ahead. That is one way the tribunal could have decided this case. It decided not to go that way.

    Mr. Larry Bagnell: So that's a great precedent for the consumer.

    Mr. Konrad von Finckenstein: It was a dissent, so the majority didn't rule that way, but clearly the judge had a great deal of trouble with the same thing I have trouble with. If you use the Competition Act to create a monopoly, to judicially sanction it, that's not the right way. It seems to me the act is exactly designed to do the opposite. It's supposed to maintain and encourage competition, not destroy competition.

    Mr. Larry Bagnell: That's great. I'm glad we're looking more and more at specific markets, because the small markets in the north, rural Canada, and perhaps even in the east and the west are going to be lost in the big picture of consumers if you just do it in one huge market--and even in the majority of consumers. So I'm delighted this will be so much help, because it has been very hard on the consumers in the Yukon.

    I can see, in lots of other mergers, where the same thing would come up, and in small distant markets or rural subsections like that we would have a very hard time fighting it if it wasn't for this change.

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

    Mr. Fitzpatrick.

    Mr. Brian Fitzpatrick: I have one follow-up question. If this efficiency argument is permitted--I guess it is permitted with Superior Propane--if you can make the case that somehow this is of benefit to the consumer and good for society and all that, what kind of policing mechanism is in place to review this and come back at it if we don't get all these alleged benefits?

    I think it's easy to make the argument in a vacuum that all these benefits will flow from this merger and everybody is going to gain from it, but experience shows that a lot of mergers fail in that mission and don't work out that way. All you have to do is look at the wreckage on Wall Street in the last five or six years to see a lot of merger disasters. How do we deal with that if there is no real benefit out of it? How do we revisit it?

    Mr. Konrad von Finckenstein: Well, that's always been why we've had so many problems with it, going on the assumption that the merger will occur, will be successful, and will generate those efficiencies. If it doesn't, then you have allowed the creation of a merger that is anti-competitive on its face. The court found it anti-competitive, and the so-called offsetting efficiencies never result.

    You can also have the efficiency result, but what if the company, let's say for argument's sake, is foreign owned? Then you have an anti-competitive merger, you have an increase in prices in Canada, but the benefits flow to shareholders who don't live in Canada and who don't necessarily reinvest them in the economy. So the grand economic argument, which is that a dollar is a dollar and these efficiencies will find their way into the economy and create jobs in a plant somewhere else, doesn't necessarily apply.

    There are all sorts of problems with section 96 as it is right now. That's why I think the amendment proposed, which suggests you shouldn't look at efficiencies as something that counters and trumps anti-competitive effects, is right. You shouldn't look at it that way. Look at efficiencies as one of the many factors of concern.

    That's why I took some time at the outset and mentioned eight factors we look at for whether to approve a merger or not. And we basically say, as a ninth one, look at what it does in terms of efficiency. There you would do exactly what you suggest. How likely is this merger to succeed? What's the record in this industry and with these people, etc.? That would be clearly one very important consideration.

º  (1645)  

    The Chair: Mr. Fitzpatrick.

    Mr. Brian Fitzpatrick: I just have one last comment. We've had lots of mergers in another industry, the airline industry, and I think I saw somebody who analyzed the mergers in the United States. Out of 18 or 19 mergers in the airline industry, he said the verdict is in on them, and 18 of them were utter failures. I was just thinking of the merger we had in Canada, and I suppose somebody made all these efficiency arguments at that time: we'll bring these things together, we have a monopoly, and everything's going to work out great. But look at where we're at today.

    Mr. Konrad von Finckenstein: The efficiency arguments are not raised that often. They are only raised in cases such as this, where you really have something that is at first blush anti-competitive, and you are bringing in the efficiency to somehow put a positive spin on it and show that there may be some gains that may be realized but that are not obvious at first glance.

    But you're right, the majority of mergers are not successful. In recent studies by the FTC, for instance, data has shown that.

    The Chair: Thank you, Mr. Fitzpatrick.

    Ms. Jennings.

    Mrs. Marlene Jennings (Notre-Dame-de-Grâce—Lachine, Lib.): Oui, Mr. Chair.

    The member on the opposite side asked the question I wanted, so I'm fine.

    The Chair: Mr. Marcil.

[Translation]

    Mr. Serge Marcil: Thank you very much, Mr. Chairman.

