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37th PARLIAMENT, 3rd SESSION

Standing Committee on Agriculture and Agri-Food

EVIDENCE

CONTENTS

Monday, February 16, 2004

1530

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.))

Ms. Sheridan Scott (Canada's Commissioner of Competition, Competition Bureau)

1535

The Chair

1540

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC)

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

Ms. Suzanne Legault (Assistant Deputy Commissioner, Legislative Affairs Division, Competition Bureau)

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

1545

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

The Chair

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ)

1550

Ms. Sheridan Scott

Mr. Richard Taylor (Assistant Deputy Commissioner of Competition, Criminal Matters Branch, Competition Bureau)

Mr. Louis Plamondon

Ms. Sheridan Scott

Mr. Louis Plamondon

Ms. Sheridan Scott

Mr. Louis Plamondon

1555

Ms. Sheridan Scott

Mr. Louis Plamondon

The Chair

Ms. Sheridan Scott

The Chair

Hon. Wayne Easter (Malpeque, Lib.)

Ms. Sheridan Scott

1600

Hon. Wayne Easter

Ms. Sheridan Scott

Mr. Richard Taylor

Hon. Wayne Easter

Ms. Sheridan Scott

The Chair

Mr. Dick Proctor (Palliser, NDP)

Ms. Sheridan Scott

1605

Mr. Richard Taylor

Mr. Dick Proctor

Ms. Sheridan Scott

Mr. Dick Proctor

Ms. Sheridan Scott

The Chair

Mr. Rick Casson (Lethbridge, CPC)

1610

Ms. Sheridan Scott

Mr. Rick Casson

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

The Chair

Hon. David Kilgour (Edmonton Southeast, Lib.)

1615

Ms. Sheridan Scott

Hon. David Kilgour

Ms. Sheridan Scott

Hon. David Kilgour

Ms. Sheridan Scott

Hon. David Kilgour

Ms. Sheridan Scott

Hon. David Kilgour

Ms. Sheridan Scott

Hon. David Kilgour

Ms. Sheridan Scott

Hon. David Kilgour

Ms. Sheridan Scott

Hon. David Kilgour

The Chair

Mr. Dick Proctor

Ms. Sheridan Scott

Mr. Richard Taylor

Mr. Dick Proctor

Mr. Richard Taylor

Mr. Dick Proctor

Mr. Richard Taylor

1620

Mr. Dick Proctor

Mr. Richard Taylor

Mr. Dick Proctor

Mr. Richard Taylor

Mr. Dick Proctor

Mr. Richard Taylor

Mr. Dick Proctor

Mr. Richard Taylor

Mr. Dick Proctor

Mr. Richard Taylor

The Chair

Mr. Garry Breitkreuz (Yorkton—Melville, CPC)

Ms. Sheridan Scott

1625

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Mr. Garry Breitkreuz

Ms. Sheridan Scott

Hon. David Kilgour

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

1630

The Chair

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.)

Ms. Sheridan Scott

Mr. Larry McCormick

Ms. Sheridan Scott

Mr. Larry McCormick

Ms. Sheridan Scott

Mr. Larry McCormick

The Chair

Mr. Larry McCormick

The Chair

Ms. Sheridan Scott

Mr. Larry McCormick

Ms. Sheridan Scott

Mr. Larry McCormick

1635

Ms. Sheridan Scott

The Chair

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.)

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

1640

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mr. Richard Taylor

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

The Chair

Ms. Sheridan Scott

The Chair

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

1645

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

Ms. Sheridan Scott

Mr. Gerry Ritz

Mr. Garry Breitkreuz

The Chair

Mr. Garry Breitkreuz

The Chair

Mr. Gilbert Barrette (Témiscamingue, Lib.)

Mr. Gilbert Barrette

The Chair

Ms. Sheridan Scott

1650

The Chair

Hon. David Kilgour

The Chair

Hon. David Kilgour

The Chair

Mr. Dick Proctor

Ms. Sheridan Scott

1655

Ms. Suzanne Legault

Mr. Dick Proctor

Ms. Suzanne Legault

Mr. Dick Proctor

Ms. Suzanne Legault

Mr. Dick Proctor

The Chair

Mr. Rick Casson

1700

Ms. Sheridan Scott

Mr. Rick Casson

Ms. Sheridan Scott

Mr. Rick Casson

Ms. Sheridan Scott

Mr. Rick Casson

Ms. Sheridan Scott

The Chair

Hon. David Kilgour

Ms. Sheridan Scott

The Chair

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

1705

Mrs. Rose-Marie Ur

Ms. Sheridan Scott

Mrs. Rose-Marie Ur

The Chair

Mr. Gilbert Barrette

Ms. Sheridan Scott

The Chair

Mr. Larry McCormick

Mr. Richard Taylor

Mr. Larry McCormick

Mr. Richard Taylor

Mr. Larry McCormick

1710

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

Ms. Suzanne Legault

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

The Chair

Ms. Sheridan Scott

1715

The Chair

CANADA

Standing Committee on Agriculture and Agri-Food

NUMBER 002

3rd SESSION

37th PARLIAMENT

EVIDENCE

Monday, February 16, 2004

[Recorded by Electronic Apparatus]

¹ (1530)

[English]

The Chair (Mr. Paul Steckle (Huron—Bruce, Lib.)): Ladies and gentlemen, we want to begin our meeting.

First of all, thank you to the members who have consented to work with this committee for another term. We don't know how long that term will be, but we'll work as long as we are given time to do so.

And we want to thank our witnesses. Today we have with us the people from the Competition Bureau. We have with us Sheridan Scott. I want to congratulate Sheridan, because she's our new commissioner. She was just brought in—your duties became effective January 12. We welcome you to this meeting. As our new commissioner, we welcome you to us as a body and to the Canadian people, who look forward to hearing what you have to say today and your responses.

She is our new Canadian Commissioner of Competition. We also have with us today Richard Taylor, the Assistant Deputy Commissioner of Competition, Criminal Matters Branch, and Suzanne Legault, Assistant Deputy Commissioner, Legislative Affairs Division.

Welcome. We want to hear from you today. We're going to give you whatever time is needed. Normally, we like to think, we keep the time limits to about 10 minutes.

Are all three of you speaking? Is that your intent? Or is it just one person speaking? We will give you a little more time, if you feel you need it, to bring information forward to this body.

The reason for coming here today, of course, has to do with the fact that we are looking at the whole BSE issue and the impact it has had on our farming community, particularly the beef industry, and how we feel the response of packers to the farmers, those in crisis, has not been what we feel is a fair response. We want today to be able to ask you some questions that may help us move in the direction where we can bring justice to this issue, because we feel there's a serious injustice taking place out in our rural communities.

We look forward to your information and your helping and enlightening us on this issue. We'll turn it over to you now, Ms. Scott, for your presentation.

Ms. Sheridan Scott (Canada's Commissioner of Competition, Competition Bureau): Thank you very much.

[Translation]

Thank you very much, Mr. Chairman and members of the committee, for having invited me here today. I welcome this opportunity to discuss the Competition Bureau's role with respect to the important issues facing the Canadian beef industry.

As you said, Mr. Chairman, joining me today are Richard Taylor, Assistant Deputy Commissioner of Competition, Criminal Matters Branch, and Suzanne Legault, Assistant Deputy Commissioner of Competition, Legislative Affairs Division.

I understand we have been invited here today to discuss your request that the Bureau conduct an investigation into the pricing of beef at the processing and retail levels, as specified in Recommendation 7 of the November 2003 Committee Report.

¹ (1535)

[English]

Having read the transcripts of your committee hearings as well as those of the recent special debate in the House of Commons, I can certainly understand your frustration about the difficult situation that is confronting our country. Canadian producers are suffering from the catastrophic results of the two BSE cases and the closing of the border. Canadian consumers are concerned about beef prices at the retail level, and many other sectors of the economy have been dramatically affected by the discovery of BSE in North America and the subsequent changes in the market.

Before I address the particular relevance of the Competition Act to these issues, allow me to say a few words about the legislation in general and the framework within which I operate.

The act's purpose is to maintain and encourage competition in Canada. The Competition Bureau's objective is to ensure a competitive marketplace that provides consumers with competitive prices and product choices. Our work promotes the efficiency and adaptability of the Canadian economy and allows small and medium-sized enterprises an equitable opportunity to participate in the economy.

This is a sizeable mandate. But the act does not give the commissioner unlimited powers. As commissioner I work within a very specific legal framework, which includes reviewing mergers and other agreements, acting to prevent abuse of dominance by firms that have significant market power, and preventing false and misleading advertising. Perhaps of greatest relevance to the questions raised by this committee, I have specific authority to pursue incidences of cartels in collusion; however, I should note that the act no longer authorizes the commissioner to conduct general inquiries into issues of competition in industries. Such a power has been proposed by the industry committee of the House, and the government has undertaken consultations with stakeholders on the proposal.

[Translation]

I would now like to say a few words about the application of this legislation to the issues you have been discussing. I should emphasize that the Competition Act is a law of general application and as such it applies to the Canadian beef industry. Any complaint of a potential contravention to the legislation is considered. Such consideration involves a review of the facts identified by the complainant and may involve further investigation by the staff of the Competition Bureau, such as the examination of public data or consultations with other industry sources. In some circumstances, I can take the further step of proceeding to a formal inquiry under section 10 of the act. Once I proceed to this stage, the legislation provides for additional, more intrusive enforcement tools, such as search warrants.

[English]

Since my arrival as Commissioner of Competition five weeks ago today, I have been closely following the developments in the beef market in the light of my mandate and responsibilities under the legislation. My staff have been active on this file. We have carefully reviewed publicly available information, such as the extensive report prepared by the Quebec government entitled

[Translation]

Rapport sur l'évolution des prix de la viande bovine durant la période du 20 mai au 30 août 2003 [Beef Pricing Trends Report, May 20 to August 30, 2003] ,

[English]

and at the report of this committee dated November 2003, as well as the transcripts from your hearings. We have consulted other sources, such as CanFax and Statistics Canada data. In addition, we have reviewed information provided by complainants, experts, and industry sources.

