INDU Committee Meeting
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Standing Committee on Industry, Science and Technology
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EVIDENCE
Thursday, December 3, 2020
[Recorded by Electronic Apparatus]
[English]
Good morning, everyone. I now call this meeting to order.
Welcome to meeting number nine of the House of Commons Standing Committee on Industry, Science and Technology.
Today's meeting is taking place in a hybrid format, pursuant to the House order of September 23, 2020. The proceedings will be made available via the House of Commons website. So that you are aware, the webcast will always show the person speaking rather than the entirety of the committee.
To ensure an orderly meeting, I'm going to outline a few rules to follow.
Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of floor, English or French. Please select the language in which you are speaking.
For members participating in person, proceed as you usually would when the whole committee is meeting in person in the committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.
Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled by the proceedings and verification officer.
This is a reminder that all comments by members and witnesses should be addressed through the chair. When you are not speaking, please make sure your microphone is on mute.
With regard to the speakers list, the committee clerk and I will do our best to maintain the order of speaking for all members, whether they are participating virtually or in person.
As is my normal practice, I will hold up a yellow card when you have 30 seconds left in your intervention, and I will hold up a red card when your time is up. Please try to respect the time limits so that all members have a chance to have their round of questions.
Pursuant to Standing Order 108(2) and the motion adopted by the committee on Thursday, November 5, 2020, the committee is meeting today for a briefing on the office of the Competition Bureau of Canada.
I'd now like to welcome our witnesses.
We have with us today Mr. Matthew Boswell, commissioner of competition; Mr. Anthony Durocher, deputy commissioner, competition promotion branch; and Ms. Leila Wright, associate deputy commissioner, competition promotion branch.
Our witnesses will present for seven minutes, followed by rounds of questions.
With that, I now turn it over to Mr. Boswell.
You have seven minutes. The floor is yours.
Thank you, Madam Chair and members of the committee, for the invitation to appear before you today.
This committee has a long history of advancing the public policy discussion on competition issues.
Mr. Boswell, could I ask you to put your microphone a little closer to your mouth, please? Thank you.
Canada needs more competition, and your committee's efforts consistently bring competition into sharper focus. We are happy to support your important work.
In these opening remarks, I want to highlight the importance of competition in responding to COVID-19. Although we face an uncertain future, an emphasis on competition today will not only protect consumers when they are at their most vulnerable, but will also ensure that our rebuilt economy is one where competition drives lower prices, improved productivity and increased levels of innovation to the benefit of all Canadians.
The Competition Bureau, as an independent law enforcement agency, ensures that Canadian consumers and businesses prosper in a competitive and innovative marketplace. The bureau does this by administering and enforcing the Competition Act. Under the act, the bureau investigates a wide range of anti-competitive behaviour.
As Canada's competition expert, the bureau promotes a pro-competitive government policy.
[Translation]
Competition enforcement is more important than ever. Businesses can use crises, like the COVID-19 pandemic, as cover to consolidate market power or engage in anti-competitive activity. Vigorous competition enforcement stands opposed to those who wish to capitalize on uncertainty and fear.
Since the first weeks of the pandemic, the bureau has taken action against businesses making unfounded or misleading claims that their products could prevent, treat, or cure COVID-19. As a result of our interventions, most of the businesses have taken corrective action, pulling products that raised concerns from their shelves or stopping the claims.
At the same time, the bureau moved quickly to support the supply of critical products and services across Canada. We issued a statement, which continues to apply, providing the marketplace with a principled yet flexible approach to competitor collaborations designed to support crisis response efforts.
Unfortunately, in the months ahead, we may see a rise in merger transactions involving failing businesses. In assessing these transactions, we must maintain our normal rigour and analytical framework. Relaxing our standards in a crisis period could cause irreversible intensification of market concentration, leading to deeper and longer-term harm to consumers and the economy.
Finally, we continue to prioritize competition in digital and data-driven markets. For example, in the past six months, the bureau has undertaken a number of actions in this area, including: our recent settlement with Facebook related to deceptive privacy claims; our ongoing investigation into the business practices of Amazon; and finally, our participation in the CRTC’s review of Canada’s wireless industry.
The bureau will continue to do everything in its power to protect consumers and businesses from anti-competitive activity throughout the COVID-19 pandemic.
[English]
In addition to vigorously enforcing the law, the bureau also champions pro-competitive government policy. Competition-friendly policies can aid economic recovery by stimulating entry, productivity and innovation. To support these efforts, the bureau has released a competition assessment tool kit for policy-makers. This step-by-step guide helps policy-makers to maximize the benefits of competition for Canadian consumers and businesses.
We urge governments across Canada to use competition as a focal point in facilitating economic recovery. In the face of a global pandemic, we can be sure that our focus on competition today will empower consumers and promote productivity, innovation and economic growth during our recovery. The bureau will continue to do all that it can to build a stronger and more competitive Canada.
Before fielding your questions, it is important to note that the law requires the bureau to conduct investigations confidentially and keep confidential the information we have. This obligation may prevent us from discussing some past or current investigations that may be of interest to members of this committee.
Finally, I'd like to once again thank the committee for the opportunity to appear today. We look forward to your questions.
Thank you.
Thank you very much, Mr. Boswell.
With that, we will start our first round of questions, which goes to MP Rood.
You have the floor for six minutes.
Thank you very much, Madam Chair.
Thank you for that presentation.
You were mentioning that part of your job is to protect consumers throughout the pandemic. Throughout the pandemic, we've seen food security issues in some places in the country. We've seen issues with grocery giants trying to gouge producers and food processors, and we've heard testimony of this at the agriculture committee as well, from folks who are in the industry. We've seen record profits by the grocery giants. We're talking about nearly $350 million by one grocer in the last quarter. We're talking about a 12.5% increase from last year in their profits.
At the same time, Metro, Loblaws and Walmart want to impose extra fees on top of the fees they already charge processors and farmers for the privilege of selling to their stores and supplying them with goods, at a time of a pandemic when food security is of utmost priority. I have asked the Prime Minister about this. He said that he was going to ask the Competition Bureau to investigate the fees that are charged to producers and processors by grocery giants.
Has he asked you to investigate this with respect to the grocery retailers?
Of course, the bureau is very much aware of these issues. They have been at the front of media coverage for some time. I can tell you today that we are already engaging at the federal, provincial and territorial level with respect to these particular issues and sharing our expertise on competition. The bureau is Canada's competition expert, and we will continue to be so going forward.
Of course, in our work we are guided by the facts and evidence. The reality is that competition law in Canada does not provide for a tool to regulate imbalances in bargaining power. From our perspective, that is what this situation appears to be.
[Translation]
We have no interpretation. The witness is probably not close enough to his microphone.
Since the reply is of particular interest to me, I want it to be interpreted.
Yes.
[English]
Mr. Boswell, could you put your microphone closer to your mouth so that translation can pick up the sound, please?
I'm sorry it's not working well. It was working well yesterday.
[Translation]
Mr. Lemire, can you hear me now?
[English]
To return to this issue and repeat briefly what I said, the bureau is very much aware of these issues with respect to retailers and their suppliers. We are already engaging at the federal, provincial and territorial level with respect to this issue, sharing our expertise on competition issues.
That said, I did make the point, and it's important to make it today, that competition law in Canada does not regulate imbalances in bargaining power. There are no provisions in our act that would specifically address that.
We know as well that this has been an issue in other jurisdictions around the world, which have taken different actions because their legal framework has permitted that.
Thank you.
Given that there's a concentration and 80% of the grocery market is controlled by only five major chains or retailers, would there be grounds for an investigation of an abuse of dominance? Could you elaborate on what the definition of abuse of dominance would be?
We've discussed these issues in detail as a result of an extensive investigation we conducted into Loblaws' business practices in 2017, when we looked at potential issues of abuse of dominance. As I said, this situation appears to be an imbalance in bargaining power, something the Competition Act does not have specific powers to deal with.
Abuse of dominance is, effectively, in the short version, where a company has a dominant market position and engages in anti-competitive acts with an intended negative effect on a competitor. That conduct results in a substantial lessening or prevention of competition.
Could you also perhaps explain what the grounds are and what the process is for the Competition Bureau to set up a competition tribunal? Is this something you would look into on the issue of grocery retailers?
We have a prosecutorial model in Canada for competition law violations. We must bring our civil cases to the Competition Tribunal of Canada and establish, to their satisfaction, the elements of any violation of the act, which is what we do when we bring allegations of abuse of the dominant position, cases that we've brought in the past.
