INST Committee Meeting

STANDING COMMITTEE ON INDUSTRY, SCIENCE AND TECHNOLOGY

COMITÉ PERMANENT DE L'INDUSTRIE, DES SCIENCES ET DE LA TECHNOLOGIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, October 23, 2001

• 0904

[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order. The order of the day is Bill C-23, an act to amend the Competition Act and the Competition Tribunal Act.

We are very pleased to have with us this morning the Business Council on National Issues. Appearing will be Mr. John Dillon, the vice-president and legal counsel.

From the Canadian Bar Association, we have Mr. Tim Kennish, the chair of the national competition law section, and we have Joan Bercovitch, the senior director, legal and governmental affairs.

We also have appearing as individuals, Professor Tom Ross from the University of British Columbia, and Mr. Howard Wetston, the vice-chair of the Ontario Securities Commission.

What I propose is that we would have opening statements from everyone and then move to questions together. If a question is not directed to you but you would like to comment, you can signal to the chair and then I'll acknowledge it.

We're going to begin in the order I've listed, with Mr. Dillon, please.

Mr. John Dillon (Vice-President, Legal Counsel, Business Council on National Issues): Thank you, Madam Chair.

I must open with a bit of an apology. Our president, Thomas d'Aquino, was hoping to be here today, but as you know, our appearance was rescheduled from next week, and unfortunately he had a number of other commitments. We tried to reschedule, but that wasn't possible, so I will be doing a solo act this morning.

It's a great pleasure to be here this morning and present the views of the Business Council on National Issues on the subject of Bill C-23.

• 0905

As my organization suggested to the Standing Committee on Finance shortly after the terrorist attacks on September 11, Canada has entered a period of national crisis and great economic uncertainty. The federal government faces urgent new demands to ensure the security of Canadians even as a slowing economy reduces expected tax revenue.

At times like these, improvements in the regulatory environment take on even greater importance than usual because they offer a means of significantly strengthening Canada's economic performance without the need for vast new spending programs. By the same token, it is vital to ensure that any changes in competition policy do not add to the business cost or reduce the competitiveness of Canadian enterprises. Especially in troubled times like these, Canada's goal must be to ensure that its competition policy framework works effectively to the advantage of both Canadian companies and consumers by encouraging rather than deterring business investment.

On the whole, Canada's competition legislation has worked reasonably well since its rather substantial overhaul in 1986. Nonetheless, the pace of change in the marketplace is constant, and competition law, along with other economic framework policies, must keep pace if Canada is to continue to offer an attractive location for investment and a sound foundation from which business can compete internationally.

Indeed, such policies must support the ability of Canadian companies to maintain and increase the pace of their innovation in order to succeed in this dynamic international arena. Changes to the Competition Act should facilitate rather than inhibit the kind of strategic alliances and new business arrangements the companies will need to operate effectively in the global marketplace.

The BCNI has participated in and supported the process of reform of Canada's competition legislation going back to the major amendments in 1986, as I mentioned. More recently we have participated in the consultations undertaken under the auspices of the Public Policy Forum, and we believe their findings, for the most part, reflect where there is consensus on necessary changes to the act. In that spirit we think the changes proposed in Bill C-23 represent a balanced package of necessary amendments.

In the interests of time this morning, Madam Chair, because, as I indicated, we are generally supportive of Bill C-23, I will limit my comments today to two subjects.

The first has to do with what is referred to in the act as “mutual legal assistance”. That is the ability of the Competition Bureau to share information with the competition authorities in other jurisdictions. Again, we support the general thrust of this amendment to improve the ability of the bureau to gather and share information related to competition matters that may cross international borders. However, we are concerned that there is not an adequate and specific protection for confidential business information, particularly where it has been supplied voluntarily to the Competition Bureau.

We understand that in his appearance before you the commissioner suggested that the intent is to protect the confidentiality of such information; therefore we see nothing wrong with making this an explicit requirement in section 29 of the act.

The other key issue that I know is of considerable interest to this committee is that of private access to the tribunal. Of course, this idea has been under discussion for some considerable time, but we're not convinced that a compelling case has been made for establishing a right of private access. In a fundamental sense we believe that access to the tribunal should be limited to those cases where it is necessary to protect the public interest in competition and that the bureau and not private parties should be the judge of that test.

We recognize that suggestions have been made, for example, in Mr. McTeague's Bill C-472, to try to ensure that only deserving cases are brought before the tribunal by private parties. However, we are concerned that some parties may be tempted to use the legislation not to promote competition, but only to seek tactical advantage in commercial negotiations or to otherwise hinder legitimate competitors.

It is questionable whether sufficient procedural safeguards could be instituted to protect against misuse by means of strategic litigation. Rather than improving competition, the right of private access could actually be used to inhibit it. It has been suggested that a right of private access would better enable small businesses to pursue remedies against unscrupulous competitors. However, we question whether such a provision would actually serve the interests of small business. The requirement to litigate and prove such cases can obviously be time consuming and expensive. The bureau's own research suggests that few cases could be brought before the tribunal at a cost of less than $1 million, thereby taking this remedy out of the reach of most small and even medium-sized companies.

We do think there are alternatives that could help small business in these cases. If in fact the bureau has been unable to bring forward otherwise meritorious cases due to a lack of resources, then the resources available to the bureau and to the commissioner could be increased to allow them to more fully examine these kinds of cases.

Where a complaint of anti-competitive behaviour has been brought by a small business and the commissioner subsequently declines to proceed with the case, he or she could be required to give written reasons for not proceeding. Other witnesses before you have already made other suggestions as to how the concerns of small and medium enterprises could be accommodated in this sense.

I'll stop there.

Thank you, Madam Chair and members of the committee, for your attention.

I'll be happy to answer any questions you might have.

• 0910

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

I'm now going to turn to the Canadian Bar Association, and I believe Ms. Bercovitch is going to start.

[Translation]

Ms. Joan Bercovitch (Senior Director, Legal and Government Affairs, Canadian Bar Association): Thank you, Madam Chair.

On behalf of the Canadian Bar Association, I wish to thank you for this opportunity to appear before the committee.

As you know, the Canadian Bar Association brings together more than 37,000 lawyers from across Canada. We have as two of our goals to perfect the law and the administration of justice, and what we will be saying here today reflects these objectives.

[English]

Our brief will be presented by Mr. Tim Kennish, who is a lawyer in Toronto practising in the area of competition law. He's the chair of the association's competition law section, which has been very active in law reform initiatives over many years. Mr. Kennish will present our brief and also take the questions directed to the CBA.

Mr. Tim Kennish (Chair, National Competition Law Section, Canadian Bar Association): Madam Chair and hon. members, the national competition law section appreciates this opportunity to comment on Bill C-23.

The bill addresses many of the concerns we've previously expressed concerning the four private members' bills considered in the Public Policy Forum. It therefore represents a significant positive step in the right direction. We do have continuing reservations about certain of the provisions, including the treatment of confidential information, both generally and in the context of international mutual legal assistance, within the scope of Bill C-23.

We're also concerned about the excessive breadth of, and indeed the need for, the special provisions that are contemplated concerning deceptive prize notices. We have comments to make regarding the potentially excessive scope of the new provisions for registration of consent agreements whereby they purport to extend beyond the remedies you could obtain in contested proceedings.

In regard to the expanded authority of the tribunal to issue interim orders in civil matters other than mergers, our concerns relate to the fairly low threshold for issuing such orders and the lack of adequate procedural fairness. If time permits, I'd like to comment also on the private access as well.

We apologize that our full commentary has not yet been translated. It is in the process of being translated for your use and it will only be possible to highlight our specific comments this morning. I direct you to the full text of our submission on specific wording and so on.

Dealing first with international mutual legal assistance, our section recognizes the need for increased international cooperation in the law enforcement of international anti-trust in an era of increased globalization of business, and we recognize that it's in the Canadian public's interest to facilitate this. Currently, we do not have this in the civil area, and it's desirable that this be provided for, particularly as in many other countries they treat much of the competition law as civil matters as opposed to criminal law. So there is a need for the civil in that for effective international enforcement.

We do have significant concerns in the context of Bill C-23 in that neither it nor section 29 of the Competition Act provides satisfactory protection of confidential information. First, there's a need to expand the coverage and to clarify the confidentiality provisions of section 29, specifically to cover all voluntarily supplied information given to the bureau. That isn't currently protected by section 29, although it's a stated bureau policy to extend its protections to that kind of information. I would mention that a very significant volume of the information the bureau receives in its work in connection with investigations is provided voluntarily because parties tend to try to cooperate, with with a view to resolving issues.

• 0915

This is now particularly important, the concern about confidentiality, in the context of international mutual legal assistance because the reciprocity is limited to cooperating with countries whose laws are substantially similar in regard to confidential information. The Canadian law, as I said, in section 29 does not cover voluntarily supplied information. I think it is otherwise desirable to clarify the scope of section 29.

The second point I would make is that confidentiality protection should also extend to information already in the possession of the bureau and not merely to what it is a foreign state may be requesting to be obtained by court order. That isn't currently provided for in the bill, and I think that should also be covered.

In regard to mergers, many states, such as the U.S.A., typically do not permit the sharing of information in regard to mergers. Confidential information in the merger context tends to be extremely sensitive, dealing as it does with current business strategies, competitive planning, and economic projections. We also know that some foreign states tend to be unreliable in protecting confidences from competing state-owned enterprises, local competitors, and merger opponents.

We urge the adoption of a rule similar to that of the U.S.A., one that would preclude the sharing of merger information except pursuant to agreed waivers. Because they want to get clearance of their mergers, parties tend to have an interest in providing waivers to those reviewing agencies in which they have confidence that the confidentiality will be protected.

In regard to deceptive notices of winning a prize, the section considers that the existing law respecting misleading representations is adequate and addresses the concerns that appear to be exemplified by these provisions. We have included in the brief you will eventually see an appendix that iterates a number of the recent successful prosecutions and enforcement actions against the promotional scams that are the target, we think, of this kind of provision. We also don't think there is a sufficiently established basis for special provisions in this area. This is in contrast to telemarketing, where there was a study done and where it's well recognized that solicitations received by telephone can create a more pressured environment than would be the case where they come through the mail or are seen over the television or on the Internet.

I would say as well that the proposed provision is cast in extremely broad terms, such that we've concluded it would prohibit many standard promotional contests that are now considered innocuous, such as those you are familiar with, ones major oil companies run. The reason for this is that most contests provide for the option of entering through the purchase of a product, although they don't require it. Typically, you don't have to buy the product to enter, but one does have the option of doing so, and a lot of people do enter that way. It's also typically a condition of being awarded a prize that you satisfy some requirement either through random selection, a skill-testing question, or both.

As a consequence, we would say that virtually all standard promotional contests will be caught, not just those that start off with a tag line such as, “Congratulations, you're 94 years of age and you've just won $2 million.” We accept that it probably wasn't the government's intention to have that breadth of application, but it is a serious issue because it's criminal legislation.

I want to move on to the registration of consent agreements. We agree that the existing consent process has been unsatisfactory virtually from its inception. It is uncertain in its operation, time-consuming, and costly. We support the need for reform in this area and generally support the provisions of Bill C-23 providing for the registration of consent agreements.

• 0920

It is not the only way to have done it. For example, in the U.S.A. the Truth in Lending Act procedure is an alternative, but we're generally supportive.

We also think the bureau or the commissioner is in the best position to determine when a case ought to be settled, having regard to all the factors that bear on that kind of a decision, just as he has the discretion initially to decide whether to bring a case or not.

Our major reservation relates to the fact that it appears, as the bill is presently drafted, the parties could have an order reached by agreement that extends beyond the scope of the remedies that could be obtained in a contested proceeding and ordered by the Competition Tribunal. We don't see why that should be the case, and we are also concerned that it may lead to parties being pushed to settlements that go beyond what they would have to accept in a contested result.

A final point with regard to consent agreements is that we think there should be filed with the application or with the registered agreement a statement of grounds and material facts in support of the agreement that would anchor the circumstances in which the agreement was entered into, such that if there were material changes later, there would be a basis for determining when it would be appropriate to rescind or bury the order.

On the matter of interim orders, we do generally support the broadening of the tribunal's powers to issue interim orders prior to the commissioner actually filing an application with the tribunal. We consider a way to do this that would be better than what is suggested in the bill would be to expand section 100 of the act to extend it to other civil matters. This would preserve the right of getting notice. One of the problems we have with the bill as it presently stands is that it doesn't appear that the commissioner would have to have a reasonable belief that the grounds exist for making your first point.

There is also not a requirement that there be a substantial lessening or prevention of competition likely to result from the activity sought to be enjoined. There need only be some competitive harm, and that could be harm to a competitor. There may not be harm to competition as such or it may not be substantial, whatever the harm is. It doesn't provide for notice to the parties against whom the order would be made. We're concerned about a lack of procedural fairness inherent in that because a violation of the order could have penalty consequences for parties affected. We think it's appropriate that the affected parties should have the right to get notice and to make representations about the order being made before it is made.