On the basis of the information available to me, I have no reason to believe that the Competition Act has been or is about to be contravened.

That being said, I would like to assure the committee that I continue to examine this important issue that is so critical to the committee, to farmers and ranchers, and to Canadian consumers, and I will not hesitate to take appropriate action if I discover information that points to a possible violation of the act.

Mr. Chair, we would be pleased to answer any questions you have.

The Chair: Thank you very much for your presentation—brief, but very much to the point.

I'm sure that by the end of today we will have what we believe are compelling reasons why you might want to further investigate this whole matter. We realize there are reasons you might find within your legislative powers to not prosecute or even investigate further. But I think we need to have a lot of this information brought to the table so that Canadians, not only the producers of livestock but also those people—and all of us are in that category—who are consumers, can consider the justification for the pricing at one end of the production side of things and then how we are treated when we buy that product at the retail level. There's a lot of difference between those two price structures.

Today, we're here to give you what we think we know at this point. We're trying to seek the information we need to take us to the next level, and that's to investigate those people who we feel may be in breach of the legislation.

We'll go to Mr. Ritz, the first questioner today, for seven minutes.

¹ (1540)

Mr. Gerry Ritz (Battlefords—Lloydminster, CPC): Thank you, Mr. Chair.

Ladies and gentlemen, thank you for appearing before us today. Since we first wrote you in November, you have replied—or your predecessor replied—and said there was really nothing under the act that your office saw was being contravened. Are you of that same opinion at this point in time?

Ms. Sheridan Scott: Yes. When the letter first came, it disclosed a concern with respect to pricing in the industry. As I mentioned in my opening remarks, I have to look to my legislative mandate to determine whether I can act or not.

The way we considered that particular issue, it appeared to be a request to look into the structure of the industry, to try to explain the discrepancy between the retail prices and the prices that were being paid to producers. Looking at that particular issue, we concluded we simply didn't have the jurisdiction to look into the matter, to conduct an inquiry of that general a nature.

That being said, we did a further review of the facts as they were available to us at that time and thought there might be a possibility to look at some of the provisions of the legislation that would apply. The one we seemed to think could be appropriate in light of the request of the committee was a suggestion that there was collusion or price-fixing; that would be contrary to section 45 of the legislation.

But I must say that having looked at the facts at that stage, there was nothing we could see that would allow us to conclude or form a reasonable belief that there was price-fixing or collusion.

That's in the second part of the letter, I believe. If there are additional facts that any member of the committee has to bring to my attention, we will obviously be very pleased to consider them.

As I mentioned earlier, we are continuing to look into this matter. Mr. Taylor is a senior member of my staff at the Competition Bureau. He's an economist and has been looking at this issue, so he will continue to review the information that becomes available to us.

As I said, to conclude, I don't believe we have the necessary information to form a belief that section 45 has been contravened.

Mr. Gerry Ritz: In your submission on page 3 you say “the Act no longer authorizes the Commissioner to conduct...”. Since when has that been the case? What statute?

Ms. Sheridan Scott: Suzanne, do you remember what year that was?

Ms. Suzanne Legault (Assistant Deputy Commissioner, Legislative Affairs Division, Competition Bureau): It was 1986.

Mr. Gerry Ritz: The government is undertaking consultations with stakeholders to vary that again. When did that start?

Ms. Sheridan Scott: The industry committee looked into this matter last year, and for several years there has been an ongoing review of the Competition Act and possible amendments. I believe the industry committee issued its report last year, where it recommended that this jurisdiction be given to the bureau to refer the matter to the CITT.

Consultations with stakeholders took place during the course of last year. I'm now waiting for a compilation of their results so we can know what the next steps will be.

Mr. Gerry Ritz: Okay, great.

There are a lot of consumer advocacy groups across the country. How many of them have contacted you on the pricing of...

Ms. Sheridan Scott: We've had slightly less than two dozen complaints on this issue.

Mr. Gerry Ritz: Is that normal, or is it under or over... You must have an average of the number of complaints on a certain issue.

Ms. Sheridan Scott: I would say that's not a large number of complaints. They include the six residents' letters we received from members of Parliament, so we would count those as one each.

Mr. Gerry Ritz: So there hasn't been a lot of controversy over this. There's concern out there, but that's it.

Ms. Sheridan Scott: I wouldn't say there hasn't been a lot of controversy. I think you asked me how many letters or complaints I've received. I've received just under two dozen complaints about this.

¹ (1545)

Mr. Gerry Ritz: We had the package before us way back in the summer. Of course, at that point the industry had bottomed out and the livestock was worth very little. Since that time the BSE compensation program has gone into effect and has basically targeted the processors to try to keep the industry alive. There's controversy over whether that was the right move or not.

We're going back now to try to reassess where the money went. Of course, $500 million of taxpayers' money is gone and it hasn't been reflected at the farm gate. The product is worth even less now than it was then.

I have a return from a petition that went to the government calling for the government to do something about it. The one line I have here says that the national BSE recovery program—the $500 million—fully accomplished the job it was intended to do.

So if you start to look at the processors, and so on, and they come up with that line, how do you proceed when they say the government agrees it was a success?

Ms. Sheridan Scott: I'm not sure whether that discloses that there has been a contravention of the Competition Act. I have to put my mind to whether I think there is a reasonable belief that there's been a contravention of the legislation. I haven't heard anything there that allows me to conclude that I should initiate a criminal investigation, which would be the next stage in the process.

Mr. Gerry Ritz: I'm talking about from the packers' standpoint. If I were their lawyer--and I'm not--I would take a line like that and say there's no problem. The government believes it was a fully successful program, so why would we go back to try to find out where the money went now? It was a success. So would that not be the fatal flaw in proceeding?

Ms. Sheridan Scott: Again, the question to me is whether I should act or not. There's nothing in that letter that tells me to act. If one wishes to draw conclusions as to whether it's been a success or not, then I guess I would suggest that's something this committee should consider.

If you'd like to give us a copy of the letter, it might be useful for me to have, just to fill out our file.

Mr. Gerry Ritz: Okay, thank you.

The Chair: We go to Mr. Plamondon for seven minutes.

[Translation]

Mr. Louis Plamondon (Bas-Richelieu—Nicolet—Bécancour, BQ): I want to discuss a particular case with you. It concerns a location in Quebec where there is only one slaughterhouse, the Colbex Abattoir in Saint-Cyrille-de-Wendover, which purchases all of the cull cows in Quebec and is taking advantage of the situation: rather than paying $600, $700, or $800 a head, it is paying about $100 a head.

At the Competition Bureau, Mr. Jorré, who was acting commissioner, received applications for inquiry from the Fédération des producteurs de bovins du Québec [Quebec beef cattle producers federation] and from one member of the Bloc Québécois, Mr. Paul Crête. Both received the same answer, that is to say both the member of Parliament and the Fédération des producteurs de bovins: under section 79 of the act, nothing can be done, apparently, because nothing indicates that Colbex attempted to prevent another slaughterhouse from opening. So section 79 does not apply, which means that Colbex is not abusing its dominant situation, and agricultural producers find themselves facing a situation they can do nothing about.

So, I would like to ask you whether as commissioner you find it fair to say that the Competition Act can do nothing to stop a monopoly that is taking unfair advantage of its situation to inflate its profits on the backs of its suppliers and consumers. Since price setting is a matter of provincial jurisdiction, what good is the competition commissioner if he or she cannot prevent a monopoly from taking unfair advantage of its situation? Is it normal that the law prevents businesses that dominate a market from colluding to fix prices, but that it has nothing to say about a monopoly that may be doing the same thing on its own? Finally, has the Competition Bureau ever considered the possibility of amending the act so as to be able to resolve a situation like that one? In other words, when several businesses get together to set a low price, you have some authority, but when a single business holds a monopoly, you cannot do anything to help the producers. I am looking forward to your answer.

¹ (1550)

Ms. Sheridan Scott: Yes, Mr. Plamondon. Perhaps I am going to give the floor to my colleague Mr. Taylor, since I have only been in this position for five weeks. I am going to try to answer your question in a general way and he may want to add some details.

I am aware of the two complaints you referred to. Indeed, the commissioner's jurisdiction under section 79 of the act does not apply in that situation. We have jurisdiction over merger issues. So if two businesses get together to create a dominant undertaking, I could then have a say, but faced with a situation like this one where there is a single dominant undertaking, it is true that there is no legislative provision that applies.

As for amending the act, this was raised at the Standing Committee on Industry, Science and Technology, and several amendments were put forward. But after hearings that lasted several months to determine the changes that people wanted to make to the law, no proposal was made in that regard.

I do not know if my colleague has anything to add on the interpretation of section 79.

Mr. Richard Taylor (Assistant Deputy Commissioner of Competition, Criminal Matters Branch, Competition Bureau): I would like to add something. There are three sections that seem appropriate to examine the situation when the price is different, when the cost of production differs from the retail price. Firstly, I think there is section 45, which prohibits conspiracies, agreements among competitors in order to lessen competition unduly.

Secondly, there is the section concerning mergers. We try to block those mergers that would significantly lessen competition.

Finally, there is section 69, concerning the abuse of a dominant position. Unfortunately, that section does not forbid anyone from finding himself in a dominant position. There has to be an abusive use of that position, a practice, some act that is anti-competitive. There must also ensue a subsequent vast lessening of competition.

So the fact that the situation you have described involves a specific undertaking unfortunately constitutes the big difference. The gap between the purchase price and the sale price does not constitute a contravention in the case of a company in a dominant position.

Mr. Louis Plamondon: Yes, but when you are the only supplier of a product, it seems to me that you are in a dominant situation. When you are the only one with the facilities that allow you to slaughter an animal, producers cannot go elsewhere. In such a situation, the company that slaughters the animals sets the prices. If that is not a dominant situation, it certainly is not far from it. You say that you cannot intervene and that you do not want to.

But you said, Madam, that some consideration was given to amending the act, and that this single slaughterhouse situation was not brought forward as the object of a possible change. Did I understand you correctly?