Thank you very much, Madam Chair.
Thank you, Mr. Boswell, for appearing before this committee.
Perhaps I could just follow up on the questions that Ms. Rood was asking.
In your opinion, are the abuse of dominance provisions in the Competition Act of any utility insofar as the issue that Ms. Rood raised is concerned, with respect to big grocery companies?
It would seem that this is a situation of imbalance in bargaining power, and not a situation of abuse of dominance. That's the bureau's perspective. Having done extensive work in this area in a previous investigation, that's consistent with our previous findings in that matter.
Now, I should point out, sir, that I made reference to other countries that have been able to adopt codes of conduct in this area. The bureau doesn't have the power to create or enforce a code of conduct that would apply to large grocery retailers.
In your opinion, having looked at other jurisdictions, would the adoption of a voluntary code of conduct help with respect to this particular issue?
I suppose, sir, that the devil is always in the details, as they say. A code of conduct can be helpful. We've seen in the United Kingdom a code of conduct that has generally received positive reaction and has appeared to be helpful to some of the issues between grocery retailers and suppliers in that jurisdiction.
Thank you for that.
You said that your bureau, in fact, has been working with enforcement authorities in other jurisdictions to grapple with this issue. Given the provisions of the Competition Act, are there any other provisions that might possibly assist in terms of ensuring that this dynamic, this phenomenon does not continue in our country?
From our perspective, sir, there isn't a clear tool in the Competition Act to deal with imbalances of bargaining power.
Thank you for that.
Now I will move to a very different area, the area of innovation.
I know that in 2019, for the first time, the Competition Bureau announced that you would be instituting a chief digital enforcement officer. For the benefit of all the committee members, could you share with us what the significance of that appointment is?
Yes. This is a part of the bureau's overall focus on being a world-leading competition agency in terms of all that we do in the digital economy.
We were successful in bringing in a chief digital enforcement officer from outside of government to assist us in all aspects of our work in terms of the digital economy. That includes an internal focus and a digital strategy for the bureau, making sure we have the right digital tools to conduct our work as efficiently and effectively as possible, as well as making sure that we're considering and analyzing the competition issues at play in the digital economy, so that we're well positioned to either provide pro-competitive advice on policies or bring enforcement action in terms of the digital economy.
Thank you for that.
Given that your mandate is to enhance productivity and innovation.... Leaving that particular position aside, are there any other tools that your bureau utilizes to enhance innovation?
Absolutely, sir. Competition is a key driver of innovation in any market-based economy. Competition forces competitors to consider innovative approaches at every turn. In fact, this is something that was pointed out by Tobias Lütke, the CEO of Shopify. Embracing competition, looking at your competitors every day and seeing how you can do better than them and how you can provide innovative new products, that's what drives innovation in our economy and in economies around the world. It drives productivity as well.
Thank you for that.
I'd be remiss if I didn't also touch on another new practice that has been adopted by your bureau, which is the new competition enforcement framework that Canada entered into with the U.S., New Zealand, Australia and the U.K.
Could you provide us with more details on that and provide us with your assessment as to how significant that is?
Yes, absolutely. Thank you for bringing this up. This is tied, once again, to the digital economy and the global nature of the economy—
[Translation]
Okay.
Thank you very much.
[English]
Mr. Boswell, I'm not sure if there's any possibility of getting that microphone a little closer. We're actually out of time on that round, but I'll let you finish that response, and we'll try the translation at the same time.
Okay. I apologize.
[Translation]
I'm so sorry, Mr. Lemire.
[English]
The point is that we've entered into numerous international co-operation agreements with our partners around the world. International co-operation and competition law enforcement is vital in a digital economy, in a global economy. Our recently announced agreement is part of our emphasis on co-operating to be able to help Canadians.
[Translation]
Thank you very much.
We will begin our next round of questions.
Mr. Lemire, you have the floor for six minutes.
Thank you, Madam Chair.
My first question, Mr. Boswell, relates to your mandate. As I understand it, you have the power to make recommendations as well as the power to coerce.
In a case of abuse of a dominant position, which is aimed at preventing small players from entering a market and therefore constitutes an anti-competitive practice within the meaning of the act, what can the Competition Bureau do to reframe the situation?
[English]
As I indicated, there is an abuse of dominance provision in the Competition Act, section 79 of the act, that should—
[Translation]
Madam Chair, I am obliged to interrupt the witness because there is no interpretation. I understand the interpreters, because the sound quality of the English stream is poor.
What can be done to fix the situation?
[English]
Madam Chair, I'm going to try a different microphone. Perhaps I could ask my colleague Monsieur Durocher to answer Monsieur Lemire's question, and I'll switch microphones.
Okay.
Monsieur Durocher, I see that you have the same kind of headset. If you could put the microphone closer to your mouth, that would be helpful.
Thank you.
[Translation]
Certainly, Madam Chair.
In Canada, in order to remedy an abuse of dominance issue, we must reach the conclusion that this is indeed the case, and that the three required elements are well established, with supporting evidence.
An amicable agreement or consent agreement may be entered into with the party or parties in question. Otherwise, the file is transferred to the Competition Tribunal, which is a specialized federal court. To do so, a file must be prepared with witnesses, evidence and documents.
The tribunal will make a decision, and can put in place a solution that will eliminate the problematic conduct, or take any other necessary action to rectify the situation.
What procedure do you follow when a complaint is filed?
For example, last February, the TekSavvy company filed a complaint with the Competition Bureau against the Bell and Rogers companies for unfair practices.
In my region, Videotron, Cogeco and Maskicom also filed a complaint against Bell.
What are the verification steps with respect to the parties involved? What sanctions may be applied?
When the bureau is required to conduct an investigation, it examines the relevant facts and evidence to determine whether an offence has actually been committed and whether there is an abuse of dominance.
To do this, a group of investigators interview witnesses, whether they are competitors, suppliers or industry experts. They analyze the evidence and review documents related to the complaint. The bureau conducts very thorough reviews to ensure that decisions are based on facts and evidence.
After investigation, the bureau often enters into discussions and negotiations with the company or companies involved to see if the dispute can be resolved without the need to refer the case to court.
The bureau may register a consent agreement with the court. If there is no mutually agreeable solution, the dispute is the subject of an application to the Competition Tribunal, in which case it is a legal proceeding. A party may be able to appeal a decision of the tribunal.
According to your recommendations, a minimum of four suppliers is required to foster healthy competition. In a remote region like mine, in Abitibi-Témiscamingue, there is only one wholesale service provider and several wholesale service distributors. It is very difficult to have this minimum number of suppliers, even if it is desirable.
In your opinion, should the wholesale service provider be independent of distributors so that it does not offer better prices to its subsidiary or to itself? Could this independence between the distributors and the provider be part of the solution to make the Internet more affordable in remote areas?
The minimum number of suppliers principle was part of a recommendation we made to the CRTC regarding the wireless sector. Based on evidence, we determined that the effect of a fourth competitor in a wireless market was significant, given the observed price declines.
In the broadband and high-speed Internet sector, there are some of the same players, but the economic and business realities are different. In this case, we often participate in CRTC consultation processes to ensure that we provide input on any aspect of competition, including methodologies used to assess access to independent parties.
When it comes to investigating specific situations where there are access issues, our role is determined by facts and evidence. We really proceed on a case-by-case basis.
I'll ask my question again.
Does the wholesale service provider have to be independent of the distributors so that it does not offer itself better prices? Could separating the distributor from the provider be a solution to make the Internet more affordable?
This question should really be put to the CRTC. We could investigate if the facts and evidence suggested that there might be an abuse of dominance in a particular case.
[English]
Thank you, Madam Chair.
I thank our witnesses for being here.
As NDP critic for consumer issues for a number of years, I want to thank the Competition Bureau, the women and men who have ably served our country for a long time. In fact, I've been calling for reformation of the Competition Act. Quite frankly, it's time we took the training wheels off and provided more empowerment. Corporations have often treated Canada as a colony with regard to the treatment of Canadian consumers and competition. When you compare, even the United States....
I had a private member's bill back in 2009 that went through the House of Commons. It was supported and actually went through this committee. It resulted in a voluntary agreement for the automotive aftermarket. The problem we have is that the voluntary agreement is now being abused. Has there been any investigation with regard to the complexity? The voluntary agreement for that particular issue was on the right for cars to be fixed and repaired in the aftermarket. It didn't include a digital chapter. I'm just wondering if you could indicate whether there's been any work or investigation with regard to that part of the bill.
