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, November 6, 2001

• 0904

[English]

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

• 0905

Just before we start, members, I want to give you a heads up that our trip to Washington is going to be delayed until January due to the constraints in Washington. So for those who are trying to adjust their schedules, I did want to let you know that. I'll get back to you about Europe, hopefully by Wednesday.

That being said, we'll go back to the meeting of the day, the subject of the day.

We're very pleased to welcome here today Mr. Stanley Wong. We also have Professor Michael Trebilcock from the University of Toronto; Mr. Robert Russell, a lawyer from Borden Ladner Gervais; and Mr. Jack Quinn, from Blakes.

We're going to begin with opening statements. I'm going to begin in that order unless there is another agreed upon order.

Mr. Wong, please.

Mr. Stanley Wong (Individual Presentation): Thank you very much, Madam Chair.

I appreciate the opportunity to appear before this committee. I know the committee has a very busy schedule, so I'm going to confine my remarks to three areas: temporary order, consent order, and private access, which I know I'm going to be asked questions about.

First I want to say I'm appearing before this committee in my personal capacity, not as a representative of any client or any organization. Specifically, I'm not appearing on behalf of the Canadian Bar Association, even though I'm a member of the executive of the national competition law section as its immediate past chair.

There's one other qualification I'll make when I come to talk about the proposed temporary order, and I'll start with that now.

The comments about the temporary order I'm going to make concerning clause 12, which adds proposed section 103.1, are made in my personal capacity. I emphasize that because I was retained by the commissioner of competition to advise him about the interim order powers. The good thing is that I made it a term of my retainer that I be allowed to comment publicly on whatever bill comes forward. Obviously, I cannot reveal to you what I said to the commissioner, but I'm free to comment publicly and that's what I'm doing.

My concerns about the proposal under clause 12 are the same as the comments I made when I appeared before the committee concerning the interim report, which was published in June 2000. Essentially, it is a generalization of the power that was granted to the commissioner in light of the demise of Canadian Airlines, what is now proposed subsection 104(1).

The last proposal that came in the private member's bill was really the same as proposed subsection 104(1), the present powers given in respect to domestic air service. The proposal in clause 12, which is set out as proposed section 103.1, just changes it from the commissioner issuing it to the Competition Tribunal being able to. Now that is an advance, there's no doubt about that.

What I find unsettling is that it still misses two key concerns with the generalized power. One is that there is no requirement, before applying for an order, or for the tribunal to award an order, to have the commissioner say, “I have reasonable grounds to believe there is a violation of part VIII of the Competition Act”. That requirement is not there. There's not even a requirement for suspicion. All it says is that the conduct “could be” the subject of an order by the tribunal.

The second point is that in terms of the impact, the commissioner is required to say only that the likely impact of having no action taken is that there would be remedial harm to competition.

Now, if it stopped there, which is in the bill, that would be fine. But it goes on to say if a competitor is eliminated, if there's significant loss of revenue, or if there is significant loss of market share.

As you know, competition lawyers and those who study the policy all know the concept of competition law and policy is to preserve competition, not competitors. There are losers and winners in any competitive process. By imposing this requirement distinct from preserving competition, it creates a different avenue for public policy.

• 0910

If, for example, there are only two competitors, obviously if one competitor is going to be eliminated, it will lead to a loss of competition. That will be taken care of by the first branch of the impact test.

By and large, I support the comments made by the competition law section in its brief to this committee.

The second area I want to comment on concerns the consent order process, which is in clause 14 of your bill. It amends section 105 of the act. I know there has been very little discussion on this in witness testimony before this committee. I know Mr. Addy has commented, and I know Mr. Goldman will be making some comments in this regard.

I am very, very concerned that this proposal is going forward. It does have broad support in the private bar. There's no doubt about that. And clearly, of course, it has the support of the commissioner. But we should not forget when Parliament amended the Competition Act in 1986—in effect, brought in the Competition Act—the Competition Tribunal was made to be a central figure in adjudicating the enforcement of competition law in this country.

What this proposal does is it turns the tribunal into a registry office. I agree with the technical and specific concerns in the CBA national competition law section brief, but not the conclusions. In my view, the proposal will marginalize the tribunal and undermine the adjudicative oversight of the tribunal with respect to enforcement of the act. That to me is very important.

I think one can see that a number of the amendments going forward, whether on the consent order process or the temporary order powers, are all designed to turn our competition laws into an administrative process where much of the power resides in the hands of the commissioner and the commissioner can make deals with private parties without public oversight. I think that is a serious mistake, which I urge the committee to address.

The final comment is with respect to private access to the tribunal. I personally support providing the right of access to the tribunal in respect of non-criminal matters except for mergers. I say this not because I have been “associated with being a plaintiff” in a number of private actions under section 36 of the act. Yes, that is true, but if you look at the cases I've been involved in, most of those clients were public institutions such as hospitals, public companies such as forestry companies, or major business organizations. So it's not a question of saying it is used for strategic litigation.

My concern around public access is related to the proposal brought forward by Mr. McTeague in clause 13. I think there are some specific problems with section 75. My concern is that it doesn't go far enough. I don't think, unless we're prepared to award monetary damages for such things as abuse of dominant position, i.e. monopolization, it will be used at all.

I know from the history of section 36 that until very recently there have been very few cases. It's very, very difficult bringing these cases. I think the availability of class action legislation in three of our provinces—and a number of provinces are coming on board with it soon—will change the landscape to some degree. But I know of no major country where a breach-of-monopolization statute does not come with a fine in the public domain, whether it's the United States or the European Union. And that to me is a concern.

I think we can all make ourselves happy by saying “Gee, this is modest; we'll bring something in.” But I don't think much will happen, because the cost of litigation is very high, even with the availability of cost remedies. I think if you want to fight a case, cost will not be a deterrent.

Those are my comments.

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

We're now going to move to Professor Michael Trebilcock, from the University of Toronto.

Professor Trebilcock, please.

Professor Michael J. Trebilcock (Individual Presentation): Thank you very much, Madam Chairman.

In the interest of time, I'm going to focus my comments almost exclusively on Mr. McTeague's amendment to Bill C-23 dealing with private party access to the tribunal. This is an issue with which I've long been engaged, and I think I can be most helpful to the committee if I focus on that issue.

Let me, however, just add my concurrence in support of Mr. Wong's point on consent orders under Bill C-23. I think it is bad public policy to turn the tribunal into a post office, to just mail them a consent order and require them to enforce it, whether they consider it appropriate or not. So I strongly endorse that concern.

• 0915

Turning to the proposed private member's amendment to Bill C-23 dealing with private party access to the tribunal, let me just situate this issue in a longer and broader context.

We have been debating this issue in this country for 30 years. We've been debating it since the Economic Council of Canada, back in its report in 1969, recommended a double damage remedy for private parties prejudiced by violations of the act. Their proposal or recommendation was not adopted, but in 1976 a single damage private remedy was provided for criminal violations of the act.

We have been debating ever since then expanding private party remedies, particularly with respect to reviewable practices. So this is a 30-year debate. This is not a debate that started with Mr. McTeague's private member's bill. I think it's time to close the debate, because 30 years is long enough to study and debate this issue.

The issue before us today is the question of whether private parties should be able to initiate complaints or proceedings before the tribunal with respect to part VIII reviewable practices, excluding mergers, which I accept. There are a number of reasons why this makes sense, as a matter of public policy, as opposed to self-interest.

First, private remedies supplement public enforcement resources. Those private parties bring their own enforcement resources to the process. In terms of deterring or discouraging violations of the act, this enhances effective deterrents. Secondly—and here again I endorse Mr. Wong's point—private remedies here provide the possibility of corrective justice for aggrieved parties, that is, righting the wrong they've suffered.

Injunctive relief, in part, rights the wrong they have suffered but only for the future, to the extent they've suffered some prejudice in the past as a result of violations of part VIII. A forward-looking injunction will not remedy that wrong, and only compensation will do that. In that respect, I think Mr. McTeague's proposed amendment falls short of achieving one of the major goals of private remedies—redressing the wrong private parties have suffered.

Private parties in some cases, relative to public enforcers, may have a comparative advantage. They're closer to the source of the grievance or the nature of the wrong; they have stronger incentives to take action to redress it; and they may have superior information about the nature of the wrongdoing, relative to the public enforcement agency. Another advantage of private party access to the tribunal is that by increasing the array of cases that the tribunal adjudicates, we will develop over time a richer, more nuanced, and more helpful body of jurisprudence.

Finally, I think private remedies—private party access to the tribunal—achieve something that's very important as a matter of public policy, and that is enhanced accountability of the public enforcement officials or agency, in this case the Competition Bureau or the commissioner who heads it. Remember this agency, unlike competition agencies in many other countries, is headed by a single commissioner. It is not a multi-member commission, like the Federal Trade Commission or the European Commission.

In terms of his decisions to bring or not bring cases, there is very little accountability. The ability of private parties to go to the tribunal, irrespective of the commissioner's decision, is an important check on the exercise of the powers and discretion he has under the act.

• 0920

All of those are good reasons why I have been arguing for 30 years that private parties should have direct access to the tribunal with respect to reviewable practices.

Let me comment on two or three specific issues. I agree with submissions this committee has already received that, in one respect, Mr. McTeague's proposed amendment should be narrowed, that is, section 75, dealing with refusals to supply, should include a substantial lessening of competition test.

In another respect, I believe the proposal should be expanded. It makes no sense to me—and I've heard no coherent argument to justify this—to exclude section 78, abuse of dominance cases, from this proposal. Indeed, those of us who are close to this field know that in the past many cases have been argued before the tribunal by the commissioner in the alternative, as section 77 cases or section 78 cases. This is true of NutraSweet, Nielson, and TeleDirect. So many abuse cases can be repackaged as section 77 cases, but not all abuse cases can be repackaged as exclusive dealing or tying cases. There'll be a subset of abuse cases that private parties will not be able to seek redress for.

Part of the domain of the abuse of dominance provisions can be covered off by parties repackaging their complaints as section 77 complaints, but not all cases. So I would strongly urge this committee to expand the scope of this proposal to include the abuse of dominance provisions.

I've already noted my concurrence with Mr. Wong on adding damages as a remedy here. I believe, realistically, this is probably an heroic request at this point. We are probably not going to see it now, but I would hope this committee would be prepared to revisit this issue in three or four years. If there have been no cases, or next to no cases under the proposal as it stands, then the committee should ask itself why. I believe if that turns out to be the case, the explanation will likely be that parties cannot obtain compensation for prior injury suffered.

Those are my comments, Madam Chairman. As I say, we've been debating this issue for 30 years, and I think we should not get into a mindset where nothing changes the competition law in this country inside of a 15- or 20-year timeframe. The world demands somewhat more timely responses to issues than that. Thank you.

The Chair: Thank you very much, Professor Trebilcock.

I'm now going to turn to Mr. Robert Russell from Gordon Ladner Gervais.

Mr. Russell.

Mr. Robert S. Russell (Individual Presentation): Thank you for the opportunity to appear before you this morning. I'd like to start by telling you, as I've provided in the written submissions this morning, I will be focusing exclusively on the interim order provision found in the proposed section 103.1.

I'd like to try to bring to you the perspective of a litigation lawyer, and the practicalities of the test and procedure proposed in the legislation.

Like Mr. Wong, I have advised the commissioner on provisions such as this in the past, but I'm appearing here today not as a representative of any private party or the commissioner, but in terms of my own individual viewpoints on the proposed legislation.

I believe we have to bring a pragmatic approach to the interim measures issue. There's no disagreement I've heard to date from the Canadian Bar Association, or anywhere else, that there is some need for a provision like this. The differences are that the CBA points to an expanded role for the current section 100. I do not believe that solution is adequate. I'm supportive of the current provision, and I believe there are a number of reasons why this committee should support the provision, as it's currently before you.

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The CBA, in their submissions to you, were critical of both the test that's applicable to interim measures and the procedure—particularly that it's an ex parte procedure for obtaining these orders. I believe the criticism that was put to you by the Canadian Bar Association is ill-founded.

The first point I'd like to raise with you is that this order is intended to be used during the investigative stage of the process under the Competition Act. Unlike injunctions in the civil courts or under this legislation, which are applicable to interim orders once proceedings have been commenced, once an application has been commenced under this provision, this is intended to deal with urgent circumstances, to give the commissioner sufficient time to investigate the matter and prevent public harm during that short period of time.

When you bring it within context, neither the test nor the procedure is ill-founded. In fact, as I'll be pointing out, they are very similar in both Europe and the United States. The U.S. provision and the process are almost identical to what is being proposed in this amendment.

Dealing first with the test, the CBA suggests the test is not rigorous enough. You've heard some of that this morning from Mr. Wong. It suggested that the commissioner would potentially move to obtain an interim order when he did not have a reasonable belief there had been an offence under the act.

My response to that is, first of all, when you look at other provisions such as section 11, which is currently in the act, the commissioner only has to say to a court in that case—in this case to the tribunal—he has commenced an inquiry. The basis for commencing an inquiry, at least in one respect, is a reasonable belief. So it's incorporated, if you will, in him putting forward to the tribunal that an inquiry is being commenced.

It's pointed out by the CBA that there are two other ways in which an inquiry can be commenced: one, by a six-person complaint, which I'm sure you've heard about; and two, by direction from the minister. It presupposes, however, that in those circumstances the commissioner will move to obtain an interim order when he doesn't have reasonable belief. That's what flows from the criticism you find in the report or the submissions from the CBA.

That ignores the oath of office the commissioner has to take, incorporated in the act in subsection 7(2), to impartially enforce the act. This is another important circumstance or perspective that you have to bring to this issue with respect to administrative discretion.

While many people put forward the litigation model or adjudicative model on almost all of these points, our act is not built that way. Our act is built on two models. It's built on administrative discretion by the commissioner during the investigative stage and then adjudicative models for final determination of issues under the act. In that respect, we are not different from other jurisdictions.

If you look at Europe, the commission has both. The commission has the administrative role and makes administrative orders under its legislation, but it also has an adjudicative role. So for those who say we should have separate and independent adjudication, our model would be better than what you'd find in Europe.

In Canada, what's being proposed here for interim orders is again better than what people would say in Europe, because in Europe an interim order can be made by the commission itself, much like was proposed in an earlier stage of proposed amendments to the act. This model brings in the balance we've always had under the legislation.

The commissioner must use his administrative discretion fairly and impartially to determine whether he's going to seek an order. Then there is an adjudication on certain issues before the tribunal. I'd ask you to keep in mind that this is at the investigative stage, which is essential to review this provision. At the investigative stage—and I say this from some of my prior roles acting as counsel for the commissioner—at the early stage, what does the commissioner know about the industry? Very often he knows very little.

He has no evidence on day one to be able to go before a tribunal and have an adjudication on any of the merits of the case. He will have, potentially, informants and complainants who have suggested certain facts that would be harmful to the public interest, which is of course his mandate. Based on the balance he has to bring at that stage, because there is no evidence to adjudicate at that early stage, he would seek this very limited interim order. We are talking about ten days at the start of the interim orders.

• 0930

Extensions are upon notice and with adjudication with the parties present. It's only for the first part of this order, if you will, that the party is not given notice. They can move immediately the day after or the same day before the tribunal to have a review of that. This is the balance they're attempting to strike in the legislation, and I believe it's very consistent with other jurisdictions.