Ms. Sheridan Scott: I simply said that some changes were proposed that were directly related to...

Mr. Louis Plamondon: Could you repeat that?

Ms. Sheridan Scott: There are no specific amendments involving the situation you have described. All I said was that a set of amendments were proposed, but not changes which...

Mr. Louis Plamondon: Which could satisfy the...

¹ (1555)

Ms. Sheridan Scott: ...which could have a bearing on that situation.

Mr. Louis Plamondon: You did not feel it urgent to recommend this change.

[English]

The Chair: Mr. Plamondon, your time has expired so just quickly wrap it up. We'll have to come back to you in the next round. I'll let you finish.

[Translation]

Ms. Sheridan Scott: Just to complete my answer, I would add that when potential amendments to the act were being considered, we were not faced with this situation.

[English]

The Chair: Okay.

Mr. Easter, you have seven minutes.

Hon. Wayne Easter (Malpeque, Lib.): Thank you, Mr. Chair.

Welcome. Thank you for coming.

Mr. Chair, I can understand, I guess, the position the Competition Bureau is in. When we go through your submission and some of the background documents, we see it is difficult for you to get at the area we want to get at.

Mr. Chair, regardless of where we go with this hearing today, I do believe we should be asking the government to support the industry committee in its recommendations that the commissioner be able to conduct general inquiries into issues of competition in industries--because this, I agree, goes beyond your parameters.

But I wonder if you have any suggestions of where we can go. Here are the facts of the matter. First, the U.S. is not abiding by science--it's my belief that they're not even abiding by good trade law. They're playing politics with an issue and keeping us out of the market, and as a result our producers are being forced into bankruptcy.

Second, on top of that, and to make it even worse, Canadian packers in Canada are in fact using this issue to drive prices down to primary producers and are price gouging as a result. I wonder if you can do anything on price gouging.

Third, the retail industry is not dropping prices accordingly at that level. Farmers are going broke. The consumers are still, in my view, getting ripped off by the retail sector.

So do you have any suggestions of where we may go as a committee to deal with this issue? The bottom line is the industry is going broke out there as a result of price gouging by the packers, and the retail sector and the U.S. playing the games they're playing.

My second question, Mr. Chair, really relates to what Mr. Ritz said earlier. I'm wondering if you can suggest where we might go on this as well. The Canadian government, in good faith, brought in a fairly substantial program as a result of BSE. The program was thought to be designed in such a way that prices would not fall. That was the intent of the program, to try to hold prices up and get money to producers.

The packing industry immediately took advantage. Whether it was collusion or not--I don't know how they all managed to do it at the same time, but they sure as hell dropped the price about 19¢ in one day and were immediately able to take advantage of the moneys the federal government was spending. Is there any way you can even look into that sector?

Ms. Sheridan Scott: I just didn't want to miss your questions. To go back to the first one with respect to price gouging, the Competition Act does not prohibit earning what one might describe as excessive profits. It does not address that particular area. It is not an act that allows me to regulate prices, or to regulate profits for that matter. So when I look at that simple question... This was the reaction I think you've had to the letter that was sent last December. That's simply a matter of the statutory framework within which I operate. It was clear from the documents I received that the concern was with respect to the possibility of price gouging.

So what we did was go to the next step, to say, all right, what can we see under this legislation that might help? Is there something under section 45? Is there something under section 79? That was the investigation Mr. Taylor and his team then initiated to find out what we could see in the legislation.

We did review a large number of publicly available documents. For example, the fairly lengthy report done by the Quebec government has a number of explanations as to why one might have seen the disruption in the marketplace. There's no doubt that this market has been severely disrupted by the closing of the border. Even if we return to the question of the single slaughterhouse in Quebec, if the border were open this would not be the same issue. We would not have the same pressures on these farmers.

In the context of the significant crisis that's gone on, we see that the discrepancy between the retail prices and the prices paid to farmers could be accounted for by a number of activities. I must say, to emphasize, that in reading a number of documents and speaking to a number of people, I have simply not been able to conclude that I have a belief that there's a criminal act going on here.

º (1600)

Hon. Wayne Easter: I want to come back to government programs as well and whether or not the government programs have been abused by the packing industry and if you can look into that. But in terms of your investigation thus far, have your people done any price comparisons between prices over the last 10 years in terms of the spread between producers, wholesale and retail? Do you have any of this information that could be tabled with the committee? I believe if you look at that you'll see, now, price spreads rapidly over and above where they were.

Ms. Sheridan Scott: I'll ask Mr. Taylor to provide a few more comments. We do have some information. As I mentioned, we have consulted Statistics Canada data and other public sources. The question after that, looking at the information, is, do I have sufficient grounds to believe there is criminal activity going on here?

So I'll turn it over to Richard, who can tell you exactly what we've been discovering about this market.

Mr. Richard Taylor: To answer the specific question on the spreads, there's some information in the Quebec report and also in the publication called the Canadian Boxed Beef Report, which is available on CanFax. Both cases give estimates of the gross margins at the slaughterhouse level, not actual margins. Based on the information there, the gross margins would seem to have increased.

Hon. Wayne Easter: My second question is related to a government program that was established. Maybe we need a public inquiry, I don't know; they seem to be the thing these days.

But in terms of the government program, clearly the taxpayers of Canada, in my view, and beef producers were in fact ripped off by the packing companies, because they lowered the prices immediately. It warrants some kind of investigation into how could a government program that was intended to....

I was in on the inner thinking on that program, Mr. Chair. The whole intent of the program was to try to ensure that prices would stay up, that the money would get back to producers. And at the end of the day I admit it didn't. But the packing industry certainly had a major role to play.

Do you have any idea how we can get at that, in terms of investigation, from your experience in the field? I'm not saying you have the power to do it, but do you have any suggestions of avenues that we as a committee might pursue, or any avenues the government might pursue?

Ms. Sheridan Scott: Well, I certainly know that in the case of Quebec--Mr. Taylor was referring to some data we obtained from the study that was done in Quebec--the government commissioned a number of economists to look into this area to see if they could shed any light on the pricing that was going on in that market.

I understand that on February 10 the Minister of Agriculture in Alberta also announced she was going to have a look at this. This committee certainly has a broad range of powers. I suppose you could invite people here to see if they can help you shed any light on what's gone on.

Beyond that, my mandate is relatively circumscribed and limited, as I've explained. So far it does not seem to be the solution for a number of the significant difficulties this committee is faced with.

The Chair: Thank you very much, Sheridan.

We move to Mr. Proctor for seven minutes.

Mr. Dick Proctor (Palliser, NDP): Thank you very much, Mr. Chair, and thank you to the witnesses.

In your second-last paragraph, Ms. Scott, you said you were going to examine this important issue. Then in answer to Mr. Easter, you and Mr. Taylor indicated that you're looking at Stats Can, you're looking at CanFax's Canadian Boxed Beef Report. What other items are you looking at in terms of staying on top of this issue?

Ms. Sheridan Scott: Well, we are able to interview industry experts or folks who are knowledgeable about this area. There are other publicly available data that I know Mr. Taylor's team has consulted. Maybe I'll ask him to just give you a little bit more information on the types of data he's been exploring.

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Mr. Richard Taylor: There's a considerable amount of data and publicly available information on prices from Stats Canada and CanFax. We have been talking to an industry expert to try to understand the market a little bit and how the price movement happened from the field to the grocery store. We've continued to collect this information, and that's really what we're doing in the examination phase right now.

We'd also be interested in hearing from anybody who has any knowledge of a potential agreement between competitors in any segment of the market, and that's ultimately an important element of what we would need to show to go the next level.

Mr. Dick Proctor: Have the industry experts you've spoken with included the packers at any stage along the way?

Ms. Sheridan Scott: We're now getting into the area of our investigative powers, and there's sort of this awkwardness about who we consult when we're at this stage of the investigation. We're trying to get information about as many of these people as possible, but beyond describing generally the types of discussions we have, I don't think it would be appropriate, because we need to pass to an enforcement stage to be more specific than that.

Mr. Dick Proctor: Also in your statement you indicated or pointed out that the industry committee of the House has undertaken consultations to give some powers that were taken away, I believe, back in the mid-eighties. Is the Competition Bureau in favour of having those additional powers?

Ms. Sheridan Scott: Yes, we had proposed that those amendments be included in the package. This is allowing the commissioner to refer to the CITT a general question for further examination.

I must say the results of the stakeholder consultations have been largely negative. We've had huge push-back in this area. So if this makes it to the House of Commons and if this committee and the members here think this is a worthwhile amendment to the legislation, it would be a good thing to have your support.

The concern of stakeholders is that there are other avenues for gathering this type of information. It goes back to your question, Mr. Easter, in part, as to what else could one do. The stakeholders have said to us that there are a number of avenues we could explore in order to gather information, short of going to the CITT. They have said there's the Inquiries Act, for example, where you can start an inquiry. Parliamentary committees actually was a suggestion they had given as well. So we'll see where that goes, but just in terms of the consultations that have been carried out, we did not get full support from the stakeholders in this area.

The Chair: We'll move to Mr. Casson for five minutes.

Mr. Rick Casson (Lethbridge, CPC): Thank you, Mr. Chairman.

In a couple of spots in your presentation you outline your mandate: “Our work promotes the efficiency and adaptability of the Canadian economy and allows small and medium sized enterprises an equitable opportunity to participate in the economy.”

I'm suggesting to you that with Cargill and Tyson involved, and the situation in Ontario, some of these smaller packers are not getting a fair shot at the market. I'll explain why I think that.

You also say you want to prevent abuse of dominance by firms that have significant market power. Some of these packing plants have significant power. One of the issues that is of major concern to producers... And you have to remember that we've had producers tell us, at this committee and elsewhere, that they are scared to step forward to complain about the abuse they take from packers because they will be ostracized and will have no market for their product. So keep that in mind.