If time permits, I will just add a word on private access, just to set out where we stand on this. We have incorporated in our brief, the one you will get, our comments to the Public Policy Forum on the provisions of Bill C-472 that deal with this. There is no unanimity on the desirability of these provisions; within the CBA we are pretty split on the subject. However, notwithstanding the lack of consensus about whether there is a need for this kind of reform, I think there's an agreement that it's important that there be provisions to deter abuse of strategic litigation and that the parties who can bring an application for relief should be limited to those who are directly and substantially affected, not merely those who allege that they are. They should be directly and substantially affected, rather than just directly affected.

• 0925

We also think that if the refusal-to-deal provisions of the act are going to be amenable to this private access, we need to add a competitive-effects test to section 75 of the act to ensure that it applies where there is competitive harm. There is not such a provision in the legislation today, and although the Competition Bureau, I think, administers on the basis that they'll only bring an application where there is, once third parties are involved one couldn't assume that would be the case. Therefore, the need for a competitive-effects provision to go into the law, if it's going to allow private access, I think is demonstrated.

Thank you for your time. I'd be very pleased to answer questions at the appropriate occasion.

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

We are now going to turn to Professor Thomas Ross.

Professor Thomas W. Ross (Individual Presentation): Thank you very much, Madam Chair. Honourable members, it's a great pleasure for me to be here to speak to you about my views of the contents of Bill C-23.

Let me begin by making clear I am just appearing for myself—these are my personal views—and by offering something also of a disclaimer. Although I work in the area of competition policy much of the time, the elements of Bill C-23 do not by and large constitute areas I've done my own detailed research in. So in forming these views I'm building on ideas often created by colleagues and interpreting them myself. Nevertheless, I hope my views will be useful to you.

I have done some work on section 75, refusal to deal, and that will feature prominently in my remarks a little bit later.

I will not make really any comment on the “deceptive notices” provisions, because that is particularly far removed from the areas I work on, which are more related to pure competition policy as opposed to consumer protection issues.

Let me begin by making just a few remarks. I believe you have my written notes and can see somewhat more detail there, so I'll go over just some of the highlights quickly as it pleases the committee.

Starting with some of the provisions for new powers for the Competition Tribunal, I should say maybe generally that I think the contents of Bill C-23 will make a very nice set of additions to Canada's competition policy arsenal. I think by and large these really are going to be very useful improvements.

My personal campaign has been towards seeing amendments to section 45. There are other things that are coming up, I'm sure, later, which I'd be pleased to talk to you about at another time. But I think the changes in Bill C-23 are also very useful.

With regard to the new tribunal powers, I think the temporary orders or interim orders power for the tribunal is a good idea. I think it is appropriate—although this may be more a legal than an economic question—for this power to be with the tribunal as opposed to the commissioner, which is what is done with subsection 104(1) for the airline industry. I like it being with the tribunal.

I share the concern that Tim Kennish expressed on behalf of the CBA. I would like it to be a requirement that before an order issue the tribunal be concerned about a loss of competition, not just a threat to a competitor. If it were possible to insert in there that the tribunal must be concerned that the loss of a competitor would result in a lessening of competition, I'd feel a little more comfortable about it.

Madam Chair, I think I noticed in transcripts that you put what I considered a good question to the commissioner: if we did get these temporary orders, would we still need the new subsection 104(1), which puts this kind of power in the commissioner's hands with regard to the airline industry? I don't see that we would. It would seem to me to make a lot of sense to get rid of that and let this new power be applied uniformly across industries in Canada.

Summary dispositions and cost awards seem like good ideas, particularly if we see ourselves as paving the way eventually to some kinds of private access. This is to allow the tribunal, in the words of the commissioner, to control its process a little more.

I think it's possible, although I don't want to push this too hard, that we might want to allow cost awards in somewhat more cases than is provided for in Bill C-23. I'll come back to that a little bit later as well.

The idea of the ability to make references to the tribunal, I think, will be very helpful. Quite often these disputes drag on because the parties just have different views about how the tribunal will come down on one fundamental issue. To the extent that can be cleared up earlier, perhaps a resolution can be achieved with less time and less expense. That completes my remarks on the new tribunal powers.

• 0930

With respect to the automatic registration of consent orders, that also seems like a good idea to me. There has been concern raised that the consent-order process has not worked the way we intended—not that I was a drafter of it, but that we observers intended or hoped—where the tribunal would, by and large, approve consent orders, interfering only in the most extreme circumstances. The tribunal saw fit to use its powers to reopen these things a little more readily than we had hoped, and that of course sent a chill through the community. People are much less willing to go with the commissioner to the tribunal on consent orders.

I don't quite know how to do it—and this is, I suppose, for legal scholars to struggle with—but in a perfect world there would still be some opportunity for review of these under extraordinary circumstances, the way we hoped there would be. I would like to think there is some safety valve in the case where a deal has been worked out between the commissioner and the parties that perhaps didn't accurately reflect the realities of the marketplace—maybe because the commissioner's staff was overworked, or missed some important bits of information, or whatever. I'm not quite sure how to put that in.

I'd like to make a few remarks about the new provisions to allow the commissioner to issue binding opinions. I've heard, and I suspect that this committee has heard as well, from some small business people—I don't know why they came to me—who have approached me very concerned about these provisions. They're worried about large businesses basically getting carte blanche from the commissioner to beat up on them and their having no recourse because the commissioner has issued a binding opinion saying this particular practice—this tied selling or whatever—is okay.

Now, there are two ways to interpret this. One is that the small firms would just like protection. They would like to use the competition law to tie the hands of bigger businesses to give themselves a bit of a competitive advantage. We don't need to do that for them.

But there's another interpretation, which I think is kinder to them and maybe closer to the mark. That is that they would like to be certain their interests are taken into account when these opinions are rendered, so that the commissioner will.... This may be more of an enforcement point than it is actually a point related to the drafting of the law, but they do, I think, have a right in some sense to be heard, so that the effects on them of a clearance of some activity—a tied sale, for example—are considered.

I think there is some worry that these opinions are going to be kept confidential and secret until they're suddenly published. At that point it's too late. They're going to have been left out, and the effects on them, which the commissioner may never really have appreciated, will be unconsidered.

Maybe this is more advice for enforcement than it is for the drafting of the legislation, but I am hopeful that if this provision comes to be, the commissioner will take every action to become as fully informed about the implications of issuing these opinions as possible, even to the extent of consulting with competitors—and small business competitors among them. And if the parties looking for the opinion object to the publicity associated with that, the commissioner should just say “Well, that's fine. You're not going to get a binding opinion.”

With respect to mutual legal assistance, there's more a legal than an economic issue. It does make sense in the sort of globalization we're going through to cooperate internationally. We've seen the benefits of international cooperation in the crackdowns on these international cartels. We need the same kind of cooperation on the civil side, particularly with respect to mergers. International merger review is really getting to be something of a mess for the companies involved. To the extent we can ease the burden and facilitate the process by allowing a better cooperation between the anti-trust agencies, we should do it.

• 0935

I'll close with my remarks about private access, particularly with reference to the provisions contained in former Bill C-472.

We certainly have much less anti-trust enforcement in Canada than they have in the United States, where they've got two agencies, states' attorneys general, and private actions. The majority of anti-trust actions in the United States are private, propelled by the ability to get triple damages.

We definitely don't want to copy the American model, but I think a good case can be made—and I've been persuaded of this over the last few years; I didn't necessarily believe it at first—that we could use more enforcement, and that probably some of it should come on the private side.

A lot of what pass as competition cases are really rather like private contract disputes between the parties. I notice this particularly with reference to the refusal-to-deal provisions, in which I did a little work. It's not that they're not really competition issues; it's just that the benefits are so concentrated and so private, as opposed to being public, that it makes a lot of sense for the parties to pursue this themselves, particularly if they can't persuade the commissioner struggling with limited resources to take it on and make it a priority.

I think the bill starts at the right places. I think section 75 on refusal to deal and section 77 on tied selling and market restriction and exclusive dealing, are the right places to start with private action.

That, however, is subject to one very important qualification, which Tim Kennish mentioned as well. Please don't give private access to section 75 until there is a competitive-effects test. There is nothing in the law right now that says competition has to be harmed by the refusal. A business person, if private access were granted without any amendment, could simply decide that he or she wants to become a distributor of some company and could try to use the Competition Act to pry out distribution, even when they never had it before and when there might be a perfectly good business justification for refusing to provide distribution to that firm.

So I think private access on section 75 makes a lot of sense, but on a revised 75, which includes, like section 77, a lessening-of-competition test.

That doesn't mean the bureau would never take cases under these sections. If a practice is starting to become widespread, the bureau might want to take a case to clear up the law, to make a point, to save people a lot of expense of going through multiple private actions. And there may be some cases where a large number of small firms are affected by an action that individually can't really justify supporting a private action, but the commissioner on their behalf might want to take up their case.

There is a concern about whether there would be a strategic use of the law, something that I think does happen in the United States—firms trying to use the law to beat up on more efficient rivals. But I doubt this is going to be a problem. First of all, there are no provisions for damages, not even single damages. You'll have to pay your own costs, and the tribunal does have the authority to dispose of these cases rather quickly, at least given the other provisions in Bill C-23.

So I'm not particularly worried about strategic use of the law. In fact, my guess is it won't actually be all that much use. We've had private actions allowable since the mid-seventies on the criminal side, and there's been very, very little activity there—and there they can get damages. So my guess is there won't be a lot of action.

In fact, you might even want to consider at some point allowing the recovery of costs in these cases. If you're successful arguing that you've been harmed by a refusal to deal and it violates section 75, it might be reasonable to consider awarding costs.

Eventually you might want to also consider expanding the right of private access to section 79, to the abuse-of-dominance provisions, but I think it's probably wise not to go there just yet. That's a very broad provision that covers lots of not-very-well-defined actions. I think holding short at section 75 for now is probably the right thing to do.

Madam Chair, that concludes my remarks. I'll be happy to answer any questions.

The Chair: Thank you very much, Professor Ross.

We're now going to turn to the Honourable Howard Wetston.

Mr. Howard I. Wetston (Individual Presentation): Thank you, Madam Chair and members of the committee. Thank you for inviting me today.

Madam Chair, I'm not sure if the members of the committee and yourself would like to know why I'm here. Basically the views I present today are my own. Although I am vice-chairman of the Ontario Securities Commission, they don't represent the commission's views. I couldn't get the commission together to decide whether this is the right way to go or not.

• 0940

By way of background, some of you know that I was Commissioner of Competition from 1989 to 1993. I took a leave of absence and went to the Federal Court for five and a half years, then decided that securities regulation was where my heart was. That's where I am today.

I have spent a considerable amount of time in this area, although it's not recent. My last major experience in competition law and policy was in 1993. That doesn't necessarily mean, however, I don't have an opinion about some of these matters.

I'm going to briefly discuss private access. I have reviewed Bill C-23 and have followed the work of this committee very carefully, but I thought I would restrict my comments to this area because it seems to be quite controversial.

In preparing for my appearance today, I read a number of the submissions and transcripts of these proceedings. I just want to say that I recognize the context in which these issues have been advanced. I think a lot of very thoughtful work has been done, but as Hemingway said, let us not confuse motion with action.

Basically, my advice today is that action is necessary. I believe this committee was right when it concluded, in its interim report in June 2000, that amendments to the Competition Act may be advisable in order to create rights of private action before the Competition Tribunal. I certainly think it's time.

The debate for private access in Canada has been discussed, in one form or another, for over 30 years. It started with the Economic Council of Canada in 1969. I wasn't part of that, but I certainly joined the debate shortly after that.

I believe the approach in Bill C-472 is very cautious, but quite sensible. It's quite sensible because Canada is ready for such a remedy—our economy is ready for such a remedy. Justice requires that private participants have access to the Competition Tribunal. You could have private access somewhere else, but there's no reason why you shouldn't have it at the Competition Tribunal, given the nature of its expertise.

I've long reflected on how much competition law enforcement we can tolerate in our country. We like to compare ourselves to the United States. We compare ourselves to the OECD countries and invariably ask our questions: “How much competition law can we tolerate? How much enforcement can we tolerate in our society?”

In my opinion, the private access provisions will be very beneficial because they will broaden the scope of competition, whether it be by public officials or by private parties before the tribunal. My personal view is that there is little enforcement of vertical restraints of trade in Canada, and there never has been.

Just by way of background, I was the deputy director of competition when the NutraSweet litigation was followed in the tribunal. I filed the Chrysler case. I filed the Xerox case. Unfortunately, I filed the Southam case. A win in this area doesn't mean it's a good thing or a bad thing, for obvious reasons—it's public policy.

But just because there is not much enforcement of vertical restraints of trade does not mean there is compliance with the law. I have a great concern that we don't know whether there's compliance with the Competition Act in Canada, because of the lack of enforcement in this area.

I don't believe there is anything to deter anti-competitive behaviour in our economy from vertical restraints of trade. I say that for many of the reasons this committee is well aware of: costs; the failure of the Competition Bureau to be able to take these cases because of resources; they're not interested; the issue isn't big enough; it doesn't cut across enough provinces; or it's not national enough. Whatever the reason, in my opinion, there is no deterrence.

If there's no deterrence from vertical restraints of trade, then some business will suffer. It may be big business on occasion and it may be small business on occasion, but the point is, we don't know. That is why we need to empower businesses to be able to take actions of their own before the tribunal and make their cases.