As to the suggestion that the test should be more rigorous, what the CBA does is say you adopt the test for injunctions. That is essentially the balance-of-convenience test we apply in the courts. Now, we apply it in the courts once everybody has the facts. Of course, two private interests—say two airlines, just to use an example—will know the facts quite well. When one of them goes in seeking an injunction, they will be able to put facts forward very easily. That's not the commissioner's role at the early stages of an investigation; he doesn't have the evidence to be able to do that.

Secondly, the most important aspect of this is that he's not a private litigant. He is not protecting some individual pecuniary interest. It's the public interest that's at stake, which is the policy behind this legislation.

There are a number of cases dating back almost a hundred years where, when the Attorney General is attempting to pre-emptively block breach of legislation, he or she is not put to a test of showing a balance of convenience. Why? Because the public interest will always prevail over a private interest under our system of law. It is proper to subordinate that private pecuniary interest to the public interest.

Here's an easy example. You're going to have an order, potentially, in an industry where the party who's affected will say that they'll lose $1 million during the first ten days. Although my friend Mr. Wong says you're not to balance the harm to private parties, we do elsewhere in the act, I might point out to him; in merger review we look at whether a vigorous competitor is being eliminated.

What this test says is that the commissioner must come to the tribunal and show that a competitor could be eliminated during the period of investigation. That's really what he's doing. That is important because nobody can predict against that million-dollar figure that the big player might put up. What's the public interest? How is it going to be affected? How much will consumers lose in the long run if a small airline is put out of business in the first ten days?

You can't judge it in the beginning. You can only judge it based on what the commissioner can bring at that stage to allow the investigation to go forward. If the party can come forward and put cogent evidence before the tribunal, immediately—I want to remind you—or the day after this ex parte order is issued they will have a review of the initial ex parte order.

And that goes to the procedural element. There is a lot of criticism, and it even goes so far as to suggest that ex parte procedures are unusual. As the CBA says, ordinary principles of natural justice and procedural fairness are being obviated by this provision.

With all due respect to my friends, I must say that there are numerous provisions in this act and in civil procedure that provide for ex parte orders. They acknowledge that that is so in urgent circumstances, which is exactly what this provision is intended to deal with.

The opposite—if I could just give you the effect of the opposite approach—would be to give notice and to allow the party to be heard. It sounds very simple and it sounds almost intuititively fair, I acknowledge that, but it's what it imports into the process that you have to be aware of.

The opportunity to be heard imports the opportunity to file materials. It imports the opportunity to cross-examine on the commissioner's materials. In some cases the litigation process that accompanies it can take weeks and months, not only days. Even if the tribunal were to order that it happen quickly, in most cases you're not able to have that process completed within ten days.

It's very natural, I submit to you, to have this initially as an ex parte procedure followed by review, which is the structure of the legislation. Otherwise, the potential for delay, either legitimate delay from process or delay from strategic litigation, is a bigger risk than what is imported by initial ex parte process in these circumstances.

Finally, the CBA is critical of a lack of right to appeal the tribunal's order. I'd like to just point out first of all that in the investigative process, appeal rights are not currently provided for in the legislation. This has been brought before appellate courts in Canada, and they have said in respect of this issue that there is no inherent right of appeal under our legal system. It's only when Parliament grants a right of appeal that a right of appeal exists in Canadian law, and that is what we call “trite” law. It's incontestable law. There's no inherent right of appeal. Let me try to convince you why it makes absolutely no sense here.

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We're talking about a ten-day initial term for this order. An appeal is useless without a stay in these circumstances. A stay means the order has no effect during the interim where the court hears the appeal. What happens is that if there is an appeal, that means the order is not applicable. Pending appeal, if you have an immediate stay, the whole effect and policy objective behind this are obviated. Second, if a stay isn't granted, the party who's seeking the appeal doesn't get the benefit they want. It simply isn't common sense to talk about appeals for ten-day orders.

In conclusion, I believe the provision on interim orders is a balanced approach in the circumstances in which it would be applicable.

I notice the red light went on. I just want to make one final comment if I could. I wasn't intending to make it, but after hearing my friends I feel compelled to.

It is on the registration of orders. If you said that the tribunal would be turned into a rubber stamp, you'd be required to make the same comment about our court system in Canada. Consent settlements are registered, if you will, or filed all the time in our legal process, and it's an efficient way of trying to resolve disputes. Right now it's done by undertakings, so it happens all the time as an efficient way of trying to deal with various matters that fall under this legislation. There's nothing untoward, nothing unusual, about the tribunal being in a position to basically register settlements on issues.

The Chair: Thank you, Mr. Russell. I'm going to have to stop you there.

I'm going to go on to Mr. Quinn, please.

Mr. Jack Quinn (Individual Presentation): Thank you, Madam Chair.

I want to confine my remarks to the amendments that would expand the rights to apply to the tribunal for relief of individuals who've suffered harm to their business interests. I agree pretty much with everything my old friend Michael Trebilcock has already said, so I won't go over all the points I would have perhaps otherwise made had I not listened to Michael's presentation.

I think the justification for this is that this is a modest proposal that's being put forward. As Michael mentioned, it doesn't provide for compensatory damage relief. That has been criticized by some of my colleagues at the bar as a deficiency, but I recognize that we're involved in expanding the scope of the tribunal's ability to develop Canadian competition law, the civil, reviewable part of Canadian competition law, and I would endorse the proposal even without compensatory damage relief.

This is for two reasons in particular. One is the point Michael made about public accountability. The commissioner's enforcement decisions under the current scheme are really not subject to any kind of external review outside the internal management structure of the ministry in which the commissioner's bureau resides. I do think that this modest proposal that's been put forward is a safety valve on the commissioner's discretion. If a private party feels aggrieved and is convinced that they have a meritorious claim, they can proceed without the commissioner's consent or involvement in the proceeding.

I think the other thing that's important to realize is that Canadian competition law has not developed a large body of well-thought-out jurisprudence in applying and interpreting the statute. With complex economic legislation of this kind, I think our system of precedent, of stare decisis, really depends on the tribunal being able to hear and decide enough cases so they can generate rules that give the law more certainty and predictability. I favour it for that second reason also.

Having said this, and in the interest of time, I'd just like to focus on two or three things where I do take issue with the amendments and where I do think they could be improved.

• 0940

My first point, already made by Michael, is that there isn't any justification I can make out for not including the abuse of dominance provisions as part of the matters that can be brought by private parties to the tribunal. I simply think it's a deficiency, one I can't really justify in my own mind on any logical basis.

The second concern I have arises from the rule for awarding costs in these proceedings. People have criticized private enforcement because of a concern it would give rise to frivolous litigation, to spurious claims being raised to inflict harm and expense on innocent respondents in these cases. My own feeling is that we should apply the same cost rules we apply in our civil court in Ontario—because that's the province where I've always practised and taught law.

I don't think the current standard that is in the bill now, “frivolous or vexatious”, is going to work very well to ensure that the private litigant's incentives are aligned with the public interest. I think the “frivolous or vexatious” test is a very high standard to meet to justify a cost award. A lower standard like the one we apply in the civil courts makes a lot of sense.

Finally—and this is where I take issue with what my friend Rob Russell has just said—I think the consent order process in the bill is flawed. I realize that in settlement proceedings in civil courts, judicial approval or judicial review is typically not required to give effect to a private settlement. But in this context, it's very plausible that the parties to privately initiated actions in the tribunal could settle the case in a way that would be detrimental to the public interest, that is, to the interests of consumers. The classic example of this would be the patent infringement cases large companies file against each other where they then enter into a settlement in which they cross-license each other to employ the patent.

These kinds of agreements, these cross-licensing agreements that arise out of settlements and litigation, are notoriously suspect in that they may well be injurious to consumer interests. What we require here is a sober second look by the tribunal. The tribunal has to be put in a position where it has to review the proposed settlement and determine that it is in the public interest, that it will not likely harm competition.

With those changes, the bill would be a very good piece of legislation.

Thank you.

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

We're now going to move to questions. I'm going to begin with Mr. Strahl.

Mr. Chuck Strahl (Fraser Valley, PC/DR): Thank you, Madam Chair.

I've really enjoyed the testimony this morning from all of you. It's nice to see people give testimony without looking at their briefing notes. You must scare people to death in the tribunals, I would guess, because you obviously all know your stuff very well.

There are a couple of things I had. One question was for Mr. Wong, to start with. You mentioned that there's no requirement for the commissioner to rule ahead of time under clause 12, proposed section 103.1. What exactly would you like to see happen there? What's your ideal world?

Mr. Stanley Wong: Well, I'm glad you raised that, because one of the requirements for him is to certify that an inquiry is being commenced. I know my friend Mr. Russell said something about its very early days, but let's not forget that there are three ways in which a section 10 inquiry can be commenced. One is under section 9, where six residents of Canada file a complaint and say, we think so-and-so is doing bad things, Mr. Commissioner, so please investigate. Under law, the commissioner must start an inquiry.

The second way is for the responsible minister, in this case the Minister of Industry, to say, Mr. Commissioner, start an inquiry; then he must start an inquiry.

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The third one is where the commissioner says “I have reason to believe that grounds exist for making an order” under proposed paragraph 103.1(1)(a), or grounds exist for an order by court under the other parts of the act.

I think if you put in there that the commissioner has grounds to believe there is a basis for making an order, that would meet that test. What in fact gets hidden behind section 10.... And we know section 10 can be started by a six-resident complaint, and that's done typically.

The Chair: Mr. Russell.

Mr. Robert Russell: I'd like to add and tell you why I have a different perspective on what Mr. Wong just said.

If you introduce as part of the test the terminology “reasonable belief”, it then becomes part of the review of the order when contested by the party. To be able to say he has a reasonable belief or not means you're going to have to look at the economic effects of the conduct to be restrained at a very early stage. Anything you import into the test for getting the order is part of the review process. That is a mistake. It's not needed, I would submit to you, because you have to be able—and this is what I said earlier—to rely on the administrative discretion of the commissioner.

I'd put to you, would the commissioner seek this order if it was a six-person complaint he didn't believe was reasonable, where he didn't have evidence to show a party was being harmed, which is part of the test? It's not reasonable to assume his administrative discretion would be abused in that way.

Second, if the minister directs it, the commissioner still has the administrative discretion whether he's going to seek this order or not. Again I'd simply say to you, if I went through the act with you concerning referring matters to the Attorney General, any of the things that involve administrative discretion are much bigger, if I can put it that way, than what is being put to you as a problem with respect to seeking this order.

But I would say to you the big mistake of putting in the test of reasonable belief is it will turn the review of these orders into full-blown adjudication of merits during an investigation. And that's what I have to reiterate: we're within the investigative stage here; there should be no adjudication of the merits at this stage whatsoever.

The commissioner is not ready to deal with that, and that's not what's happening under the legislation.

The Chair: Thank you.

Mr. Strahl, you may have one more question.

Mr. Chuck Strahl: I have a whole bunch, but let me just try to chase this down a little bit further. Mr. Wong, is the reason you want this provision in there to limit the possibility of vexatious litigation, or why do you think it's important to have it?

Mr. Stanley Wong: I think it needs to be tied to a provision of the act, because if you look at the requirements under proposed section 103.1, it isn't tied to a provision of the act saying “I believe somebody is about to do something contrary to the abuse of dominant position” or “I believe somebody is doing something contrary to a tied selling provision of section 77”. There's nothing that's required. All it says is that conduct “could be the subject of an order”. We know the word “could” is very broad. Then it goes on to say there's “injury to competition”, but not all injury to competition is within the ambit of this act. There is plenty of injury to competition that's not compensable—if it's not substantial, for example.

So that's the reason. Nobody's suggesting the commissioner has bad motives, but our system of laws requires independence of adjudication, and what this provision does is limit the review of the tribunal in issuing that order.

That's all I'm saying, and in fact it's a cosmetic change from 104(1) where the commissioner issues an order out of his own office.

The Chair: Thanks, Mr. Strahl.

Mr. McTeague, please.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): That was a very interesting exchange between both of you, and I'd certainly like to see you continue that in just a moment if I could, but I had a concern.

First of all, thank you for being here, all of you. I realize there are other things that may preoccupy you on a morning like this.

You voice concern, Mr. Trebilcock, and yourself as well, Mr. Quinn, about private access not going far enough. In a perfect world I suppose we could make it do that, but this has been crafted in such a way that it doesn't raise the question of public interest or detract from the authority of the commissioner. I think many of us are content to hold on to that just for a little while—although I think the idea of single damages, as we'll see from the Australian example and others, is certainly in keeping with global trends.

I'm interested in your comments with respect to “refusal to deal”. The competitive harms test I believe some of you had alluded to ought to be in there. We've heard this from other witnesses as well.

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I'm wondering, in light of the Xerox case—where the tribunal, I suspect, has actually read this into jurisprudence—whether we need to crystallize that more formally. Is there a necessity for putting in a competitive harms test as it is written, given that case?

Prof. Michael Trebilcock: Is that directed to me, or—

Mr. Dan McTeague: Well, all of you, I suppose, but you can—

The Chair: Professor Trebilcock, would you like to start?

Prof. Michael Trebilcock: I'm not sure the tribunal's decision in Xerox is quite as clear on that issue as you're suggesting; that is, that it has interpreted section 75 as having a substantial lessening of competition. In fact, behind me in the audience are Neil Campbell and William Rowley, both of whom have jointly authored a paper on the Xerox case in which I think they argue the opposite. So to the extent there's any ambiguity about whether there's a competitive harm test implicitly in the section, we should resolve the ambiguity.

I'm more concerned about the exclusion of the abuse of dominance provisions from the proposal. I think this is a serious shortcoming, so I want to re-emphasize it.

Mr. Dan McTeague: Perhaps, Madam Chair, I will go on. Does anyone else have any comments on that?

The Chair: Mr. Russell.

Mr. Robert Russell: I didn't speak on private access, but I would like to say that I believe the balance struck in the current proposal is probably the best balance, because you are experimenting quite broadly with this provision. I don't think there are too many people who would endorse the problems that come out of private antitrust lawsuits in the United States. This is an appropriate balance to bring some of the benefits my friends have spoken of without attracting too much strategic litigation, which has always been the concern about private access. A balanced approach, I believe, has been put forward.

On the issue of reading in to “refusal to supply”, I just comment that the courts typically say it's when Parliament hasn't done its job that they have to read in. I say that with all due respect to the committee. If you have an opportunity to clarify, and the courts or the tribunal have said it needs to be read in, then I think that's an invitation to clarify the issue.

Mr. Dan McTeague: On the question of private access, I'd like to get your impressions generally. I must also suggest very strongly that I thank many of you here for your help and assistance over the years—Professor Trebilcock in particular; Stanley, you as well; and Jack, I know I've read some of your material in the past as well on this subject in trying to find the proper balance.

We have heard overwhelmingly from witnesses that this isn't going to bring an end to industry as we know it in Canada. But there are some who have suggested—and I suggest for a number of reasons.... But dealing with the facts and the arguments, do you believe the current safeguards that are in Bill C-23, as represented in part IV, section 72, will be enough to prevent strategic litigation? Do you also believe, if I could ask all of you—it's up to you, Mr. Russell, if you want to answer some of these—

The Chair: Mr. McTeague, I'm going to have to ask you to limit yourself to one question right now.