Also, I don't know if it happens here in Ontario, but the packers in western Canada control the feedstock. They are allowed... One of the numbers I heard was this fall they bought 60% to 70% of the yearlings that were sold. They have these yearlings sitting in the feedlots, and they can use them to play off against the independent feedlot operator. If that feedlot operator will not come to their price and will not sell that day, they use their own cattle. They'll starve this guy until he sells. That's happening. Now, to me, that's unfair competition.

Just let me finish.

If it is not your mandate to pursue this, then please tell us whose it is. Somebody has to step forward and help this industry survive, because it is on the brink. A lot of it is already gone. There are people who are broke and they won't be back. Others do not have enough money to continue, and they're looking for some help. If you can't do it, then who can?

One of the recommendations that come from this committee was that a task force be struck to look at the entire industry, and I support that. I think that should be done. Now, if that is a recommendation that you would make, or somebody else would make, then it should be done at the highest level, whether it should be a royal commission or whatever. We are talking about a multi-billion-dollar business that is sliding out of this country. Producers and this committee are looking for people to help, and we're not finding it anywhere.

I would just like you to comment, particularly on the fact that these packers can own a large percentage of the animals and control the flow-through that way. Tell us who can help.

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Ms. Sheridan Scott: Just to go back to some of the citations about small and medium-sized business, those are taken from the overarching purposes of the legislation, and we certainly hear from those companies--for example, smaller companies--when we're looking at some of these larger mergers and take into account their issues.

I would say, Mr. Casson, one of the huge difficulties in this whole area has been the closing of the border and the change that has taken place in this market. This is a very different structure in the market than we have had before and it makes the question particularly difficult, because when we look at analysing it, we're analysing changed circumstances, an extremely different structure of the market than we had a year ago today. So when I look at the legislation and how it applies, I have to try to figure out whether there are provisions that I could actually use in order to address the circumstances in a very changed market.

I don't underestimate the huge impact. In fact, I made allusion to it in my comments. I understand the major changes that are taking place in this market and the devastating effect it's having on many people. So it's difficult for me to come here and say to you that I'm limited by my legislation, but the reality is I am limited by my legislation. I'm trying to be as helpful as possible by finding provisions that we can pursue to look at how we can help address this matter, but short of that, I'm not sure I can say I can amend this legislation. I can't amend this legislation.

What can be done? Well, there are a number of recommendations--for example, having your committee look into this matter, if you think that's going to be helpful. But that's quite apart from my mandate, which is simply to look at the enforcement of the legislation.

Mr. Rick Casson: What about the issue of the packer ownership of the cattle? Do you find that is contrary to competition?

Ms. Sheridan Scott: The legislation doesn't prohibit unfairness. The legislation addresses the structure of the market when there's an abuse of a dominant position that results in a substantial lessening of competition, and the question is whether we have the facts that will allow us to conclude that there's a result of a substantial lessening of competition in the marketplace.

There we're talking about competition at the packer level, so I'm not sure one could say you have the facts that would allow you to proceed, again, with looking at whether this legislation has been contravened or not.

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

Let me just ask, because Mr. Casson has raised some very interesting points, if in fact one dominant player in a particular province controls and owns a high percentage of all the cattle in that province, is that not dominance?

Ms. Sheridan Scott: I'm sorry, I missed the first part of your question.

The Chair: If a particular packer in a particular province of this country controls or owns a high percentage of the cattle in that particular province, is that not dominance? And because that packer owns those cattle, because he has such dominance, even the smaller packers are relegated to the same level as those producers: not being able to speak out and playing the game along with these...simply because if they fall out of line they will be rooted out and destroyed, as those with dominance have the power to do that.

Ms. Sheridan Scott: Again, if I can go back to my legislative mandate, it isn't illegal under the legislation to be dominant. That is not what's illegal under the legislation. It's if you have an industry participant that has dominance, that abuses that dominance, that engages in a practice of acts that then results in a substantial lessening of competition.

The Chair: Mr. Kilgour is next.

Hon. David Kilgour (Edmonton Southeast, Lib.): Thank you, Mr. Chair.

If I might add to the points my fellow Albertan, Mr. Casson, made--all of the points he made--this study by the Quebec government from May 20 to August 30, 2003, on page 12....

Ms. Scott, you've probably seen this study, have you?

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Ms. Sheridan Scott: Yes, I have.

Hon. David Kilgour: Well, as everyone can see, the price has kind of collapsed for the people trying to bring their animals to slaughter. If you turn to page 26, the price for T-bone steaks has not gone down at all.

There is a maxim in law called res ipsa loquitur, that the thing speaks for itself, and it seems to me that CanFax's February 13 edition suggests that the prices have actually gone down much further from when the Quebec study was done, and boxed beef prices, on the back, seem to me to suggest that the situation has got substantially worse--and I think all of us around the table know it has. So what on earth does it take for you people to get off your butts, frankly, and go and find out what's going on?

Ms. Sheridan Scott: In the Quebec study, of course, they do have a number of explanations as to why you might have that particular set of facts, the discrepancy. The economists who did that study have a number of explanations as to why you would have had the price movement you have had in that marketplace. Again, if I look through that, simply because you have a discrepancy between the two prices does not mean you have facts that would point to criminal activities.

Hon. David Kilgour: You are saying “criminal activities”. That's the magic word for you.

Ms. Sheridan Scott: Well, it's because I'm only empowered to examine the matters that are under the legislation--

Hon. David Kilgour: I appreciate that.

Ms. Sheridan Scott: --and section 45 is the provision we've looked at, and that's a criminal act of collusion and price-fixing. We've also looked at abuse of dominance in this particular market where you have the two large firms in Alberta. We would also be looking at that to see if there's an agreement between those companies in order to make out the abuse of dominance.

So in both of those cases, Mr. Kilgour, I would be pursuing the matter pursuant to the criminal provisions, and I simply identify them that way, because that's what portion of the legislation I'd be looking at.

Hon. David Kilgour: They're not going to write out their agreement on a piece of paper, Ms. Scott, so perhaps somebody from your agency should go and talk to the farmers in Quebec, Alberta, Ontario, or wherever. Then perhaps somebody should go and talk to the people who are buying the beef from the slaughterhouses and see if there isn't a problem that you could reasonably infer that there was collusion, that there was price-fixing, that there were anti-predatory pricing practices going on.

Ms. Sheridan Scott: Well, again, there are a number of ways these matters can come forward to us. Sometimes for us to have the necessary information to go ahead we have disgruntled employees or folks seeking immunity because they believe there's some problem here that might bring that information.

On the face of that report, the Quebec report, which I have looked at, as well as a number of other facts, I don't think there are reasonable grounds to make out a contravention of section 45.

Hon. David Kilgour: You're hard to persuade.

On this six-person complaint, did these people have to have direct evidence themselves? We heard not many farmers are going to come forward and say they have direct evidence if they're going to lose their major market of animals.

Ms. Sheridan Scott: Well, in a six-person complaint, they would at least have to set out the nature of the offence, the provisions they believe would be engaged, and then identify the people who are engaging in the illegal activity. They would have to have the basic facts.

Hon. David Kilgour: They would have to put six of us around the table to sign a complaint?

Ms. Sheridan Scott: No. You would have to include in that a description of the nature of the offence, who it is you think is engaged in that offence. And that's correct, that would provide the grounds for a six-resident complaint, absolutely.

Hon. David Kilgour: Okay. Thank you.

The Chair: Are you finished?

We'll move to Mr. Proctor next, and then we'll come back.

Mr. Dick Proctor: Thank you.

In response to dominance, there's no law against that. But then in response to Mr. Kilgour, you indicated an abuse of dominance. I want to come back to the question that was asked about feedlots and the packers controlling those. Why wouldn't that be considered an abuse of dominance?

Ms. Sheridan Scott: I may again ask Mr. Taylor to add some comments to this.

The provision talks about an abuse of dominance that results in a substantial lessening of competition, so we would have to make out all the elements that would be present there.

Richard, do you want to...

Mr. Richard Taylor: Sure. You'll have to excuse this, but I don't quite understand the significance of them owning the feedlot. Does that mean basically that they control all of the supply into the packers?

Mr. Dick Proctor: Large parts of the supply, as Mr. Casson indicated so eloquently.

Mr. Richard Taylor: Right, but under the concept of abuse, I think it's fair to say they would have to be doing something to prevent or eliminate another company from operating to be in a violation of the law. Who are they preventing, the smaller...

Mr. Dick Proctor: They're preventing the smaller operator from having access to that slaughterhouse facility.

Mr. Richard Taylor: What percentage of the cattle available in Alberta is coming off feedlots owned by the packers?

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Mr. Dick Proctor: I don't know. Perhaps Mr. Casson can get back in on this. All we know is we understand that between Tyson and Cargill, they are responsible for in excess of 60% of all the slaughter capacity in this country for beef. In terms of the Alberta number, I don't know, but obviously it would be higher than that.

Mr. Richard Taylor: I understand that about 25% to 30% of live cattle go to the United States for slaughter.

Mr. Dick Proctor: Well, they used to.

Mr. Richard Taylor: And they used to--

Mr. Dick Proctor: None of them goes there any more.

Mr. Richard Taylor: They don't right now. I guess when the market was fully integrated, that provided competition to these two companies, right?

Mr. Dick Proctor: I think that's fair enough, that it seemed to be operating at that point. Then the border closed and they had a dominance effect with the larger feed lots.

Mr. Richard Taylor: So we've had a structural dominance since May, exacerbated in December, that is basically restricting the opportunities of farmers to have their beef slaughtered.

Mr. Dick Proctor: Right.

Mr. Richard Taylor: And it's hard to make that out as an anti-competitive act before the Competition Tribunal. It has to be a practice of anti-competitive acts by a dominant firm, and the anti-competitive acts that we have looked at to date are not extraordinary events. They're the typical predatory pricing, exclusive dealing, tied selling.

So under the section we'd have to look at what is causing the rise in concentration, what is causing the problem. I think in that case we'd have difficulty establishing that they caused the closing of the border, which in turn gave them the concentration.