    The change you are proposing to the French version, or even the English version, of Sub-section 96(1) involves replacing the word “doit” by the word “peut” at line 3.

    Why are you requesting this change? Does the word “doit” necessarily mean that it's an obligation? The word “peut” means that it is not necessarily an obligation, so it could be yes or no, although there would have to be a legal reason.

    M. Konrad von Finckenstein: Yes, absolutely. If you look at Section 93 of the current Act, it uses the word “peut” or “may”, as in “... the Tribunal may have regard to the following factors,” and then you have the list from (a) to (h). The suggested change would add efficiency gains to that list of factors.

    For consistency with Section 93, the wording should be “peut” rather than “doit”.

[English]

    Mr. Serge Marcil: Merci beaucoup. Thank you, Mr. Chairman.

    The Chair: Mr. McTeague.

    Mr. Dan McTeague: Thank you, Commissioner, for appearing here. I thank you not just because of the comments you had to make here but because I know this has been a very long process for you.

    Before I get to the question of the suggested changes in language you proposed, I'm wondering if you might be able to illustrate for the committee any potential for the use of the precedent that was set in Superior. I realize there are a number of calculations that were used, economic models. Some of us are familiar with many of those models, but given that you have in essence a defence for efficiency that may be harmful, do you foresee the same precedent being used as a result of a Superior in future cases?

    Mr. Konrad von Finckenstein: That's one of our fears, that you will be able to use the efficiency as a defence in industries where you only have two or three players left, where we already have a situation that is less than desirable, and those would be the cases of established, mature industries.

    My colleague Mr. Jorré, who runs the merger section, can probably give you some better examples.

    Gaston.

    Mr. Gaston Jorré (Senior Deputy Commissioner of Competition, Mergers Branch, Competition Bureau, Department of Industry): I'm not sure I want to talk about any specific industry. They may, after all, be coming before us. But certainly, as the commissioner indicated, with those where you already have a very high degree of concentration and where the conditions are right--because you actually have to go through all this evidence to determine what the efficiencies are and what the anti-competitive effects are--there is a distinct risk that there are other industries where, when you add it all up, if Superior Propane were followed again, you could have situations leading to a quite anti-competitive transaction being approved. That's not good for customers and consumers, so it's a distinct fear.

º  (1650)  

    Mr. Dan McTeague: Commissioner, Mr. Jorré, Mr. Sagar, given that there has been no consideration or weight attached to the prospect of a transfer in the scenario of Superior Propane from consumers, in essence, to shareholders, has it come to light at all or has anybody discussed what happens when some of those shareholders happen to be foreign entities in terms of transferring from consumers wealth that exists or companies that may simply transfer the effect of the efficiency into another nation, particularly any one of the nations of--take your pick--Australia, the U.K., the United States, where such an efficiency would never be allowed under such circumstances? Has this been raised at all in some of the casework?

    Mr. Gaston Jorré: No, it has not come up, and indeed the current test, as elaborated in Superior Propane, is neutral in terms of who the shareholders are.

    I might add that there was a very small consideration of the wealth transfer in the final decision, but only a very small weight was attributed to it, which did not have any effect on the ultimate result.

    Mr. Dan McTeague: I see.

    Mr. Konrad von Finckenstein: You're aware that when you administer the Competition Act and you apply it, we do not look at ownership or something like that. We look at the competition and how it works and what is the effect of it on the Canadian market. Whether a firm is Canadian or foreign-owned is totally irrelevant.

    But as I mentioned in my opening remarks or in answer to the question, it does become somewhat relevant when you look at an efficiency defence, the way it works in section 96 right now.

    Mr. Dan McTeague: I have a question with respect to your proposed changes on the question of “may”. In the English version, you recommend changing the word “shall” in line 3 to “may”.

    I realize that kind of wording may be consistent with section 93, “Factors to be considered regarding prevention or lessening of competition”, and in my book here, it may be a little old, but the word “may” seems to allow significant latitude to the tribunal indeed not to consider these factors. Therefore, we wind up with the same problem we have, as an example, where consumers frankly didn't get any shrift at all in Superior.

    Could you explain to me why the word “may” should be there, as opposed to “shall”? It almost defeats the purpose and allows latitude to the tribunal basically to say, we really don't have to consider the factors on which so much of the balancing of interests seems to hinge.