Mr. Dan McTeague: On the same question, do you believe this proposal will bring Canada's economy into a state of fragility as a result of its introduction, as some no doubt will probably try to suggest, if they haven't already? Thank you.

The Chair: And is that addressed to each of them?

Mr. Dan McTeague: Each of them can respond.

The Chair: Mr. Wong, would you like to start?

Mr. Stanley Wong: I just don't think this present proposal will lead to strategic litigation. The benefits are enormous here. If you had monetary damages, it could, without proper safeguards, but as it's proposed now I don't think it will lead to a serious problem.

The Chair: Professor Trebilcock.

Prof. Michael Trebilcock: I agree entirely with Mr. Wong. My worry is that as the proposal stands it's almost excessively modest, and I worry that three years from now we'll be meeting here and finding that nothing has happened. So if I have any concerns, they're the opposite of those you note.

The Chair: Mr. Quinn.

Mr. Jack Quinn: My only point, to elaborate again, concerns the cost award standard. “Frivolous and vexatious” is a very high standard to meet in order to get a cost award. The idea that the cost rule functions to discourage frivolous claims I think is well-founded and a very important part of our civil justice system. So I would apply the normal cost rules and not have the standard be frivolous and vexatious.

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The Chair: Mr. Russell.

Mr. Robert Russell: I believe we can take some instruction from the experience under section 36, which is the provision that provides access to the courts in respect to criminal matters. That has been around since 1976, and although there haven't been a large number of cases, that doesn't mean that matters aren't resolved because of section 36 all the time. Of course, in any sort of commercial litigation—and that is what this is all about—nine out of ten cases don't see the courtroom steps. So you can have a lot more effect from this provision than you may see in terms of adjudication.

I agree with Mr. Quinn that the test for costs is actually, in my view, somewhat contrary to the structure of the act today, because under section 36, is it right that you would get costs in the ordinary model if you commence an action under section 36, but to go to the tribunal you have to meet a higher standard in order to obtain a cost award? I think that's inconsistent, and I would agree with Mr. Quinn that it should be applied the way he has suggested.

The Chair: Thank you.

Mr. Wong, did you want to add something?

Mr. Stanley Wong: Yes. I think the cost provision under section 36 is more than the normal cost rules. It really is a provision for the cost of investigation, and certainly, although it hasn't been litigated yet, it is broader.

The Chair: Thank you.

Thank you, Mr. McTeague.

We're going to move to Mr. Rajotte, please.

Mr. James Rajotte (Edmonton Southwest, Canadian Alliance): Thank you, Madam Chair.

I want to follow up on what Mr. McTeague was asking about. Particularly, Mr. Quinn, you mentioned that we should apply the same procedure for awarding costs that exists in civil cases. For those of us who are not lawyers, could you expand on what the current procedures are and why you think they are better than what's proposed?

Mr. Jack Quinn: I think the civil standard is typically to award costs, not all the consequential costs but a substantial portion of them, to the party who wins the litigation. So this discourages people from bringing cases that clearly are not likely to succeed.

Mr. James Rajotte: When you say “a substantial portion”—

Mr. Jack Quinn: I mean two-thirds or half of your costs.

It is possible for courts to award solicitor and client costs, but that's typically only done when the judge determines that the case was probably frivolous and vexatious, which is a hard standard to meet.

I think we need to use the cost rules to encourage people to bring meritorious claims, or claims that are likely to be meritorious, and to discourage behaviour that makes the trial process unduly costly and expensive.

Mr. James Rajotte: Does anyone else want to add to that?

Private access is obviously the controversial issue that this committee is looking at in terms of Bill C-23, and many industry groups have opposed it, but I have not frankly heard many reasons why a moderate form of private access should be opposed.

To follow up on that with a general question, I believe at least three of you have said what's in Bill C-23 is almost too modest and we should go farther, and I believe, Mr. Russell, you said this is a good balance. Maybe you want to comment generally. Are those your positions? Is it too modest, and if so, how much farther would you go at this point?

The Chair: Mr. Trebilcock.

Prof. Michael Trebilcock: As to why I think it's modest—I'll comment in a moment on whether I think it's too modest—first, as the Roberts study that the committee will have access to has reported, almost every other industrialized country's competition laws have private rights of action or private remedies in the context we're talking about. So we are the outliers; we are not ahead of the pack here.

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Secondly, if you think about other fields of law that will be familiar to many of you, in securities law, regulation of securities markets are common, both in Canada and other jurisdictions, for breaches of securities law, like insider trading, to lead the best criminal prosecutions and private rights of action by aggrieved parties. This is routine. In environmental law, there may be a public prosecution; there may be a tort action for nuisance or breach of statutory duty. In consumer protection law, misleading advertisements may lead to prosecutions that may lead to breach of contract actions or tort actions for fraud, or whatever.

Let me emphasize that I think people who come here and defend the application of competition laws to private monopolies, that we should apply our anti-trust laws to inhibit private monopolies, but at the same time argue the virtues of a government monopoly, a government monopoly on the enforcement function, are adopting a position that is internally contradictory.

The Chair: Mr. Russell.

Mr. Robert Russell: As I've said, and I don't retract from my viewpoint, I think it's balanced, given the competing interests. I'm not sure, you may have heard it from other people, but there is a competing interest against it, of course, that the Competition Act is a form of economic regulation and that we have in the past chosen a system where that is the purview of government because it is intrusive and it can be abused when it becomes part of private process.

The reason I say it's balanced is because I'm concerned that we would shift too much towards the United States, where nine-tenths of any trust law enforcement is done through private action. It's a very costly process in the U.S., and very costly to the businesses that operate in that environment, and in fact causes some companies to avoid setting up operations in the U.S. So you are looking at broad economic regulation. It's a much bigger issue than whether I believe we should have private action or not in my world. It will give us more jurisprudence.

That's a good thing, but the process in getting it is not necessarily a good thing for the economy, and I think you have a big job on your shoulders to balance it. If you are trying to balance it, I think what has been put forward is a good balance, but there are very important competing interests from a public policy standpoint that Parliament has to balance here.

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

Mr. Volpe, please.

Mr. Joseph Volpe (Eglinton—Lawrence, Lib.): Thank you, Madam Chair. Gentlemen, you might find this kind of a strange question, but I find some of the presentations, including your response just now, Mr. Russell, a little curious as well.

Others have come forward and have essentially said, as you have, that this could turn out to be a costly exercise for businesses, as we see in the United States. I'm wondering why we would be concerned about that, simply because in the United States this cost factor has already absorbed into the business environment, and it would appear that statistics and analysts who read them and convey their impressions would agree that the American economy is probably more productive and more competitive than any other, bar none. Is that too big a cost to bear, to add the jurisprudence you're talking about?

Mr. Robert Russell: You're inviting me into a debate I don't particularly want to get into, but I believe any form of regulation is a form of tax, to put it in a context. We came from an economy that had a fair amount of regulation, and the current government has brought us a long way in taking some of those costs away. That's the first thing I'd say.

We are talking here about introducing another form of regulation, albeit by private action, a cost to our economy. I'm not exactly the best person equipped to balance the benefits of the structure of the U.S. economy compared to Canada—you have better people to speak to you about that—but I'd just make the observation that it's that economic cost that's very difficult for you to judge when you introduce this issue. I'm quite willing to leave it in your hands, but I'd just make the point that it is a tough balancing act, and you really don't know where it's going to take us.

If it shifted us all the way to what the experience is in the U.S., I'd be alarmed, because I think it would be a very big cost, and we have other ways in which we want our economy to run in Canada. We have social needs that we see as more important than maybe they do south of the border, but you have to balance all these costs of doing business in Canada.

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So I wouldn't ask you to adopt willy-nilly—you wouldn't do it anyway—the U.S. approach, because we have other objectives to meet in our economy, and it's a really important balance.

The Chair: Mr. Wong, did you want to answer that?

Prof. Michael Trebilcock: I would like to say something.

The Chair: Yes, Mr. Trebilcock.

Prof. Michael Trebilcock: I think the U.S. experience with private actions is a red herring in the context of this proposal. They have one-way cost rules, contingent fees, expansive class action procedures, treble damages, and civil jury trials. If you add all of these things together, it's a night-and-day contrast with what is being proposed here—adjudication by the tribunal, no damages, two-way cost rules, no civil jury, and no contingent fees in most jurisdictions. So I think the scare-mongering by drawing on the U.S. experience—I appreciate you are not doing that, but some interests will—in the context of this proposal should be dismissed out of hand.

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

Mr. Stanley Wong: I think sometimes, Mr. Volpe, the comment is made that this legislation will have a chilling effect. Well, if it's the chilling effect, it may bring us a better standard of living and a higher dollar. I agree with what my friend Mr. Trebilcock said about it being a red herring. What is being proposed is very modest—with some technical changes that are needed.

The Chair: Mr. Russell, you wanted to respond?

Mr. Robert Russell: A litigator has to reply, particularly when he's being accused of offering up a red herring.

I simply say this to my friends. The problem with the argument I just heard is if there are so many impediments to the U.S. experience in the current proposal, then you have to judge whether it delivers the benefits my friend suggests it will, and that's the problem.

If you want all the jurisprudence my friends have talked about developing—like in the U.S., they're really saying—then you're talking about a model that would attract that amount of litigation, which they say is a red herring that won't happen.

Similarly, if you don't have a broad enough right of private action.... We do not have a large consumer movement in Canada, so you don't have.... While I started off saying it's a balanced approach, I predict you won't find the jurisprudence being generated the way my friend suggests, because without that large consumer movement in Canada, I don't know who exactly is going to bring it, except people who may want to interfere with the transaction. That's the problem. And it's really a tough one for you to judge.

The Chair: Okay. I'm going to let Mr. Wong respond, and then I'm going to have to move on.

Mr. Wong.

Mr. Stanley Wong: I actually wanted to make a remark that I didn't make in the beginning. I want to say I appreciate what the committee has done in their interim report. I know there were some early debates in this committee at the start of this session on whether to continue with it or bring it up on a different day. I personally think it's a great idea that we have another independent source of debate about competition law policy. It shouldn't be in the hands of lawyers, private companies, and the commissioner of the government of the day. We do have a parliamentary system, there's no doubt about it. Things won't happen if the government of the day doesn't support it. But I think it is important that this committee develops its expertise to offer independent observation about the public policy issues in this area.

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

[Translation]

Do you have any questions, Mr. Bergeron? You do not. Okay.

[English]

I have Mr. Bagnell.

Mr. Larry Bagnell (Yukon, Lib.): I have one short follow-up to Mr. Volpe's question.

I agree with you we don't need more litigation in general, or regulations or cost, but in this situation, where it increases competition, I think the only cost is to the inefficient businesses, the large businesses. The benefit of that litigation is to the consumer, because you make the businesses more competitive, and in the long run, that actually improves the business and the economy, as opposed to taxes, because when they're more competitive, they're going to get more international contracts.

Mr. Robert Russell: There are a couple of things I'll respond to.

The first is the statement that we don't have a system that guards competition as effectively as we've suggested. Second is that large enterprise isn't necessarily efficient to deliver consumers the best benefits. I don't agree with that. For example, there have been numerous international studies that show Canada has the lowest food prices in the world, bar none, for every hour of work done in Canada. Yet there are those who say it's too concentrated.

It's not an easy equation to say big versus small, but again, I would say we've picked a model where we do have a champion of competition. We've picked an administrative model, much as we did in various other areas, be it corporations or the securities commission, and I would suggest if you look at the experience in Canada and what's being delivered, bar some industries, like airlines, we actually do better than we think we do in preserving competition in Canada. I said I believe it's a balanced approach, but you're talking about a fundamental change, and with that you are embarking on a very major policy decision in competition law.

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The Chair: Are there any other comments?

Mr. Strahl had another question.

Mr. Chuck Strahl: A couple of you brought testimony about the consent orders provision of the act. Mr. Addy, in his submission, suggested that perhaps we should go.... I think, Mr. Russell, you expressed some concern about how this may develop under the current system, but he suggested something in between full right of appeal and delaying tactics and so on. Mr. Addy suggested we adopt the U.S. standard of a waiting period, allowing the concerned parties to have written submissions, and so on.

I don't know if you've read Mr. Addy's testimony or not, but he suggests that on the consent order, we actually consider some sort of middle ground where we do allow people to...not actually file a full appeal, perhaps, but allow them to make submissions and allow a period of time to do it. Are you familiar with that idea?

The Chair: Mr. Russell.

Mr. Robert Russell: I'd just say I'd be dishonest in appearing before you if I didn't tell you I've been retained by private interests that would look at consent order processes as an opportunity to delay and to interfere with the transaction. I think any of the people who are in this area would have at least similar consultations, and legitimate arguments to bring, hopefully. But what you do by introducing that is take something that is settled and then open it up into an unsettled state, to put it simply.

The suggestion that the tribunal is rubber stamping is incorrect. The tribunal is not asked to adjudicate. That is true. The commissioner has used his administrative discretion to enter into a resolution and is asking to have enforcement of the tribunal. If you open it up, as is suggested by Mr. Addy, you're opening up the same possibilities as we've seen in a number of other consent order proceedings.

The Chair: Mr. Wong.

Mr. Stanley Wong: The concern here is that unlike in the civil courts, where there's a settlement every day, this is not a settlement between two private parties. The court has to make sure it has jurisdiction—basically, when you send an order in, within the four walls of the litigation, it's settled. But here, one of the powers that is going to be granted the commissioner is to make terms the tribunal itself cannot make.

As the Canadian bar pointed out—I disagree with the conclusion, but I agree with the observation—you could have a term that's already part of the registered consent agreement. Then it comes up for amendment and variation, and the tribunal asks to vary a term that it had no power to make. It boggles the mind to think that could go on.

The Tunney Act is what Mr. Addy has proposed, and I know Mr. Goldman has been in favour of that. I think we need something like that. The problem is we've had very few cases. I know in the early days of the 1986 amendment that brought in the consent order process, the tribunal went too far. It opened the door for interventions left and right. But that has been changing through the course of reform. The trouble is, with all due respect to the commissioner, he's too impatient. Every time he loses a matter, he wants to amend the act. That is absolutely wrong. If he doesn't like the result, he should appeal it.

I know, as a private practitioner, when I make a deal with the commissioner I do very much want to have no interventions, but that is not what I say as a person trying to talk about the public interest. You want the tribunal to mediate. Maybe the standard should be some sort of public interest, but I want to be careful about using the words “public interest”. Public interest has to be for the purpose of the act. It can't be in a broad context, for example, employment or regionalism. That is not what this act is about. This is about a law of general application dealing with preserving competition generally in the marketplace, and not any other purpose.

I say this looking at some of the members who have been introducing legislation to deal with their favourite interests. I say this very bluntly, but I think it is wrong to turn the tribunal into a registry office. That's what it is.

The Chair: I'm going to have to stop you there, and I'm going to have to stop Mr. Strahl there.

We are definitely over time, but I wanted to ask a question that didn't come up earlier today. Is proposed subsection 104(1) still necessary in light of proposed section 103.1, which would give the tribunal the power to issue interim orders?

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Mr. Stanley Wong: I know you asked the commissioner that question at his first appearance before the committee. I think he evaded the answer.

The Chair: That's why I'm asking you.

Mr. Stanley Wong: If you're going to keep proposed section 103.1, which I hope you don't, you won't need proposed subsection 104(1).

The Chair: Are there any other comments on that?