The Chair: I wonder if I might just ask, if in fact an agency of government, which you represent, is unable to bring to conclusion and some justice an issue that we think is very unjust, who does the primary producer have? It could be any other industry for that matter. Who is the advocate for these people? These people cannot speak out. If they did, they'd have no place to market their cattle, because the dominant player rules. We are here as advocates for these people, and that's why we're asking you to please help us today to find a way we can bring justice to this issue.

We're not suggesting people shouldn't make a profit. We're not suggesting people are paying too much for beef. We're just saying there seems to be--and it's not only the appearance--tremendous discrepancy between farm gate and retail level.

Mr. Breitkreuz.

Mr. Garry Breitkreuz (Yorkton—Melville, CPC): I'm very frustrated as I listen to all of this because it seems like we're fiddling while Rome burns.

I'm in total agreement with everything I've heard here so far. I don't know what kind of evidence you still need. You asked us to produce evidence. If you need evidence, I don't know, do you not go out and gather that? If you came to my riding and you talked to the farmer, he would tell you he's getting 20¢ a pound, but if you talk to the consumer, the price has not dropped one cent in the store.

What other evidence do you need? Would that not indicate to you there's a huge problem?

Ms. Sheridan Scott: It indicates that certainly there's a discrepancy. It indicates that there's someone making unusual profits somewhere along the chain. But there isn't anything in the legislation that will allow me to act in those circumstances. What I have to look at is whether I can form a belief that there is collusion or price-fixing taking place. As I indicated, looking at the Quebec study, for example, there are a number of explanations to suggest why the prices have moved the way they have. As Mr. Taylor has discussed, there have been fundamental changes to this market brought on by the closing of the border. That's a highly unusual event.

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Mr. Garry Breitkreuz: But the border is not completely closed. These packers can ship beef. I don't know the numbers; I thought maybe you would be able to inform us. It's boxed beef, and they're making huge profits on that boxed beef because they can buy it here for next to nothing. Some farmers will take a cow to market and they won't even get enough from that cow to fill their gas tank. That's how little they're getting. And these cows are ground up into wieners and all kinds of....

If you look at the whole thing, I can't understand why you can't investigate it. Can you not go out and gather that evidence? It's as obvious as anything.

Ms. Sheridan Scott: Well, we have certain abilities, as we've described, to go out and consult the data that's available and speak with industry experts. Really the issue here is whether I would go to the next stage where I conduct a formal inquiry, because at that stage there are additional tools and enforcement mechanisms available. But before I get to that stage, I have to be able to form a reasonable belief that there is a contravention of the legislation. Also, when I move to the next stage, I will have to be able to convince a judge, for example, if I want to obtain a warrant or a subpoena, of the basis upon which I'm asking the judge to issue that instrument.

So there are a number of stages here, and we will continue to investigate this matter by consulting those who are knowledgeable. But there's an additional issue, which is whether we can move to a more formal inquiry stage where we engage the powers of the state, in a sense, to investigate.

Mr. Garry Breitkreuz: We're fiddling while Rome burns. We can't keep going like this. I hear you saying that you think there's adequate competition out there.

Ms. Sheridan Scott: No, I didn't say that.

Mr. Garry Breitkreuz: There cannot possibly be. There has to be some kind of collusion in order for this to occur. Would that not be obvious?

Ms. Sheridan Scott: No, I wouldn't say that it's obvious that we had collusion. I'd say there are other explanations one could have.

When we're looking at collusion, we're looking for any type of evidence of an agreement, a coordination, and those types of things. I haven't seen anything in the facts we have looked at that would allow me to form that belief.

Mr. Garry Breitkreuz: Okay, so you're saying there's not adequate competition. Is that what I just...?

Ms. Sheridan Scott: I didn't say there wasn't adequate competition. I'm saying I'm looking at whether there's a contravention of the legislation. That's my mandate.

Mr. Garry Breitkreuz: Well, inadequate competition would be contravention.

Ms. Sheridan Scott: No, no. No, that's not true.

Mr. Garry Breitkreuz: No?

Ms. Sheridan Scott: If you read the Competition Act, it has certain prohibitions that relate to abuse of dominance, and there's a jurisdiction over mergers. There are very specific powers that have been given to the competition commissioner and also to the Competition Tribunal. If I want to bring a matter forward to the Competition Tribunal, then I have to have a case that can be made out in accordance with the law.

Mr. Garry Breitkreuz: You're telling me that you don't think that the evidence is obvious.

Ms. Sheridan Scott: I don't see the evidence right now for a belief that there is a contravention of section 45, the collusion provision, which is the one I think most people have suggested might be at play here, or section 79, which is the abuse of dominance. Those are the two we have looked at very closely to see if we have data that would allow us to move in that direction, and that would allow me then to move on to exercising more formal enforcement powers.

Mr. Garry Breitkreuz: Let me conclude by saying that I would urge you quickly, ASAP, to really get into this, because the farmers in my area are being.... In the last ten days the picture has changed dramatically. They feel that there is something going on out there. They're helpless. I feel helpless discussing this with you, because it doesn't seem like we're going anywhere.

Ms. Sheridan Scott: I understand your frustration. I certainly have read the transcripts of the House of Commons debate, and I could sense this deep, deep concern. I don't know if you want to tell us a bit about what's happened in the last ten days, if there's something that would be useful and relevant.

Hon. David Kilgour: How can we tell you anything that's going to persuade you, Ms. Scott? That's really the question. You're not going to be persuaded by anything we say.

The Chair: Let's allow her to finish. We can do it in order here. Let's stay within the order, okay?

Ms. Scott, do you want to finish? Do you want to comment on that?

Ms. Sheridan Scott: I don't think it's fair to say there's nothing that's going to--

The Chair: I'm sorry, there's a lot of frustration. We're frustrated. So you'll have to understand that some of us, some people around this table, may from time to time say things that may be disturbing, but this is a very, very disturbing issue. We are very serious about this. And if you have anything more to say to my colleague's comments or to Mr. Breitkreuz, you may do so at this time.

Ms. Sheridan Scott: I appreciate the frustration. It's just that I have a statutory mandate that I have to adhere to as well. There may be disagreement in terms of how that's carried out, but I have a statutory mandate. I have to pay attention to the law. I'm certainly not above the law.

We will continue to look into this matter, and if there's anything, as recent developments happen.... And we do look at movement of prices in the marketplace. We look at what else is happening. We will be following the Alberta inquiries as they are carried out by the Minister of Agriculture, and certainly we follow the proceedings before this committee as well, to see what people say to you.

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The Chair: Thank you very much.

Mr. McCormick, for five minutes.

Mr. Larry McCormick (Hastings—Frontenac—Lennox and Addington, Lib.): Thank you, Mr. Chair.

Thank you, witnesses, for being here, in frustration.

A year and a half ago at this committee I heard some of the strongest language I ever heard when the chair at that time.... We had five witnesses, the five companies that control all the grocery wholesales, all the groceries in this country. The chair, from New Brunswick, said “It's pretty scary, isn't it, when we think that two of you people control more than 50% of the groceries in Canada”.

Well, I would hope, Mr. Chair--and we have excellent people working for this country--that we would have the desire within this Competition Bureau to do something about this. As far as the last ten days, that's probably the only word I would disagree on, because it's documented. You don't have to go to the Alberta report or the Quebec report of what happened when we brought the money out. The first $500 million got sucked up by the industry, by two packers--98% of the money.

Somebody told me sarcastically on the weekend--but I'm not sure whether it was sarcastic or whether it was the truth--“The Competition Bureau, is this the same Competition Bureau that takes on the oil companies?” Well, any one of the five oil companies is larger than this great country. There have been people who have lost their businesses and had their lives destroyed because of those oil companies. We have thousands of people who are hurting. These are real people. These are families. These are communities. The devastation is enormous.

So why haven't you people taken the steps yourself? Why haven't you gone the extra mile? How many people work with the Competition Bureau?

Ms. Sheridan Scott: About 400.

Mr. Larry McCormick: Four hundred people.

I'm probably not giving you enough credit because you have talked to a lot of people, a lot of different facets of the industry—and to packers, I'm sure. But let me ask for the record, Mr. Chair, how many producers, how many farmers, how many cow-calf people, and how many feedlot people have been interviewed personally by people on your staff?

Ms. Sheridan Scott: Well, again, we get to issues of confidentiality.

Mr. Larry McCormick: No, I'm just looking for a number, approximately.

The big boys have all been in to lobby you, one way or another. They've been here, and they're out there with statistics. They have the money.

But have you been talking on the ground to individual producers in Canada?

I think it's a fair question, Mr. Chair.

Ms. Sheridan Scott: As I said, at this stage, what we have done is—

Mr. Larry McCormick: Mr. Chair, could I ask for an answer?

The Chair: Let her answer.

Mr. Larry McCormick: Mr. Chair, just one moment, though. This—the first case—happened in May. So at this stage I just want to get one question answered at least.

Has this bureau, with only 400 employees, been on the ground talking to producers in at least eight or nine...and I'd better include the tenth province too? I think perhaps it's fair to ask for an answer.

The Chair: Okay.

You've been asked a question. If you wish to respond....

Ms. Sheridan Scott: Fair enough.

Mr. McCormick, just to put things in proper context, 400 people are working on a large number of files, so I'm not sure it's fair to simply point out that there's a large number of people. I have jurisdiction that is quite extensive, so it's not really the number of people. It's a fair question to ask how many people are working on this particular issue.

Again, I don't want to talk in detail about who we've spoken to, but we haven't been out to speak to the farmers individually. No, we haven't been out to speak to the farmers individually, but we certainly have a sense of the issues for the farmers.

Mr. Larry McCormick: I'm not sure, Mr. Chair, how people—

Ms. Sheridan Scott: But it's not for want of asking them. We understand what's happening here; we know how devastating this is; we know that the prices to the farmers are at rock-bottom. We're aware of all of that.

Mr. Larry McCormick: Mr. Chair, I was at a meeting in an adjoining county on the weekend, and the people are probably laughing at all of us because of what was happening on the news on the weekend and leading up to the weekend.

You get into important issues. Again, these are human beings; these are lives that are being threatened, not just a few dollars. Lives are being devastated.