    Mr. Konrad von Finckenstein: Well, if you put it to “shall”, as you have it in your draft, it means that in every case you have to look into efficiencies. The tribunal has to consider efficiencies whether they want to or not, whether they were led by the other party or not. Since most cases don't involve efficiencies, that doesn't make sense.

    Section 93 now says, here are the factors; you may consider them. It's obviously then up to us, challenging the merger, to lead evidence on whatever factors are relevant and for the other party to leave counter-evidence.

    If there is an efficiency case to be made with the other side, we will undoubtedly lead it, and we will try to point out why the efficiencies are material or not. It is the proper thing to come up with, but it depends on what the parties bring before the tribunal.

    If you put in the word “shall”, as you have, it is automatically part of every challenged merger. I don't think that is the intent you had in mind. You want to ensure that the tribunal would look at these things in context, and I think the amendment will do that, if you change the word “shall” to “may”.

    Mr. Dan McTeague: I was convinced the word was significant, so I thank you for pointing that out.

    I was also concerned about the word “may” in section 93 for the simple reason that...but that would, of course, require another private member's bill. I'm not going to burden this committee yet again. My role as vice-chair may be nasty, brutish, and short as a result.

    Mr. Chair, I understand Mr. Marcil has a question, and I would gladly defer to him for a moment.

    The Chair: Your time was almost up anyway.

[Translation]

    Mr. Serge Marcil: Thank you, Mr. Chairman.

    I want to come back to the issue I raised earlier. In Section 93, it says: “The Tribunal may have regard to the following factors”, and then there is a series of factors listed, meaning that it can consider some of these factors, or all of these factors, or not consider any of them.

    In the Superior Propane case, if it had said, instead of “may”, “…the Tribunal shall have regard to the following factors…”, do you think--I realize this is a hypothetical question--that the Competition Tribunal's findings would have been different?

º  (1655)  

    Mr. Gaston Jorré: Because the evidence and the purported reasoning of the Competition Tribunal and the Court of Appeal would have been the same, I don't see how the outcome could have been any different. The primary effect of saying “shall” would be that even in cases where parties to the transaction did not raise the efficiency argument, that factor would still have to be considered. It is much simpler to say “may”, because then this would only apply in cases where this defence is used.

    Mr. Serge Marcil: Thank you for that clarification.

[English]

    The Chair: All right.

    Mr. Masse.

    Mr. Brian Masse: Just to make sure it's clear, the only danger I see with that is it opens up the possibility for...or could it be possible, for example, with Superior Propane, to dismiss the “may” and say, well, we had the option and we chose not to, so we're not accountable? We don't have to answer why. Is that going to be possible?

    Mr. Konrad von Finckenstein: When you have a case argued before a tribunal, one side leads evidence and the other one leads counter-evidence. The judgment of the tribunal then deals with what it thinks are pertinent facts of pertinent arguments. It can choose to disregard some of them. It is unlikely it would have done that in a case like Superior Propane, where everything hinged on efficiency, and a huge number of witnesses and evidence was led on the efficiency.

    You cannot bind a tribunal. When you say “may”, obviously they may disregard it. On the other hand, if you say “shall”, it just means they have to look at it. It doesn't mean they have to look at it in a specific way.

    The real point is what Gaston just said right now, which is that it means in every single case you would have to look at efficiency even though neither party wanted to and neither party led evidence to it, and that really would be a waste of tribunal time.

    Mr. Brian Masse: I haven't been to any of the tribunals before, so that's why I'm asking, to be sure. It still sounds like it's possible, but it's highly unlikely, provided there's a substantial case that is brought forth by....

    Mr. Konrad von Finckenstein: Yes.

    The Chair: Mr. Bachand, did you have any comment?

[Translation]

    Mr. André Bachand: No, thank you.

[English]

    The Chair: Ms. Srgo.

    Ms. Judy Sgro (York West, Lib.): Thank you. I'm sorry I'm just getting back at the end of this, but I've been following it, needless to say.

    When you talk about the resources it has taken to deal with Superior Propane.... I assume that you, like everyone else, do not have an endless amount of resources for this kind of work, and the length of time...it's taken two years, hasn't it, to deal with this particular one?

    Mr. Konrad von Finckenstein: More than that, yes.