Just so other members know, what was happening was that the United States was allowed to get aftermarket fixes to their vehicles, equipment, software and a series of different things that were denied in Canada. Ironically, in Windsor you could get your van in the aftermarket fixed over in Detroit, but you couldn't get it fixed over here in Windsor because the companies wouldn't provide that information. It resulted in a voluntary agreement.
I'm curious to know the state of that situation right now.
Madam Chair, that's not something I'm familiar with and can provide any meaningful detailed response on today. I would be happy to follow up off-line with the honourable member on that issue.
Great. That's fine. It's just recently become more challenging with that voluntary agreement.
I guess from there, what type of benefit do you think consumers would enjoy if the Competition Bureau were allowed to actually do criminal proceedings? Can you comment on other countries that have the ability to have their competition laws enforced through criminal proceedings, and whether that modernization might empower the ability of the Competition Bureau to readily get results?
I can tell you, Madam Chair, that under certain aspects of our law, we do have the ability to bring criminal prosecutions. In fact, we do bring those.
In terms of how it works, when we investigate, we're akin to a police force, conducting a thorough investigation and following the evidence where it leads. We then refer the results of our investigation to the Public Prosecution Service of Canada. Certain particular offences set out in the Competition Act are criminal. Perhaps the most well known are what we refer to as “cartel” offences, which are agreements between competitors to fix the price, restrict supply or allocate markets. We also have bid rigging, which is criminal.
Over approximately the last 10 years, as a result of our criminal prosecutions, companies have paid approximately $120 million or more in corporate fines. Dozens of individuals have been found guilty of criminal offences.
It's not the whole act, but there are certainly criminal offences within the act.
Well, that's the point, I guess; there may be a more modernized approach for encompassing the whole act.
Here's where I'm going with that. When you look at the most recent issues we've had related to the digital economy, there's Facebook, Amazon, CRTC, which involves a digital economy, Ticketmaster, the Apple battery scandal. All of those are relating to a new, modern economy.
Is it not time, perhaps, to review the act, to be more robust, or to at least have that discussion? If there were increased capabilities, do you think the people in the Competition Bureau would be up to new types of enforcement provisions or investigation provisions, if provided the proper supports legislatively?
As the committee may know, the Competition Bureau is part of the broader Department of Innovation, Science and Economic Development. ISED itself has control over competition policy in Canada. Of course, elected officials are responsible for any amendments to our law.
That said, in our view, it's always useful to review a law to make sure it's fit for purpose. Minister Bains actually wrote me an open letter in May 2019 asking our team at the bureau to look into all aspects of our law to make sure they were fit for purpose. We've been working hard on that. We've done work on that and hope to see progress on that.
So perhaps we can expect, hopefully by the end of this year, something that would be publicly disclosed with regard to some type of potential change.
Thank you very much.
We'll now move to the second round of questions.
MP Dreeshen, you have the floor for five minutes.
Thank you very much, Madam Chair.
I know that in recent years, the European Commission has been much more active in enforcing competition rules on big tech companies such as Amazon, Google and Facebook. Does the Competition Bureau have enough resources and legal powers to effectively enforce competition rules against big tech companies? More importantly, does the Competition Act provide high enough penalties to discourage big tech companies from engaging in anti-competitive practices?
In terms of resources, the bureau strives every day to get the absolute most out of the resources we have, to be as efficient and effective as possible, always looking at our processes and how we can do better, and what tools we could use to do better.
That said, I've spoken publicly multiple times about some of the challenges the bureau faces with respect to administering and enforcing the Competition Act in the digital economy. We've had a veritable explosion of data in the world and, of course, law enforcement agencies have to deal with the data we receive on cases. The amount of data we've received has gone up six times. The cost of cases has increased dramatically.
Our budget has been about the same for 10 years, so in real dollars, it's down about 10%, and we have fewer resources now than we did 15 years ago in terms of people working on files. Outsiders have called on the bureau to get more resources, including the C.D. Howe Institute as well as the Global Competition Review in its annual review of competition enforcement agencies around the world.
We're doing the best work we can in the public interest to protect Canadians. We've brought cases. We've investigated Google. We brought a case against Amazon in 2017 with respect to some of the pricing practices. We obviously resolved the matter with Facebook earlier this year in terms of privacy representation. As some members of the committee may know, we have an active investigation into Amazon.
The good people at the bureau get up every morning and our mission is to serve the public interest, to do as much as we can to enforce and administer the law and to promote competition in Canada.
Thank you.
When you mentioned the Global Competition Review, it made me think about some of the other predatory practices that other countries are using. Primarily I think about China. If you take a look at what is happening in Africa, the way in which they embed themselves in the infrastructure projects that are there, environmentally and human rights-wise there are serious issues there.
I'm curious whether you have your finger on the pulse of what is happening in those issues, or would a different department look at those types of investments and predatory practices?
Yes, absolutely. Our focus day in and day out is on competition issues in Canada, doing everything we can to make the Canadian economy as competitive, healthy, vibrant and fair as we can.
To that particular point, you mentioned during your address that you have aid in pro-competitive work, and you're trying to maximize that. Are these provincial initiatives or federal initiatives, when we're talking about pro-competitive work?
The reason I say that is that we continually hear how the government is saying they want to push forward into green technology and all that, whereas by doing that...and if that's where you have to concentrate provincial initiatives and things to try to get energy into the world to take care of the problems that China is doing in Africa and so on, it seems to be left on the back burner. I'm curious whose initiatives you will be pushing when you try to look at pro-competitive work.
Our work, in terms of advocating for more competition in Canada and promoting competition, is at all levels of government, sir.
We work with municipalities on how their regulations could be more pro-competitive, as well as with provinces, territories and the federal government. We're trying to help at all levels of government.
Thanks very much.
Thanks, Commissioner, for joining us.
At a recent grocery innovation conference, you said, “In general, communications among competitors regarding employee wages would seem to be unrelated to an effective response to the pandemic” and “I heard of such discussions with concern”, in relation to our national grocers and their cutting of pandemic pay.
I've tried to wrap my head around what could have been the rationale for those discussions. I can't think of any rationale except for collaboration to reduce employee wages specifically. Could you think of another rationale?
As I said when speaking to the Canadian Federation of Independent Grocers, the concern here is the slippery slope. When competitors, certainly at very senior levels, are having conversations, there is a slippery slope towards what I referred to earlier, when answering Mr. Masse's question, with respect to cartel conduct. That's why I flagged that issue, in particular, with respect—
I'm glad you did. I'm glad you flagged it to them directly. I would also say that I appreciate the November 27 statement on wage fixing.
When I compare our interpretation of our own laws out of Justice and out of your statement versus the FTC guidance, it does seem pretty straightforward to me that, if that same conduct that we saw among our national grocers had occurred in the United States, it would have amounted to negative wage fixing, and the FTC could have criminally investigated it. You don't have that power, though.
That's what we clarified to the Canadian public last Friday, that agreements between competitors with respect to things such as wage fixing and no-poach agreements are not captured by our criminal powers, as a result of 2009 amendments to the law that removed the word “purchase” from that particular section of the law. We had legal advice that we couldn't bring those cases criminally.
Of course, as you point out, that puts us out of sync with our biggest trading partner, where the U.S. Department of Justice antitrust division has indicated that those types of agreements—if the agreement is established, which is obviously an important first step in any investigation of that sort—will be prosecuted criminally in the United Stated.
I note that the FTC also says that mere communication can amount to an agreement in certain circumstances.
I would also note a limitation, in my read of section 90.1. While it could, in theory, apply where an agreement must be “existing or proposed”, in this case it would have been a past agreement, so even there there is a limitation that we might well want to address.
The past commissioner, your predecessor, Commissioner Pecman, recommended expanding the act's purpose beyond protecting consumers to include the fair treatment of labour. You referenced the 2009 change that we could potentially reverse. Do you think our laws ought to be consistent with those of the United States?
I think that, for a variety of reasons, convergence of competition laws, certainly within North America, is something that would be beneficial in multiple ways, including beneficial to the business community, because they would understand that the laws they must comply with are the same or nearly the same in both Canada and the United States, so there is value there.
Clearly, as a result of our statement last week, there is now divergence on that particular issue, which, as we pointed out in our statement, is a serious issue for Canadian workers.