As far as needing a six-person group, which I think we have here, and which I think we can come up with from several political parties.... But again, if we went to the people and if we went the extra mile, it's not six people there or 600, but a lot more than 6,000 people whose lives are being destroyed.

Even here in eastern Ontario, where we don't have as many major producers, people call the line that's available because they feel that very drastic measures are going to be taking place in their homes.... Lives have disappeared and it's drastic.

So I think we need some proof here that you people will recognize.... You may have many, many other issues, but on some of those other issues that we've been at bat on, we've been beaten by some of those major corporations. So how about putting some emphasis on this? How about talking to the people?

You wouldn't have to go very far, Mr. Chair, to feel the hurt of the people.

Thank you, Mr. Chair.

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Ms. Sheridan Scott: I should just add that I understand that absolutely. Talking to these people, I know how devastating this is. I don't dispute you on that point at all.

My point, really, is just to try to figure out whether I have the authority to move in this area. I'm not underestimating to any degree how devastating the closing of the border has been and the discovery of the two examples of BSE.

The Chair: Thank you.

I'm going to allow another Liberal, another government member, to speak now so that we have everybody speak. Then we'll come back to our routine, and I'll come back to you on the next round.

Mrs. Ur is first.

Mrs. Rose-Marie Ur (Lambton—Kent—Middlesex, Lib.): I'm just devastated sitting here today. I'm saddened. I can't believe, as part of the government, that this is what we're hearing.

Mr. Proctor asked a question and Mr. Taylor.... And I thank you for being honest enough, not understanding what the situation is—but that's our problem. We don't have anyone there who understands the problem. You can look at the numbers.

You print in here, “Canadian consumers are concerned about beef prices....” They're not; they're happy to pay them. I haven't had one constituent say, “Gosh, get those prices down”. Not one. But they sure as heck are complaining about the primary producer, and you sit here and say you can't.... We don't want names, but you haven't even been out to see what it's all about.

An hon. member: Shameful, shameful.

Mrs. Rose-Marie Ur: So how can you actively sit on this? It's time sensitive. People's lives are being wasted.

So you sit here. It's not your legislation, and you can't tell me there isn't vertical integration in these packers. When those programs came out, they took their cattle before they took the fellow down the road. They cashed in on those programs, and you say there's no problem?

That's vertical integration in my layman's terms.

Ms. Sheridan Scott: I know I'm going to add to your frustration again when I say that even if one recognizes some of the basic facets of the market, what we're trying to understand is whether there are grounds for us to move ahead and do something about this.

Mrs. Rose-Marie Ur: You will never understand if you don't speak to people.

Ms. Sheridan Scott: Fair enough—

Mrs. Rose-Marie Ur: There aren't many cattle producers in Ottawa.

Ms. Sheridan Scott: In terms of reaching out and speaking to as many people as we can, we will have to continue to do that. You're absolutely right about that.

Mrs. Rose-Marie Ur: I can't believe that—not you personally, I'm saying the bureaucracy you work within—this Competition Bureau has no teeth. I really don't know, sitting here listening to you today, what significant role you really play if you can't do anything. That's no disrespect to you. It's the mandate you're given.

Ms. Sheridan Scott: I understand that. I guess what we're finding in this area—and our own frustration—is there has been a catastrophic event that has shifted the market structure. Our examination of this industry before was taking place within the context of a North American market. That's how we would look at this market. That has changed. The legislation doesn't necessarily provide us with the means of addressing that catastrophic event.

Mrs. Rose-Marie Ur: Even last week the wholesale price of beef went up for the grocery chains. How can that possibly be justified when the price of cattle is going the opposite way? You can't see that there could be a problem? What has to happen for you to all of a sudden say, oh, I think we have a problem?

Ms. Sheridan Scott: I'd be repeating myself just to say we've tried to find provisions under the legislation that would be applicable. I would have to have some basis for believing there was collusion or price-fixing. That would be the one we would look at.

Mrs. Rose-Marie Ur: I can't understand why people can't understand. The farmers out there are probably popping pills because not only are they going down the tube, but to hear this kind of discussion.... I'm frustrated and I'm not a cattle producer.

The fact of the matter is, if the wholesale prices are going up for the grocery chains but the prices are dropping...you don't have to be a rocket scientist here; you just have to understand the industry. But from what I hear today, I don't think you understand the industry.

º (1640)

Ms. Sheridan Scott: There have been a number of explanations about how these packers have been put in different circumstances than they were put in before because of the closing of the border. The competitive dynamics were very different—

Mrs. Rose-Marie Ur: Cargill is selling all kinds of boxed beef to the United States. They're laughing all the way to the bank. And guess who owns them?

Let's get on with this and get some kind of action. Tell us what you need to change in the legislation so that you're not sitting there doing nothing. It has to hurt you, if you really are sensitive to your job, not to be able to be constructive.

That being said, can you tell me what is credited to your bureau that you've done good for Canadians that you're able to check and challenge? What really good things have come out from the bureau that something really took place because you investigated it?

Ms. Sheridan Scott: We have done major investigations into criminal cartels--

Mrs. Rose-Marie Ur: I don't want to know what you've investigated. What was one case that was really good?

Ms. Sheridan Scott: For example, we have levied fines of $90 million against criminal cartels. In fact, maybe I'll just pass it over to Richard to describe some of these cases to you if you want to hear some of the issues relating to the farming industry matters. I'll give you a few examples of that.

Mr. Richard Taylor: We caught a number of companies conspiring to fix the price on lysine, which is a major ingredient in feed to chicken and also pork. They were fined $17 million.

A few years ago—I think three years ago—we caught all of the major manufacturers of bulk vitamins fixing prices. They had a long-standing agreement, with meetings and quotas, and they were fined $90 million.

We review a lot of mergers that touch on the farming sector. We're very sensitive to those. We talk to the associations representing farmers; they're a key stakeholder for us. An example was the merger—

Mrs. Rose-Marie Ur: Excuse me. You say you've talked to a lot of associations. That did not appear to be available when you were speaking to Mr. Proctor. He asked pretty simple and clear questions. I was glad that he was certainly able to inform you. But those are all statistics that you should have if you're actually working on a case such as this.

Do you have anyone in agriculture within the Competition Bureau that has a bit of expertise? Things are different when you're out in the community.

Ms. Sheridan Scott: In situations like this, if we don't have the expertise, we will go outside and try to find industry experts.

Mrs. Rose-Marie Ur: But if you're going to go to the packers, you're going along the wrong path.

The Chair: Sorry to cut it off just as it starts to get interesting.

Ms. Scott, if we were to order the minister to ask you to do an inquiry on this issue, what would your response be to that?

Ms. Sheridan Scott: If the minister ordered me to go on an inquiry, I would go on an inquiry.

The Chair: Mr. Ritz, five minutes.

Mr. Gerry Ritz: Thank you, Mr. Chair.

Welcome to the wonderful world of agriculture politics, ladies and gentlemen.

Everyone is always looking for a scapegoat. As we started out talking about, you are a complaints-driven organization. If nobody complains, you don't investigate. You don't take it upon yourself to launch an investigation unless there are a significant number of complaints that drive you to do it.

Ms. Sheridan Scott: I don't think that's exactly correct. Essentially, we begin with complaints, but we're not prohibited from acting. We can act without a complaint.

Mr. Gerry Ritz: Perhaps you're lacking in your mandate, but surely the federal government is not lacking in any mandate it tends to go after. The probe that was done in Quebec and the probe that is being undertaken in Alberta are not driven by your department. They're driven by governments that want to get to the bottom of these types of things. Certainly there are things that we as a committee can do, that the minister can do, and that the government itself can do. They have a little equalizer called Revenue Canada. If they think someone has gouged someone, there are folks there who can pay you a visit.

So I share the frustration of my counterparts from all parties here in what my farmers and ranchers are telling me. Their major concerns are a definition of competition, access to facilities, and so on. They're being given the runaround by certain processing facilities, because, of course, the market is in total disarray. I'm not sure there's anything you as a department can do. I think it goes beyond your mandate and always will. I think it's a total government situation, which we have to address. Maybe you can give us some direction there.

º (1645)

Ms. Sheridan Scott: I don't know if I'd characterize it as a government issue. I would say there's an industry issue here. There have been changes in this industry, and one might have to take steps to address those changes in the industry.

Mr. Gerry Ritz: In a market-driven industry like this was, if there's a crisis and the market no longer comes to bear, is it not the role of government to start to prop it up and make sure it doesn't bottom out?

Ms. Sheridan Scott: That's not really my area of expertise, how much the government should intervene or not.

Mr. Gerry Ritz: I understand that. That's what I'm saying. It goes beyond--

Ms. Sheridan Scott: Obviously, there are a number of steps that government can take. But I can't advise you on that. It's really not my area, tax policy. I just wouldn't be able to provide you with useful insights.

Mr. Gerry Ritz: My colleague had a couple of points to make on the 10 days. Garry.

Mr. Garry Breitkreuz: I just wanted one minute to clarify something. I don't know where Mr. McCormick is, but he questioned--

The Chair: Are you sharing the time?

Mr. Garry Breitkreuz: Yes.

I was talking about how this is an urgent issue. This problem hasn't suddenly become worse in the last 10 days. Cow-calf producers are starting to calve out their cows. They're starting to come, the spring crop. They haven't even sold the last crop. That's a huge problem for them. They're now going to their banker and looking for loans for the new season. A fellow from Goodeve came to me this weekend and told me his banker said, “I'm not giving you any more money”. He needs a $50,000 loan to carry on. He said, “You had better go to Alberta and work in the oil patch”. He's telling these guys to get off the farm. This is absolutely devastating. This was a fairly young farmer, so he hasn't worked very long. But he has the farm and he doesn't want to give it up. That's what is changing now. They're getting into the new season. Something has to be done very quickly.

Because of the severe weather on the prairies, their feed stocks are running very low. Remember that they have a lot more animals they planned on selling but couldn't. They lose about $600 per animal. They're getting $600 less. So that's the crunch they're now feeling. If the weather stays as cold as it is, those feed stocks may not last. That is what's happening. That's why I say something has to be done ASAP.