Mr. Russell.

Mr. Robert Russell: I think they are for different purposes. I hope that's what you got from the commissioner, and I tried to focus my comments on the particular purpose of proposed section 103.1.

It's an investigative stage we're at, and our act is actually broken into those parts. One is investigation, and that's what this is all about.

The Chair: I have one other question on private access.

Often opponents of private access will say it's not necessary, since you already have the ability to take actions through private contracts or tort. Are there any comments on that?

Mr. Wong.

Mr. Stanley Wong: That's not necessarily so. For example, you could be a competitor under the abuse section, and the dominant player could be locking up all your suppliers. You would have no contractual relationship, necessarily, with the competitor. I hope you wouldn't because then you might be into a conspiracy issue.

So there will be non-contractual bases for complaints.

The Chair: Thank you.

Professor Trebilcock.

Prof. Michael Trebilcock: I agree completely with Mr. Wong.

Most of the abuse cases occur when the complainant has not had a contractual relationship with the respondent. In fact, that's what they were complaining about. In the TeleDirect case, the advertising agents were complaining that they could not form a contractual relationship with the respondent.

The Chair: What about under general tort law?

Prof. Michael Trebilcock: There might be some kinds of abuses that would be subject to tort claims, but I think there would be very few. This would be interfering with economic relations, or something. These would be quite speculative kinds of tort claims.

The Chair: Mr. Russell.

Mr. Robert Russell: I believe there are more remedies available than have been put to you, both in tort law and under section 36.

Many of us have crafted lawsuits, on behalf of private companies, that have relied on concepts in tort law like unlawful interference with economic interest, and general laws related to conspiracy to injure, which Canada has uniquely in the world as a tort. This allows you, without certain elements required in the U.S. and England, to bring a lawsuit for conspiracy. So there are various remedies.

The other thing I would point out to you is the abuse of dominance section. There is significant overlap with the conspiracy provision, in terms of application to facts. If you have a strong enough case to bring one—and I'm talking about somebody who's prepared to spend a fair bit of money bringing a case—and it doesn't matter whether they're in front of the tribunal or the courts when it comes to this area of law, they probably have a good enough case under section 45, if they have a good enough case under the abuse section, to at least test the waters.

The Chair: Under the sections you refer to and under tort law, do you have any idea of the success rate?

Mr. Robert Russell: Like any commercial litigation, there have been a number of cases settled on those. I've commenced cases on some of the earliest ones, and we had resolution based on the case being brought.

The Chair: Okay. Thank you.

I want to thank you all for being here. I do apologize. We have gone over our time a bit here. I'm going to ask members to try to stay in their places as much as possible, so we can exchange witnesses, because we have another group of witnesses coming right now.

I thank our witnesses for being here, and invite our next group of witnesses to the table.

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I want to welcome our next group of witnesses. We're very pleased to have with us, from the Canadian Council for International Business, Mr. Mark Katz, the vice-president and a lawyer from Davies, Ward, Phillips & Vineberg; and Mr. Matthew Ivis, who is a policy analyst.

We also have with us, from the Competition Law Policy Group, Mr. William Rowley, a lawyer from MacMillan Binch; Mr. Neil Campbell, also a lawyer from MacMillan Binch; and Mr. Arthur James, a former vice-president of law and corporate relations from IBM Canada Limited.

I propose we have opening comments from both groups, and then we'll move to questions together, if that's okay. I propose we have the comments first from the Canadian Council for International Business, unless there's a different agreement among you.

We'll begin then with Mr. Katz or Mr. Ivis.

Mr. Matthew Ivis (Policy Analyst, Canadian Council for International Business): Thank you, Madam Chair.

The Canadian Council for International Business is pleased to have this opportunity to provide comments to the committee on Bill C-23, an act to amend the Competition Act and the Competition Tribunal Act. This bill raises several issues of vital importance to the CCIB membership.

CCIB is the Canadian business secretariat to two important international business associations—the International Chamber of Commerce and the Business and Industry Advisory Committee of the OECD. In this capacity, the CCIB is the key business voice on policy issues, including competition law-related issues discussed at a number of multilateral forums, including the United Nations and the World Trade Organization.

The CCIB generally considers Bill C-23 to be a positive contribution to the development of Canadian competition law. However, we would like to provide the committee with some detailed comments, specifically in the areas of mutual legal assistance and consent orders.

Before I turn the microphone over to Mr. Katz to relay CCIB's detailed comments, I'd like to briefly express our perspective on the issue of private access, which is under consideration by this committee, in addition to the other elements of Bill C-23,

Generally, the CCIB believes it is premature to introduce private right of access to the Competition Tribunal. The consultation process failed to forge a consensus on this issue, and from the perspective of CCIB, there hasn't been much progress in this area since the consultation process concluded. Specifically, from the perspective of CCIB's membership, we recognize there are both pros and cons to private access.

On the pro side, for example, we believe that private access will result in reducing government expenditures, which is something we fully support. However, on the con side, there are some serious concerns as to whether private access will achieve its stated goal, to provide SMEs with a more efficient access to enforcement on competition matters. The fact that the cost of bringing a case in front of the tribunal is estimated at over $1 million raises serious concerns among our membership as to whether private access will help the SME community.

Furthermore, the CCIB believes this process should not be about building consensus for consensus' sake. We should be looking to implement the best solution for our stated objective, which is to provide effective remedy to the small business community. Currently, one can point out at least two such solutions to this issue: one, to allow private access as this committee is discussing; and two, to give the bureau more resources, on a committed and prioritized basis, to bring more cases forward.

I understand earlier witnesses to this committee provided other alternatives, and I think all of these possibilities must be evaluated on equal footing. In short, we believe the necessary groundwork has not been completed on this issue. We submit that much more assessment, with input from relevant stakeholders, including the Competition Bureau, is necessary to determine which solution is best for the stated problem.

There has been no comparative analysis of alternative solutions, and we believe the committee could benefit from such a robust discussion. Only then will we be able to weigh the pros and cons of each proposal and implement the most effective solution.

With this brief introduction, I'd like to turn the microphone over to Mr. Katz, vice-chair of the CCIB's international competition law and policy committee, to relay specific detailed comments on the elements of Bill C-23 itself.

Mr. Mark Katz (Vice-President, Canadian Council for International Business): Thank you very much, Matt, and thank you, Madam Chair and members of the committee. I'm very happy to be here today, particularly because prior to this morning I didn't realize I was vice-chair of this committee, so it's nice to see I've been promoted.

Let me open with a brief explanation. As you probably know, Mr. Cal Goldman, who is the chair of the committee, was originally scheduled to be here. As matters have developed, however, we thought it more appropriate that I appear at this initial stage to present the CCIB's views. Mr. Goldman would of course then be happy to appear at a later date to answer any questions you may have once you've had the opportunity to fully consider and absorb our own submissions and those of the other parties who have appeared or are going to be appearing before this committee.

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That could take place in the context of a subsequent hearing or in a series of round table discussions that we understand the committee is planning, whatever the committee chooses.

As I said, we thought proceeding in this way would be of greater benefit to the committee and allow for greater use of Mr. Goldman's expertise and experience. We hope you understand.

That said, I'll turn very briefly to detailing the CCIB's views on Bill C-23, which are set out in detail in the brief that has been submitted. I understand the members will have a copy.

As noted by Matt, by and large the CCIB is very comfortable with Bill C-23, and we commend the Competition Bureau and the other officials involved for the work they have done.

There are two areas, however, in which the CCIB believes that changes are appropriate and would make the bill even more effective. These areas are with respect to, one, the provisions of Bill C-23 dealing with mutual legal assistance and, secondly, the provisions of Bill C-23 dealing with consent order proceedings.

Let me turn to the issue of mutual legal assistance first. Again, our specific comments relating to this issue are set out on pages 3 to 7 of our brief. Let me outline them for you here. On the whole, the CCIB considers international cooperation in competition law enforcement to be a necessary development. The benefits of increased cooperation for the private sector include a reduction in the cost and time of investigations, less duplication of effort, enhancement of the level of transparency and certainty afforded in the legal process, and less frictions arising out of the multiplicity of national competition laws.

That said, one of the key concerns of the private sector in this process is the protection of confidential business information. In other words, accepting that there will be cooperation among authorities in terms of exchanging confidential business information, which they have been provided or have obtained through other means, the question is what protections will be in place to secure the legitimate interests of business in that information?

Bill C-23 recognizes the importance of this issue by incorporating a series of very helpful protections, and these are listed on page 4 of our brief at footnote 6. This certainly represents an improvement over the first proposed version of the legislation for mutual legal assistance that was contained in Bill C-472. Nonetheless we believe that certain gaps remain, and these can be summarized briefly as follows.

First of all, in terms of scope, the mutual legal assistance provisions in Bill C-23 are extensively meant to apply only to cooperation with respect to civil, reviewable matters. Unfortunately, the language of the bill gives rise to a certain degree of confusion regarding the bill's intended scope. For example, proposed paragraph 30.01(a) speaks in terms of the agreement addressing conduct that is prohibited or reviewable under this act. The use of the term “prohibited” connotes possibly criminal matters.

Accordingly, the CCIB suggests that Bill C-23 be amended to explicitly indicate that this applies only to mutual legal assistance in civil non-criminal competition law matters; that is to say, matters that are treated as civil in both Canada and the foreign country with which the agreement is entered into.

Second is the level of confidentiality required by the other party. Proposed paragraph 30.01(b) provides that before Canada enters into a mutual assistance agreement contemplated by the bill, the Minister of Justice must be satisfied that any record or thing provided to the foreign authority will be protected by laws respecting confidentiality that are in his or her opinion substantially similar to Canadian laws.

We believe that the standard of substantially similar is not sufficiently precise. At the very least, Bill C-23 should be amended to require that the requesting foreign government offer protections that are at least the same as the protections conferred on this information by the commissioner and the Competition Bureau.

Having said that, this actually points to a more fundamental problem with Canadian law. There's currently a lack of clarity regarding the scope of protection afforded to confidential information under the Competition Act due to a disagreement over the interpretation of section 29 of that Competition Act. Until such time as the scope of section 29 is clarified, it is actually difficult to say what constitutes a degree of protection that is substantially similar to Canadian law.

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Accordingly, we recommend that the opportunity afforded by Bill C-23 be used to put an end to this controversy once and for all. I'll get into more detail below. It is our position that this be done by stipulating criteria to govern the disclosure to foreign authorities of information received by the bureau as part of its own investigative processes, and particularly information that is provided voluntarily to the bureau.

The third element of the bill we'd like to discuss is the issue of disclosure of information already in the Competition Bureau's possession. As drafted, Bill C-23 does not provide any protection for information a foreign agency may request that is already in the Competition Bureau's possession, as opposed to protecting information that is actively secured at the behest of the foreign agency. That is the case whether the information was obtained by the bureau pursuant to compulsory process, or provided to the bureau voluntarily.

In our view, there's no principle or reason for excluding information already in the bureau's possession from the protections afforded by Bill C-23. The risk that such information might be handed over to a foreign government would act as a severe disincentive for companies to voluntarily provide this information to the commissioner.

Therefore, we again submit that Bill C-23 should be amended to prohibit the communication to a foreign government of confidential information already in the bureau's possession, absent a waiver by the party from whom this information was obtained, or a court order of the type contemplated by Bill C-23.

Finally, and following from that previous point, we have concerns about disclosure of information provided under merger pre-notification filings or requests for an advanced ruling certificate. As you know, merger review under the Competition Act regularly involves the filing with and review by the commissioner of very highly sensitive company information. Accordingly, we believe that Bill C-23 should be amended to explicitly prohibit the communication of this type of information pursuant to any agreement with a foreign agency. This, for example, is consistent with the position that is adopted in the United States.

Those are our views regarding mutual legal assistance. Our next area of concern is with respect to Bill C-23's provisions governing consent orders, of which there's been some discussion today.

In our view, if enacted, these provisions go too far. We understand that the proposed changes reflect a certain level of concern that some have felt regarding the Competition Tribunal's consent to order proceedings. But, as we said, we don't believe the balance that is sought to be struck here is an appropriate one.

Accordingly, we have prepared draft language for your consideration, which I believe has already been provided to the clerk, which we think strikes a better middle ground by returning a limited role of oversight for the tribunal. In the end, we think it is important to maintain checks and balances in the system.

The legislation that we have provided is modelled to some degree after the U.S. Tunney Act, which you have heard referred to today, and as well by Mr. Addy. At least it's modelled on the practice under the Tunney Act, perhaps not exactly on the statutory language. But we believe this approach will provide a much better balance in terms of the various interests that are involved.

If you do have, or are able to gain access to, the proposed draft, obviously you can review it afterwards, but I would like to bring your attention specifically to two key provisions.

First of all, proposed subsection 105(2) would read as follows:

(2) The consent agreement shall be filed with the Tribunal at least 30 days prior to its effective date and shall be based on terms that could be the subject of an order of the Tribunal against that person.

That addresses the provision in Bill C-23 as currently drafted that would allow the commissioner to file and register an order, even though it may contain terms that the tribunal itself could not have granted. We don't think this is appropriate, and we think our provision strikes a better balance.

I'd also like to point out to you proposed subsection (4), which says that:

(4) The consent agreement shall be registered upon the expiry of 30-days from the date on which it was filed with the Tribunal, unless a determination has been made by a judicial member of the Tribunal that there may be grounds for not registering the agreement based on a reasonable apprehension of bias, bad faith or a conflict of interest on the part of the Commissioner, or an excess of jurisdiction.

This is probably the core provision here. What we're trying to do is maintain a limited form of review. We have deliberately avoided using terms such as “patently unreasonable”, because we don't want to open the door to a full-scale review of the competitive implications of the consent order, taking into account that this is based upon a settlement between the commissioner and the private party involved. However, we do think a limited form of review is appropriate, and this is our suggestion to narrow the scope. Of course, this is something that is obviously open for further consultation and consideration.

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In any event, I hope this brief has been of assistance, and I thank you for the opportunity to appear today. We'd be pleased to answer your questions afterwards.

Thank you.

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

We're now going to turn to the Competition Law Policy Group, and we have Mr. Rowley, Mr. Campbell, and Mr. James. I believe Mr. James is going to begin.

Mr. Arthur B. James (Former Vice-President, Law and Corporate Relations, IBM Canada Limited; Competition Law Policy Group): Thank you very much, Madam Chair.

We are here representing the Competition Law Policy Group, and that organization in its structure has been in existence for over 30 years. It has followed the involvement and developments in competition policy. It's made up of 14 Canadian companies. We've already made our submission, and I hope it has been read. Today we're going to restrict our comments to one issue only where we think we can add some value to this debate, and that's on private action analysis.

We have, independently of this hearing, as a group put together over the last several months a report that you all have, which we've distributed to you, and I commend it for your research as it has material that I don't think has been covered by any other group in trying to examine the issue of whether private access should be adopted in the law.

The report has four components to it. It analyses proposals for private actions, the need for them, rationales, benefits, safeguards, and cost effects. We have a separate report prepared independently by Mr. Donald Baker, former Assistant Attorney General for anti-trust in the United States, on the American experience, and I think it will be helpful to you.

Third, Deloitte & Touche has prepared a report that's included in here on the empirical survey costs of all of the reviewable practices, actions that have taken place, and the actual costs that have been incurred by the organizations to pursue these matters before the tribunal. Finally, there's a detailed executive summary.