From the point of view of the rule of law and justice in our society today, we should empower business to do that. It is not just public officials who should be the gatekeepers in competition matters today. I don't believe we're at that stage in the development of our economy, and I think it would be regressive if we didn't have this opportunity in our legislation today.

• 0945

Let me move on from the speech and give you some of the reasons why I think private access is good. I know and read a lot about the cost of litigation and strategic litigation. This is not new. Just by way of background, you should know that the Ontario Securities Commission has just drafted a bill that we have sent to the Minister of Finance in Ontario. The minister hasn't agreed to pursue this particular bill or amendment, but it's an amendment to the Securities Act that is similar to what we're talking about here today.

The amendment would give investors in the secondary market the right to sue any public company for making misrepresentations about the company. The amendment has been designed with a gatekeeper mechanism. It would require leave of the court. There are loser-pay cost provisions. I know this sounds familiar to you, because many of the same kinds of issues are in Bill C-472. So I just wanted to give you an idea that we're facing a similar kind of situation in the secondary market with respect to continuous disclosure.

In my opinion, this boils down to the public interest. What does the public interest require? It requires private access, but it's not just about competition and it's not just about private business; there are larger issues that need to be considered in the context of these amendments. It's the public interest in broadening the scope of competition in our markets.

The act was amended 15 years ago. I joined the bureau at that time. I believe the Government of Canada should amend the act now to include such provisions. The work of this committee might be most useful, however, in studying the design of the amendment to address concerns that have been raised.

I believe the committee could propose and design a bill that would take into account the various concerns that various stakeholders have. You've done some of that in Bill C-472, and you've done some of that in your interim report. You've reflected on those concerns, but there's more you can do.

I just toss these out for your consideration. I'm not necessarily recommending any of them. Besides requiring leave of the tribunal and providing only for injunctive relief, loser-pay cost rules, and summary judgments, which I think you're contemplating, you could also require that the parties have very limited discovery. You could reduce the discovery opportunities by the parties. You could limit discovery. The litigation bar would be upset about that, but you could limit it.

You could also have no discovery, although you'd probably hear a lot of screaming if you did. You could require agreed statements of facts on every possible issue the parties could agree upon, and you could have a pre-hearing conference tribunal member ensure that the parties agreed on as much as possible in order to limit the issues, or the facts at issue, in the hearing.

You could limit the number of witnesses. You could restrict the witnesses. You could say that by the rules of practice of the tribunal—which I know, of course, the litigation bar would oppose enormously—you could limit the number of witnesses.

You could also limit the number of experts. Vertical restraints of trade require a great deal of economic analysis, but you don't need four or five expert witnesses like Tom Ross. You could have one or two and you could limit them. He'd be the best one.

You could confine the hearing. You could also limit standing. Frankly, I'm not even sure if you'd want to give the commissioner standing. If he chose not to proceed with the matter, you could let the private parties proceed with the matter; let the Competition Tribunal deal with the matter. They would decide those matters in the public interest. The standard would be competition, but they're a public interest tribunal—the Federal Court of Canada, Appeal Division, in Superior Propane stated that. So you could do that.

You could include a three- or four-month time period in which to conclude these hearings. If you brought the action, it would have to be concluded in three months or four months, from beginning to end.

There are a number of things you could do. You could also build in a five-year review. You could say that in five years you want a report from the Commissioner of Competition on the merits or success of private access in Canada. Is it being used? Is it being used strategically? What are the costs? You could build that into the legislation as a bit of a safeguard, so the public would know that the government is going to look at this new area to determine whether it's beneficial or not.

• 0950

Thank you very much, Madam Chair.

The Chair: We're now going to turn to questions and begin with Mr. Penson.

Mr. Charlie Penson (Peace River, Canadian Alliance): Welcome to the panel this morning. There has been some good discussion and some excellent suggestions on how to improve Canada's competition law and effectiveness. I'd like to explore that area a little with you—how effective our competition law is. Should there be exempted areas to competition law in the economy? The airline industry was some of that...some of our trading enterprises, regulated industries, and so on.

The other area I'd like to explore, especially with Mr. Wetston, who seems to suggest that the private access should be simply a civil matter, is why we would want to limit witnesses, limit time. Wouldn't there soon be some body of evidence at the Competition Tribunal and some case history so that companies and individuals wanting to take actions would soon see where they were going. And if it is a complex case, it may require six months. Why would you want to put in artificial barriers if that's the case?

If we have time, I'd also like to explore the competition commissioner's powers versus a tribunal. Is it in the right balance?

The Chair: Who do you want to start with, Mr. Penson?

Mr. Charlie Penson: I would like to ask each of the witnesses about the effectiveness of Canada's competition law, which was my first question, in terms of exempted areas.

The Chair: I'm just wondering if we could ask each of you to comment on the first question and we'll see how the time goes. Who wants to go first?

Mr. Kennish.

Mr. Tim Kennish: I believe the regulated conduct principle, which excludes from the purview of the bill, more or less, those areas of business activity that are subject to some other dynamic than competition, should be outside the scope of the bill. I think the bill is a general application. Competition is a strong and compelling rationalizing principle that helps protect the public and creates efficiency, so I'm opposed to unnecessarily taking out industry from its coverage as a matter of principle. I recognize there are other dynamics.

Prof. Thomas Ross: I'd be happy to offer a few words as well. Recognizing what Tim Kennish said, there are, in general, interests in exempting from the Competition Act areas of the economy that are otherwise regulated the way we have in the past regulated telephone pricing and electricity pricing. Apart from that, most competition experts, and perhaps I should speak more for economists than lawyers, would not approve of opening up the Competition Act to special provisions for this industry or that industry.

First of all, it seems to me you have a choice. You can say competition will be our regulator or we will put in place a proper regulatory structure for an industry. And you should do one or the other. If you've decided that competition is your regulator, there should be no special provisions for that industry. The problem that you introduce when you create special provisions is that you create an industry looking for special provisions. If banking has special provisions, and now transportation has special provisions, then the next industry that's in a little bit of trouble wants a little break so that they can collude or do whatever they want. They want their special provisions.

Sometimes you might decide that competition isn't going to work as the regulator of economic activity in the way we used to think for utility pricing, for example. Fine. Set up a regulatory process that's transparent and has clearly defined objectives. If you said this is an area that's like the rest of the economy, subject to regulation by competitive forces, then the law should be applied to that industry as it is to all others.

Mr. Charlie Penson: Mr. Ross, sorry to interject, but the airline industry comes to mind because it would be half in and half out.

Prof. Thomas Ross: Right. It's a little tricky to say whether or not some industries are regulated. There are aspects of the airline industry that are still regulated. Our general view used to be that we were going to let competition be the regulator of air fares, at least in the southern part of the country, with perhaps some consideration for the north. Now we have special provisions for the airline industry in there, which a lot of us feel nervous about and we would just as soon they come out.

• 0955

The Chair: Mr. Dillon.

Mr. John Dillon: In reference to the general question about how well our competition laws are working, as I indicated in my brief opening comments, we believe that on the whole the law is working relatively well.

I obviously would disagree, to some extent, with Mr. Wetston's obvious concern with respect to the degree of enforcement and his supposition that there may not be compliance with the law, or that we simply don't know. I'd like to hear some specific examples, because certainly in our viewpoint the law is working reasonably well.

There are certainly questions about the resources available to the commission, as I said earlier. There are always choices that any authority has to make in terms of which cases it pursues or chooses not to pursue in terms of the general pursuit of competition. We remain to be convinced that there's anything fundamentally wrong with enforcement of the law in Canada.

Mr. Charlie Penson: What about the question, Mr. Dillon, of whether there should be exempted areas?

Mr. John Dillon: I don't have a lot to add to the comments that have already been made by Mr. Kennish and Mr. Ross. We haven't gotten into this area in great detail within our organization. We do believe the Competition Act is a law of general application. As Mr. Ross suggested, regulation may be appropriate in certain instances. Obviously the airlines are a particularly difficult case at this time. Generally we believe that competition is the way to deal with these things and not through special provisions.

The Chair: Mr. Wetston.

Mr. Howard Wetston: I'd be more than happy to have a debate with BCNI anytime about the workings of the law, but that's not the purpose today. So I would invite them anytime for that purpose.

Basically in answer to your question, I think my colleagues are right. One should appreciate that there are still so many regulated areas in our economy in which competition policy still does have some role, but that role is changing and it has changed over a number of years. Even in the securities industry there's a role for competition policy despite the enormous amount of regulation.

With respect to exempted areas, obviously airlines are very much on the minds of people today. The airline industry and its history has been subject to so much governmental involvement that it has really led to what I think is an industry that has gone through a number of industrial organizational changes that have been as a result of, to a great extent, government policy. Foreign ownership is the best example of that.

We have created an industry here that makes it very difficult for it to compete in the manner we expected. Basically exempting it would not be purposeful and would be very much out of step with other countries. I don't think it would be in our public interest to do that.

Mr. Charlie Penson: Somebody has mentioned—and I'm not sure if it was you—the state-trading enterprises when it comes to international competition law and the difficulty there. We have our own state-trading enterprises in Canada that we don't have access to information for. How would you see that matter being resolved in terms of the international aspect of cooperation and competition law?

Mr. Howard Wetston: I didn't really reflect on that today. The manner in which Bill C-23 is addressing it seems sensible. I'm not sure what you're getting at.

Mr. Charlie Penson: Let me give you the Canadian Wheat Board as an example.

Mr. Howard Wetston: Yes. It's highly regulated so the scope for the application of competition law is limited. Telecommunications is quite regulated, but not as regulated as before, so the scope is greater.

Mr. Charlie Penson: My point being, though, if we're concerned about other countries having state-trading enterprises where we can't get access, don't we have the same concern here? That's what I'm getting at.

Mr. Howard Wetston: I think that's valid.

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

We'll move on to Mr. Lastewka, please.

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

I want to spend my time on the section under private access, and I want to go to the Canadian Bar Association and Mr. Kennish.

First of all, I want to thank all the contributors for their testimony this morning.

• 1000

Mr. Kennish, I really appreciate your report. Many times I'm not quite sure where the bar association stands when they finish their report, but I thought your report was very clear for us. That's why I want to spend my time just on the private access portion, where you had mentioned there is no consensus. I'd like to hear from you the two sides and some of the points they were making for and against private access.

Mr. Tim Kennish: I'd be pleased to respond.

The bar, as you can imagine, represents a variety of viewpoints on something like this where it might be seen as an opportunity for practice development, but I think more high-minded members of the bar are genuine in their difference of views about whether they think it will be a positive benefit.

On the side of people who are skeptical about the case being made for reform, there's a sense that to the extent that it's being seen as something that the small and medium-sized enterprises could access, where they're not getting the attention of the bureau because their particular interests are too small or are below the radar screen, or whatever, the way in which the tribunal has operated makes it unlikely in the minds of many that it would be extensively used, due to cost considerations, time, and the cumbersomeness of their process. I think Howard Wetston's suggestions for further reform of the provisions are a reflection of the concern that you wouldn't get expeditious treatment, and it wouldn't be extensively used.

The other side, of course, in opposition, is a view expressed by Mr. Dillon this morning that even with all the bells and whistles wrapped into the legislation to prevent strategic litigation, it still wouldn't be possible to stamp it out completely.

I think those are the principles in opposition, and in fact in our report we have gone through the pros and cons.

On the pro side, I think there's a feeling that where there is a wrong, there ought to be a remedy, and the bureau has limited resources. By necessity, it's having to focus its attentions on things that have more pervasive effects, such as mergers, cartels, and matters in other areas, and it's of necessity going to be the case that the smaller matters won't get their time and attention. There's going to be more discipline on competitors in the marketplace if in fact individual parties see that they could be held accountable by the other actors in the marketplace who their actions are affecting.

While we haven't done a nose count on this, this has been an issue that has been part of the debate and discussion around competition law reform for several years, and the bar has had a split right down the middle on this point every time. But as I say, notwithstanding this agreement, there is agreement that if you're going to proceed with it, there are some safeguards that need to be built in, and we've included comments on that in the brief.

Mr. Walt Lastewka: Thank you, Madam Chair.

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

[Translation]

Ms. Girard-Bujold.

Ms. Jocelyne Girard-Bujold (Jonquière, BQ): Thank you, Madam Chair.

Gentlemen, Madam, I appreciate the views that you have articulated on a number of the provisions contained in the bill currently before you. What is of particular interest to me, however, is section 45 of the act, the provision dealing with conspiracy.

Mr. Ross, in your testimony of May 4th, 2000, you stated that you had paid particular attention to section 45, the one that deals with conspiracy.

• 1005

You know that for over a year now, all areas of Canada have seen incredible increases in the price of gasoline. At the present time, the situation seems to have cooled down for some reason or other. In my own region, we have established a citizens' committee. We have called this committee the Coalition to protect Fuel Consumers. As you yourself have done, I have filed two complaints with the Competition Bureau under section 45. I asked the Competition Bureau to do away with the word "unduly", since the presence of this word in the act prevents the Bureau from launching any investigation in the absence of written or oral evidence.