    Ms. Judy Sgro: So how do you see this happening in the future, being able to deal with these things, having sufficient resources to manage? That would be the reason not to go forward; there would just be too many resources that you would require.

    Mr. Konrad von Finckenstein: Those are two very good points.

    We are under-resourced. You know that. I've said it before this committee. This committee endorsed it in its last report. We don't have the means to do our job properly. That's pretty clear. Hopefully, one of these days the issue will be resolved, and I appreciate any support the bureau can get from this committee.

    That being said, like any law enforcement agency you have to prioritize and you allot your resources in accordance with what you think is important. We felt the efficiency clarification was exceedingly important, and letting the creation of a monopoly occur through a perverse application, in our view, of section 96 was something worth fighting for. So we had four contested proceedings on it.

    We lost, and it's clear to us that the way we read the section and the way we think it should be applied is not what the court has held. So be it. The court has ruled, so we will do what the court says. That leaves the option to the government to change the law if it agrees with the bureau that this is not a desirable result, and hopefully that will happen.

    But in our view, cases like Superior Propane are precedential cases. They have to be fought, and we will find the resources necessary to do it, because it's very important that these issues be clarified.

»  (1700)  

    Ms. Judy Sgro: Do any of your colleagues have anything to add to that?

    Mr. Peter Sagar (Deputy Commissioner of Competition, Competition Policy Branch, Department of Industry): I think cases like Superior raise such enormous resource costs for the bureau in establishing the precedents, just the econometrics alone that we have to form, the outside experts we have to hire, outside legal counsel. It also imposes a fairly significant dead-weight burden on the economy, because Superior had to fight back with their own. This is wonderful for the bar, and I have many friends in the bar association and love them all dearly, but it's probably not the best use of our resources or theirs.

    I think the clarification of this act that comes about with the amendment will help enormously in not having to fight these cases ad nauseam on very technical econometric bases. It's a good move in that regard.

    Ms. Judy Sgro: So you are supportive of the amendment and the interventions here.

    Mr. Peter Sagar: Yes.

    The Chair: Thank you, Ms. Sgro.

    Ms. Judy Sgro: Am I out of time?

    The Chair: Yes, you had five minutes, plus we covered that one item already.

    Ms. Judy Sgro: My apologies.

    The Chair: We'll have one short question, 30 seconds, from the legal researcher and a short answer, and then we'll suspend.

    Mr. Geoffrey Kieley: Commissioner, it has been suggested by some that by moving the consideration of efficiencies from section 96 to section 93, we imply a qualitative analysis. Will the analysis remain quantitative, on efficiencies?

    Mr. Konrad von Finckenstein: The wording that was being proposed suggests that you look at efficiencies, and I can't see that you would look at efficiencies other than quantitatively. You try to determine whether there are efficiencies generated, and then you have to look at whether they will be passed on to consumers in terms of low prices.

    That clause involves a whole set of assumptions, but it is still a logical, rational argument. It's not a qualitative argument.

    The Chair: Again, thank you very much for appearing before the industry committee. I'm sure we'll be back to you if there are any questions.

    Mr. Konrad von Finckenstein: Thank you.

    The Chair: We'll go into the final portion of today's meeting, and that's the motions.

    We have a motion by Mr. McTeague.

    I would ask you to comment on it quickly.

    Mr. Dan McTeague: Thank you, Mr. Chair.

    Last week I believe the committee came to an unfortunate conclusion in a debate over prioritization of the schedule. It would appear again that the subject that this committee agreed, in May of last year, to discuss immediately on its earliest opportunity, the issue of automatic injunctions, was defeated last November. It was raised again a week later and resurrected, and again last week knocked down to a period of time that the automatic injunction consideration could not take place until some point in June--everyone having the expectation that at some point we will not be here.

    Whatever the motivation, I propose the following motion, and in the context of discussion with many members around this table--well, not every member; in fact, a lot of different members--we discussed the possibility of providing what I believe to be an accommodation.