This morning we're proposing to approach this by, first of all, focusing on the uniqueness that Parliament put in place in the Competition Act in terms of its approach to reviewable practices, which is very clearly different from that of Australia, the United States, and the EC; second, discussing whether private actions needs are actually established; third, giving a cost-benefit analysis of the introduction of private actions; and fourth, presenting alternatives to ensuring concerns are effectively addressed.

At this stage, I'd like to turn it over to Mr. Rowley to pursue these four points.

The Chair: Mr. Rowley.

Mr. J. William Rowley (Lawyer, McMillan Binch; Competition Law Policy Group): Thank you very much, Madam Chair, members.

I think we'll start with the proposition that if it is not broken, don't fix it. If there is not a mischief that is understood across Canada, then don't try to fix the mischief. We say there is not such a mischief or such a problem, and the reason we say there is not such a mischief or a problem is because of the nature of our law. It's a very different law from any of the laws studied by the Competition Bureau that have been put before you in the Roberts report in support of introducing private actions. That report says all these jurisdictions, Australia, New Zealand, the United States, Ireland, and the U.K., either have or are considering private actions.

Each of those systems is entirely different from the Canadian because these systems are all systematically prohibitory. Canada's system is made up of prohibition and review. The reviewable practices—we crafted these in 1976 and added to them in 1986—are admired worldwide. We're moving in the world through the international competition network towards convergence.

Commissioner von Finckenstein is interim chair of this new unit, and I very much hope we will be using Canada as an example.

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The reason the reviewable practices are so important is that they are understood to be practices that are commonplace, day-to-day practices that can be pro-innovation, pro-efficiency, competition neutral, tough competition, or anti-competitive. You do not want to constrain those practices unless they are anti-competitive. We've chosen as our general standard substantial lessening.

Now we put in a commissioner with a legal duty who is subject to being required to investigate—from the sources we've heard this morning—these complaints, and we say the issue he faces.... You heard von Finckenstein on October 4. He says we agonize over this decision. Why do we agonize? Because such a tough line has to be drawn between what is pro-competitive and anti-competitive.

In 1995 the then-commissioner, then-director, had a consultative panel. They said do not go forward until you do a thorough cost-benefit analysis. That has not been done to date. We hope very much that the data in this book we have prepared and commissioned will assist in that process.

Let me make a couple of points before taking it to the important data. It is not suggested by anybody that meritorious cases are not going forward. It is not suggested that the director will not look at them; indeed, he is obliged to. The fact is that many unmeritorious cases are filtered out.

Here are some facts and figures. Over the last seven years the average number of complaints under part VIII, excluding mergers per year, was 537 complaints, and of those less than 1% are said to be anti-competitive.

Think about that number and assume you have a private action now, a right to go forward. Take 5%, 10%, or 15%; that's an additional 27, 54, or 81 cases a year. The tribunal has huge difficulty in dealing with two or three a year. Why? Because competition law cases, it is understood, are the most complex, expensive, and problematic of the legal system. One needs to think of those numbers.

Now let's look at costs. What does this Deloitte & Touche study tell us? Let me just tell you what they did. They looked at every case from the beginning of the Competition Tribunal that went through the process so they could judge an apple against an apple. The costs are direct and indirect, the out-of-pocket and those from the chill effect.

On the direct costs, the learning is that the average external legal costs born by defendants amount to $3.3 million per case. The average total cost, and this involves executive time, is $5.5 million per case. The average intervener's cost is $316,000 per case. The average Competition Tribunal cost is $685,000 per case. Add to that the average costs in the Wise, Blackman study of $1 million per case for the plaintiff and you see what you're dealing with. Multiply that by the 5%, 10%, or 15% we talk about as possibilities, and you have added costs to the system, leaving aside any chill effect, of $95 million, $100 million, or $292 million annually, and that's based on only half of those cases going forward.

Much has been said about safeguards. I'd like to say two final things in conclusion, something about safeguards and something about an alternative to ensure that the proper complaints are dealt with.

As to safeguards, there are basically three: leave of the court, summary judgment, and absence of damages. On leave of the court, let me just say, from 30 years of experience in the courts, that courts are very, very hesitant at the beginning of a case to deny a person his or her day in court. Second, summary judgments are very, very difficult to obtain, but it's not as if this will save costs. The only example of summary judgment we have before the tribunal is that the director in the Warner case was subject as soon as he brought his application to a summary judgment application.

• 1045

I was involved in the case, and we succeeded. The director's costs were $627,000 up to that point. There were two of us who were respondents. I can assure you that our costs were a good deal more. So in a summary judgment, we were at well over $2 million in costs.

Finally, as to the absence of damages, this entirely ignores strategic litigation. Strategic litigation is engaged in regularly. We heard from Mr. Russell that this is what people come to us about. Why? To delay, to get information, and to interfere with transactions.

Now if I may, I'll just turn in conclusion to some recommendations for alternatives if this committee and the government decide the costs we're putting in front of you are worthy of further consideration.

Let's look at service standards. The commissioner has done a lot in other areas of this act. He's published service standards. He has 360 round tables. They have guidelines. This will give certainty, and it will show when cases ought to be brought, when they ought not, and when they will not.

Finally, I'd talk about reasoned decisions. Look at Europe as an example. The European Commission's merger task force and the director general for competition publish a reasoned decision for any decision they make. What this has done in Europe is it has given a very rich body of jurisprudence as to when cases should and should not be brought.

In conclusion, Madam Chair and members, we hope this is a useful contribution to the debate. There is no question it is felt that there is a potential for chill that would arise if this kind of action were made available. Who would use it? Obviously, people who could afford it. That suggests on its face that strategic litigation would be high. We say the cost benefit needs to be analysed properly. We say the case is not made. When you do the cost-benefit analysis, it comes out in favour of an act that works exceptionally well now, that is a model for the world, and that can be improved by one or two transparency headings.

Thank you.

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

We're now going to questions. Mr. Rajotte, please.

Mr. James Rajotte: Thank you, Madam Chair. Thank you very much to the witnesses for your presentations this morning.

I do want to follow up with Mr. Rowley. You talked about how Canada had a unique competition legal system and about how other countries, particularly those with which we share our common law system, were different. I was wondering if you could expand on that.

If you could talk about.... You mentioned international convergence and how the current commissioner is very much involved in that. If he is involved in that and if Canada is a model the way it is now, why did he himself endorse private action or private access when he appeared before the committee?

Mr. William Rowley: What the commissioner said—and I wasn't here, but I've read the transcript of his comments—was, well, we're not putting it forward at this time. He personally believed there would be a basis for rounding out the act. He set out the pros and cons.

What you have not asked the commissioner about and what you may wish to when he comes back—and you'll have Mr. Fels this afternoon, who's an old friend, the commissioner of Australia—is the basic difference in the system. Canada chose, when it introduced reviewable practices, to say, we will not characterize these as unlawful. You heard Mr. Wong speak of violations. You heard about breaches of prohibitions. These are not prohibitions. These practices are practices everybody in business engages in, usually in an efficiency-enhancing way.

A small business benefits from having a region in which to distribute goods. Unless there is an anti-competitive purpose, the business benefits from the distributor saying, no, I will not give my goods to the person next door and make the distribution system not work for us unless there is an anti-competitive purpose.

• 1050

We have said all these reviewable practices are reviewable. There is jurisdiction in the public interest to look at them. We give the commissioner extraordinary powers of intervention. We have a right of six Canadian citizens, the minister, or the commissioner himself, to initiate proceedings, and he does regularly.

There are three proceedings. Think about it, because I know you've been talking about the interests of small and medium-sized business. The Xerox case, the Chrysler case, and the Laidlaw case, all landmark cases in the reviewable practices, were brought as a result of complaints brought to the commissioner, the then director, by small and medium-sized business.

Small and medium-sized businesses, and indeed large businesses, are not being denied access. The director in fact represented large business when he brought the Warner Music case. That was at the suit of the Bernalsman group. So the director is doing a very good job at bringing appropriate cases and filtering out those that are not in the public interest of competition.

Mr. James Rajotte: I want to follow up, then, on the costs, because people argue that it's going to be used for strategic litigation, but people are also saying that the costs are going to be prohibitive, particularly for small and medium-sized businesses. But when we had before us many representatives of small and medium-sized businesses, they argued in response to a question from me that the costs would actually be less if you had private access.

Mr. William Rowley: If I may answer that directly, these are facts we're putting in front of you as to costs; they're not made up. They're based on the survey as set out here. These are the real costs involved, and if you look at the Roberts study, the Australian Law Reform Commission says—and I can give you page references—we understand that this is the most expensive and complex litigation in the world.

If you put this in, I venture to say that small and medium-sized businesses have the ability more to suffer than to win. The expense of bringing this forward is very high, but the director now is obliged to represent the interests of those who complain to him. He must do so. He must look at it. He makes a value judgment. If you put this in, the director can say with greater equanimity, well, no, we've had a quick look, and we don't think so; you bring your case.

I can tell you, they cannot afford to bring their cases. The director's own facts tell you that. It costs the director $1 million to mount a case. The director has the most experienced bunch of plaintiffs, lawyers, and economists in Canada. I can assure you that small, medium-sized, and large business, unless they are bringing strategic litigation, cannot afford it. So I think you're running the potential of disadvantaging the small and medium-sized business community.

Mr. James Rajotte: Mr. Ivis, do you want to comment on that as well?

Mr. Matthew Ivis: I don't think I have much more to add to those comments, other than to concur that on its face value, from what we've heard from our membership, it appears to be a cost-prohibitive solution to help the constituency it's supposed to address in the SME community.

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

Mr. McTeague, please.

Mr. Dan McTeague: Thank you, Madam Chair, and good morning to all of you. I hope this doesn't take us too far into the afternoon.

Mr. Rowley, I'm interested in the document you've presented.

I note there are 15 companies here, Mr. James, and that a good number of them—BP Canada, DuPont, General Electric, General Motors, Imperial Oil, IBM, Shell Canada, Xerox Canada, and I think Xerox even printed this—are companies that do business in other jurisdictions around the world.

Tell me, Mr. Rowley, are any of these companies in a position or have they in the past ever used an equivalent private access in any other jurisdiction around the world?

Mr. William Rowley: Sorry, I do not understand your question.

Mr. Dan McTeague: The companies that are represented here in the text, which I presume you represent, do business in Canada and elsewhere in the world. Have any of those companies triggered or operated in a jurisdiction where they've had to avail themselves of, for instance, the Clayton Act in the United States, or the Australian competition act or the Irish Competition Act, with respect to private access? Have any of those companies availed themselves of the use of the tool of private access?

Mr. William Rowley: As plaintiff?

• 1055

Mr. Dan McTeague: As plaintiff, preferably. We'll talk about as defendant shortly.

Mr. William Rowley: I'm not immediately aware, so I'll see if Mr. James can help us.

Mr. Arthur James: In my experience—and I can only talk for IBM Corporation—I'm not aware of any case in which we have initiated action as a private plaintiff in a competition—

Mr. Dan McTeague: Your company or your group?

Mr. Arthur James: My company—all of our company worldwide.

I can talk to you very specifically, however, about being defendants in such actions—

Mr. Dan McTeague: I understand that, Mr. James, but I just want a simple answer, because I have a couple of questions I want to ask.

I note that some of your comments here refer to the great fear of what is happening in the United States. I also note, Mr. Rowley, your comments with respect to there being no overwhelming need for this, that in the 30 years you've been here, there hasn't been any great expression. I think the witnesses who have been here prior to you would beg to differ. Canadian truckers, independent oil, travel agents, and many who will be coming forward have not only stated to this committee their ability to avail themselves of private access notwithstanding the great shibboleth of costs that you raise, but are also prepared to mount the resources necessary so that someone will actually listen to their cases.

So it becomes a bit of a concern for this committee when we hear comments by Mr. Ivis and others that the SME community.... We've heard from the SME community, the Canadian Federation of Independent Business and others, and they're very favourable to the notion, limited as it may be, to private access.

So if what you're representing here today is the position of 10, 12, or 14 companies that do business in Canada but ostensibly may do business in other jurisdictions, and we have the private sector, who you've vicariously suggest are smaller businesses that are concerned about this, that are not concerned, on what basis do you make the claim that this is going to affect them, and more importantly, bring Canada's economy into a state where it may not be able to function as well, come to a screeching halt, or bring about chill? Is the chill only one-sided in terms of large businesses?

As Mr. Strahl has pointed out in previous demonstrations, it would appear that your view is extremely one-sided to those of large businesses who have nothing to fear in other jurisdictions.

Mr. William Rowley: Let me, if I may, provide a two-pronged answer, part from Mr. James and part from me. But let me just say at the start that when I say there is not a large body of complaint and has not been over the years, I do not say there has not been some complaint. There has been. Professor Trebilcock has been arguing this for many years. A number of plaintiffs' lawyers are very keen on this. A number of economists who will benefit are very keen.

You will find when you look at the PPF process that there were over 100 briefs filed, and about 52 dealt with this, about private access. So half didn't deal with it at all. Of the half that did, they were roughly evenly divided, 50% in favour and 50% against; but of those in favour, a good number were also the individuals I've mentioned.

If you look at the directors' reports over 30 years, you will not find a concern in the directors' reports about concerns about access not being granted at the tribunal, at the proper level. Yes, there have been two white papers, I'll call them, on private actions put forth in the last 10 years, and as I said, on the last one, the consultative panel said you must do a cost-benefit, because it could be harmful to proceed without it, and on this one, the PPF said there is no consensus. Maybe there will be a consensus.

Mr. James can speak about what he knows about small business, and I invite you to hear what he has to say.

Mr. Arthur James: As part of my role, I have served as chair of the Canadian Chamber of Commerce. The Canadian Chamber of Commerce has gone out of its way, and I might say, partly because of my insistence, to go to its members across the country on seven occasions to see whether there is any interest or concern about this topic at all. The last attempt to get feedback from people was after their appearance here, and as of yesterday, there had been zero—zero small companies had come forward.

• 1100

Mr. Dan McTeague: On that point, Mr. James, Mr. Ivis, and of course Mr. Rowley, we hear constantly from you that you're not hearing. Of course, one talks about the PPF. Mr. Ivis, for instance, is here on behalf of one organization but two weeks ago represented the Canadian Chamber of Commerce.

I guess it's kind of difficult to reach and achieve consensus in a stacked deck. What we're trying to do is address some of the concerns that have been raised with us, that have been raised ostensibly by witnesses who have come before us here. I don't expect people with a legitimate complaint to take their problems to you.

We've heard from a lot of chambers of commerce across this country, smaller ones, that have never heard of the position you have taken today, which is opposed to private access. Conversely, we have heard from many who believe this would be a unique opportunity to provide issues that may not bring about a public concern about competition but may bring about, nevertheless, a harm that is occurring to the competitive process in outreaches that aren't normally represented at this industry committee.

The Chair: Mr. McTeague, your final question.

Mr. Dan McTeague: This is a question.

In your document here, I note that, for instance, you have my name in here several times. I have to tell you, I don't remember ever being contacted by Deloitte & Touche, but it may have very much to do....

There are eleven sections that you've looked at with respect to reviewable practices, Mr. Rowley, examples of unmeritorious reviewable practice complaints, page 194. I know that this committee and I and others have dealt with at least five or six of these. So to suggest, as it does here, that somehow there is no real reason to involve ourselves with this issue is a bit alarming.