I just wanted to explain that comment about the last 10 days for Larry's benefit. That's how things are developing. It's not that the crisis suddenly came up. The crunch is really coming for these farmers. I hope that gives you an understanding of how urgent it is that something happen.

Thank you, Mr. Chair.

The Chair: Are we finished, Mr. Breitkreuz?

I'll go to Mr. Barrette, and then I'll come back to you, Mr. Proctor.

Mr. Gilbert Barrette (Témiscamingue, Lib.): Thank you, Mr. Chair.

I'd like to add my voice to all the others here, in my first presence at the committee.

Some hon. members: Hear, hear!

Mr. Gilbert Barrette: What I'm hearing is just what I heard in my own area in Quebec, where I have quite a few producers. On the study that was done in Quebec, I cannot make them believe it's serious, just looking at the price. I saw cheques of $19 for an animal, when last year they got $700 for an animal of about the same size. If you go to the grocery store, you know the price you pay, and there's not much difference. So how can they believe that's serious?

So I want to add my voice to what you've heard. And you've heard calm voices around the table; perhaps the voices would be a little higher if you had producers around the table. We are discouraged, they are discouraged, and we need help. We would like you to tell us what we can do to help those people.

The Chair: Good question.

Ms. Sheridan Scott: I'm not sure I have all the answers for you. We've talked about other avenues that involve the government, and again, I'm not an expert to provide you with advice on those. If your question to me is not what we can do to help those people but what you can do to help them, and you're asking me what I can do, that's the difficulty we're having here.

I know how frustrating my answers are to you, and how you'd like to be able to have greater reassurance that I could act, but even if I were going on an inquiry under section 45 or section 79, we would not be talking about immediate relief. That's not what the Competition Bureau is about, turning things over in a matter of days or weeks, and for a number of these people, these are issues of days and weeks. These are not long periods of time. Provisions under the legislation take me into court proceedings and what not, and they would not provide immediate relief.

So even if we could make out a case of abuse of dominance, or collusion, the relief is not overnight.

º (1650)

The Chair: Mr. Barrette, do you have some more...

Oh, Mr. Kilgour, you're going to take some time now. Okay.

Hon. David Kilgour: We have two things, Mr. Chairman.

First of all, eight of us have signed a request: “We the following apply for an inquiry under section 45 of the Competition Act”.

Can I provide that to the clerk? This of course relates to what we're talking about today.

Second, apparently we need a motion that this committee request the Minister of Industry to have the Competition Bureau make an inquiry under section 45 of the Competition Act.

Perhaps we should pass this--

The Chair: First of all, I must ask, is there unanimous consent? We have the signatures, but I have to ask the question. Do we have consent to do that?

Some hon. members: Agreed.

The Chair: You've heard the request, that the Minister of Industry be asked to have the Competition Bureau make an inquiry under section 45 of the Competition Act.

(Motion agreed to [See Minutes of Proceedings])

The Chair: I believe there is a second item, and that will be directed to the Minister of Industry.

What was the second matter?

Hon. David Kilgour: Eight members, under a section of the act, requesting an inquiry by this tribunal--a six-person application.

The Chair: We're going to defer this, at the request of the table officers, to the end of this meeting.

Are you finished, Mr. Barrette?

We'll move on to Mr. Proctor.

Mr. Dick Proctor: Thank you very much.

Ms. Scott, you acknowledge that you've heard our frustration, and I guess I hope we're sensing from you that the inadequacy perhaps of the Competition Act as it's currently written...that it might allow you to insert yourself more in it.

The notes that have been provided for us talk about the enforceability of section 45:

Competition law experts believe, almost unanimously, that section 45, as currently written, is hard to enforce in a contested trial setting, even when applied to a “naked hard-core cartel”. They also believe the two-step “market structure-behaviour” tests provide too much room for litigating irrelevant economic matters...

You've been in this job now for five weeks, and presumably, in applying for the job, you looked at relevant legislation in other jurisdictions. Assuming that you would like to see stronger legislation, is there a country, or are there countries, you could point to that would help us to understand where we might get some of the changes we need so that we can have a more effective competition bureau in this country?

Ms. Sheridan Scott: Well, those are some of the issues canvassed, and I may ask Suzanne to provide you some details. She was in charge of this whole legislative amendment process.

It's true, what you read there about section 45. That's one of the amendments that we're actually seeing that are included in the package, to see if we can change section 45 so that it has both a criminal part to it and then a civil part to it, which might be easier to make out.

In terms of identifying a country that has the perfect competition law regime, I think what we have done is looked in various jurisdictions for various changes to our regime. There's not one that would be better, I wouldn't say. In terms of the legislative amendments, there are also changes to the ability to conduct general inquiries. There's also a suggestion that predatory pricing be dealt with in a manner that would be easier for us to make out those cases as well.

I don't know, Suzanne, if you want to talk about other jurisdictions we've looked at.

º (1655)

Ms. Suzanne Legault: What I can tell you, Mr. Proctor, in terms of section 45 and the reforms we are looking at, is that all countries are basically moving in the same direction, or at least our major trading partners seem to be moving in the same direction. That is, that for hard-core cartel behaviour, which would be price-fixing, we are looking to have legislation that would not have a complex economic test attached to it, but that we would keep those kinds of analyses before a civil tribunal.

Although Australia has a civil regime, it does have more of what we call a “per se rule” for these types of offences. The U.K. has moved recently, at least for individuals, in cases of cartel, with a rule that has no competition test. The Americans' case law has developed a test whereby in price-fixing there is no competition test. That's definitely where we are trying to go with this proposal that's on the table, which was recommended by the industry committee in their 2002 report.

Mr. Dick Proctor: Just so I understand this, Ms. Legault, where are you pushing to? Who does the Competition Bureau go to, to say “We think this legislation needs to be strengthened by the following changes”?

Ms. Suzanne Legault: Well, we have been consulting through the Public Policy Forum. We've had about a hundred submissions that have been written by various groups and individuals. We've also consulted nationally with 13 round tables. We try to have a broad range of stakeholders so that we get as broad a range of views as possible.

Mr. Dick Proctor: Would you hazard a guess as to the timetable, where you are in the process?

Ms. Suzanne Legault: The round tables are finished. The Public Policy Forum is preparing its final report, which should be completed probably in March. That will be posted on their website. Subsequently, the report will be sent to the commissioner for her review and further analysis if required, with a view then to make recommendations to our minister for a package of amendments.

Mr. Dick Proctor: Thank you.

The Chair: Mr. Casson, for five minutes.

Mr. Rick Casson: Thank you.

I want to start by saying that we certainly aren't holding you responsible for a badly designed government program that slipped through the producers' hands and ended up somewhere else.

I also think that when we had the packers here early this summer, at that particular time, and they told us they were losing money, they were. But things have changed.

We specified that restricted materials had to be taken out, some of the back-end of the plants where they make their money off the offal and some of the other things. It's not happening. So there is some case there for these folks, but I'm not completely agreeing with them.

When the border closed, things did change. When the border is open, our producers have a wider variety of markets. Miller Brothers, Washington Beef, these cattle go down to Hyrum, Utah; Greeley, Colorado; Pasco, Washington. They leave western Canada. I'm talking about western Canada because that's what I'm most familiar with. I know in the east, particularly in Manitoba as well, all the cattle that are slaughtered leave the country, or did.

That situation has changed. We don't have five, six, seven, or eight players in this market. We have two. To a great degree we've got Tyson and we've got Cargill, and then there are some others that are not so great.

From May 20 on there has been a great change. I think that if that border stays closed for any length of time, we are in a shifted market from what we had. So that, I think, should be enough trigger for you, because the players have been reduced and there's a lack of competition or lessening competition, that it should be looked at.

If indeed you do take the mandate up to look at this, can you publish in weekly newspapers and newspapers across this country that you are indeed carrying on this investigation, and that you do want submissions from people affected? Does that happen when you start, or is it all kind of on the QT and you don't advertise that you're doing this?

» (1700)

Ms. Sheridan Scott: No. We would seek out opinions from a number of people. I don't believe we ever advertised in newspapers to seek out that sort of opinion, but there are broad industry consultations that take place. Richard could describe the process he goes through in order to gather information, but there would be fairly broad consultation from a number of people in the industry.

Mr. Rick Casson: I think you must be careful that you not only talk to the industry organizations, but you also have to talk to the individual producers, which are of different sizes. We have people with 100 head of cattle, 500 head of cattle, and 100,000 head of cattle.

Ms. Sheridan Scott: I didn't mean we would talk to associations. I meant there would be a range of people. One wouldn't talk with just one group or one association.

Mr. Rick Casson: For you to get an understanding of how this industry works and the problems it faces, I think you really need to do that, right from the cow-calf operator to the guy who hauls the finished beef to wherever they haul it.

Ms. Sheridan Scott: Again, remember that I don't have this ability to do an investigation of the structure of an industry. That may be something, as I said, that the Quebec government and the Alberta government have commissioned. It might be something you want to consider doing. Our stakeholder consultations suggested there might be other avenues. I'm not sure they are all that realistic for you, quite frankly--inquiries or whatever. That still wouldn't be within the realm of what I could do, to start looking at the structure of the industry.

Mr. Rick Casson: The options these producers have, have been cut to less than half by the closing of the border, and that could create a situation where they are at the mercy of the remaining players. Is that not...

Ms. Sheridan Scott: It always has to be with a view to seeing whether a provision of the legislation has been contravened. In terms of consulting people, as I said, we do broad consultations, or we will call upon a number of different perspectives, but there is a provision of the legislation that says this must remain confidential, because again, these are enforcement activities. If an inquiry takes place, this is with a view to seeing if the act has been breached or not, and then you are into this area where you have to guarantee confidentiality to people who are speaking out.

The Chair: Mr. Kilgour.

Hon. David Kilgour: Ms. Ur has put it better than anybody, as well as Mr. McCormick, Mr. Barrette, and the others around the table. This is a human problem. This clinical detachment you have does not sit well with the people whose lives are in the breach right now.