    I will read the motion, and I will ask Mr. Marcil to provide the amendment or the proposal of not reviewing witnesses, but allowing three days in which I propose to do the following through this motion: On April 29, or a date that is convenient to this committee--I'm looking to Mr. Rajotte on this--Industry Canada; April 30, Health Canada; and Thursday, May 1, in camera. There will be no witnesses at that point. The committee could then discuss what it has heard from both these organizations, which would be, at the very minimum, an opportunity simply to review what we've heard in terms of a growing concern that, by all evidence, is showing that consumers are losing hundreds of millions of dollars every year as a result of something Parliament may or may not have intended to pass. So it is with this that I provide the following motion:

That the House of Commons Standing Committee on Industry, Science and Technology review the automatic injunction notice of compliance regulations under the Patent Act, at its earliest opportunity.

    I'm sorry, that's the incorrect version. There was a date on that. So I would propose that the date of “earliest opportunity” be April 29.

    The Chair: That's your understanding, that it would be April 29, April 30, and May 1--

    Mr. Dan McTeague: Correct.

»  (1705)  

    The Chair: --with the understanding that on April 29 we'd have Health Canada, to hear their point of view; April 30, Industry Canada, to hear their point of view; and May 1, in camera.

    Mr. Bergeron.

    Mr. Dan McTeague: May 1 will be in camera.

[Translation]

    Mr. Stéphane Bergeron: Mr. Chairman, with all due respect to Mr. McTeague, it would appear that the motion he is moving now is not the one that was tabled with the appropriate 48 hours' notice. So, I would ask that we limit ourselves to the motion that was tabled with 48 hours' notice and which does not specify a date.

[English]

    The Chair: Do you have the motion of Thursday, March 27, in front of you?

    Mr. Stéphane Bergeron: Yes.

    The Chair: Is your proposal not to accept his amendment?

[Translation]

    Mr. Stéphane Bergeron: My proposal, Mr. Chairman, is that in accordance with the Committee's rules, we consider the motion that was tabled with 48 hours' notice--in other words, the motion dated March 27, rather than the one Mr. McTeague has just brought forward.

[English]

    Mr. Dan McTeague: Mr. Chair, I'm quite willing to accept that.

    I'm simply providing for Mr. Bergeron, and members of his party who clearly don't want to study this any time soon, the following.... At his earliest opportunity, I'm quite willing to discuss those dates. I know Mr. Rajotte may also see those dates as conflicting with the study on Kyoto. I'm prepared to see some flexibility on that as well.

    The Chair: Okay. Are there any further questions or comments?

    Mr. James Rajotte: Does he amend an order or not, Mr. Chair? I think that question was posed by Mr. Bergeron.

    And did Mr. McTeague move the amendment?

    The Chair: Well, the earliest opportunity is....

    Mr. Dan McTeague: I'm going to leave “earliest opportunity” with the proposal. I wanted to put on record the dates, but I am willing to do other dates.

    The Chair: We're doing Bill C-249 now, and we've allocated those days.... This week and next week is--

    Mr. Stéphane Bergeron: Yes, but he dropped his amendment.

    The Chair: Let me finish. I don't want to get into a debate.

    We have Bill C-249 and our final report, which will be done this week and next week. We then have the two weeks of recess. After that, the first opportunity we will have to study anything starts on the 29th and the 30th. And now we have the Kyoto Protocol.

    The amendment was to have the earliest opportunity, which would be the 29th and 30th.

    Mr. André Bachand: No.

    The Chair: That's how the amendment or motion reads.

    Mr. Dan McTeague: I'm sorry, Mr. Chair, I have a point of order. It states “The committee commences consideration....”

[Translation]

    Mr. André Bachand: I just have one comment to make, Mr. Chairman. My reading of this…because last week, we passed a motion with a specific schedule. So, the motion with the schedule takes precedence.

    What this motion says is that we will do our best to get this done. But last week, we passed a motion with a clear schedule; so it seems to me that this one does not take precedence because there is no date specified.

[English]

    The Chair: What is your point of order?

    Mr. Dan McTeague: My motion duly tabled on March 27 reads: “The committee commence its consideration immediately after its study of Bill C-249”.

    The Chair: All right. Does everybody have that motion?

[Translation]

    Mr. Dan McTeague: “The Committee commences its consideration immediately after its study of Bill C-249.”

    It's written there in black and white.

[English]

    The Chair: So the motion is in order, and the earliest convenience is after Bill C-249. That's what I understand the motion to be.

[Translation]

    Mr. Serge Marcil: I have another point of order regarding Mr. Rajotte's question. Can a motion tabled with 48 hours' notice be amended? It was tabled previously, and today it is being dealt with. Can someone propose an amendment to it, or does that require unanimous consent?