The question has been put to us here before.... You're concerned about supplier relationships and distribution, etc. If indeed there is a contract that is established between individuals—and the question was put, of course, by you, Madam Chair, with respect to torts—

The Chair: Mr. McTeague, your question, please.

Mr. Dan McTeague: Madam Chair.

Can you tell us why you have a concern with respect to wanting these issues to be addressed in the courts when they could very well be addressed by the tribunal, which of course was specialized and made for this very mandate?

Mr. William Rowley: We think the tribunal is the right place to address competition law issues. We say we have a system that is the envy of the world, that does address it, and we say we have a commissioner who is obliged.

We also say there is a way to get to courts. If you look at appendix 5, we set out there ten methods of contract or tort where people can settle private issues in the courts. I can tell you that we represent people, the whole time, who are faced with court litigation for breach of the Competition Act and other competitive torts and contractual matters.

I invite you to have a look at it with care. I know you have not had the chance to look at this for long. I also know you're going to have round tables. We truly hope this provides some input that will be useful, but the costs are the costs.

The Chair: Thank you.

Mr. A. Neil Campbell (McMillan Binch; Competition Law Policy Group): Could I just briefly elaborate on Mr. McTeague's reference to appendix 4 in the report, which talks about some unmeritorious cases, just to explain where that came from.

Those are all reproduced as quotes from the annual reports of the Competition Bureau, in which they describe investigations undertaken and report in a number of cases on overtly finding that despite particular complaints, the conduct was certainly not anti-competitive, indeed often pro-competitive and efficiency enhancing.

I guess, Mr. McTeague, if the subtext of your question is that the bureau is not doing a good job on reviewable practices, I have a couple of remarks first.

We've reviewed the enforcement record in some detail in the body of the report. We weren't able to come to that conclusion. But to the extent that there is a feeling that in particular private and local matters are not getting on the radar screen with the Competition Bureau, it may well be that you would wish to seek the bureau doing the equivalent of a VanDuzer report with respect to its enforcement policies and criteria. Indeed, that is where we attempted to suggest an alternative, which we thought would be constructive to small, medium, and large business consumers, anyone, which is to enhance the rigour around guidelines, around reasoned decisions, around performance enforcement criteria, in the civil matters branch of the Competition Bureau.

Our comment about the small business constituency was not to seek to speak for them, obviously, Mr. McTeague, but simply to make the observation that this proposal might backfire if it gives the Competition Bureau a greater ability to say that's private and local and not our job, and you pay for it yourself and deal with it yourself.

The Chair: Thank you, Mr. Campbell.

• 1105

[Translation]

Do you have any questions, Mr. Bergeron?

Mr. Stéphane Bergeron (Verchères—Les-Patriotes, BQ): Thank you, Madam Chair.

I will not repeat what Mr. McTeague said so eloquently. However, I must say that, as we have seen many times in this committee, some groups representing big businesses have a rather different view on the private access issue from that of small or medium businesses. As I indicated from the start, I will not add anything on this. I think that Mr. McTeague summed it up very eloquently. I want however to ask a question to the representatives of the Canadian Council for International Business.

In your submission, in Section II, Comments on Bill C-23, you say that:

The CCIB urges this Committee to limit its deliberations to the amendments proposed by Bill C-23 and to refrain from expanding the scope of inquiry to other, more contentious issues. These issues were deferred for a good reason.

Do you know that reason?

You continue:

There will be ample time to deal with them at a subsequent stage, after a more comprehensive consultation and analysis has taken place.

In fact, our committee wants to hear the witnesses to know whether there are other elements, other issues which could be the subject of our inquiry. First, how do you reconcile your request to refrain from expanding the scope of inquiry to other issues with the amendments to Bill C-23 you are proposing? Secondly, what is you motivation to insist so much on us to refrain from elaborating or examining other issues pertaining to the Competition Act?

[English]

The Chair: Mr. Katz.

Mr. Mark Katz: I guess I've been elected to answer.

I think what we were referring to here is the fact that the PPF process involved the consideration of a number of issues. The thought was that the issues that would proceed to be included in the bill would be those for which consensus was achieved. On those issues for which there was no consensus, there would be perhaps subsequent debate if deemed necessary. That's what we were getting at.

Our suggestion, of course, was that in order to expedite Bill C-23, in order to ensure the rapid enactment of items for which consensus had been achieved, this committee would be better off considering those issues rather than perhaps getting bogged down in other matters for debate. That was the sole purpose of this.

I don't believe there is any contradiction in the proposal we've put forward regarding consent order proceedings. What we're trying to do is deal with the matter that has been raised specifically by Bill C-23 and to propose an alternative solution. So it's certainly tied to what the bill is proposing. Again, that was our sole intention here.

[Translation]

Mr. Stéphane Bergeron: Excuse me, but I want to come back to my question. You are saying in your submission: "These issues were deferred for a good reason". I wonder what you were alluding to when you wrote this. As a matter of fact, this committee intends to hear a number of witnesses to know whether there are other elements of the Competition Act which need to be amended or to be changed. You seem to presume right away that this committee did not want to focus on the issues in Bill C-23. What did you mean when you indicated: “These issues were deferred for a good reason”? What is the good reason you were referring to?

[English]

Mr. Mark Katz: The good reason we were referring to was the fact that no consensus had been achieved at the PPF level during the prior consultations. So again, to repeat, our view was that this committee should—obviously it's up to you to do what you want to do—focus on Bill C-23, for which there was, by and large, a consensus, proceed with the enactment of that bill in an expeditious fashion, and to the extent that there are issues like private access or others for which there may be more scope for debate, deal with that in another forum. That was simply the suggestion.

The Chair: Mr. Bergeron, are you finished?

[Translation]

Mr. Stéphane Bergeron: Yes, I am finished.

The Chair: Okay, you are finished.

• 1110

[English]

The Chair: Mr. Volpe, please.

Mr. Joseph Volpe: Thank you, Madam Chair.

Gentlemen, thank you for your interventions. My experience on committee is that we usually get representatives who come forward because they are interested in public policy or because they are advancing private interests. Both are legitimate approaches, in my view, but the two rarely mix. I gather this is a situation where you're advancing a private interest?

Mr. William Rowley: I'll have a first crack at that.

Just so I can give you a bit of my background, I'm the former chair of the International Bar Association's business law section, and prior to that, the antitrust section. The International Bar Association advances public policy interests with respect to the law around the world. It represents its view marrying business and legal interests in the—

Mr. Joseph Volpe: I'm sorry, I don't want to be discourteous, and I thank you for that, but I also don't want to impugn anybody's motives. I did indicate that these are all legitimate. I just wondered whether you were acting for a private interest or—

Mr. William Rowley: I'll give you a short answer, then.

The propositions we put forward we believe are in the interests of Canada, public policy, and the business community at large, because we believe—

Mr. Joseph Volpe: Yes, it's clear enough—

Mr. William Rowley: —in the law as it exists. We do believe this is one of the very best competition laws in the world.

Mr. Joseph Volpe: Mr. Rowley, I'm sure you're very sincere in that. The reason I asked that is not to put you on the defensive, but because you did make reference to the fact that Canada deliberately chose this model, and it chose this model in the timeframes you indicated. So I assumed you were speaking about a context in which this piece of legislation and this model were important and central to public policy.

I'm not a great student of history, but I think some of the assumptions upon which competition policy and other models of economic and regulatory affairs were struck have changed considerably since the initiation of the competition model you have just referred to. So I'm wondering if the basic premises are the same.

For example, until 1988, and just shortly before that, we believed in what one can still refer to as a “national policy” designed to introduce direct foreign investment and protect Canadian competition from the ravages of foreign competitors. I think all of those presumptions went by the wayside in 1989, again with the passage of NAFTA, and then again with the emergence of the WTO.

I'm wondering whether I'm way off base, but I noted Mr. James took some exception to Mr. McTeague's reference to the 15 members of the competition policy group, all of whom fare relatively well in an environment in which the competition model is different from the one you want to defend. In fact, I think some of them have their subsidiaries here defending a model that was okay before 1989, and across the river in Detroit they do fairly well in a model that you say is probably not good for Canada.

Mr. William Rowley: I know Mr. Campbell wanted to respond, but let me just suggest that Mr. James tell you about the experience of his corporation under a different model.

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First, I'll just say there is no changed model. We've moved from ten competition laws around the world about ten years ago to about a hundred today. It's the model of all competition law, and nobody is against it. It's fundamental framework legislation and it makes for a better economy, better global welfare, and better consumer welfare. One wants the best model, and one does not want to bring disincentives into the model. One does not want to, in a very fragile economy, add chill. And above all, you don't want to divert your focus—and Mr. James can tell you something about that.

Mr. Joseph Volpe: But before he does that, let's accept that members' interventions around the table, mine included, are as sincere as those of the witnesses, and that we agree with what you just said.

Now, I'm as patriotic a Canadian as the next person, but the models I keep hearing about, especially when the word “convergence” comes forward, which you introduced in this discussion, mean that we have to converge to those models that prevail and are dominant in the marketplace. They are not the ones in Canada.

Now, Mr. Rowley, if you'd suggest—

Mr. William Rowley: Is that a question?

Mr. Joseph Volpe: Well, I'm coming to the question.

If you'd like to suggest that the model you want to defend is the one to which the rest of the competitive world is going to converge, then I'm going to applaud you.

The Chair: Mr. Campbell.

Mr. Neil Campbell: May I start just by noting that in the analysis we have done in the report, we looked to economics, which is the discipline that applies the intellectual framework about what competition is and why we think competition is good. The views are very different when you're dealing with hard-core cartel conduct, which everyone recognizes is unambiguously bad, versus distribution practices, which are frequently very efficient, and indeed very beneficial to both large and small businesses in allowing for distribution through distributors and dealers, rather than a vertical integration approach. And it's through exclusive territories and dealing arrangements, and sometimes bundling arrangements, that one has very often a beneficial situation, both for the intermediate distributors and dealers in the distribution chain and also for consumers.

To give you just a quick sense of it, tied selling can capture something as extreme as your combo meal at McDonald's. That would be within the definition of “tied selling”. When you look around and see the things that are tied selling, 99% of them are good and beneficial, and result in lower prices and more competition.

What the economists have said, which supports that, is that one needs to be attentive to very limited conditions in which a tie, a territorial restriction, or an exclusive dealing arrangement would be anti-competitive. So the concept of reviewable practice was to allow a competition authority to fix things when there is a problem, without interfering with the vast majority of activities when there is not a problem.

The Chair: Thank you.

Thank you very much, Mr. Volpe.

Mr. Neil Campbell: And I don't think the economic model has changed in that area.

The Chair: Mr. Volpe, I'm going to have to move on.

Mr. Strahl, please.

Mr. Chuck Strahl: Thank you, Madam Chair, and thank you all for your testimony here this morning.

Mr. Rowley, you mentioned our competition policy is the envy of the world, but a couple of weeks ago in the paper there was quite a report from the OECD that indicated the opposite. The quotes that were published indicated that Canada's Competition Bureau is plagued by an inconsistent policy framework; it's hampered by national monopolies; it's undercut by a lack of resources; and it's tainted by a reputation for having no independence. That comes from the OECD, which is made up of other countries that I would think would have fairly well-developed competition frameworks. Their report, which I've asked the clerk to try to get a copy of in its entirety, seems, at least in its initial comments, to say there may be some significant problems with our Competition Act.

Mr. William Rowley: First of all, I know about that report. In fact I was at the OECD meetings the day before it came out. I've not read the report. I believe it's a draft. I believe it is one of the country reports that covers all of the 30 OECD countries, and I don't think it's been completed yet.

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Concerning the comments I read about in the paper, about lack of funding and perceived lack of independence—really, on the funding question—I hope every witness this committee has heard from would endorse what we believe to be the case: if there is perceived to be a lack of funding for this framework legislation, then it should be provided. You might ask the commissioner how the funding of the Canadian agency compares with other G-8 agencies, for example.

Respecting independence, I think the question is in reference to some of the comments that have been made in connection with banks and airlines, both of which are very special cases. The OECD report, as far as I know, makes no criticism whatsoever of the substantive law. I do know, because I travel in these circles, the Canadian law is very highly regarded. We're one of the leaders in the competition community. It is true, we don't have private actions to enforce the reviewable practices. But do you want to take on the American experience? Because that is where we will head, or that's the risk. If you read the Baker report, you'll see.... I'll read you his conclusion in two sentences. It's at page 227:

I suggest that the idea of an expanded right of action for essentially private disputes is probably not worth the potential cost to Canada, a cost that will be measured in private litigation and counselling, public cost for the courts, and most importantly, the cost of forgone business opportunities caused by legal uncertainty.

Now, Mr. Baker was Assistant Attorney General in charge of the antitrust division in the Ford administration. He's one of the leading scholars today in antitrust—and yes, he takes plaintiff cases; he also defends. But when we look at the reviewable practices, that's his conclusion.

I can't tell you it's right. The one thing about antitrust—and public policy of course—is it's forward-looking. You have to look into the future and say: “By going this route, are we adding benefit that is better than the cost?” That is a very tough question. It is why it was suggested by the last committee that a very thorough cost-benefit analysis should be performed before you take that risk.

You even heard from the previous panel that maybe nothing will happen; maybe you'll have to move to a damages award, so you can get in the U.S. experience.

Mr. Chuck Strahl: But I don't think anyone's proposing going to the U.S. model; that's the thing. If everyone said let's just copy the U.S. model—we'll just open the floodgates and do treble damages and look back and forward at the same time.... But no one's really proposing that.

Other witnesses have come forward and said this is really pretty modest. It will allow some right to private access, but it's not as if you're going to get rich doing this. You're going to want to be pretty serious about it before you start in on this because, as you've already mentioned, it's just way too expensive to do it for fun. Under this current regime there's no way you're going to make that money back for past damages. So you have to be pretty serious. It's not like the American experience, where if you win, you hit the jackpot. Here, it seems to me what we've been hearing from a lot of witnesses is that it's a reasonable middle ground.

I have to say that one of the things that's really weakening the arguments—obviously, I haven't looked at your book here—is that when we line up those for and against, it really is a case where all the big oil companies don't want it and distributors and the retailers do. Chapters Books doesn't want it; the small book distributor people do. The bigger the outfit, the more likely they are to be against it.

If it's such a bad thing for the small folks, why don't you just say “serve 'em right”? Let it go through, and they'll just pay through the nose for the rest of their days.

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I mean, it's nice for you to be concerned about the small businesses, but that's really how it's coming down. People just are saying “We want it”. The big business groups are saying “It's better not to let them have it, because it's not good for them”. If I were you, I'd just say “Let 'em have it”.

Mr. William Rowley: We're not saying it's not good for them. We're saying it's not good for Canada. We're saying it very clearly.

Let me say a word about big business. I happen to represent big business, medium-sized, and small business, and I have over my whole career. I am in no way anything but proud to be associated with this group, because if we do something that hurts big business—and we say the potential is very much there—then we're doing a disservice to the country. The fact is, it will also not benefit small- and medium-sized business.

So I'm not coming here and saying we're doing them a good turn. I'm coming and putting forward the best evidence we can concerning a policy decision the government is going to have to make. What we are saying is that on balance, we strongly believe—and the facts suggest—the costs involved are very high. The chill risks as a result are high because there is strategic litigation that goes on, and you don't have—as I said at the start—a system that's broken.