Mr. Ross and the other witnesses have done research in this area, and I would like to hear from them, as well as from the former commissioner. You have been involved both in investigations and in research, and I would like to ask you this. We are presently considering new procedures, new ways of doing things under section 45. What changes should we bring about in order to protect consumers and prevent any potential collusion between oil companies?

[English]

The Chair: Professor Ross, I'll allow you to answer the question if you wish, but I do want to remind members that we are talking about Bill C-23 and private access and that we have decided not to go into the other areas outside of this. But I will allow this question if you're willing to answer it.

Prof. Thomas Ross: Certainly.

I have done work on section 45, and in fact, by some lucky coincidence, my co-author is sitting beside me. Tim Kennish and I have written on section 45, proposing a new approach to that section that would do two things.

First of all, it would take out the word “unduly” to make it easier to secure convictions for pure price-fixing cases, which are unnecessarily difficult now.

The second element of our proposal is to create a second civil track for strategic alliances and joint ventures, where firms that are competitors are getting together for possibly some quite legitimate purpose—to open new markets, to create new products, to do research together. We don't want them to get caught up in this criminal prohibition. It may be that we don't like their agreement and think it's anti-competitive, but it's a different kind of agreement than a price-fixing agreement, and we think it deserves a different kind of hearing, more like a merger process, where they can make arguments about efficiencies and things like that.

So I do think the time is right for section 45 reform, and I hope this committee will take that up sometime soon.

[Translation]

Ms. Jocelyne Girard-Bujold: Madam Chair, I would like to get back to the section dealing with personal access.

Mr. Wetston mentioned that Hemingway used to say that you should not confuse mere motion with action. I quite agree because the simple fact of our moving on this does not necessarily mean that we're doing something to bring about a change for the better.

You also say that this is a good time to amend the act with regards to private access. And you mentioned that we should not leave it to government officials to determine the private access procedures to be set up under the new guidelines. I wonder if you would elaborate on that for us.

[English]

Mr. Howard Wetston: I'm not sure that in the few minutes I have I could develop it much more than I had suggested, except to say that my belief in the need for private access stems from many of the reasons that your committee has heard.

Basically, I think the arguments I have heard over the years are the same, and they're quite tiring. They don't represent any new thinking about our economy or about the legal status of the participants in our economy. They don't represent any new thinking with respect to the performance of the tribunal—of which there has been a lot of criticism, but it hasn't been given much of a chance to perform. To some extent, it started out perhaps badly with Palm Dairies, which I participated in, and from that day forward, the tribunal's legacy has perhaps not been the best.

• 1010

But basically, a number of issues I've raised about safeguards are doable and achievable. They're in the public interest. I see no reason why only public officials should be able to pursue these kinds of actions. Indeed I agree with Tom Ross when he says section 45 deserves to have, and should have, some very serious amendments, because we are offside with many other jurisdictions who do have this, like Australia, the United States, and the U.K.

For us to only have criminal price-fixing provisions, proven through a very difficult criminal process—which I'm very familiar with because I started my career as a prosecutor in this area and know how tough it is to get a conviction.... And the charter does not help. It's a wonderful document, but it doesn't help get convictions in this area. So the result is that we need to refocus our attention in the competition area to reflect the reality of our marketplace.

I'm not sure if I've helped you with this response, but I believe that is the case today.

The Chair: Mr. Dillon also wishes to reply.

Mr. Dillon.

Mr. John Dillon: Thank you, Madam Chair.

Obviously, Mr. Wetston has opened up a very broad area with some of his comments. I want to put a couple of comments on the table, and I'm sure we'll get back to this.

In our view of the world, competition is in fact increasing, looking at the way most global companies have to operate in this marketplace. There's a significant debate over whether the competition legislation we have today actually works in terms of ensuring that Canadian-based companies can compete on a global scale. I appreciate that this is not part of the mandate of this particular committee today, either, but we can have a legitimate and lengthy debate about the state of competition law and its enforcement in Canada, and I'm sure Mr. Wetston and I will do that after today.

It is important to recognize that we're talking about changing the system here. Our members and I feel quite strongly that opening up our competition legislation to more litigation is not necessarily going to help either Canada's economy or our competitiveness. This is a fairly fundamental issue. And I'm sorry if Howard's getting a little tired of these arguments, but I don't think the reality has changed. This is not an employment program for lawyers, at least I certainly hope it's not—and I say that as a member of the bar, or a recovering lawyer, as I sometimes call myself—nor is it necessarily a case....

There's been a great deal of discussion in this committee and elsewhere on how the tribunal has never really been used to its full extent, how there's a need to bring more cases before the tribunal. This too is a legitimate area for discussion and debate. The issue is whether we want to do this through means of private access, which could open it up to a lot of private parties who are not really interested in promoting competition. That is the real crux of the issue, and I'm not sure we have the answers today.

The Chair: Thank you.

Thank you very much, Madam Girard-Bujold.

I am going to turn to Mr. McTeague now.

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

Indeed, Mr. Dillon, this committee has more than amply discussed changes to the Competition Act. What is before us...with the help of the clerk, I'd like to ensure that the members who have come here today as witnesses—and I thank them for that—have a copy of the proposed changes contained in Bill C-472 dealing with private access.

Professor Ross, you stated in your brief—and I'm reading from what I read here. As it now stands:

Bill C-23 grants the tribunal a new set of important powers that in many ways seems to be laying the groundwork for an eventual private right of access.

I want to thank you and commend you for that observation. Many witnesses have yet to allude to this fact.

Do you believe that Bill C-23 would be somewhat incomplete without the inclusion of private action?

Prof. Thomas Ross: There's certainly a lot to commend in Bill C-23 as it is, without private access.

But as I reflected on it over the last weeks preparing for this appearance, many of the items it includes are not really terribly important without private access. Some of the controls the tribunal will have over its process may, I suppose, be useful without private access, but that seems to be what's really going to use them.

• 1015

I agree with Howard Wetston. The time to move on private access is here. You have a bill that's going to do this in a measured, careful way, with very limited opportunities for strategic use of the process.

I haven't really discussed this with my legal colleagues, but one other point I didn't mention before is that it would seem to me that if a firm actually did aggressively use strategic litigation supported by private access, it could in turn be subject to an action under section 79, if it were a dominant firm seeking to protect its position by use of strategic initiatives.

The bill will look a little incomplete. It's like it's all set up for the big show and then it's not there.

Mr. Dan McTeague: Professor Ross, I remember looking at some of the transcripts from an earlier committee—Madam Chair, with your indulgence—from 1985 in which the same kind of concerns were raised about the special remedies under 36, and that the sky would fall and that of course business would come to a screeching halt and there would be a chill on investment.

I'm looking again at all these words that tend to come back 10 or 15 years later, and I'm rather interested in the commentaries made by some who, despite the restraint that has been put into Bill C-472 or the amendment you see before you, still contend that this will be a sop to business and investment.

It seems to me that the Canadian Bar Association would be chomping at the bit with the opportunity of more litigation, if I take seriously what Mr. Warren Kinsella has said in a recent press release, that the real winners would be the litigation lawyers.

Mr. Dillon and Mr. Kennish, the Australian model has been around for some time. Before it was implemented in the 1970s, was there this kind of pre-private right-of-access trauma expressed as vividly as some have done here in the past or as you've just done? Is the sky really going to fall if we proceed with this, Mr. Dillon, and would this not have provided you with an opportunity to maybe expand your membership from the 150 largest companies in this country?

Mr. John Dillon: First of all, I don't think anyone is suggesting the sky is going to fall, and I certainly reject that characterization.

I can't speak for what might have been said to this committee or others in 1985 or what might have...in fact I'm not familiar with the situation in Australia. I am familiar with the input and concerns consistently raised by our members over the years with respect to.... I appreciate that Bill C-472 as it then was has a number of improvements over what would have been discussed in the past and is a legitimate and fair attempt to try to put in a number of safeguards that would answer some of the questions.

We have discussed this. I have discussed it with a number of people in the business community and within our membership and they're not convinced that this is sufficient. The reality is that if a large company, or indeed a small company, wants to use this, presumably it can build some kind of a case to get beyond the summary disposition. Companies are going to employ the lawyers needed—some of whom Mr. Kennish referred to—to help them build a case and they're going to get beyond the bar of a summary dismissal by the tribunal. Similarly, they're not likely to be terribly deterred by cost awards, since they're ready to pay a great deal of money to have people put this case together for them.

So if someone is determined to use this...and that is the concern, and as has been suggested, it is the case to some extent in the United States that the damage awards and the treble damage awards there provide a significant additional incentive for people to take these cases. Some of these cases are used for strategic purposes in the United States without companies necessarily looking to monetary compensation at the end of the day, but simply to cause havoc for competitors.

This is the concern, and after many discussions I don't see it dissipating.

Mr. Dan McTeague: Mr. Dillon, if you then take the view that there probably can be no safeguards that would make your membership happy, would your membership then be comfortable with a status quo that, as Mr. Wetston has very eloquently pointed out, may very well prevent certain anti-competitive activity from occurring that we can't detect and that we can't enforce? Is your membership not concerned that the reverse may very well be true?

Mr. John Dillon: That's certainly not what they're telling me.

I want to make clear that I'm not saying there is absolutely no safeguard that could ever deal with the situation.

• 1020

Mr. Dan McTeague: It's just bizarre, Mr. Wetston, that so many other countries have one form of private access or another. You, of course, and I know that others...I don't think you wish to characterize what we're doing here as the American system, but it's interesting to note that someone always tries to refer to what we're attempting to do here as being the American system.

What does this say when, on the one hand, the Business Council on National Issues is advocating a level playing field between ourselves and the United States, saying that Canadian businesses, small and large, should get on board as they have in the past—I think that's a very good policy—but on the other hand wants to maintain an act that for all intents and purposes may exclude a number of people from either participating effectively in the competitive process or at the very least be provided with some modicum of justice, let alone enforcement?

The Chair: Is that for Mr. Dillon or Mr. Wetston?

Mr. Dan McTeague: Mr. Dillon.

The Chair: Okay. You said Mr. Wetston.

Mr. Dan McTeague: Sorry.

Mr. John Dillon: There are differences between us, at least on some items.

Mr. Dan McTeague: Mr. Wetston can answer it just as well, if he wishes.

Mr. Howard Wetston: I thought I was invited here by the committee, not by BCNI, Mr. Dillon—

Some hon. members: Oh, oh!

Mr. Howard Wetston: —but I'd be happy also to respond to your question, Mr. McTeague, if I could.

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

Mr. John Dillon: I'm sorry, I didn't mean to suggest that you were.

First of all, I'm not sure we are at all suggesting that this is the American system or that we need to be worried about all of the things that have happened in the United States. In fact, we clearly consider Canada to have a competitive advantage because it is less litigious than the United States. We don't happen to believe an excess of litigation is actually either necessary or helpful to Canadian business and competitiveness.

There may very well be legitimate concerns about small business and its access to this. As I said in my opening comments, we should be looking at what kinds of provisions can be included to ensure that meritorious cases small businesses want to bring forward can be dealt with, whether or not we do this through increasing the resources available to the bureau and imposing a duty and an obligation on the commissioner to respond in writing with the reasons why a complaint brought forward by a small business will not be proceeded upon.

Witnesses before your committee have made other suggestions on how to deal with this. There are means for dealing with legitimate complaints and we should be looking at those. I'm not convinced private access is the way to do it. I'm not convinced most small businesses will have the resources to bring these cases forward in the first place.

The Chair: Thank you, Mr. Dillon.

Mr. Wetston, please.

Mr. Howard Wetston: I'll try to give the committee a sense of what goes on in this area. This is an area involving vertical restraints of trade primarily. That's all you've recommended, with the exception of abuse.

I would agree with my colleagues; you need to fix the refusal-to-deal provision. It really was intended to be a lessening of competition provision, but there's many a slip between cup and lip sometimes when it goes from the policy table to the drafting table and into the House. I believe you might find that this was the case in the early debates. But something happened along the way—just like the preamble of the Competition Act got kind of fixed up along the way so that it doesn't mean a lot any more.

This is not just about small business and big business. Exclusive dealing in market restrictions very much depends on whether the restraint's upstream or downstream. It very much depends on whether you've got an exclusive dealing arrangement that might affect a competitor upstream, too large competitors, or it might affect the downstream suppliers or retailers, smaller competitors.

You can still have market restrictions that will affect the downstream competition issue. You can have exclusive dealing arrangements that affect upstream competition issues. Tom Ross knows this very well from an economic and analytical perspective. You get inter-brand competition upstream. You get intra-brand competition downstream. It's a complicated area from the point of view of sorting out what's going on.

But basically it goes on every day—in franchise agreements, in licensing arrangements, in supply arrangements in market-restricted areas. It goes on every day. It's the fabric of how our economy functions, more so than mergers and acquisitions in many ways, because it's everyday business we're talking about here.

• 1025

If you think about the picture of what's going on here and you ask yourself what you want to do.... You want to give private parties access. Why do you want to give them access? Because you want to ensure, if they have a valid complaint...whether or not it proves to be a substantial lessening of competition, which requires a sophisticated market-power analysis. It requires Tom Ross to get on the witness stand and demonstrate there's market power and there has been a lessening of competition, and for Tim Kennish to argue that point legally. That's what it requires.