[English]

    The Chair: Yes. The answer is yes, you can. We can vote on the amendment and then we can vote on the whole motion.

    Mr. Bagnell.

    Mr. Larry Bagnell: I was just going to say the same thing. Let's start the discussion on this motion, and then Marcil or someone can make an amendment.

    The Chair: So does everybody understand the motion on the floor? It's as written.

    Now is there an amendment to that motion?

    Mr. Marcil.

»  (1710)  

[Translation]

    Mr. Serge Marcil: Mr. Chairman, if we're going to vote on this motion moved by Mr. McTeague, I would like to suggest that before we do that, we change the title of the schedule proposed last week, because it is confusing.

    Second, we had agreed on a schedule whereby we were to meet with representatives of Health Canada, then the brand name companies and the generic companies. After that, we were scheduled to prepare our report, and that would be it.

    So, if we are going to accept this proposal, I would like it to be stated that we will limit ourselves to Health Canada and Industry Canada, and that after that, we will work in camera. At that point, we can decide what we want to do.

[English]

    The Chair: So your amendment is that we add to the motion. I take it that what you're saying is we have Health Canada on April 29, Industry Canada on April 30, and an in camera meeting by the committee on May 1. Is that your amendment?

[Translation]

    Mr. Serge Marcil : I would prefer that we meet with Industry Canada on April 29, and with Health Canada after that.

[English]

    The Chair: I'm just trying to get the notes so I don't make a mistake.

    Monsieur Bergeron.

[Translation]

    Mr. Stéphane Bergeron: Mr. Chairman, once again, with all due respect, my understanding is that Mr. Marcil has not actually moved an amendment, but rather expressed a wish, namely that once the motion has passed, we change the schedule so that, contrary to what was initially planned, we meet with Industry Canada and Health Canada, and then meet in camera to determine our next move.

    I believe, Mr. Chairman, once again with all due respect, that you responded to Mr. Marcil's comments by setting dates for the different meetings that could take place. But I believe he only expressed the desire that we set our schedule as he described, once the motion had passed.

[English]

    The Chair: Is that agreed?

[Translation]

    Mr. Serge Marcil: I don't want to contradict myself. I am moving an amendment.

    Mr. Stéphane Bergeron: And how would that amendment read?

    Mr. Serge Marcil: It would read as follows : That the Standing Committee on Industry, Science and Technology meet at its earliest opportunity, and that the Committee commence its consideration immediately after its study of Bill C-249, it being understood that the Committee will meet only with representatives from Industry Canada and Health Canada before continuing its workin camera.

[English]

    The Chair: Mr. Rajotte.

    Mr. James Rajotte: I have a question for Mr. Marcil.

    So if we accept that amendment, we cannot call witnesses such as the Patent Office before the committee to discuss this issue. Is that correct?

[Translation]

    Mr. Serge Marcil: What I have always objected to, from the very beginning, is that the way this was presented, it seemed like we were trying to pit one industry against the other. People are saying there is a problem. So, I believe that we should get those people here to convince us that there really is a problem, and those people are officials from Industry Canada and Health Canada.

    Once we've heard their comments, I think we should consider whether this matter is worth pursuing or whether a report to the Minister of Industry will suffice. If there really is an issue here, we will look at that together. I cannot simply assume that there is some reason to pursue this. I want to be sure that all Members have an opportunity to understand the issue. My impression is that there is currently quite a bit of confusion. If we decide to hear only from Industry Canada--because they do have things to tell us, it would seem--and Health Canada, then I think that we could decide together, at an in camera session, based on the analysis and information our researcher will have gathered with respect to their statements, whether we want to draft a report to the Minister or not. There may not be any real issue here. Some people are saying there is, but others don't agree. So, let's take a look at this. If there is no issue, we won't go any further than that, and if there is, we can always draft a report to the Minister.

    My view is that there is absolutely no point in inviting the representatives of competing industries to appear. We are already aware of their position, in one way or another. I know exactly what each of them is going to tell us.

[English]

    The Chair: Okay, is everybody clear on that?

    (Amendment negatived)

    (Motion agreed to)

»  (1715)  

    The Chair: Now we have Ms. Girard-Bujold's motion, but she's not here. So we will table that at another date.

    There being no further business, the meeting is adjourned.