There's no evidence that meritorious cases are not being brought.

Mr. Neil Campbell: May I just add one point again, Mr. Strahl? Just to clarify, what we're talking about in terms of strategic litigation is very often brought by competitors. We certainly don't mean to imply it will be small businesses who are always the plaintiffs. It is quite often big businesses who have the wherewithal to bring the strategic case, where cost is not a deterrent because the opportunity to disrupt your rival—to impose costs on your rival, to get discovery of information about your rival, simply to divert their focus from their business—may be of significant strategic value.

When the proposal is brought forward described as private matters between buyers and sellers, that is certainly not really the nature of a tied-selling, or exclusive-dealing, or market-restriction action. Those are going to be most typically brought by the competitor who is outside of the customer-supplier relationship. It may be the competitor of the supplier, and it may also be the competitor of a dealer who for example objects to the local dealer having an exclusive territory and wishes to get supply from the same supplier—to undermine a dealer who's made an investment in promoting whatever brand of products that dealer has an authorized franchise for.

Mr. Chuck Strahl: I don't know if anyone wants to answer the first part of my question, which was that this does seem to be the modest, middle ground for many people who have come before the committee. That says that it's not the American experience; it is a limited right to private access with limited rewards in doing so. The chill factor's not nearly as much as it might be if we had a similar framework to the States.

Mr. William Rowley: I'll speak to the middle ground very quickly.

You heard, with the witnesses before us: “You'll be back if you suggest the government should make this change. You'll be back because it won't work. You'll be back three years from now—and then you'll listen to us about adding damages, maybe one-way cost rules, and maybe double damages, so we can get the case law and get the cases going.”

There is a slippery slope with this business. My own personal experience is the litigious nature of Canada is changing. We live in a North American market. A plaintiff's bar has developed in competition matters over the last several years—a class actions bar.

I can assure you that people who make their livings doing these things will be seeking more. So yes, it is not as bad as the U.S. system, but that's not the question you should be asking yourself. You should be asking yourselves.... Forgive me; I don't mean to be instructive. But the question, it seems to me, I would ask myself is does the present system not work? If so, how can we make it work better? We have suggested some methods of making it work better, in our proposal, that stop short of this, which we believe would be destructive.

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The Chair: Thank you very much.

Mr. Ivis, last comment please.

Mr. Matthew Ivis: Just quickly, to tie this question back to a question on the issue of public policy, I think you might want to step back and see, from a different angle than what was just mentioned, what issue we're trying to solve here. What is the problem we're trying to solve? In this context, it's the issue of access to enforcement for small businesses. We've been presented with one solution, in trying to forge a consensus on one solution to fix this problem.

We've heard from a number of witnesses that there are alternative proposals to fix this solution. In making good public policy, we're trying to say there may be a need to have a robust discussion on all these proposals, to make sure we make the right public policy to solve this one identified solution.

Thank you.

The Chair: Thank you very much, Mr. Ivis. Just so you know, it's not just about small business when we talk about private access; all businesses would have that action—just to clear that up.

I also want to suggest to the witnesses that this committee takes the role of making public policy very seriously. We take the role that it is our goal to make the Competition Act better. That is why we're here.

I want to remind the witnesses, with all due respect, that several times now I've appeared at different conferences over the last three years to try to explain the role of the committee and why we were elected to be legislators. That is our job, and we appreciate your input into the process.

We also take our jobs very seriously. Many of us spend long hours reading briefs and documentation, in preparation for meetings. Regretfully, we didn't receive your book until yesterday afternoon, Mr. Rowley, and because it wasn't in French, we had to have permission to distribute before it could be distributed. Members have only now received it at this committee, and we will take a chance to read through it.

I'm a little bit disturbed by some of my initial review of it, and the way the interim report of the industry committee seems to have been dismissed, because we put a lot of work and effort into what we do here at the committee.

I also have great respect for what you do in your profession. Some of us sitting around this table have legal training. Some of us had legal training in both Canada and the United States, before we were elected to Parliament, and have worked in that regime. We now come here to look at this legislation, and we'll look at it in a very clear fashion.

It is a very difficult task we have before us, as members of Parliament. We believe that the Competition Act and competition law are very complex areas and very serious matters. We have given much time to this over the past several years.

I have to go back to Professor Trebilcock's earlier comments—30 years of study. I'm just not sure how many more years of study we need, before we come to some kind of decision. In the end, consensus does not mean that 100% of the people will agree, because it's not possible to have 100% of the people around the table agree. I'm not sure what this committee is going to decide. I don't have a vote as chair. The reality is we're going to work together as a committee to try to come up with some type of agreement on how we proceed with Bill C-23.

It was referred to the committee after first reading for the very fact that we could have this discussion. So for those who think it shouldn't have been here after first reading, and those who don't think we should be discussing it, that's why it was sent here. I couldn't have made that clearer at the conference I spoke to in September. I couldn't have made it clearer at the conference I spoke to a year prior to that in June, and the year before that in September.

I've been out speaking to the legal community. For the legal community that wants to ignore the processes of the committee, or the businesses that want to sponsor this book, with all due respect to them, maybe you should hire someone to monitor the work of the industry committee and its role in the Competition Act, because we are working on this and have worked on this for several years. Members of Parliament have put a lot of time into private members' business in the past. This committee has had hours and hours of witnesses, and hours of work done outside of the committee process, in reading and preparing.

I don't know what the decision is going to be of this committee, but I hope we can work together as we move the Competition Act forward. I hope we will have an opportunity to meet together, in a round-table format, so everyone is at the table. We've invited witnesses in the past to our committee meetings and they have chosen not to attend. So when we draw conclusions in our interim reports or our final reports, if people choose not to appear, it makes it difficult for us to have a different opinion. So I encourage you to participate.

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This meeting today has been very good. We have a lot of information now to review, which we will review. We've set a 10-day break in the process before we go to clause-by-clause, so members can take that opportunity to review, if there isn't more information we have to hear.

That being said, we have kept you long enough. We're way over your time, and I do appreciate that. I know you're all very busy individuals.

We're going to suspend for about two minutes while we change witnesses. Thank you very much.

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The Chair: Would members take their seats, please?

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We have scheduled two groups of witnesses from now until the end. I'm going to propose we hear all of the witnesses together and move to questions together. One witness has not yet arrived—it's Canada Post Corporation—but when they arrive we'll include them in this session. That will give us more time for questions. And if we have similar questions for all companies, they can all be asked at the same time.

We're going to hear from the Canadian Real Estate Association, the Association of Canadian Travel Agents, AT&T Canada Enterprises Inc., and Canada Post Corporation.

We'll begin with the Canadian Real Estate Association and their opening comments.

[Translation]

Mr. Pierre Beauchamp (Executive Director, Canadian Real Estate Association): Thank you very much, Madam Chair.

First, I cannot give you a French copy of my text this morning as opposed to what the Association is used to do. I apologize for this.

The Canadian Real Estate Association represents more than 65,000 realtors throughout Canada. Those are real estate agents or brokers who practice in all parts of Canada.

[English]

In Canada, the word “realtor” may be used only to designate licensed and registered members of the association. Our membership is organized in 106 local real estate boards and associations, 10 provincial associations, as well as 1 territorial association.

Realtors in Canada own the Multiple Listing Service trademark. In 2000, some 374,000 properties were exchanged through the Multiple Listing Service for a dollar volume of about $62 billion.

Most of you meet with representatives of our real estate boards and associations when they come to Ottawa annually for their political action conference. Many of our members are small business owners, that is, they are self-employed real estate brokers who operate in some 6,000 brokerage offices here in Canada.

The Canadian Real Estate Association was represented at last year's round table discussions on the four private member's bills. Our association also submitted written submissions directly to the Public Policy Forum.

As you well know, the real estate industry, like the vast majority of businesses in the country, is subject to competition laws. The Canadian association has had some experience with the Competition Bureau in the past. In fact, we negotiated a comprehensive consent prohibition order back in 1988, and were subject to a section 11 order for production of documents in the 1990s, concerning a national ad campaign.

As a result of our involvement with these two matters, however, no member board, provincial association, territorial association, or even the Canadian Real Estate Association, has been successfully prosecuted under this act.

Our past involvement with the Competition Bureau and our subsequent compliance programs to heighten awareness of the law are evidence of our keen interest in this legislation.

I will now ask our senior legal counsel, Marcia McGuire, to outline one of the concerns of the Canadian association, with respect to Bill C-23.

Ms. Marcia McGuire (Senior Legal Counsel, Canadian Real Estate Association): Madam Chairman, we are basically concerned about any substantial amendments that would change the scope of Bill C-23. We have focused particularly on the proposed private right of access provision.

We understand the committee is considering an amendment to facilitate private access to the Competition Act, and this is a significant and very controversial amendment. There are compelling arguments as to why this amendment should not be made. There is a real concern that private parties might misuse such a right of direct access to achieve unfair strategic advantages. I know you've heard this over and over again.

It is our view that private persons may wish to utilize the tribunal to further their personal interests. Private persons could force businesses to incur substantial expense and potential embarrassment defending proceedings that might be without merit.

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Currently, the Competition Bureau performs an important screening function in ensuring that such proceedings are not commenced before the tribunal. Although it has been suggested that private persons might commence proceedings only with leave of the tribunal, this is of little comfort. Litigation designed for strategic purposes may not appear to be frivolous or vexatious. The gatekeeper function performed by the bureau is an important one, and it should not be passed to some tribunal that would hear the matter. It is entirely unclear to CREA that any satisfactory screening mechanism will remain in place if an amendment of this nature were to be enacted.

To our knowledge, there is no evidence that anyone concerned with our industry has been prejudiced under the present legislation. Therefore, we see no pressing need for any change.

We note that the public consultation processes have shown that there does not appear to be any consensus as to whether a private right of access should be granted or, if so, on what terms. The consultation process that followed the introduction of the four private members' bills last year reflected broad division of opinion on a private access proposal. As the Public Policy Forum noted in its report to the Commissioner of Competition, there were divided views as to whether this proposal should move forward.

A similar division of views was expressed with respect to the proposed amendments to section 45 of the act, which has resulted in further study of section 45 issues. In our view, further study should also be undertaken before any amendments proceed to allow private access. We don't believe private business should, under these circumstances, be forced to pay the cost of developing case law. This argument assumes that at present the commissioner is failing or refusing to commence proceedings. We are aware of no such evidence to this effect. If evidence does exist, it should be shared with the stakeholders. If that were indeed the case, we would submit that the solution rests in adequately funding the bureau.

As well, granting to private parties the right to initiate proceedings before the Competition Tribunal may ultimately dissuade people from bringing legitimate complaints to the attention of the commissioner. This could ultimately undermine the commissioner's role and current position in negotiating with parties in his efforts to enforce the reviewable trade practice provisions of the act. If private parties have concerns about the bureau's decision to investigate or commence proceedings, those concerns are best addressed through better dialogue between the bureau and the complainant.

The commissioner could be authorized or instructed to explain in more detail why particular cases have not resulted in the commencement of proceedings before the tribunal. Again, to the extent necessary, increased resources could be made available to the commissioner to ensure that legitimate concerns pertaining to any competitive context are addressed in a timely and effective manner.

Mr. Pierre Beauchamp: Madam Chairman, we are keenly aware that this issue has been framed as a big guy versus the little guy type of issue. It's the position of the Canadian Real Estate Associate that private right of access is not beneficial for small business. In the absence of strong evidence that it is necessary and indeed in the public interest, we oppose this amendment.

We thank the committee for the opportunity to appear before you today and stand ready to answer any of your questions.

The Chair: Thank you very much.

We're going to move to the Association of Canadian Travel Agents. Mr. Martin Taller, please.

Mr. Martin Taller (President, Ports of Call Travel Services Ltd.; Association of Canadian Travel Agents): Thank you, Madam Chair, and again we congratulate you on creating this opportunity for us to speak before the second reading of the bill.

As the owner and operator of one of 5,000 travel agencies in this country, I am pleased to have the opportunity to comment on the changes to the Competition Act.

As you know, we live the day-to-day competitive reality in a business dominated by one large supplier, one who is also becoming a direct retailer. In this context, ACTA would like to make three points. First, we would like to comment briefly on the expanded powers being accorded the tribunal. Second, we would like to bring you up to date on the consequences of the last round of the amendments to the Competition Act. And third, we would like to suggest a couple of items to be placed on the agenda for the next round of legislative amendments.

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Given the safeguards the government has introduced with the amendments contained in Bill C-23, ACTA supports limited direct access to the tribunal. We believe that small and medium-size businesses should be given the additional opportunity to seek a remedy for what they believe to be an unjust competitive situation. Like the proceedings of a small claims court, such a provision might not have a measurable impact on the macroeconomic level, and for that reason actions might not be readily taken up by the bureau. Nevertheless, it should benefit the particular businesses in their buying and selling operations.

Second, as you recall at the time of the airline restructuring legislation of Bill C-26, the Competition Act was amended in section 4 to allow agencies to come together for the purpose of collectively negotiating fair compensation with the dominant supplier of air services. A special committee representing all travel agencies was formed and began in good faith to negotiate with Air Canada. After months of slow progress, the dominant carrier announced on August 27 that it was reducing commission rates unilaterally, thus bringing a halt to any further negotiations.

Parliament's intent in putting in place a legislative remedy for travel agencies has been foiled. However, this committee now has the opportunity to see that Parliament's will is respected. ACTA proposes that you amend Bill C-23 by adding a new clause that will extend the provisions found in section 4. Essentially, we are requesting that an arbitration process be laid out to deal with such a contingency as a breakdown in negotiations.

Having willed an end, Parliament should be prepared to will the means. The kind of arbitration we have in mind can be found in the consent order approved by the Competition Tribunal in the case of the merger between Indigo and Chapters. To remedy the loss of competition, the dominant distributor had to agree to certain ceilings on the terms of its contracts with book suppliers. In the event of a dispute arising out of this behavioural remedy, an arbitration procedure has been provided. ACTA would like to see the air travel industry benefit from a similar procedure.

Finally, my last point is that the government has made it clear that it wishes to proceed incrementally with changes to the Competition Act. ACTA would like to put two items on the table for future consideration: amendments to section 45 and amendments to section 78.

ACTA was pleased to see the Competition Bureau has begun to get expert opinion on how we in Canada can best handle the increasing number of complex agreements between competitors. There is clearly a need in this age of easy communication and information sharing to revamp section 45. On the one hand, we need a civil procedure that will put strategic alliances and joint ventures to the test of reasonableness and, on the other hand, a criminal procedure that would cover the hard-core cases of conspiracy, regardless of their effect on competition.

ACTA for some time now has raised the issue with regard to global airline alliances and the creation of ORBITZ, a single online agency created by the five biggest airlines. At what point does cooperation become collusion?

Sections 78 and 79 of the act, which deal with the abuse of dominance, form another item ACTA would like to see clarified in the next round of amendments. Whenever there is a lack of competition, it is important that policy makers keep a close eye on the behaviour of the dominant firm or firms. But that behaviour extends vertically as well as horizontally. It is not just a matter of how they treat potential rivals in their core business but how they treat ancillary businesses upstream and downstream with whom they sometimes enter into competition.