I appreciate that, Commissioner.
We are a country of oligopolies, and there is great inequality of bargaining power in the context of oligopolies. You have noted a couple of times now in your testimony that the Competition Act really does not directly address the inequality of bargaining power, unless it amounts to an abuse of dominance.
We see in Australia a conversation about a code of conduct between news media and platforms using a competition lens to address that inequality of bargaining power. We also see in the U.K. a code of conduct used between national grocers and producers. It's been brought to my attention that we should have a code of conduct like that for our national grocers and producers to address that inequality of bargaining power. That could be a provincial conversation.
Do you think there would be a way, though, to amend the Competition Act to allow for you and your office to impose codes of conduct where you deem it necessary to address that inequality of bargaining power in the case of oligopolies?
Well, that's a good question. It's not something that I have a ready answer for in terms of the various issues that might be in play with that in the provincial-federal jurisdiction and those sorts of things. As you point out, a code of conduct in the United Kingdom has been well received.
Thank you, Madam Chair.
Mr. Boswell, earlier, you mentioned your concern about the increase in mergers, particularly in the context of the COVID-19 pandemic and of the impact of market concentration and long-term harm. You are therefore monitoring the impact of these mergers.
Cablevision, which is a subdivision of Bell, does not provide an essential service to the population, under the pretext that the population pool does not meet regulatory requirements. For example, it provides television services at the low price of $25 if there is a pool of at least 20,000 customers. This is not the case, for example, in Amos, in Abitibi.
Have you been made aware of this situation, and can the Bell company, through its Cablevision subdivision, relieve itself of its responsibility in this way?
It will be my pleasure.
I'll go back to the first part of the question. The Competition Act includes provisions that require companies to give us advance notice or information before proceeding with a merger. They have to wait a certain amount of time to see if they meet certain financial thresholds. We must be given the opportunity to review merger plans that could affect consumers.
With respect to the business activities of some companies and their decision to be present in certain markets or not, I think that companies make their decisions mainly according to their business interests.
In our view, it is important to ensure that there is no anti-competitive behaviour, no abuse of a dominant position, and no purchase of a competitor that could lessen competition in a market.
If I understand correctly, there could be inequity in remote areas where the population base is smaller.
One of the main problems in deploying the Internet in the regions is access to the infrastructure, poles and networks of major suppliers. To your knowledge, is it the same across the country?
For example, Hydro-Quebec can provide access to its poles without delay. In the case of Bell, on the other hand, there are often delays. Can you confirm that this is an anti-competitive practice, and have you ever looked into this issue?
Thank you for the question.
I cannot comment when we are conducting an investigation on a particular file. We are on the lookout for new developments. If the CRTC is looking into this issue, we will be able to intervene and provide our competitive perspective. Clearly, access to poles, for example, is important to the rollout of 5G across Canada and in the regions. The role of the Competition Bureau is to provide a competition perspective on this.
[English]
Thank you, Madam Chair.
Part of the challenge for a country like Canada is that we've become a branch-plant economy in many respects, aside from a few domestic champions for headquarters here in Canada. A good example is the lack of use of the Investment Canada Act to protect iconic Canadian companies like Rona, for example, which is now owned by Lowe's. Hence, other than companies like Burger King, which wanted to put its headquarters here to evade tax in the United States and put up false offices, really, in Toronto and other regions, we don't have the decision-makers here as much.
How much of a disadvantage is it for us—for example, compared with the United States—not to have greater co-operation amongst our laws, and consistency? For example, in Windsor here, as our minivan, which is a world-class vehicle, is being built, it literally crosses the border back and forth seven times. There's a whole regulatory regime that protects consumers, aside from the aftermarket issue that I raised, with regard to the building of it, the quality and a series of things that are consistent for the consumer.
With a digital economy, how important is it for us to get further co-operation legislatively with the United States to protect consumers?
As an enforcement agency, we co-operate and collaborate extensively with our American counterparts. We have deep relationships with them and we share information on cases, or potential cases, on a regular basis in many aspects of our enforcement work, which we believe provides a better result for Canadians and a better result on the U.S. side of the border when we are working together on these matters.
Of course, as I pointed out earlier, there are some areas where our laws diverge. Those areas could be examined if there was a desire by elected officials to bring our laws closer together.
Would that result in better consumer protections and repercussions in terms of benefits, similar to what Americans get on different cases? For Toyota, for example, it was clearly different what took place, as well as for Facebook and a series of things. Would that help merge those two types of penalties and repercussions?
A review of sanctions is something that, obviously, came up following the Facebook resolution in Canada and was commented on extensively.
Thank you very much.
Our next round of questions goes to MP Cumming.
You have the floor for five minutes.
That's great.
Thank you to the witnesses for being here today.
I want to start off with a discussion around the concentration that's happening with the large, big tech players. You mentioned earlier that you've had a couple of rulings related to Facebook and Amazon, but given the nature of their business and the direction in which it's going, how concerned are you about the market concentration they will have as major players in Canada? What tools do you have in your tool chest to be able to hold them accountable for predatory practices and market dominance?
Madam Chair, I thank Mr. Cumming for that excellent question.
This is an issue that competition agencies around the world have been grappling with, how these digital platform markets can be, to a certain extent, winner-take-all markets where the competition is for the market, not in the market. The bureau has been very alive to these issues and working on these issues for several years.
In September 2019, we put out what we refer to as a digital enforcement call-out, where we had a white paper, an issues paper, that explained to the Canadian public the key competition issues in these digital markets, how they could tip to concentration of one or a small number of companies, and what type of anti-competitive practices to be on the lookout for in these markets.
That's similar to our call-out for information earlier this year about conduct in Amazon. That's obviously an ongoing investigation, so I can't get into the details.
These are serious issues that, as I said, our colleagues around the world are grappling with. There has been extensive work done in this area. The bureau is on it and is paying close attention. Where we find the evidence or where the evidence leads us to bring a case, we'll bring a case.
I completely agree with you. It's a significant issue, and actually made far worse with the pandemic. Given that market dominance, it has increased significantly.
Has your department spent much time reviewing the provisions within Bill C-11 on data privacy and some of the data regulations? Are the definitions strong enough? Have you done a thorough review? Can you share with us any opinions you might have, either right now or by following up with something in writing?
Madam Chair, thanks again for the question.
We haven't done a deep dive on the bill before Parliament. What I can say, though, is that there are certainly aspects in the bill that we view as positive, including giving the Office of the Privacy Commissioner greater ability to share information with the bureau, and a small amendment to the Competition Act to provide for sharing between the bureau and the Privacy Commissioner. That we view as positive.
There is also the notion of data mobility, which is set out in the bill, to be expanded upon, I guess, with more detail to come in regulations to follow. Data mobility, to my mind, is synonymous with data portability, which can have tremendous competitive benefits in the economy. It allows for greater switching between services in multiple different sectors.
We have, of course, looked at the bill. As I said, we haven't done a deep analysis, but on our initial review there are elements that we view as positive for our work and for our ability to work with the Privacy Commissioner, because more and more there's a great intersection between competition and privacy.
Were you not asked to provide input prior to the drafting of the bill? This bill is very strongly connected to the work you do.
I'm a bit taken aback by that; I'm surprised by it. Shouldn't your department be thoroughly involved in a bill of this nature?
Thank you very much.
Our next round of questions goes to MP Jaczek.
You have the floor for five minutes.
Thank you very much, Madam Chair.
Thank you to the witnesses for coming today.
You of course have heard from my colleagues a number of our frustrations in relation to competition in Canada, whether it be the large grocery chains or the large purveyors of telecommunication systems. Certainly this committee has heard what I think a lot of us may feel—certainly I do—that somehow, competition isn't working very well.
I'm very pleased to hear that since May 2019 you've been working on some suggestions for Minister Bains to potentially amend the legislation. You've given us a few hints of some areas where you may be going with that—codes of conduct, a convergence with our largest trading partner, the United States, etc.
I'm interested in the enforcement side. If you feel there's a civil case, you go to the Competition Tribunal. If potentially criminal charges might be laid, you go through the director of public prosecutions. Do you see any changes there that could be helpful for your work and that you may be looking at for the future as well?
Our ability to bring cases to either the Competition Tribunal or the criminal courts via the Public Prosecution Service of Canada is obviously fundamental. We have a prosecutorial model.