It must be understood, if you're talking about a small business that has gone to the Competition Bureau...don't think for a minute they haven't spent time, money, and resources, and have hired lawyers. Think about the energy and concern that somebody who's on the other end of a refusal-to-deal situation, as in the supplier who was refused parts by Chrysler, has to deal with. Now that was a small parts supplier, although it may be fairly large in terms of Montreal business. It was relatively small in relation to Chrysler. That person will pursue the complaint and spend his or her time and money, retain an economist maybe, retain an MBA to help out, retain an accountant, retain a lawyer, and then find there's nowhere to go because the Competition Bureau has decided it's not a case they should pursue—and maybe validly.

There's no hidden agenda here. It may be valid. Maybe it doesn't lessen competition substantially. Maybe it's not a large enough case. Maybe they don't have the resources. Maybe it's not a priority, and they don't pursue it. Where does that person go? Where does that business go? In my opinion, you go to the tribunal and you have a hearing. You put the safeguards in and you know that justice has been done, and that's important.

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

Mr. Martin, do you have any questions?

Mr. Pat Martin (Winnipeg Centre, NDP): Yes, I do, Madam Chair. Thank you for the opportunity and thank you, guests, for being here.

I'm sorry, as a substitute for the regular member of the committee I missed the first two briefs, although I've tried to pick up the general gist through the exchanges that have been going on with the panel.

I'm interested as a lay person in this area, as most Canadians are, and when we think of regulatory competition or whatever, it's usually the issue that Madam Girard-Bujold raised, which is in terms of gas prices. But I understand there's an agreement on the committee that we won't dwell on that, so I won't use my time on that issue.

I'm also concerned, though, with the point Mr. Ross made, that either you have a regulatory regime in an industry sector or you say that competition will be our regulator.

There are a lot of Canadians who feel that in an era of deregulation—an era of 15 or 20 years of systematic deregulation, largely taken from the wish list of the BCNI and implemented—competition as regulator has, in fact, failed them. There's a growing hue and cry amongst lay people, people who are neither lawyers nor economists—householders—that they want more, if not more regulation in industry sectors, at least a competition system that's effective and accessible, that deals with day-to-day issues of working people and families. They want to be comforted that they're not being gouged or ripped off by some...conspiracy, I suppose, is the way you would put it.

I watch the American model as well, and I noticed in Mr. Ross' brief he deals at length with a couple of points. There's a growing feeling in the States that maybe there's too much anti-trust enforcement—largely due to private actions—to the point that it has the reverse effect, that it might be impeding competition, that many of these claims are laid not to expand or enhance competition, but to have the reverse effect.

I guess my question was partially answered. Even Mr. Dillon is saying nobody's looking to replicate the American model, which is probably the most litigious in the world. But by the same token, it seems to be the trend to harmonize with American business.

I would ask Mr. Dillon and then others to comment on where the business round table in the U.S. stands on their current anti-trust regulations or the number of private access challenges they have.

• 1030

Are they taking active steps in Congress to harmonize more with the Canadian model so they're not burdened so much with what they consider to be nuisance complaints?

The question to others would be, should we take steps down the road toward increasing private access? How do we shield ourselves from getting to be that court of nuisance, as it seems to be in the United States?

The Chair: Mr. Dillon.

Mr. John Dillon: I'm not sure I can give you a terribly specific answer to your question, because I'm not in touch on a regular basis with U.S. business organizations and organizations like the business round table on these issues.

I do know, as has been mentioned, there are significant concerns in the United States with respect to the amount of litigation, not just in the anti-trust area but in a number of other areas as well, and the multiplicity of enforcement agencies leads to considerable costs and complications. I do believe there is some movement for reform, but I'm afraid I can't give you any specifics about that.

Mr. Pat Martin: Fair enough.

Anybody else?

The Chair: Mr. Kennish.

Mr. Tim Kennish: I would say the U.S. courts have a long tradition of dealing with these issues. Their law is, by comparison to ours, very stable. I don't see or hear much in the nature of a major discussion on reform, particularly in vertical issues that are the subject of private access.

There are some things that do constrain private actions in the U.S.—for example, you can't bring a private proceeding to restrain a merger. There's a great concern that strategic behaviour could interfere with that, and it has not been permitted.

There's also the indirect-purchaser rule. Generally the law in the U.S. prevents an indirect purchaser from effectively collecting damages from someone who has established, through any competitive agreement, a higher price upstream. But they do have treble damages there, which is something we obviously don't have here in our civil recoveries.

Just to comment further—and it goes back a bit to Mr. McTeague's question—on our proposed private access provision, one of the concerns our members sometimes state is that they think the proposed access will not be really useful to small and medium-sized enterprises because of the costs, the slowness of process, and the limited remedies available, but it will likely be used by parties who have more financial resources and larger business interests. So it may miscarry in terms of what it was intended to achieve.

To go back to the U.S., my impression—and I haven't cited this extensively—is that the great plethora of cases in the private area are in the vertical terminations of distributorships and that sort of thing. A lot of litigation is in that area. So who knows whether it will be an active area for enforcement or not.

The civil provisions that are planned to be connected with private access are somewhat limited, as Mr. Wetston has observed—exclusive dealing, tied selling, refusal to deal. The big civil provision that isn't proposed at this time to be connected with private access is the abuse of dominance. If you look at the track record of the Competition Bureau, that's where they have been most active and successful in enforcing the law. And arguably, that's the most important area, because the parties that are challenging their practices are sitting in a dominant position in their industries and can do the most damage. That's perhaps the area where you'd expect the bureau would continue to be active.

Sorry, those aren't particularly focused comments. They're just observations that relate to your topic.

The Chair: Professor Ross, did you have anything to add?

Prof. Thomas Ross: No, probably not, but I'm a professor, so I'll say something.

Voices: Oh, oh!

• 1035

Prof. Thomas Ross: I will just speak to the point Mr. Martin made, that there is a perception in some quarters that deregulation has failed ordinary people in Canada and in the United States, and perhaps as well in Europe. I think that's a bit unfair, but I concede that there is some evidence. We're certainly worried about the state of the airline industry in Canada now, which is one that we deregulated more than 10 years ago.

There's a lot of concern about California's experience with electricity deregulation, which I do want to say is California's mess; we don't have to go there. If we wanted to, we could deregulate in a lot more sensible way than California did. But that's a story for another day, or week, or month.

But I think there are some successes with deregulation as well. I think some aspects of the telecommunications deregulation has been good. Some broadcast deregulations have probably been good and we can make some progress I think in the other areas as well. And when you do deregulate, it does mean that you have a larger role for competition policy. You're handing things over to the competition agency and then saying, okay, we're done trying to control prices in this market, competition's going to do it, so you're the agency that has to keep your eyes on this.

And that makes it that much more important to keep the changes to the Competition Act up to date, to keep it nimble, and flexible, and responsive to the needs of Canadian businesses and consumers. So I think the package in Bill C-23 is a very nice start; moving on to changes in section 45 will be great as well. I commend this committee for its interest.

The Chair: Mr. Wetston.

Mr. Howard Wetston: I think it's a very good question. From my perspective I think it's important to look at regulation and competition as complements, not as substitutes. I think there are many sectors in which that is very much the case. I think that's the reality of our marketplace, and it's not terribly different in many other economies.

I do believe, as Tom indicated, there have been some successes, but I think the reality of how we want our marketplace to function from the point of view of competition policy is not easy to describe.

My experience with foreign firms in Canada—and we all realize that foreign firms have a huge presence in Canada, and it's growing—is that the acquisition of Canadian firms is a continued phenomenon. There's not much we can do about it, but it's a reality. But we do want to keep Canadian jobs, and we want to continue to have an increasing standard of living. We want Canadian productivity to go up even if there's foreign ownership.

My experience with foreign firms is they want two things in Canada—besides the opportunity to become monopolists, which everybody likes to do, but they like to do without violating competition laws; grow their business, so to speak. They want effective laws. They come to Canada knowing they're coming to a country in which there are effective laws. They want to be able to come to a country in which they know securities commissions are enforcing securities laws, and there's a lot of complaints about that.

They want to know that there's an effective anti-trust law in place, because sometimes they may have to use it. And that's a reason for them coming, not a reason for them not to come. They want to know that they're coming into a country in which they have access to courts and tribunals where appropriate, because that's what they're accustomed to, particularly if they come from the United States, or Australia, or New Zealand, or the U.K., or Europe. That's what they want. So I don't think we should be too concerned about amendments to the Competition Act that look a little like what other countries may have, provided we have the safeguards because of concerns with respect to the kinds of things we have talked about.

One of the biggest concerns in our capital markets today is liquidity. What's going on? It's moving to the south, moving to the United States. How are we going to keep it in Canada? It's no different from maintaining an airline industry in Canada and maintaining a vibrant telecommunications industry in Canada. The framework laws though have to work. And if they don't work and they're not effective, I don't think we're going to get the kind of investment we're looking for.

The Chair: Thank you.

Thank you very much, Mr. Martin.

I'm going to turn it over to Ms. Torsney, please.

Ms. Paddy Torsney (Burlington, Lib.): Everyone seems to be describing the private access provisions as small business using them to go against bigger business. Is it not possible that big businesses could go against each other and spend an awful lot of time on this? And is it possible that big business can go after small business with it?

Perhaps somebody could elaborate on how that would happen, because I would have great concerns about this. If it's going to be hard enough for a small business to launch a case against a big business, God forbid, if a big business comes after a small business, they have a heck of a lot more resources. Everyone seems to be talking up here, but what are the specific sectors in which people actually envision using some of the provisions of private access?

• 1040

Mr. Dillon, some of your member companies operate on both sides of the border, and I would think it would be easier for them in terms of dealing with the head office, especially if it's in the south, if they have the same or similar laws in both places. I can't imagine that if they're already dealing with it in the U.S. it would be much harder for them to deal with it in Canada. Would you respond to that.

Mr. John Dillon: Let me take that last question first.

As I tried to indicate earlier, I think most companies operating in Canada would want to have the advantages of the Canadian system and not the disadvantages of the U.S. system. So companies headquartered in the United States may be familiar with and indeed practise with the U.S. system, but are not necessarily in favour of it. And if there's a way to avoid that in Canada, so much the better.

But to answer your first question, I think that is a legitimate concern. Our expectation, and the concern many of our members have, is that it would be used by larger companies to basically harass their competitors, not in the interests of the general public interest in competition. That's why we think the commissioner and the bureau should be the ones to make that judgment. But simply to pursue their own private interests.... And, yes, for the most part, it would be larger companies that would have those resources, and it also is quite possible they could use it against small companies.

As I said earlier, there is a legitimate interest in trying to find the safeguards, but I'm assuming that people would not launch these cases unless they've hired sufficient talent to help them build a case that at least gets them past the original hurdle of not having it summarily dismissed by the tribunal when proceeding with the case. So if they're skilled enough to do that, then it's the only control over it and they can very much pursue their own private interests. That is the concern, and they could use it against small companies, very definitely.

The Chair: Mr. Kennish, did you wish to add anything to that?

Mr. Tim Kennish: Yes, thank you.

Well, it would be a law of general application, so it could be accessed by any member of the public. Large companies could seek to pursue those remedies. I think the hope is that sham and strategic litigation would be pre-empted through the safeguards that are built into the legislation. I think it's accepted that from the initial time the private access provisions were first discussed, there have now been embroidered onto the proposals a number of safeguards that go a long way to dealing with those concerns.

The Chair: Professor Ross.

Prof. Thomas Ross: I'll just add a couple of things.

As Tim Kennish said, since it is a law of general application, it could presumably be used by a large firm against a small one, but there are two things about that. First of all, to the extent that the law is meant to protect against a lessening of competition, a big fish going after a small one is going to look rather ridiculous probably, and is going to be subject to summary disposition, I would think, with costs probably. And a policy of doing that, I would think, by a large firm could be actionable under section 79 as an abuse of dominance if a firm really decided it wanted to develop a reputation of being a bit of a bully using the anti-trust arsenal.

The Chair: Mr. Wetston.

Mr. Howard Wetston: You should know, there is law to that effect. That's the Laidlaw case, in which the tribunal specifically decided that, as an anti-competitive act with strategic litigation, it was specifically one of the act's...conduct, as I recall. I can't remember if I filed Laidlaw or not, but I remember the case.

A voice: And you won that one.

Mr. Howard Wetston: There aren't many wins in this area.

I think your point is a very valid point of taking it from the treetops and looking at what goes on. You're talking about certain specific kinds of activity here. Let me try to describe it a little bit if I can.

I think Tom is absolutely right. If we're worried about big firms taking on little firms, if a little firm is going to have to go to the Competition Bureau and spend the time, and money, and resources there, it may as well spend the time, and money, and resources at the Competition Tribunal. At least it would have control of its own case instead of coming into the bureau and trying to convince one of the commerce officers they have a problem. With all due respect to the bureau, they may be very talented but they have a lot to do.