You have a motion passed by this committee now. The minister will request you to do it, and you will make an inquiry under section 45 of the Competition Act, I take it?

Ms. Sheridan Scott: In that section there is a provision of the legislation that says:

10. (1) The Commissioner shall

(c) whenever directed by the Minister to inquire whether any of the circumstances described in subparagraphs (b)(i) to (iii) exists

and those are saying that the act has been breached,

cause an inquiry to be made

As long as this section is complied with, the legislation speaks for itself. In accordance with this section, the minister has to inquire whether any of the circumstances are met, and those are the ones of all the sections that I have been mentioning.

The Chair: Thank you, Mr. Kilgour.

Ms. Ur.

Mrs. Rose-Marie Ur: Thank you, Mr. Chairman.

Ms. Scott, you just said that when you are reviewing and doing all your consultative work out there you have to protect those who are speaking out, due to confidentiality. Well, guess what? All of us here as members of Parliament respect the same with our farmers. They can't go out in newspapers. They can't do anything. They have no other hope other than their members of Parliament. That's why we were elected.

I find I'm really letting them down when I hear what is going on here today. You keep saying confidentiality. These people have no lives left. Their farms are gone. Their industry is gone. The communities are gone. We're looking at this so sensitively to make sure of confidentiality and all that. That is all well and good, but we have to move beyond that.

I don't think you really understand the situation, because you have not gone out to see what is actually happening out there. When the program came out from Agriculture Canada to help the farmers, the primary producers, the prices dropped 20 cents ASAP. That tells us something.

Ms. Sheridan Scott: I don't think you should conclude that I don't understand how devastating this is, because I do understand how devastating this is. That being said, I have a legislative mandate, and there are provisions in this legislation that say I must keep confidential this information that I will go out and gather in the context of these inquiries.

» (1705)

Mrs. Rose-Marie Ur: You seem to hide behind that too, Ms. Scott.

Ms. Sheridan Scott: But I'm simply not in a position to do it.

Mrs. Rose-Marie Ur: And I don't want Mr. and Mrs. Smith, or who you consulted with; I really don't care for names. It's easy to hide under an umbrella and say we have all these people we're consulting.

I'm getting to be a bit of a pessimist here when I hear those kinds of phrases bandied about, because I see the other side of the story.

Thank you, Mr. Chair.

The Chair: Mr. Barrette, if there's something you want to add to this, go ahead.

Mr. Gilbert Barrette: I would like you to make sure that what we put on the paper corresponds with what you can do for us, what you can do for the producers.

You understand what you heard around the table; you understand the objectives we're after. So we wouldn't like to hear, “We can't do it because this part of the law or this part of the law doesn't correspond.” We'd like to have it clear, clean, and done, please.

Ms. Sheridan Scott: All right. I can't amend the legislation. I can simply say to you that if the minister wishes that I inquire into a matter because there's a possible contravention of the legislation, then I will take the next step to go on the inquiry.

It doesn't mean, though, that I can take this matter to the Competition Tribunal and have a remedy, that I can prosecute a case that there's collusion. I can't guarantee that for you. All I can say is that in the legislation there's a provision here that says if the minister directs me to go on an inquiry because the minister is of the view that one of the sections has been contravened, then I'll take the necessary action.

But I don't think anyone should be misled into saying that I can be told that I have to find there's a contravention of the legislation. That's not possible.

The Chair: No, we understand your mandate; we understand that. But I think you also understand that there is a case here today where there's a lot of frustration, and I think we've seen the Competition Bureau in action over the last number of years on many issues, one of which was the gasoline issue, and they gave anything but what we felt were satisfactory responses.

Mr. McCormick.

Mr. Larry McCormick: I have a short point of clarification. But before I do, I should say to Ms. Scott that you've certainly been introduced into this senior position through baptism by fire, or whatever. So please excuse me.

I want to clarify something, though, that you put on the record--the commissioner did. I have a friend in another riding who follows every word that's said, and you were saying sincerely that.... We're talking about a standing order here, the study of the pricing of beef at the slaughter, wholesale, and retail levels in the context of the BSE crisis in Canada. That's the framework. You were talking about the continuous consulting in that.

So my question, Mr. Chair, if I can, is to Mr. Taylor, because Ms. Scott hasn't been in charge for that long a period of time.

Let's go back to May. Mr. Taylor, there's been a lot of consulting done, correct? With different partners, there are so many levels and so many....

Mr. Richard Taylor: There's been a lot of information obtained and analyzed. I think that would be more accurate.

Mr. Larry McCormick: But have you done... I just want to clarify this because Ms. Scott was saying you've been consulting. I suppose “consulting” is probably the meaning of the word, and you'll have to decide that on another day, but...

Mr. Richard Taylor: We have obtained information from those we felt it was relevant to. It is important to note that under section 45 we need evidence of an agreement. We discussed earlier the high standard under section 45 and how it is very difficult--it's criminal law, it's jail for up to five years, and it's a fine of up to $10 million. It's a serious criminal offence, and we need some evidence of the agreement. We have not been able to win a case where we have shown just a disparity in prices, or high profits, or that something is not right. We need evidence of the agreement.

We have a process in our branch that is a program called the immunity program, and if you come in you will get complete immunity from prosecution. That's been the most successful way that we have found yet to detect an unlawful agreement.

Mr. Larry McCormick: I appreciate that, and our daughter, who is studying criminology on Vancouver Island at Malaspina, appreciates that.

You have clarified it well for me, but there's just one other thing, which is if you really, again, have the desire to look at every facet of all of this, I would think you would also consult--and starting several months ago--with the producers. You might be surprised by what could be found.

Thanks, Mr. Chair.

» (1710)

The Chair: Thank you.

Mr. Proctor, do you have anything else you want to bring? Mr. Casson? Anyone else from the government side?

Seeing no other questions...

Whose burden of proof is it to prove a prima facie case of wrongdoing? Who has to prove the prima facie case?

Ms. Sheridan Scott: In order for me to proceed to the inquiry stage, I have to have a reasonable belief that there is a contravention of a provision of the legislation, and then it goes forward to an inquiry. Then there are additional requirements once one goes before a judge in order to seek a warrant or a subpoena, for example. Then the judge would have to satisfy himself that there were grounds for issuing the warrant or the subpoena.

The Chair: The difficulty in this issue is that we have all kinds of evidence out there of where the farmers have had injustices done to them, but for those people to speak out and be public about it would simply mean they would never sell another animal. The big packers would not buy their animals any more. And if that is the case, how do we protect the information of those people? If evidence comes before the committee, what does the committee do with that evidence?

Ms. Sheridan Scott: If they spoke to us, the confidentiality provisions kick in. They're protected under.... And it's exactly for this reason that people worry during the investigation stage that they're going to say something.

Then there is this issue, which I think is what you're alluding to, of a worry about a vendetta if you then go public, and this is an issue we deal with all the time. It's a real issue because people are reluctant to speak out, so we have to try to find ways of getting the facts out. Again, Richard is much more experienced than I in this area, working in the criminal branch. But in the end, in criminal cases we have been able to persuade some people that they would be witnesses in these trials.

The Chair: If there is indeed a vendetta--and there is all kinds of proof of that--if we expect that at some point in time we're going to find one packing house colluding with another one with a document that goes back and forth, we'll never see that.

Ms. Sheridan Scott: That's why--

The Chair: Collusion can take place in all kinds of forums.

Ms. Sheridan Scott: Right, and that's why often we find that what we have is a disgruntled employee who may come forward, for example. You may be able to get at it that way.

Maybe I'll just turn the microphone over to you, Suzanne.

Suzanne has provisions here in the legislation that address whistle-blowing, because that's another way in which one tries to get the information. There is some protection under the legislation for whistle-blowing, as well, but these are real issues about getting the facts out, and I know it's not the first time we've had to deal with them.

Ms. Suzanne Legault: In the criminal context--and generally under the act--we do have section 29, and that is the purpose of the section. It's not to hide behind it; it's in fact to protect our sources. We find it is necessary to protect our sources in order to conduct investigations.

In a criminal context we do have informant privilege, which is what protects informants in a criminal context. We also have a specific provision dealing with whistle-blowing. And in a civil context, before the Competition Tribunal, there are also protections and safeguards in place for commercially sensitive information, which is only heard in camera to protect that kind of information.

That being said, yes, at the time there is a trial--be it in a criminal context or in a civil context--people do have to come forward and testify.

The Chair: If evidence is provided to the committee, notarized by someone, could that evidence be received by yourselves in the case of making a case for wrongdoing?

Ms. Sheridan Scott: Coming forward at my stage of the--

The Chair: You would receive it--

Ms. Sheridan Scott: Certainly, people could submit information like that.

I think the fear is that once one goes public and you have a prosecution or an action before the tribunal, one would worry, but we'd be quite happy to receive information.

The Chair: I'm sure that in the next number of meetings we will have evidence come to this committee that will probably have been given and notarized by someone, just to give it that solemnity that would normally not come in a statement simply coming before a committee.

Ms. Sheridan Scott: And we will follow what goes on before this committee, obviously, if you call other witnesses and what not. We'll be reading the transcripts and we'll be looking at the documents, because I assume those documents will be filed and made public here and we would have access to those documents. Is that your procedure? That must be your procedure.

» (1715)

The Chair: Yes, it is.

Is there anyone else who has anything before the committee? If not, I'm going to adjourn this part of the meeting.

I want to thank you first, though, for coming today, Ms. Scott, Ms. Legault, Mr. Taylor. We may call on you again. Obviously this is not the end of it, this is the beginning, because we do want to make a difference. People's lives have been changed forever, and we cannot undo some of these things, but we need to make sure that for the future we have brought into place new measures that will allow us to deal with unfairness and treat those people with the kind of respect we would all like to be treated with.

Thank you again.

I'm going to ask for the room to be cleared. We have one matter that needs to be talked about in camera.

Thank you very much again, and we look forward to meeting you again.

[Proceedings continue in camera]