We've talked a bit today on the civil side about the ability to have financial sanctions that are scaled to the size of the enterprise that we're dealing with. This is something I perhaps should have brought up in response to Mr. Cumming's question, in the sense that another positive development, from our perspective, of Bill C-11, the privacy bill, is that the financial penalties in that bill are scalable. That is, they can be based on a percentage of global revenue. Many of our partners around the world have those types of financial penalty provisions in their acts. In my view, it's important, in order to encourage compliance with the law, to have sanctions that reflect the volume of commerce involved and the revenues at play.
Thank you.
That's very useful. I think it ties in quite well with what my colleague MP Masse was saying in terms of our being, in essence, such a small player in terms of the potential volume of activity locally. These are huge corporations that obviously would respond to potentially more onerous sanctions.
Am I understanding you correctly that you would see sanctions and fines potentially matching the scale of the operation of the particular company?
It's something that's certainly worth considering in a comprehensive review of the act.
I should point out that there are areas of the act where there are no financial penalties available at all. For example, in relation to civil agreements between competitors in section 90.1 of the act, which is the alternative section to examine wage fixing, there is no ability for a financial penalty in that section whatsoever.
Thank you very much.
We'll now start the third round.
Our first round of questions goes to MP Jeneroux.
You have five minutes.
Thank you, Madam Chair.
It's a pleasure to be here with everybody.
Mr. Boswell, thanks for joining us.
I'm looking at your budget. Your budget in 2009 was $40 million, and your budget in 2020 is $37 million. Your employees essentially have stayed the same, but you're down one employee. Unless that one employee was making $3 million, I assume that essentially everything has been kept about normal for that period. I suspect the pandemic itself has only accelerated a lot of the requests or need for the Competition Bureau.
Big tech is interesting, but I'm also curious if there are practical examples of things like hand sanitizers or PPE, perhaps, that you can share with us and how this pandemic has accelerated some of those concerns.
As I alluded to in my opening remarks, shortly after the declaration of the global pandemic, the bureau took the unprecedented step of issuing guidance to the marketplace in terms of a willingness to exercise enforcement discretion for competitor collaborations that were specifically designed to keep supply chains going so that critical goods and services could get to Canadians. We put that out in early April. We set out that if those agreements or collaborations between partners were time-limited and very much focused on making sure that Canadians got the critical goods and services they needed, then we would exercise enforcement discretion with that. Of course, we also cautioned that we wouldn't tolerate any abuse of that indication to the marketplace.
Sadly, this didn't come as a surprise to us. In fact, we issued a warning within days of the pandemic starting, in terms of deceptive marketing practices trying to take advantage of the pandemic: false or misleading representations of products saying they would prevent, treat or cure COVID. Within days of the pandemic being declared, we assembled a dedicated team to monitor the marketplace for these types of false or misleading representations.
As they came to our attention, we would send these companies warning letters, rapidly, saying that this conduct was likely offside of the act and that the representations were false or misleading, and calling on them to change their conduct immediately. We did that with dozens of companies, and fortunately the vast majority of them heeded our warnings, took down their representations and had products pulled from shelves. That allowed us to make sure that these, in fact, dangerous false or misleading representations weren't out in the marketplace.
We still have a team dedicated to this, monitoring this and getting complaints. We had a surge in complaints between April and June of this year, two times the number of complaints in terms of deceptive marketing practices. Sadly, as I said, it did not come as a surprise to me. There are always people who are willing to try to step into a crisis and make money off it. In this case it was, in our view, through false or misleading representations.
I will heed the chair's warning. I'll sneak in a quick question, then.
It seems everywhere you go there are different hand sanitizers. Some are more potent in smell; some you barely smell, that being just one indicator. It seems like every distillery across Canada has come up with a way to shift to making hand sanitizers. How connected are you guys with Health Canada in making sure those hand sanitizers...? Inevitably, they have to get pulled off the shelves, and then they get put back on the shelves once they've met the criteria.
You probably don't have time to answer. I'm trying to be polite. I guess it's something to think about and maybe touch on in another question.
Thanks.
Thank you. Unfortunately, you are out of time, but perhaps Mr. Boswell can answer that in a subsequent round. Those were excellent questions, MP Jeneroux.
Our next round of questions goes to MP Jowhari.
You have the floor for five minutes.
Thank you, Madam Chair.
Thank you to the witnesses. It's quite an informative session.
This question goes to Mr. Boswell. In your recent speech to the Canadian Club Toronto, you argued that to ensure a strong economy and a prosperous future for Canadians after the COVID-19 pandemic, it was necessary to take action “in three vital areas”: fostering competition in digital space dominated by global tech giants; developing a robust telecommunications infrastructure underpinned by competition; and prioritizing competition in regulatory environments at all levels of government.
Can you talk about what action specifically the federal government can take to support this agenda?
Yes, I suppose the third pillar is where the federal government and all levels of government can support this agenda, which is to examine existing or proposed regulations—as I said, at all levels, including municipal—to make sure that those regulations—obviously, they may have other policy objectives—are taking competition into consideration and hindering competition as little as possible, while also trying to achieve those other objectives.
In line with that, as we flagged to this committee in a submission in May, we have developed a competition assessment tool kit for use by regulators across the country to bring that competition lens to their regulations. There's extensive evidence out there that Canada could benefit. It could be a great opportunity for Canada to really bring this competition lens to all of our regulations in this country.
Thank you for that.
Given our constitutional framework and the fact that you emphasize all levels of government, how can the federal government encourage other levels—the provinces and municipalities—to prioritize competition in their own regulatory environments?
Could you respond quickly, because I want to squeeze in another question for you?
I suppose it's leadership by example and embracing a culture of competition in this country coast to coast to coast.
Okay. Thank you.
The federal government, as you know, recently introduced Bill C-11 for the protection against commercial exploitation of personal information and the establishment of a data protection tribunal. Clause 14 of this bill would notably amend the Competition Act to facilitate co-operation between the Competition Bureau and the Privacy Commissioner.
How does this bill affect your activities, if Parliament enacts it in the near future in its current form?
Madam Chair, I'm going to ask my colleague Mr. Durocher to answer the honourable member's question, because I'm going to try, yet again, a new mike so I don't have to hold this up by my mouth for the next hour.
I'll turn it over to Mr. Durocher.
Madam Chair, in response to the question, it creates a means to facilitate the sharing of information between the Competition Bureau and the Office of the Privacy Commissioner, which can be particularly important in the context of investigations. It would facilitate information sharing between us to make investigations progress. From our perspective, the ability to share information with like-minded partners is particularly important, and this was certainly something that was welcomed in our preliminary review of the bill.
I have about 30 seconds. I'm going to squeeze this one in. Hopefully you will be able to answer it.
From a competition perspective, what balance should the federal government aim to achieve between protecting individual privacy and fostering innovation in the database market?
Does anyone want to answer in 15 seconds?
I'm happy to answer. I wasn't sure if the commissioner was back on.
Obviously, in a data-driven world things like data portability and data mobility are key to empowering consumers with their own data, which in turn can facilitate competition, but we recognize that data is critical to drive innovation as well and to enable companies to improve the quality of their products and their offerings in the marketplace. Certainly from a competition perspective, empowering consumers to switch providers with their data through data portability is a very important notion in a digital world.
[Translation]
Mr. Durocher or Mr. Lemire, where do you see the line between the need to foster competition in the markets and the need for government intervention?
For example, in the case of an essential service, is it really a good thing for citizens to be left in the hands of free market actors?
That is a very good question. Our role is to ensure that there is healthy competition in the markets and that there is no abuse of dominance or anti-competitive practices.
We sometimes note, for example in the telecommunications market, that there are no business plans for certain regions because it is simply not profitable to offer services there. Hence the importance of government's role in encouraging the deployment of broadband Internet service. In this context, the bureau's role is to provide the CRTC with evidence of the benefits of competition to ensure that their decisions and actions are based in part on competitive concerns.
This partly answers my second question, but I'm going to ask it again anyway.
Where do you see the line between the need to foster competition in the markets and the need for government intervention?
Let me point, for example, to the cases of Bell Canada and Air Canada, which were investigated by the bureau. When it comes to providing essential services to the population or the economic development of a region, is it really a good thing for citizens to be left entirely in the hands of free market players?
I would say that the Competition Bureau favours free markets so that businesses can take advantage of the benefits of competition, such as low prices and the opportunity for innovation.