• 1045

You will get large firms taking on large firms in this area, not large firms taking on small firms. You will get small firms trying to take on large firms, and there will be a resource problem, but we can't satisfy everything. They are going to have to spend time and money and energy anyway, and believe me, if they're on the other end of the major refusal to supply, they're out of business. Make your choice. They're out of business, or they're going to have to take some action. Where are they going to go?

If there isn't a substantial lessening of competition or going back to the same scenario, it's not a priority for the bureau. It's not a significant case because it doesn't cut across provinces, it's not national enough in scope, it's too local, or whatever, and that individual has lost recourse. I think recourse is an important part of the rule of law in our country, and if you don't have access, you might take it to the normal courts, but that's a whole other complicated problem.

You can have large competitors having a reduction in competition at the upstream level, where you have exclusive dealing arrangements. It's not just downstream suppliers that are affected as you would think in a resale price-maintenance scheme or sometimes in a refusal-to-supply or refusal-to-deal scheme. I think it's important to understand that it's not just a question of big companies and little companies; it's big on big, it may be small on small, and it may be big on small. There are a number of combinations here. I think Tom's absolutely right. If a large company takes on a smaller company, I can't imagine that the tribunal wouldn't carefully look at that in a summary way.

Ms. Paddy Torsney: The reason I asked is partly that on Sunday we met with the independent grocery manufacturers. They said that they certainly think the Competition Act is important to them as a tool, but they weren't very happy with some of the applications.

For example, on the one hand they would look at all of Nova Scotia instead of Pictou County in one case and look at Mississauga instead of all of Ontario on the other. Their complaint is, I think, that in some cases the bigger companies get away with things because they can make things look a lot better, or they can compete to make things look a little different in different markets. I can imagine that in certain markets, where perhaps there aren't some of the big dominant players, they could go against some of the independents or some of the smaller companies.

The Chair: This is your last question, please, Ms. Torsney.

Ms. Paddy Torsney: The last question relates to the fact that having dealt with all the phone calls, Mr. Kennish, from all those people who dealt with those game cards, I can tell you they are a bad thing. I'm glad no one actually took too many swipes at that section of the bill. It is a problem in the country when people get things that say they've won something yet the people do not fully appreciate what the costs of collecting are. We do need to have some changes there.

Mr. Tim Kennish: If I may, I'd just like to add in response that our point is simply that we think that the net is too—probably unintentionally—broad. There needs to be a bit of restriction so it will apply to the kind of things you're concerned about and not to the straightforward game you get at your gas pump, where there's simply an offer to permit you to participate in something, there's a skill-testing question, names are selected at random, and you can enter without buying something.

Ms. Paddy Torsney: You're absolutely right. There's no intention to do that, and I don't think it does do that. I think the greatest concern was people having to pay $35 to collect a $2 prize or no prize, and not being aware of the obligations they would enter into by dialling a 1-900 number or what have you.

The Chair: Thank you, Ms. Torsney.

I'm going to turn to Mr. Rajotte, please.

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance): Thank you, Madam Chair, and thank you very much, witnesses, for your presentations this morning.

I want to start with Mr. Wetston and follow up on something Mr. Penson was talking about—namely, understanding why you recommend limiting private access. You talked about requiring the parties to have limited discovery, requiring agreed statements of facts, limiting the number of witnesses or restricting the witnesses, and limiting the number of people who have standing, even the commissioner. I was just wondering if you could expand on why it is you are making these recommendations.

• 1050

Mr. Howard Wetston: When I sat on the Federal Court of Canada, I was tired of sitting at six-month trials. That may be part of the reason.

I'm not making that recommendation because I think it's necessarily something I would put in the bill. What I was saying, sir, is that I think you could design provisions that might go towards reducing the costs, because I know that's a concern. I was simply flagging some possibilities, recognizing that whenever you do something like that, you do restrict the opportunity for a full evidentiary development of the case.

I want you to understand that I think the facts at issue in many of these cases are often quite clear. It sometimes comes down to a couple of issues, and the couple of issues may involve difficult economic concepts like what market power may exist or what market definition you're looking at to determine whether this will substantially lessen your competition.

I think there are better ways of doing it than, for example, what happened with Superior Propane. There were 70 witnesses who were called, including a lot of lay witnesses. I don't know the reason the commissioner would do that. I'm sure it was very justified, but I don't think you need to do that in a private access case.

My suggestion is that we look, for example, at the European Union. There they do a full merger review from beginning to end in four months, so there are other regimes in which limitations are provided in order to have timely disposition. We don't do that.

When I talk about discovery, I still believe discovery is a wonderful tool. It's a great tool for getting admissions in civil cases and for fact-finding in civil cases. But if you believe this is a part of the public law, in part being enforced by private prosecutors, then I'm not sure why you want to have full and open discovery as you might in a purely civil case in the courts.

It's just a suggestion. It may not be one that you like, but you might be able to limit the discovery, for example, in a pre-hearing conference with one of the tribunal members by deciding you only need three days of discovery on several issues and knocking counsels' heads together to get that agreement. It's just that thought I'm providing you with.

The Chair: Mr. Dillon

Mr. John Dillon: I just have a quick follow-up to that. One of the concerns that's been raised with respect to the ability to use this for strategic litigation is exactly that concern—namely, that companies that want to find out more about their competitors will get discovery through this process. I'm not necessarily suggesting that Mr. Wetston's proposal is going to solve that problem, but that is a big part of the problem.

Mr. James Rajotte: Actually, that's where I was going. In your exchange with Mr. McTeague you said that the safeguards that were in Bill C-472 were not substantive enough, but you seemed to indicate that there were safeguards you had in mind that would safeguard private access. I'm just following up on this. Would Mr. Wetston's suggestions be enough, or do you have other ones?

Mr. John Dillon: The reality is that we have debated this, as I'm sure Mr. Kennish and his colleagues have within the CBA, and so far we haven't been able to come up with a set of safeguards that would satisfy people in this respect.

As I understood Mr. Wetston, what he was suggesting was to limit discovery so as to limit the costs of bringing these actions, which is obviously one of the concerns of private business. However, it doesn't get, as I said, to the fundamental concern about people who are bound and determined to use this for strategic litigation to get more information on their competitors; this will be a form of compelled disclosure.

Mr. James Rajotte: So you don't have any safeguards at this point.

Mr. John Dillon: Not at this point, no.

The Chair: Thank you, Mr. Rajotte.

Mr. Howard Wetston: If I may, can I offer a suggestion on that point?

Discovery proceedings are not simply random exercises in getting anything you want. You can ask the question, but counsel will tell his client not to answer it. If there's a dispute, you go before the court or the tribunal, and a decision is made as to whether you need to answer the question. There just may be areas you can't get into because you're not going to get into those areas that have nothing to do with the issue.

There are ways of handling it. I'm not saying it's perfect. Our system is not perfect. What we're talking about is the adversarial system; that may be the problem, but we want to preserve it. If you want to preserve the adversarial system and still provide an opportunity for access, then there are trade-offs. I agree with Mr. Dillon. It's not perfect, but I think it's better than not having the access provision.

The Chair: Mr. Kennish, you wanted to respond.

Mr. Tim Kennish: I'd just like to wrap up with one further thing. I think that most people would acknowledge that in today's environment, without changes to the way in which the Competition Tribunal operates, the expectation would be that if you were going to bring a private access case in a contested situation, you're looking at a year before you get a remedy and are probably well into several millions of dollars in costs in pursuing that kind of relief.

• 1055

I think that's in part what Howard is getting at. He's not necessarily anxious to abandon ship on the rule of law, but there is a cost in terms of expeditiousness of proceedings and in terms of the ability to get justice, if that's what you want, given the limitations on resources. You know, is the game worth the candle?

The Chair: Mr. Wetston, do you want to say something else?

Mr. Howard Wetston: It might help the committee if I could make one other comparison here.

First of all, we're not talking about the criminal law. We're not talking about respondents having to make a case or having the full panoply of charter rights in a proceeding. We're not talking about making full answer in defence.

The reason we're not talking about making full answer in defence is that there's no quasi-criminal proceeding here like we have under the securities law, where an individual comes before the commission on market manipulation or insider trading, or some form of securities act violation in which we give respondents the full panoply of procedure. We would not cut them off, because it's important for them to make full answer in defence.

That's not what this is about. It's a reviewable trade practice, and parties should have the opportunity to go and the tribunal and the law should have the means to preclude frivolous actions and long, drawn-out proceedings that are not in the public interest. So I'm simply reminding the committee that this is the kind of thing we're talking about here.

We're not talking about liability in civil cases either.

The Chair: Mr. Rajotte, do you have one more question?

Mr. James Rajotte: Professor Ross, you talked about section 75, refusal to deal. You said it should include a competitive-effects test. Then when you were discussing proposed section 103.1, you said to focus on protecting competition, not on protecting competitors, and you indicated that the conditions that were in there could actually be good, clean, but tough competition.

That's a tough question for the committee, which I've tried to ask as many witnesses as I can: How do we distinguish between good, clean, but tough competition and anti-competitive behaviour?

I don't know if you have a simple, good answer to that or whether there are alternative criteria you suggest we put in the bill to replace this set of criteria.

Prof. Thomas Ross: You're quite right. There's not an easy answer for when competition is too tough or when it crosses the line and becomes unfair.

In general, economists want to see efficient markets, prices close to the costs, allowing for reasonable returns for investors, and things like that. We consider competition good when prices stay down more or less permanently, close to their level of costs. We consider it to be perhaps excessive if there's a temporary dip that is only meant to eliminate some competitors so that, later, prices can come up.

My specific thought on proposed section 103.1, for example, which relates to the interim orders, was that proposed subsection 103.1(2) does suggest that the tribunal could make an order if there is, under proposed paragraph 103.1(2)(a), “injury to competition that cannot adequately be remedied”. That's okay, because it mentions injury to competition. But my concern is proposed paragraph 103.1(2)(b), which just says “a person is likely to be eliminated as a competitor”—stop.

If I had my preference, that would continue a little bit to say “with the likely effect that competition would be lessened”. So if you just knocked somebody out but there's 100 other people, that's no reason for an order; but if you've knocked somebody out and there's only two, maybe there is a reason for an order.

Similarly with proposed paragraph 103.1(2)(c), which actually, in some sense, is more problematic:

a person is likely to suffer a significant loss of market share, a significant loss of revenue, or other harm that cannot be adequately remedied by the Tribunal.

Well, competition does that to people. It knocks down their market share and hurts their revenue sometimes. But if we stuck a line in there, saying “with the likely result that competition was lessened”, I'd feel a little bit more comfortable.

Mr. James Rajotte: Can you tell that in even a short period of time, one to three years? If, say, you have four big players in a market and you lose one, won't it take three to five years to determine the effects on competition?

• 1100

Prof. Thomas Ross: Obviously, if it's for an interim order, you have to make a pretty quick judgment. But it at least helps rule out some really silly cases where, as I say, you have 100 competitors and some small guy is complaining, and he's going to get knocked out, but there's lots of other competition. Then you just don't grant an order in a case like that.

It is true that benefit of the doubt should maybe go in favour of granting the order. If it looks plausibly like there could be a lessening of competition, then that's fine, you can have your full hearing to see whether there should be a more permanent order.

These are difficult questions. It's the kind of thing I get asked when I provide advice to the bureau, in many cases: How badly is competition going to be hurt in a case like this, when we go from four firms to three?

You have to look at a whole bunch of things, like how easy is it for new people to enter? What's the history of competition in this industry? Have the firms been aggressive toward one another in the past? How easy is it for imports to come in?

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

I'm going to turn now to Mr. Bagnell.

Mr. Larry Bagnell (Yukon, Lib.): Just before I start, I would like to say that I agree with my colleague here on the game cards. In fact, I want to not widen the net, but make the existing provisions even more stringent to catch the problem she's talking about.

Related to regulation, I'm one who thinks regulation doesn't really work that well, when you have 20%, or 30%, or 40%, or 50% increases in price and inflation is at 3%. That's why I think competition has to be made to work well.

I just want an short answer. I'm curious about process. Mr. Kennish and Mr. Ross, basically you work full time in this field. Did you provide any earlier input into this process? Did you get a chance to provide input to the people developing this, the bureaucrats? Because you work so much on this, in my opinion, it might be useful.

Mr. Tim Kennish: On Bill C-23?

Mr. Larry Bagnell: Yes.

Mr. Tim Kennish: No, not personally, but some of these ideas have been floating around for some time, and we have commented on prior iterations of this.

Prof. Thomas Ross: Basically, it would be the same answer for me. In my own professional work, I've written a little bit on section 45, certainly, but also section 75, on refusal to deal, but I didn't provide any formal input into this process at any stage.

Mr. Larry Bagnell: Okay.

We've had a couple of hours of the standard position, so I want to play devil's advocate for a second.

My first question is on resources available to the bureau, in the context that, if there are not enough resources available to the bureau, and the existing system with the tribunal catches the major or the most serious issues, or if private access on average would have less serious issues, if the major issues can't all even be dealt with, then if you opened it to private access and diluted the seriousness of the issues that could be dealt with at all, because there aren't enough resources, wouldn't that make less effective the reduction of anti-competitive behaviour?

Prof. Thomas Ross: I'm not sure I quite understand the question. You're asking if.... I think many of us do believe that the bureau has been under-resourced over the last several years, particularly since the new act, which gave them a whole lot more to do without the people to do it, without the resources to do it.

Your concern seems to be, if we provide private access, this will somehow drain resources away from important cases. Is that your view?

Mr. Larry Bagnell: Yes. If there's not enough to start with, then maybe even fewer of the important cases would be done.

Prof. Thomas Ross: If the bureau's budget stayed the same and it didn't have to particularly respond to requests, if it could more expeditiously off-load—I suppose I should choose that word carefully—some of the responsibilities for enforcement to private parties, that, in a sense, preserves more resources for the big cases. So I would think that should actually help.

Mr. Tim Kennish: If I may add, I think the bureau is under-resourced, but a good deal of their enforcement effort is unavoidable yet dedicated to merger review, which is part of their process.

One of the difficulties is the fact that we haven't had any change in the thresholds for review since the legislation became effective in the mid-1980s. That has been proposed, but it hasn't happened, partly because of resource limitations.

• 1105

As for the other areas, I think everybody would agree that cartels, and abuse of dominance, are of a higher order of magnitude than some of these other matters, important though they may be. It's not surprising to me that the bureau has moved in the direction it has, with control of merger abuse and enforcement of cartels as its primary objectives.

In past position papers, particularly on private access, the bar has argued—and I think they got tired of arguing—that there ought to be more money to fund the bureau's work. If they have a job to do, they shouldn't be constrained by lack of resources. But I think that isn't being pushed any longer, because it seemed to be playing very well.

The Chair: Thank you.

Mr. Wetston.

Mr. Howard Wetston: In September, I gave a paper with Tim at the Canadian Bar Association in which I compared the Securities Commission's budget with the bureau's, and ours is about double.

Touché.

The Chair: Mr. Dillon.

Mr. John Dillon: I think the issue of under-resourcing has been discussed. Our organization doesn't have a formal position on that issue, but I think it's acknowledged by a number of people in the business community.

I want to deal with your particular concern, because if this private access goes ahead, as I understand it, presumably most people would take their case to the bureau first...and only if the bureau decides not to proceed with it. So I'm not sure we wouldn't run into your problem.

And presumably, as well, if the tribunal entertained one of these cases, it would seek to have some input too. Possibly the bureau itself would choose to be part of any private action.

So, yes, I think this is going to increase the bureau's resource constraints, unless significant new resources are put in.

The Chair: Thank you.

Do you have a question?

Mr. Larry Bagnell: Yes, a short one for Howard.

You talked about other remedies, and not going the whole hog with the prosecution because it's so difficult. But if you put in other potential options, would it not be like sentencing: you can get ten years, five years or one year, but for most cases the judge will put the sentence somewhere in the middle? If you brought in weaker options, is there a chance that some serious cases that should be prosecuted to the full extent might end up with a less serious penalty?

Mr. Howard Wetston: I think that's a good question, but I don't think it's likely to happen in this area.

If we're simply talking about limiting areas of private access to the vertical restraints of trade, I don't think that's likely—because there's not much going on there anyway. I would agree with you on the example of cartels and price checks. I have raised this issue before, and asked why there appears to be less enforcement of conspiracies to reduce competition in Canada. I think there are probably some good reasons for it, but I do ask the questions. Those conspiracies are very difficult to detect, and very difficult to prosecute.

But in the area of vertical restraints of trade, other than the issues my colleagues have described, and that you have to grapple with, from the point of view of penalties I think it's quite benign. Frankly, there's not much going on.

The Chair: Thank you.

Thank you, Mr. Bagnell.

Before I go on, a couple more people would like to ask questions. And I want to clarify a few things before I move forward.

First, Mr. Kennish, in your paper and in your discussions with Ms. Torsney about deceptive notice of winning a prize, I thought that the non-application section under proposed subsection 53(2) would alleviate many of the concerns. In your brief, you say the proposal would prohibit virtually all standard promotional contests. I don't see that with the proposed subsection. It clearly talks about non-application, where you're okay if there's adequate notice, or fair disclosure, or a skill-testing question, or if you get some prize or other benefit.

So I'm a bit confused between the statement in your brief and what I see in proposed subsection 53(2). Maybe you could enlighten me.

Mr. Tim Kennish: I'm not familiar with that part of the brief, since the draft was generated by our marketing practices group. My understanding is that the exempting provision doesn't take away sufficiently from the application of the prohibition, in circumstances where there is an offer or promise of a prize and as a condition of getting the prize, a requirement for entry, or an option of entering through a purchase, or being required to do something.

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I'll be happy to follow up on that.

The Chair: That would probably be the best thing. Maybe we could do that, and have some dialogue with the group, because I'd like to get that clarified. If there's an error in the way the legislation is drafted, then we need to fix that, because that was not the intention...that adequate and obviously fair disclosure would allow contests to continue.

Second, I also want to pick up on something you said earlier, Mr. Wetston, about whether it should be in the act. The proposals or suggestions you mentioned: should it be up to the tribunal to decide, or should it be in regulations or guidelines? Do you have a firm opinion on that, or is it something we should just recommend?

Mr. Howard Wetston: That's a really good question, and I think it can go both ways. I personally would like to give the tribunal as much flexibility as possible in designing its rules to accommodate this area, should the government decide to include it in amendments. I think that's a better result.

On the other hand, some of these may require a legislative solution, so the tribunal is able to do it. Because if it tries to limit discoveries, it's going to run up against a brick wall with respect to the litigation bar and the kinds of issues we raised earlier. If you're serious about it, I think it would be better to pick the major areas and legislate it.

Let me give you an example: all matters must be concluded in three months. I think that should be in the legislation, because I doubt very much if that would happen in tribunal rules of practice. So my advice would be to leave as much as you can to the tribunal and its rules of practice, so it can fashion them to suit the cases.

The Chair: One last thing before I move on. I'm listening very attentively to what's taking place, and to what Ms. Torsney pointed out earlier on the border issue. I have grave difficulty with this. I see companies in Windsor and companies in Michigan with the same owners, technically, and I see businesses in Windsor that don't have a right of action and businesses in Michigan that do. It could actually be a business in Windsor that now has a subsidiary in Michigan that has a right of action against the parent in Michigan, but their company in Windsor doesn't. Something doesn't seem right with this.

I don't agree that we want to go the same route as the United States, with treble damages. But at the same time, as a lawyer trained in both Canada and the United States, I can't understand why we think it's a bad thing to give people and companies access to protect their ability to be in business.

I'm not sure how to resolve that. I've listened to all the arguments, and with all due respect I haven't heard a strong argument for why we shouldn't. Other than that, there's not a consensus. I guess that means there are people who are for and opposed in many organizations. But I really haven't heard a strong argument for why it's a bad thing. I can't imagine it's a bad thing to have a right of action.

I'd appreciate any comments on that. Coming from a border community, about 95% of my time is occupied with what's going on at the border right now. Companies in my riding have businesses in both Canada and the United States, and they're having to make decisions. I wonder if we think this is a bad thing, or if we just don't think the legislation is there yet. But when we've discussed it for 30 years—sometimes change is good, and maybe it's time to make a change.

Mr. Wetston.

Mr. Howard Wetston: If I might add to your consideration...and obviously your riding is Windsor.

The Chair: Essex County, actually.

Mr. Howard Wetston: Essex County is up against Michigan, in that area.

Just so we don't lose sight of it, I always like to point out that in 1993, when I left the Competition Bureau to go to the court, we were doing work on trade, competition policy, globalization, and how innovation was changing our markets. We were trying to decide whether Canada really wanted to participate in a global marketplace or just continue to function with small, inefficient plants behind barriers.

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Those decisions were made a number of years ago, and I think we're in a different economy today—thank goodness. But at that time, 80% of all Canadians lived 100 miles from the border. Maybe it's 85% now. So I think your experience is not terribly different from the experiences of a lot of other people in Canada with respect to the impact of U.S. competition, and being on a level playing field.

But your point is very well taken, and my only response is to recall that most of us do live near the U.S. border.

The Chair: Thank you.

Are there any other comments?

Mr. Dillon.

Mr. John Dillon: I think we could obviously get into a much longer discussion of the complexities of the Canada-U.S. relationship. But it's interesting, because my organization usually gets accused by our critics of being in favour of total harmonization with the U.S. and not retaining any advantages as Canadians. That is fundamentally not our position. As I said earlier, I think this is one area where we consider our comparative lack of litigiousness to be an advantage over the United States. Our companies actually favour that.

So we don't have to adopt everything the United States does, particularly if we find those policies, laws, or practices not as efficient and helpful in improving productivity and competitiveness in Canada.

But what we've been arguing about is not whether companies should have rights, access, and remedies. Clearly they should. And as our other panellists have mentioned, in many cases there are remedies in law, and there are contractual disputes. What we've really been arguing about is whether this kind of provision could be abused, and how we could control that abuse in a way that promotes competition rather than inhibiting it.

The Chair: Thank you.

I'm going back to questions, starting with Mr. Penson.

Mr. Charlie Penson: I wonder if the panel members have seen the OECD report that talks about the Competition Bureau and the tribunal. Essentially, it comes down pretty hard on Canada for being ineffective in competition law.

I want to discuss that, particularly as it relates to private access and how that might or might not improve the efficiency of Canada's competition law. I'm going to the airline industry again. Mr. Ross talked about the airline industry being deregulated, but I would offer a rather different viewpoint: although the airline industry may have started down that road, there's still significant regulation.

I'm wondering how the right of private access would improve a situation like the WestJet case, which has been delayed for six months for a hearing, and now for a further six months by the Competition Tribunal. The case won't be heard until spring.

For background, a couple of airline start-ups have gone broke in the last year. One airline has an 80% monopoly; it has been accused of anti-competitive behaviour by WestJet; and the case takes at least a year to be heard. Would the right of private access help that situation any?

Prof. Thomas Ross: I'll take a stab at that. I don't think Bill C-23 would help any, or the proposed additions related to private access. Those kinds of cases typically fall under section 79, abuse of dominant position. As I've suggested, that might be the next place to introduce private access.

But it is a big area, and I favour the idea of starting small, with access to sections 75 and 77, and not 79 yet. Those are the kind of cases that come naturally to mind as areas where you might want to provide some access for parties damaged by predatory behaviour. But the bill that's before you, and the contents of Bill C-472 as well, won't help.

Mr. Charlie Penson: Professor Ross, if that was applied, and if we did include it in section 79, would it help that particular case?

Prof. Thomas Ross: It would provide an alternative outlet. WestJet, for example, could take the case itself, as opposed to relying on the commissioner to take the case.

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Now, I think the commissioner sees significant public interest in this case, and he's going with it. So the next question is, could the case go any better for WestJet...? If it were running it itself, well, it would be paying its bills, which would be worse for WestJet. Or it would be paying more bills; I'm sure it's paying some.

Could it make it move any faster? Well, I guess—

Mr. Charlie Penson: That's really the point here, isn't it? In these cases, companies can fall very quickly in this kind of market condition. That's the whole point in having effective competition law.

Prof. Thomas Ross: Right. The commissioner can now ask for these interim orders—and has, in fact. Under the previous amendments, that would not be available to private parties. I don't think there's anything in the proposed Bill C-472 or anything that provides for interim orders like that. So in some sense the commissioner has more tools to address this quickly than does a private party, even if you extend it to section 79, I guess.

Mr. Charlie Penson: But that hasn't happened either.

Prof. Thomas Ross: The commissioner issued interim orders to Air Canada, at one point, to withdraw some special fares it was offering—I forget what they were called, because they have clever names for those things—and then threatened another order. Air Canada just voluntarily withdrew a fare at one point.

But the process isn't as fast as you'd like, that's for sure.

Mr. Charlie Penson: I guess the point is, this would not be any magic solution, either.

Prof. Thomas Ross: It would not.

Mr. Charlie Penson: It could be a long drawn-out process. Even if there was a private access, it wouldn't really help in cases where there needs to be a timely decision made, or may not help.

Prof. Thomas Ross: No,

Mr. Howard Wetston: Not unless you put in more expedited provisions along the lines we were talking about.

I recommended before that you put in a five-year review. I really suggest you do that for private access. It will give you an opportunity to expand it, if you think it's appropriate, if it's working.

It will give the committee an opportunity to focus on it. It will give the government an opportunity to think about it. I've had some experience with that in the securities area, and I think it's very effective. It really focuses the mind when it's in the legislation.

The abuse of dominance is not being considered here. That's what this is all about.

Mr. Charlie Penson: Would you suggest that it be included?

Mr. Howard Wetston: I haven't given enough thought to it. I agree with Tom, to some extent. But I agree that if WestJet had access to the tribunal directly, was in control of its own proceedings, and there were more expedited processes in place, it might take a year, but I have a feeling it would take less time than that.

There's a lot involved, even with the public interest issues the commissioner is proceeding with. They may be completely valid. But don't forget, WestJet's in the business; they know what they're facing. The commissioner is not in the business. He's a public official.