In some cases, the market does not work. When it reaches a certain limit, we take action that may help strengthen regulation or enforcement to correct the situation, while promoting our views on competition.
[English]
Thank you, Madam Chair.
I mentioned the Investment Canada Act and foreign takeovers of iconic Canadian companies, most recently Rona by Lowe's, leaving us with a false competition nationally, basically, between Lowe's and Home Depot, which is a joke. On top of that, we've had in the past Future Shop being sold to Best Buy. That has resulted in a loss of competition, no doubt, in the electronics industry, especially when you look at where other electronic industries are owned. Another good example is the loss of Zellers to Target. With that foreign takeover, we saw that Zellers actually paid above industry average wages and had benefits and also had a profit.
Does the Competition Bureau provide insight on the Investment Canada Act when takeovers are actually brought forth, in terms of commentary for the minister? Is that something that takes place?
Madam Chair, I'm back and hopefully this microphone is working for everyone, including the translator. It's amazing how many microphones we have in this building.
What I can say is that obviously for the Investment Canada Act, there's a team at Innovation, Science and Economic Development that deals with those foreign investment issues. The bureau examines these situations through our merger review lens, which is set out in the Competition Act.
In your opinion, has any of the three episodes I just mentioned in terms of takeovers benefited Canadian consumers? Now that we can look in the rear-view mirror, have Canadians benefited from those takeovers and the closure of competitors?
That's not something I can comment on at this time. I haven't specifically looked back at those particular transactions.
If we continue, though, to allow takeovers of competitors in the same industry, especially Canadian ones that we can control, doesn't that seem self-defeating for consumers, having fewer choices? Also, the current laws that you're under require multiple competitors in the same field to actually do comparisons. Isn't that a disadvantage?
Madam Chair, as I said, these are questions perhaps more appropriately put to the individuals who deal with the Investment Canada Act.
Thank you, Madam Chair.
I want to ask a question about section 32 of the Competition Act, which authorizes the Federal Court to restrict any competitive exercise of intellectual property rights, but only in proceedings initiated by the Attorney General of Canada. I'm just wondering if you think it would be a good idea to grant the Competition Bureau itself the power to initiate proceedings under section 32 of the act.
Intellectual property considerations come up quite often in competition law, and we have published detailed guidelines on the issue, the intellectual property enforcement guidelines, with numerous examples.
I can't really comment on section 32 itself, but I would note recent examples of action we've taken on IP issues that have come up in our litigation against the Toronto Real Estate Board. Oftentimes we see similar issues of a company not sharing data and claiming to have intellectual property or an IP right to that data. Whether or not that is exclusionary depends on the facts and circumstances of a given matter, but our Competition Tribunal has opined on these issues, which really informs the enforcement approach we've tried to clarify through our guidelines.
I'm wondering why you can't comment on section 32. My basic question is whether or not the Competition Bureau should have the power to initiate proceedings. Isn't that a question you could have an opinion on?
Certainly it's not something I've turned my mind to of late. I'd be happy to provide the committee with a more fulsome answer in writing after today's hearing.
Okay.
Given that, would you have an opinion on the advantages and disadvantages of allowing private parties to initiate a similar proceeding under section 32 of the act?
Thank you for that.
I wanted to switch over to talking about the Internet. There have been a lot of concerns about anti-competitive practices that are being engaged in by the big Internet service providers, for example delaying or avoiding payment of wholesale access rates by the CRTC. Is there any way that the Competition Bureau can ensure that these incumbent telecommunication service providers do not engage in any competitive practices against the smaller ISPs? If you can make any further comments on that, I'd appreciate it.
Madam Chair, there are a number of different aspects to the telecommunications regime in Canada, and there are areas where the Competition Bureau can be involved. The CRTC is the organization that oversees the wholesale regime in Canada. Questions regarding that regime would be best placed with the CRTC.
The Competition Bureau recognizes the importance of ensuring that the wholesale regime allows competition in the marketplace. We've been very active with the CRTC in providing our views. Most recently, we spoke with the CRTC and provided a submission in their recent proceeding on rate setting. There we were looking at the different ways in which rates can be set in the wholesale regime and what the impact on competition would be with those different rate-setting methodologies.
To follow up on that, it sounds like your opinion is that the Competition Bureau does not have any direct ability to enforce any competitive practices in that sphere. It's more a CRTC regulatory jurisdiction. Is that what you're saying?
We do have the ability to take action when potential abuse of dominance is happening, exclusionary conduct in the marketplace. There is a very specific test we need to use in order to use our abuse of dominance provision, and it also includes a requirement to show that there's been an adverse effect on competition.
Therefore, we try to take a multipronged approach to these issues, where we have our enforcement ability under the Competition Act as well as our work with the CRTC to look at the whole framework.
Thank you very much.
Mr. Boswell, if you can make sure the information that was requested by MP Sloan gets sent to the clerk, he'll make sure to circulate it among all the members. Thank you.
We now go to MP Lambropoulos. You have the floor for five minutes.
[Translation]
Thank you very much, Madam Chair.
I would like to thank our witnesses for being here today to answer our questions.
Mr. Boswell, you mentioned in your testimony that global competition can help us with our economic recovery from the COVID-19 pandemic. Do you think changes to the act could help the economy recover? If so, what would you suggest?
[English]
As I alluded to in the opening remarks, we believe that a focus on competition in Canada will assist in the economic recovery. Competition has multiple different benefits. Of course, competition drives lower prices for consumers, so affordability, more choice and better-quality products.
In terms of the macro picture, competition drives productivity increases and innovation. There's been a long-standing productivity lag in Canada, and if we can increase productivity and GDP, that will assist in the economic recovery.
[Translation]
Thank you very much.
I completely agree with you that we needed this during this difficult time.
[English]
We have to make sure that we're really encouraging productivity and that we're encouraging people through jobs being created. However, in regular times—and this is not a COVID-related question—I've had many companies in my riding, which is a very industrial riding, come to me and complain that they don't feel like they have equal opportunities with regard to bigger players, bigger global players.
I was wondering if there's anything in the act that protects Canadian companies or gives them some kind of an advantage with regard to this type of competition.
I'm interpreting the question as whether there's anything in the act that helps Canadian companies compete versus large global players. There isn't anything specifically in the act in that regard.
What there is in the act is the ability of the bureau to bring enforcement action if we discover—if the evidence shows—that large global players are behaving in an anti-competitive manner inside Canada. That is the subject of much of our work here at the bureau. We rely on complaints and we rely on our marketplace intelligence to see if there's anti-competitive conduct by big players, and then we pursue that investigation to obtain the evidence that we believe is necessary and to determine if we should bring a case.
Thank you.
With regard to enforcing competition rules on big companies, we've heard a lot from telecom companies recently, and we know the case is the same for companies like Google and Amazon. Does the Competition Bureau have enough resources and legal powers to effectively enforce competition rules? Why is Europe more effective than Canada in doing so?
What I can say is that—as I think I've said several times—we're focused on doing as much as we can with the resources we have, and I'm proud of the bureau's track record. We have a wide mandate in terms of enforcement. We bring a lot of enforcement actions, and we have done so for very many years.
Obviously, in a more complex environment, more resources would be extremely helpful. The world is very complex for these types of digital investigations. You need special skill sets; you need data scientists, data analysts. You need to really understand what's going on under the covers, the opacity of the visual economy, with algorithms and those things.
Those are issues and challenges that we're tackling every single day.
My Internet connection got unstable at one point, so I'm not sure how much time I have left, and I also don't know if you answered my next question. My next question is, what is the difference between Europe and Canada that makes it easier to actually enforce these rules?
It's quite a lengthy answer. There's certainly a different regime in the European Union with respect to competition that allows for initial prosecutions or findings of wrongdoing in a different manner from that in Canada, and of course, there is much more emphasis on competition in Europe. There's the European Commission's directorate-general for competition for the whole European Union, and then each state—
Unfortunately, we are out of time.
I'm going to start the next round of questions. We go to MP Cumming.
You have the floor for five minutes.
Thank you, Madam Chair.
I want to follow up on a question from my colleague Mr. Jeneroux that you didn't get a chance to answer. The relationship between the Competition Bureau.... He was on the path with distillers, hand sanitizers, just this flood into the market of product priced all over the place, with effectiveness probably all over the place. How closely do you work with Health Canada on some of these issues?
Madam Chair, thanks to the honourable member for that question and for following up.