In my opinion, the person who's in the business has the most to win and the most to lose. People who have that expertise are in the business. That's not to say the Competition Bureau doesn't have a lot of expertise in this area, but you could also help by decriminalizing predatory pricing and price discrimination. If you decriminalized predatory pricing in the area of the airline industry, you'd probably have a better opportunity to get speedier resolution of some of these issues, as well.

Mr. Charlie Penson: That would be a civil action.

Mr. Howard Wetston: Exactly.

Mr. Charlie Penson: It wouldn't have to go through the Competition Tribunal, and so on.

Mr. Howard Wetston: It could go to the courts, and maybe you could put it into the Competition Tribunal—but that's for another day.

The bottom line is the scheme might be a little off for what we might need, to have a really good functional competition law. Mr. Dillon says it's working pretty well. I don't disagree with him. I was part of this process in 1986 and I like to think it's working well, but it could work better. We're all searching for a better law, I believe.

The Chair: Mr. Dillon, do you wish to respond as well?

Mr. John Dillon: I'm hearing concerns about the process and the time it takes. I'm not convinced that private access is going to shorten that time very much, unless you're also prepared to introduce the kind of procedural changes Mr. Wetston is suggesting. There are at least two parties in all these disputes, and the other side will want to ensure it has access to its full rights and its ability to make a defence, as he suggested earlier.

The issue is the procedure you take before the tribunal, whether it's the commissioner himself who brings the case or a private party. The reality, as I understand it, is that the process today is quite slow. Maybe there are some ways to fix the tribunal process, so people can get access.

I appreciate, especially in cases such as WestJet, there is a need—that's why there are the provisions for interim order—to deal with these things expeditiously. But it's the process, and I'm not convinced that private access is going to speed that up.

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Mr. Charlie Penson: You may not have the answer to this question today, but why have a quasi-judicial body, the tribunal? Why not just make it a full court hearing?

Mr. Howard Wetston: Do you have an hour?

Mr. Charlie Penson: No, but I wouldn't mind you supplying some kind of opinion.

Mr. Howard Wetston: From about 1976 to 1986, when we made the first set of amendments to the Competition Act where we put in these vertical restraints of trade, and then improved everything in l986 by decriminalizing the merger law and decriminalizing monopoly law.... You have to recall that in 1986, in order for you to proceed with a merger, it was criminal law and so you had to go to the courts and prosecute a merger and show it was detrimental to the public interest.

I believe you're from the Maritimes. No? I thought there was a representative here from the Maritimes, where I'm from originally. The Irving newspaper case, which is a very famous Supreme Court case, was prosecuted under the criminal provisions of the Combines Investigation Act, because it was criminal law.

So they tried to find a tribunal resolution, and the government looked at different models around the world and tried to decide whether they would just go to the courts as they do in the United States, or the FTC as an alternative, as they also do in the United States, or develop other kinds of models. The decision was made that we'd get the best of both worlds if we mix a judicial model with an administrative expertise. So we'd have an expert tribunal with judges chairing the panels being able to make rulings on the law and then put members like Tom Ross on the panel who have the expertise in economics, and others in accounting and business. This was the decision that was made, a hybrid tribunal.

So that's a two-minute historical rendition of what went on.

The Chair: Thank you.

Mr. McTeague, finally.

Mr. Dan McTeague: I believe Mr. Kennish had another comment.

The Chair: I'm sorry, Mr. Kennish; I didn't see that.

Mr. Tim Kennish: I would add to this that what Howard said is correct. From a procedural or process point of view, the Competition Tribunal operates in a very court-like manner. It's quite formal. It does apply most of the safeguards and procedures that a court employs, which is one of the reasons their processes take quite a long time.

The Chair: Mr. McTeague.

Mr. Dan McTeague: Madam Chair, I have two questions.

The first is to all of you, and I'd ask you to answer as briefly as possible. We were discussing the issue of better allocation of resources, or the more appropriate use of resources, that are made available. There's much discussion over the question of how much is expended on conspiracy, abuse of dominance, and of course on merger review.

I'd like to turn it to a different side to talk about the allocation of resources to the tribunal. In your opinion, is the tribunal effectively used as it is today? Could they be doing more? And does the private access correctly respond to the true or appropriate role of the tribunal?

That's the first question. I'll ask the second one after, Madam Chair.

The Chair: Professor Ross.

Prof. Thomas Ross: I'll start.

Mr. McTeague, I don't want to pretend to be speaking for anyone else, but just from my discussions with my colleagues, lawyers and economists working in competition policy, I think there is some disappointment with the tribunal model as developed. It's not that it's not fixable, but there's a feeling that it's more formal and slower than it needed to be, with the result that people are less interested in going to it, which means it hasn't been maybe as busy as it should have been. More stuff has been settled in the director or commissioner's office between the parties, because no one really wants to be involved in that process.

Some of what you're doing in Bill C-23 is going to address that, I think. As the current commissioner said, it does give the tribunal tools to control its own process to a greater extent. I don't know that there's any particular lack of resources at the tribunal. Other people here might know more about that than I do.

There is a question as well about the model of mixed lay and judicial members. I like it very much in principle, but the hard part is getting good members. That's not to cast aspersions on any particular members, but it's difficult for people, especially part-time lay members, for example, to drop whatever they're doing to come hear a case, with the result that you get people who are perhaps retired, which isn't meant to be good or bad. No one's ever asked me to be on the tribunal, but I'd have to say no, for example. It's probably better for Canada if I don't. So there are some bugs to work out, I think, in maybe making it work more effectively.

I'll leave my remarks at that.

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The Chair: Mr. Wetston.

Mr. Howard Wetston: I'm noticing that this committee asks difficult questions.

Mr. McTeague, there's no easy answer to that, although I don't have a sense that the tribunal resources are underutilized, because I don't think they have enough cases to be underutilized. So if the tribunal's purpose was not to require the commissioner to become the pro tem tribunal, which it has become, by resolving most issues inside the bureau in a non-public manner except for maybe a press release, then that result was not what was considered when the law was passed.

There was a real belief in 1986 that this tribunal would be used, it would not be as judicialized, despite judges being on it, and that it would be more efficient or effective. I don't entirely blame the tribunal, it just hasn't worked out that way. I think we need to recognize that there is a public policy problem here, and that we need to try to solve it. So the question is, how do you solve it? Is it by doing something to the tribunal? Is it by giving it more work so that it can develop cases that are in the public interest?

We need a body of jurisprudence in this country. Lawyers like Tim Kennish are giving advice every day to clients without proper guidance from either the courts or the tribunal. There isn't enough. The guidelines produced by the commissioner are just not enough. With all due respect, I started that process and issued the merger enforcement guidelines in 1990. I issued the predatory pricing guidelines. I issued the price discrimination guidelines. It is not enough.

So in terms of the question of how do you get enough, there's only one way. You can decide that you have the tribunal and you want it to work, and you make sure it has the resources, the rules, and the cases and then you'll get the result. If it doesn't work, this committee can look at it in five years and decide to change it again.

The Chair: I have Mr. Dillon next.

Mr. John Dillon: I recognize there's been a lot of discussion, certainly in the legal community, with respect to whether there is enough case law in this area, and the reality is, as Mr. Wetston suggested, that the vast majority of complaints in cases are settled within the commissioner's office by consent orders, by agreement between the parties. I dare say that for a lot of the questions that would be addressed through this private access, dealing with sections 75 and 77, the reality is the commissioner can deal with these companies and say, just a minute, this particular behaviour or refusal to deal, whatever the case might be, is really skirting the line here, and the behaviour is changed. So the reality is that's the way a lot of these cases are dealt with.

I believe it is a view of the bar—I'm not absolutely sure it's shared by the business community—that we need more litigation, and more cases, and more case law. I think there is a need for clarity in a number of areas. That's what I've been hearing from our members and from people who deal with this. As Mr. Wetston suggested, there are guidelines, but it's not always clear in all instances. So there is not an entirely satisfactory situation, but on the other hand, I think there is a body of practice that is building up within the bureau that does provide a fair degree of guidance as to what kinds of practices are acceptable. I'm not convinced that simply bringing more private actions to get more cases before the tribunal is the best way to deal with this issue.

The Chair: Mr. Kennish.

Mr. Tim Kennish: I'm here in a representative capacity, so I'm a bit constrained in terms of not having instructions in responding to your question, Mr. McTeague, but from a personal point of view, in my own practice we don't really want to end up in front of the Competition Tribunal for a variety of reasons, which certainly include the time it takes and the costs associated. So just about any other solution is to be preferred in situations where you have to get to a particular point. Of course, if you're being challenged over something that's happened in the past, and is ongoing and is important to you, then you're confronted with that being the only option. But I think the fact it's a slow process, it's costly, and so on is difficult.

One procedural area that has historically plagued enforcement is the problem on consent orders, and I think that's been effectively fixed in this bill. It's an important change and it will allow things to get resolved more quickly.

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Mr. Dan McTeague: This is a a brief question to Mr. Wetston since you, sir, served as a commissioner or director in a research investigation in the past. I would ask what your views are, sir, on the commissioner's power of reference on matters dealing with competition to the Canadian International Trade Tribunal, which is a proposal put before this committee by me.

Mr. Howard Wetston: Refresh my memory on this, Mr. McTeague. Is it the reference to the CITT by the commissioner?

Mr. Dan McTeague: Right. The commissioner would have the power to refer matters dealing with sectors of the economy, or competitive impacts on particular sectors of the economy, to the Canadian International Trade Tribunal, rather than simply the finance minister or another minister.

Mr. Howard Wetston: Yes.

Mr. Dan McTeague: This is of course referring to the issue of the Conference Board study and the difficulty we had with it last year.

Mr. Howard Wetston: I would be unfair to you if I commented on it, because I haven't really given it a lot of thought. I would rather not engage in a professorial discussion here. Mr. Ross probably has a better response to it than I do.

I will say this, though. When I was in the Competition Bureau there were a number of trade-related matters. Mr. Kennish and I were involved in one, a very lengthy one as I recall, that ended up in a consent order. It certainly had as many trade components as competition components, and we had to seek a resolution to some extent on the trade side to resolve the competition side.

Am I stating that correctly?

Mr. Tim Kennish: I'm having trouble recalling the case you're referring to.

Mr. Howard Wetston: I'll remind you in the hallway.

I think there's no question—and I'm not sure what drove your desire to propose this—that there are many competition issues associated with trade-related issues, and it's hard to know sometimes whether the remedy is a trade remedy that will alleviate the competition problem or vice versa.

I'm sorry; I can't help you any more than that.

The Chair: Okay.

Mr. Dan McTeague: Madam Chair, perhaps if anybody wishes....

The Chair: No, I have another question.

Mr. Dan McTeague: There's no other question here, but if the witnesses wish to provide this committee, Madam Chair, through you, any of their observations after today, then that would be welcome.

The Chair: Certainly, but I have Madame Girard-Bujold first.

Madame Girard-Bujold, please.

[Translation]

Ms. Jocelyne Girard-Bujold: Thank you, Madam Chair.

Mr. Kennish, you represent the Canadian Bar Association. You are chairman of the National Competition Law Section. In your brief you stated, in Appendix A entitled "Private access" that the members of that section are divided on the issue of whether such an amendment is desirable or not. Earlier on, you outlined some of the arguments put forward in that regard. You also stated that by granting private individuals access to the tribunal, we were bringing about changes to the Competition Act and broadening the spectrum of proceedings that could be introduced under it.

I wonder if you would, as a lawyer—since what we have here is a piece of legislation based on October 30, 2001 texts drafted by lawyers—why the members of your section, of your association, are divided on this issue. Why do you state in your brief that this is what is going to happen? Are a majority of your members of the same opinion?

[English]

Mr. Tim Kennish: We have 1,300 members in our section. We have not canvassed the whole section to get their views on these issues, which are quite complicated and cover a broad range of issues. What we did when this initially came up was get people together who knew the most about the area, either from experience in litigating cases before the tribunal, or from other related areas of competition law, or from being just generally knowledgeable.

I would say the opinion was split down the middle as to whether or not people were supportive of the proposal. I'm really just saying we don't have a position on whether the case has been made out for reform in this area. But if it is decided to proceed with it, we've made some observations about how you might go about doing it to make sure the concerns about strategic litigation and so on are addressed.

The Chair: Is that it?

[Translation]

Thank you very much.

[English]

I have no other questions on my list.

I want to thank you all for being here this morning. You've left us with a lot of thought-provoking answers. It's been a very interesting discussion. The researchers obviously will have a lot to do now, as well as all the members on the committee, in trying to come to some type of consensus as we move forward.

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If you do have further comments as the proceedings continue, please don't hesitate to send them to the clerk.

I will advise you that it is our intent to move to clause-by-clause in the week of November 20. The House won't be sitting the week of November 11, so our last hearings, technically, as things stand right now, will be the week before November 11. This will give us all about 10 or 12 days to decipher everything we've heard before we move to clause-by-clause. That being said, we may have other witnesses and may delay clause-by-clause by a day or two when we return.

We are trying to ensure that everyone has a chance to listen and hear and respond. So if you do have any comments, please forward them to the clerk. He'll make sure we get them.

I want to thank you all for joining us. We look forward to meeting with you again in the future and hope some of you will participate in our round table when we finalize our interim report in December. Thank you very much.

The meeting is now adjourned.