I did want to respond to Mr. Jeneroux that in fact the bureau has been working quite closely with Health Canada throughout the pandemic. Our emphasis in that work has been on what I talked about earlier: false or misleading representations of products that prevent, treat or cure COVID. That's been our focus. We've been in touch with Health Canada. We already have an established relationship with Health Canada on other enforcement matters, so we're able to build upon that.
I should also point out that we created a specific portal on our website that connects Canadians not just to the competition issues but to Health Canada and the Public Health Agency of Canada, as these issues are all intertwined.
I'm finding this very informative. Thank you for being here today.
I want to come back to the discussion related to the dominant tech players, particularly the giants—we're seeing organizations like Amazon, particularly, coming into the market—and the use of data. I know you said you will be reviewing Bill C-11, but I wonder, with that kind of dominance and that control and use of data, if we should be concerned that there aren't enough teeth in your act or in Bill C-11 to deal with things like customer lists. This is stuff that's proprietary and that could really put at risk smaller Canadian companies, small businesses that are using what they think is a service provider but actually could quite likely be a competitor.
I'm not too familiar with the connection to Bill C-11 in that regard, but what I can tell you is that it's very clear, with these large platforms, that data is a huge factor in controlling the market. If you control the data and it's very difficult for entrants to come in and acquire the necessary data to have the scope and the scale to compete, those are very significant issues in terms of competitive intensity and new entrants coming into a market.
We're paying very close attention to the competition issues related to the control of data and the prevention of access to data, which is why I pointed out earlier that the data mobility provision in Bill C-11 is certainly interesting. It ties to something that the bureau has been talking about for some time, which is data portability. This ties into things like open banking, which could provide more competition in the Canadian marketplace.
I'm not sure I answered Mr. Cumming's question.
It was close enough. It was headed in the right direction.
The change in the marketplace is a significant change for your department. My colleague also talked about your budget. Trust me, I'm never one to spend more money. It's how I run my budget. Do you have adequate resources to be able to deal with the new digital age and some of the things that are in front of you? Do you have the talent on your team to be able to deal with what has really changed the entire competitive marketplace?
Thank you, Madam Chair. I see the warning sign, so I'll be as succinct as I can be.
These are pressing issues for the bureau. We are working as hard as we can to do the most we can with what we have, but the world is incredibly complex in terms of competition law enforcement. It's getting more complex and more demanding every day. We literally have mountains of electronic records to deal with on cases. Those are the challenges we're facing.
Thank you very much, Madam Chair.
Mr. Boswell, I'd like to return to the first issue that was raised. You said that your bureau is following developments in jurisdictions around the world in terms of dealing with the big, dominant grocers in the Canadian market. First of all, insofar as the Competition Act is concerned, what would your recommendations be?
As you can imagine, during difficult periods such as this, a lot of Canadians are very concerned about these practices. Would you be good enough to provide suggestions not only as to how the Competition Act can be improved, but also as to any other remedies, other than the fact that the federal and provincial governments work on this together, that we could look to in terms of federal legislation?
Thank you.
Madam Chair, I thank the honourable member for that question.
An interesting aspect of this, when one looks at the international landscape, and specifically the United Kingdom.... The United Kingdom's code of conduct in terms of grocery-supplier relationship developed as a result of an in-depth market study undertaken by our counterparts in the United Kingdom, the Competition and Markets Authority, which is the U.K. competition enforcer. They have a market study power that allows them to really examine if a market is working in terms of competition by compelling information from market participants, analyzing that information and then providing evidence-based recommendations to their government.
In Canada, we conduct market studies, as you have heard about today, but we don't have the market study power to compel information and to provide recommendations to government. Just to go back to the United Kingdom, that's how their code of conduct came to be, and it has been well received because it was based on evidence.
Thank you for that.
Now I'll switch to a very different topic, if I could. You recently appeared before the Canadian Club Toronto. One of the issues you highlighted for attention was the need for the bureau to have better powers to ensure that we are fostering competition in the digital space.
We had an opportunity to highlight some of the changes that have been made. Are there any other recommendations you would like to share with the members of this committee?
Back in May 2019, in an open letter to me, Minister Bains asked me to start a team here at the bureau to work with his team at ISED to make sure the Competition Act was fit for purpose in terms of tools, legal framework, resources and all those issues.
We have been working with Minister Bains' team since that letter was received, and we're continuing to work with them going forward.
MP Ehsassi, my apologies. Could you move your microphone a little bit further away from your mouth? I'm getting a popping sound, so I assume translation is as well.
Thank you.
My apologies for that.
Mr. Boswell, I just want to go back to a question that was posed to you earlier by Mr. Dreeshen. You talked about the Global Competition Review. Assessing the resources and the tool kits that the Competition Bureau has vis-à-vis other authorities around the world, how are we doing as a country? How is the Competition Bureau doing in the grand pecking order of things, if you will?
We work with partners all around the world. We work very closely with our Five Eyes partners, our European partners and many others. What I can say is that our assessment from inside the bureau is that Canada's competition enforcement agency.... We are it for Canada. There are no provincial competition enforcement agencies, unlike in the United States, where each state has an attorney general who deals with competition. Of course, as I said, Europe has the European Commission, plus every European member state has competition powers.
It's likely that we're one of the least-funded competition enforcement agencies, certainly among our peers.
What about in terms of resources? You have alluded to that on several occasions, especially the cutbacks that happened approximately a decade ago, as I understand.
In terms of performance, how are we viewed around the world?
Well, I will try to be objective because, obviously, I'm extremely proud of the Competition Bureau and the amazing people who work here.
The number of times I have heard from colleagues around the world, including colleagues at the OECD competition committee and the International Competition Network.... The expression that is said repeatedly in terms of international convergence and working together is that the Competition Bureau routinely punches above its weight. That's the expression I hear over and over from colleagues around the world.
As I said, we are working as hard as we can to serve the public interests with the resources we have.
Thank you for answering these questions and for the great work you're doing at the Competition Bureau.
[Translation]
Thank you, Madam Chair.
I thank the witnesses for their answers and our colleagues for their in-depth questions.
I would like to mention some information on public-private partnerships that I found on the Internet. I have a huge fear about the federal government's agenda. I am particularly concerned that my region, Abitibi-Témiscamingue, which is sparsely populated, will be one of the remaining 2% that will not be able to connect to the Internet in 2026 as part of the government's strategy.
When I asked Minister Bains, he told me that the Competition Tribunal and the Competition Bureau were independent and that they would look into the matter as they saw fit. I am passing this information on to you with an invitation to reflect on it.
Mr. Boswell, I would like to ask you a question about your analysis of the Air Canada/Air Transat transaction.
Since much of the research work has already been done, do you think an update on your study of competition in air transportation, particularly in regional transportation, would be possible?
Does the negative effect of the pandemic still justify the absence of competitors in this context to ensure coverage of a market, since the pandemic is a temporary situation and the effects of the sale of Air Transat could be permanent?
[English]
Madam Chair, perhaps I'll start and my colleague Mr. Durocher can supplement.
On Monsieur Lemire's question, in terms of Air Canada's proposed acquisition of Air Transat, that's a situation where the Canada Transportation Act allows the Minister of Transport to make a decision that there will be a public interest review of that matter. That decision was taken, and when that decision takes place in terms of transportation undertakings, my role is to provide information to the Minister of Transport with respect to the transaction, more specifically any concerns regarding potential prevention or lessening of competition that may occur as a result of the transaction.
That input was provided back on March 27, 2020. At the time, we took note of the pandemic in the March 27 report we provided to the minister. This matter is continuing, so I can't comment further. The next stage is to provide information to the minister on proposed undertakings by the parties to resolve competition concerns.
[Translation]
By not offering an assistance program for small airlines, the government could create a monopoly situation similar to what resulted from Air Canada's purchase of Air Transat.
Do you think you can act when there is a monopoly situation that derives from a government policy rather than a commercial transaction?
In situations where federal government decisions are involved, we can offer our advice to ensure the promotion of government policies that promote competition.
Thank you very much.
[English]
Our next round of questions goes to MP Masse.
You have the floor for two and a half minutes.
Thank you, Madam Chair.
Back in 2003, the then competition commissioner came to this committee and said that they didn't have the proper supports necessary to investigate price gouging in the gasoline industry. From that, we had hearings from 2003 to 2005. We had a report that was commissioned, and eventually a petroleum monitoring agency was announced in the dying days of the Paul Martin government, and after that it wasn't funded by the following Harper administration.
As nothing has changed in that scenario, my question for you today is, do you have enough powers to successfully investigate potential price gouging for the petroleum industry, especially when it comes to retail in upstream and downstream investigations?
In the United States, they have some more robust laws with regard to disclosing market purchasing. Would that not protect Canadian consumers a little bit better than our current situation?
Thanks for the question, Mr. Masse.
The bureau does not have specific price-gouging powers, and that issue has come to light once again during the pandemic as there have been complaints of different types of price gouging related to products that people were looking to buy on an urgent basis in terms of the pandemic.
The power we do have, as you know, sir, from your work in this area, is to investigate and refer for prosecution retail gas price-fixing cases. We have done so. We had a significant gas price-fixing case in the province of Quebec, where three separate rounds of charges were laid in 2008, 2010 and 2012, with over 20 convictions of individuals, multiple companies convicted, millions of dollars in fines. We also had a gas price-fixing case in Ontario.
That's where we're able to take action with regard to retail gas. It's where we find the evidence of agreements between gas stations to fix the price.
If the laws were modernized, would you feel confident that the Competition Bureau could do more work to protect Canadians on the gas price-fixing issue, if the laws were updated?
I guess it would depend on what aspect of the law was updated. These are often tricky investigations that involve wiretaps and search warrants in getting to the truth.
Thank you very much, Madam Chair.
It sounds as though in 2008, 2010 and 2012 there was some action taken with regard to price-fixing that seemed to be working at that particular point in time. I guess if we wanted to take a look at exactly how the petroleum prices are, we could talk with former Liberal Dan McTeague. He could easily tell folks just what we can expect as far as prices are concerned.
Mr. Boswell, I alluded earlier to the Global Competition Review. Just listening to your testimony, when we talk about transportation, as soon as it looked as though there was some kind of an issue, I believe Air Transat and Air Canada.... Once it gets to that stage where there's a lessening of competition, you would anticipate that it's in the public interest to review it.
I'm curious to know how robust the government is in taking the advice you have. I'll tie that into another point in a moment.
I'm not in a position to comment on how much of my advice they take into account. My role is to provide that advice. I did so on March 27, 2020, in an extensive report that set out extensive competition concerns about the Air Canada acquisition of Air Transat.
Thank you.
My reason for asking this is that on transportation, you got to a stage where they were going to pay attention to what you were saying. When we talk about the Investment Canada Act and we see foreign actors coming in to pick up distressed companies, really, then, as far as competition is concerned, once that's done, the only time you have a chance to comment on it is once we start to see negative effects from the fact that these companies have come into Canada and are starting to change the landscape, so to speak. Similarly, in terms of companies such as Amazon and so on, you don't really know what they're going to do. It all sounds great to have them here, until you start to see how it affects other companies as far as competition is concerned.
How do you keep up to that? How do you keep up to Investment Canada decisions that allow companies to come in and do what they please, and then you're there to clean up the mess? The same thing happens with some of these other companies that are coming in and starting to displace Canadian companies.
We go about our work in the parameters set out by the act and set out by case law in Canada. We review mergers to determine if they're going to result in a substantial lessening or prevention of competition in Canada. That's our focus when there are acquisitions. We do the work.
When it's a foreign competitor coming in and seeking to buy a Canadian competitor, we will do the analysis to determine if that's going to result in a substantial lessening or prevention of competition in Canada. We are vigilant for other foreign companies that are operating in Canada, to make sure they're not engaging in anti-competitive conduct and to make sure they're not engaging in false or misleading representations. We're paying attention, to the greatest extent we can, to these issues.
That takes me back, then, to what you said about our Five Eyes partners. We have a situation where, of course, Huawei certainly has been in the news. We've seen what all of the other Five Eyes partners have talked about and where they're going.
Would concerns about Huawei ever come to you prior to any decisions being made by the government, or again, does that simply come in after the decisions have been made?
Thank you.
I know I'm getting low on time, but I just want to make this one final point.
When we talk about competition, with COVID we've seen small businesses in communities being shut down, and yet box stores have been able to stay open. This is, again, one of those competition situations. I don't know whether or not you have any comments on that.
I think it would be inappropriate for me to comment. These are public health considerations that I don't have the foundation to make an appropriate comment on.
Thanks, Madam Chair.
Anthony, you probably recall that, when you attended our privacy committee before, we had a conversation about data portability. It hadn't been in the competition commissioner's early reports, but I know that you have taken data and privacy issues much more seriously now. I think as a consequence of that, we now see it in Bill C-11. I just want to thank your office for that.
When it comes to the Facebook agreement, which I think is also good news, that consent agreement and a $9-million fine with $500,000 also to reimburse the commissioner for costs.... When we look at the States and the fine of $5 billion, even when you adjust for population here in Canada, it would still be significantly more in terms of a fine in the United States than we saw in Canada.
Can you speak to the capacity of the competition commissioner to levy those fines and why it was one-fifth of what we saw when you adjust for population?
Madam Chair, I'll start.
The act has a maximum financial penalty for false or misleading representations, which was the section of the act that we were investigating Facebook for. The maximum is $10 million. As a matter of general course, we'll give a slight discount for parties that co-operate and resolve the case. That's why we ended at $9 million, but the maximum is $10 million.
I should point out that the U.S. financial penalty was, in fact, as you say, $5 billion. There were some differences. There had been a prior consent order in the United States in 2012 involving Facebook, and there were other privacy issues, as the Federal Trade Commission in the United States also has privacy within its remit, but the fact remains that our maximum fine is $10 million.
When we look to co-operation with an organization like the FTC or competition commissioners in other countries, can you speak to the agreements that you've entered into, if any, as they relate to enforcing rules against some of these global players?
Madam Chair, to answer the honourable member's question, I wouldn't say that we have agreements with respect to enforcement. We work together—we collaborate on enforcement and we communicate on enforcement—but there aren't specific agreements, to put it that way.
In our enforcement, co-operation is one of the most important things we do in terms of global cases. We see that in our cartel work where there are international cartels. We prosecuted a series of them for auto parts, bid rigging and price-fixing. We had to co-operate with authorities around the world, as these companies were under investigation around the world. We do that with the FTC, with the United States Department of Justice and with Australia.
It's vital that we do this kind of co-operation.
When we look to co-operation with our American allies, I remember when your office hosted, in fact, a conversation with experts on competition concerns in big data and privacy for companies that are involved in big data markets.
I don't know if you've had the opportunity to read “Investigation of Competition in Digital Markets”, a report by our American colleagues in the Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary. It's a big report, 450 pages.
I wonder if your office has started a review of that and would be making recommendations to Canadian parliamentarians about what changes you might like to see along the same lines.
Yes, Madam Chair, we're certainly familiar with the report from the U.S. House antitrust subcommittee, with representative Mr. Cicilline leading that work, but we are also aware of a lot of bipartisan support in the United States for more antitrust or competition law enforcement and bipartisan support for more resources for their competition agencies in the United States.
As Mr. Erskine-Smith mentioned, it's a significant report, 450 pages, but there's bipartisan support for more enforcement of competition laws in the United States.
If you do have a review and can provide that at some point to our committee, it would be appreciated when it comes to recommendations.
My last question is simple, because I'm running out of time.
Does the Competition Bureau support a right to repair, yes or no?
One thing we'd be happy to share with the committee is.... We did make a submission last year to the Quebec government in respect of right to repair issues. We would be pleased to share that with the committee members.
Thank you so much. That is our time today.
I want to thank the witnesses for being here, for a really great panel today and, of course, for the work they're doing. I think it's fair to say that you're punching above your weight, as you mentioned, so thank you so much.
[Translation]
I also want to thank the interpreters for their very hard work, as usual.
[English]
One moment, Mr. Masse.
[Translation]
I also want to thank the staff of the information technology department.
[English]
Yes, Mr. Masse. You have a point of order.
I'm sorry to intervene.
I just have two quick things. Could we get a list from the analysts of outstanding questions that we're going to get answers back on? I know the Competition Bureau will get back to us, but there are a few other witnesses who have yet to get back to us. Maybe we could get an inventory of those outstanding answers that we have.
Also, I thank Mr. Dreeshen for mentioning former member Dan McTeague, who is the author of that legislation in the House of Commons and also the committee work here as well. There's a lot to look at there. Dan was the one who pushed this issue so well.
Thank you.
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