ACTA would like to see the expressions “for the purpose of” and “with the object of” found in section 78 replaced by the expression “with the likely effect of”. These changes would clearly shift the focus of an inquiry by the bureau away from why a firm does what it does to how it maintains or increases its dominance.

In conclusion, ACTA urges the committee to give serious consideration to our proposed amendment to section 4 and generally to maintain its close watch on the state of competition in this country. I would be pleased to answer any questions you may have.

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

We're now going to turn to AT&T Canada Enterprises Inc. Mr. Chris Peirce.

Mr. Chris Peirce (Vice-President, Government Affairs, AT&T Canada Enterprises Inc.): Thank you, Madam Chair. Thank you for the opportunity to be here today.

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I've provided your clerk with copies in both English and French of a brief submission. Knowing that your desire is to focus on questions and that you've heard a number of these issues talked into the ground by no doubt a number of witnesses, I don't propose to read through the letter but merely to summarize the submission briefly for you.

First I would like to provide some context as to who AT&T Canada is and who competitive providers are more generally in the telecommunications industry, as they comment on something like amendments to the Competition Act. AT&T Canada is the largest of the national competitive providers of telecommunication services in Canada. So at one level you would see a certain size associated with our company. We have over 500,000 access lines in service, 29 cities within which we have a presence, 3,300 buildings in which we have facilities to provide services, and over $1.5 billion in annual revenues. In the context of the telecommunications industry overall, however, we are not a significant player. We have less than 10% market share overall in telecommunications, less than 5% of the target market of local business services.

Attached to the letter are three charts that put in context where competitive providers find themselves in the context of the telecommunications industry. The first is a bar graph of the business market in Canada. The blue portions of the columns represent incumbent market share; that is primarily Bell Canada and TELUS. The red portions provide competitive market share. Similarly, for the residential market the blue represents incumbent, the red competitive providers. And finally, in terms of profitability of incumbents versus competitive providers on the last chart, the white bars above the line are incumbent profit figures. The blue bars below the line are competitive provider losses showing a trend of growth in incumbent rates of return and profitability following the introduction of competition and showing competitor losses increasing over time.

Further, despite having invested over $2 billion in facilities in Canada over the last three or four years, a company such as AT&T Canada finds itself paying to incumbent providers sums each year approximating 55% of our direct costs; that is, competitive providers overall in Canada pay to the incumbents approximately $750 million for facilities and services they require of the incumbents in order to compete with them.

And finally, most customers that competitive providers are taking on were previously customers of the incumbents. Now, of course in telecommunications part is regulated activity under a regulator, the CRTC, and part is forborne activity where the CRTC has found competition to be present and the competitive playing field supposedly to be level. But companies compete in a converged way, so incumbent providers are vertically integrated and consequently for competitive providers the threat of anti-competitive behaviour is constant and very difficult to guard against.

So we congratulate the committee and the government on taking up the issue of reform to the Canadian Competition Act. The areas that are of relevance to us include interim orders, first off. We support the granting of interim orders—the broadening of the authority of the tribunal to issue interim orders. We agree with a lot of the comments the Commissioner of Competition made to the government in October that presaged the airline amendments. I think those types of amendments could have far greater applicability wherever you have a dominant provider and competitive providers struggling for market share.

Given the short duration of the interim order that's contained in the bill before you, we also support the lack of notice. In the context within which competitive providers find themselves, that reversal of onus, if you will, of a dominant player having to apply to have an interim order reviewed, where the tribunal has found grounds to grant it, is importing a necessary bias for action to preventing the continuation of anti-competitive behaviour while any study is ongoing.

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We support the additional powers the tribunal has been given under the bill to deal summarily with issues to award costs. We think that the power to award costs could be more generally available, as is the case in the typical area of litigation with costs being capable of being granted to the successful party.

Finally, we strongly support the right of private access to the Competition Tribunal. Frankly, we think that access should be available under part VIII as generally as possible. We disagree in this respect, obviously, with some other members of this panel. But believe that the additional tribunal powers included in the bill would give the tribunal and a party who is on the other side of a matter brought before the tribunal by a private party the ability to defend against any notion of the act being used for strategic purposes or vexatious purposes.

Frankly, we don't believe the flood of litigation that's threatened by opponents to private access would result. The simple cost of pursuing an action, the dynamics of the market, and the ability of the tribunal to deal summarily, we would suggest, provide ample protection in this regard. But the private right of access would serve, we believe, to promote the ultimate goal of the act to help and assist as much as possible in creating a competitive playing field in Canada.

We also would agree with the ability of private parties bringing actions before the tribunal to obtain damages when conduct that is contrary to the provisions of the act is found to exist. I have to agree with Professor Trebilcock in this respect in saying we find it difficult to understand why a party who is found to be responsible for actions that are in contravention of the act shouldn't bear the responsibility of those actions in terms of damages.

We would in closing suggest that more general amendment to the Competition Act is something that Canada, the Canadian economy, and competitive providers and industries such as telecommunications would be richly served by. We encourage a continuation of the process of invigoration and review of the Competition Act.

Thank you, Madam Chair.

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

I'm now going to ask Mr. Ian Scott from Sprint Canada if he has any opening comments.

Mr. Ian Scott (Vice-President, Government Affairs, Call-Net Enterprises Inc.): Good morning. Thank you, Madam Chair, members of the committee. Thank you for the opportunity to appear before you and to provide you with a few brief comments of Call-Net Enterprises on Bill C-23.

In view of the late stage of your deliberations and the obvious time pressures on the committee, I'll limit my opening remarks to just a few key issues of concern to Call-Net Enterprises.

My name is Ian Scott. I'm the vice-president of government affairs of Call-Net. Call-Net is one of the leading integrated suppliers of telecommunication services to both businesses and residential customers in Canada, primarily through its better known operating company of Sprint Canada. Call-Net's headquarters are in Toronto. It owns and operates an extensive national network across Canada. Like Mr. Peirce's company, it is very much in competition with the large former monopoly telephone companies.

I won't repeat some of the comments made by Mr. Peirce, but in the context of the Canadian competitive landscape, we and AT&T are major competitors in virtually all of the market segments for telephone services to those former monopoly companies, such as Bell Canada and TELUS. It's in this context that we retain a very key interest in the current and future amendments to the Competition Act.

There is a process by which we move away from regulation and towards more competition and the role of the competition authorities will be ever increasing in significance to competitors in that important market. Even large national competitors such as ourselves are facing difficult times in terms of competition with the larger dominant telephone companies, so the competition amendments are very important to us. For that reason, we are very supportive of the work of this committee and the decision of the government to examine and modernize competition law in Canada.

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It's my understanding that the Commissioner of Competition has indicated to the committee that future work may indeed address other provisions, including perhaps the abuse of dominant position provisions of the act.

I would like to urge the committee to carefully look at these provisions of the act and also legislation relating to other federal regulatory agencies, if you will—the issue of parallel jurisdiction between the competition authorities and regulatory agencies such as the one we deal with, the Canadian Radio-television and Telecommunications Commission. This will be very important, I believe, in your future deliberations.

With respect to the current bill, I'll limit my comments to the issue of the private right of access to the Competition Tribunal. I believe that the private right of access is an important issue and should be addressed immediately. On a general basis, I concur with Mr. Howard Wetston, the former Commissioner of Competition, that there is no valid public policy reason why the commissioner should be the only individual to have access to the tribunal.

I believe that the issue of a private right of access to the tribunal and damages should be explored in a more generalized way in the future. The debate, it appears to me, is less about the issue of access and more about concerns of strategic behaviour or abuse of private access. If this is correct, we should focus on ensuring that the matter of strategic behaviour is addressed, rather than hesitating to introduce the issue of private right of access.

With respect to the proposed amendment, there should be no hesitation at all. The private right of access will be restricted to areas that deal largely with private matters between buyers and sellers, specifically the provisions relating to refusal to deal, tied selling, market restrictions, and exclusive dealing. With the inclusion of the appropriate safeguards, such as those contained in the bill's provisions around summary judgments and costs, a private right of access will complement the respective roles of the Commissioner of Competition and the tribunal.

With respect to the stated concerns about the strategic use of a private right in the context of section 75 and section 77, or the threat of a flood of litigation, I believe they're unfounded. The cost of pursuing a claim, the dynamics of the market, and the ability of the tribunal to deal summarily with appropriate applications and to award costs will effectively discipline this type of behaviour.

Thank you. Those are my comments, Madam Chair.

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

I'm now going to ask Canada Post Corporation, Mr. Gerard Power, general counsel and corporate secretary, and Mr. Marc-André Leblanc, legal counsel, to do your opening comments. Then we're going to move to questions as a group if that's okay.

Mr. Gerard Power (General Counsel and Corporate Secretary, Canada Post Corporation): Thank you, Madam Chair.

Thank you for the opportunity to speak to this important bill on behalf of Canada Post Corporation. Canada Post had the pleasure of participating in the consultation process led by the Public Policy Forum. We were pleased to notice in reviewing Bill C-23 that indeed it reflected what we perceived to be the broad consensus achieved during that consultation process.

The importance of the Competition Act to Canada's economic legislative framework cannot be overstated. We applaud the purposeful and methodical process in which the amendments to the act are being undertaken.

The purpose of these comments is to put on record Canada Post's support for the provisions of Bill C-23 in their current form and to bring the committee up to date on Canada Post's efforts to contribute to issues relating to unscrupulous use of the mail by fraudulent telemarketers and also to speak on the ongoing debate regarding private access to the tribunal.

As with the other provisions of Bill C-23, Canada Post fully supports the proposed amendments relating to notices that are calculated to mislead recipients into paying money to win a prize of little value or for no prize at all. We have noted the comments of others relating to the need to clarify language to ensure that the provisions are not misunderstood as prohibiting legitimate promotional contests.

Promotional contests, as we all know, are popular with advertisers and consumers alike. It would be unfortunate if an overly cautious interpretation of section 53, as proposed, would lead to some legitimate businesses abandoning contests completely. Consequently we are supportive of the intent underlying section 53 as well as the call to clarify its language.

Canada Post has marshalled its resources to raise public awareness of the risk posed by fraudulent marketers. Detailed information about fraudulent schemes has been posted on the Canada Post website. We've also placed posters warning against marketing fraud and informing Canadians about Phone Busters in thousands of outlets across the country.

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Canada Post is a founding member of the Deceptive Telemarketing Prevention Forum and we are one of its biggest contributors. We've also formed partnerships on a national level with Crime Stoppers and the Better Business Bureau. We have mounted an awareness campaign with our own employees, approximately 55,000 Canadians, to raise the awareness of other Canadians with respect to these schemes. Our retirees go out to malls and set up booths to advise Canadians as to the dangers of fraudulent telemarketing.

We feel that public education is the most effective means of dealing with marketing fraud. However, we also have legislative tools to deal with these issues. Canada Post has contacted federal, provincial, and municipal law enforcement agencies from one coast to another in order to advise them as to the provisions of the existing Canada Post Corporation Act to deal with illegal use of the mails.

As you know, Canadians enjoy the freedom to communicate through their mails without censorship, but as a balance to this, when the mails are abused the mailing privileges of the abusers can be suspended by order of the minister responsible for the corporation. As a check to that, the individual who is subject to such an order may seek a board of review to review the minister's action. The minister's final action is also subject to review by the Federal Court.

In the last year we have had orders made against companies and individuals engaged in fraudulent marketing practices. Those orders were brought before a board of review, and the board of review, at the request of those who were the subject of the orders, indeed adjourned its proceedings sine die. In other words, the orders remain in force and those schemes were shut down. Thousands and thousands of pieces of mail were seized during that process and the individuals who would otherwise have been defrauded were protected.

On the issue of private access, while there appeared to be a consensus on other issues, we were of the view from our participation in the Public Policy Forum that there was not a consensus on this issue. It was clear in looking at the written submissions that were made during the consultation process that views are deeply divided.

Canada Post is only too aware of the enormous costs, both in terms of the distraction of management and in the legal and other expert fees that are generated by a complaint before a tribunal for strategic reasons. United Parcel Service used every administrative procedure that it could conceive of in its campaign to undermine Canada Post and thereby gain a competitive advantage.

Although Canadians are closer to Europeans and Australians in our aversion to litigation, the growing presence in the Canadian economy of U.S.-based interests who are steeped in a culture where strategic use of litigation is common cannot be ignored. These are very wealthy enterprises. The Canadian enterprises do not have the deep pockets, do not have billions of dollars from initial public offerings in the U.S. markets that American enterprises have in order to fund campaigns against Canadian businesses.

The cost of defending a tribunal proceeding is so great that many Canadian companies will prefer to cease a practice or leave a market rather than defend it. The result will be reduced competition and another advantage for large global companies that have the funds to litigate.

We noted that the current commissioner and past director seemed to favour some form of private access because they feel that the Competition Bureau lacks the resources to pursue all meritorious claims. Little has been said, however, as to the resources the tribunal will require if it is to hear a great many more cases. We know that the bureau currently weeds out hundreds of frivolous complaints each year. If this were to cease being the case, the tribunal, even with summary dispositions, will be taxed to the prejudice of larger issues that have an impact on competition law at a national level.

It is equally unclear how the bureau, which still has an active interest, will be expected to achieve the savings that would correspond to the increasing costs of the tribunal. We know from the bureau's annual reports that filing fees, advisory opinions, and fines from criminal prosecutions generate funds well in excess of the bureau's annual budget. Consequently, the funds appear to be available for the Competition Bureau to fulfil its enforcement mandate, which is fundamental to a healthy competition law environment.

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What is clear is that more discussion and thinking needs to go into the issue of how legitimate complaints regarding reviewable practices can be heard and dealt with fairly and in a practical manner. We noted that some excellent suggestions have already been made to this committee. At the same time, what has been forcefully argued is that it is too important a matter for it to be introduced without sober consideration that has so well served the process of amending the Competition Act in the recent past.

Thank you for the invitation to make these comments. Canada Post looks forward to participating in the continuing discussion. Thank you.

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

We're now going to turn to questions. I would remind members that we'll probably be here until about one o'clock, so if they could try to keep their preambles brief, it would be great.

Mr. Rajotte, please.

Mr. James Rajotte: Thank you, Madam Chair.

I would like to thank the witnesses for their presentations today. There's a very healthy disagreement amongst some of you, and I think that's helpful, actually, particularly for members who are trying to decide on the issue of private access.

I want to get a bit of a discussion going, and I'll start with you, Mr. Peirce.

In your presentation you say you're not concerned about strategic litigation because the ability of the tribunal to deal summarily with appropriate applications and award costs will limit these types of cases, and I believe Mr. Scott said something very similar. But then how do you deal with the concern raised by Ms. McGuire that strategic litigation may not appear frivolous or vexatious? I'm assuming she's saying if a company hires a legal firm that's very good at this sort of thing, it will be very difficult to just dismiss this out of hand.

So if you could respond, and then, Ms. McGuire, if you could comment as well....

The Chair: Mr. Peirce.

Mr. Chris Peirce: I think “strategic litigation” is a delightfully obscure term. We have courts of general jurisdiction in Canada. It reminds me a bit of saying that if a party perceives that it has been wronged in some other field of endeavour, a contract, a tort, or something like that, there would be circumstances where you don't want that person who's being victimized to have the ability to go an independent decision-maker.

Obviously it's strategic, if you perceive you've been wronged or you perceive someone is not playing by the rules, to go to a decision-maker to try to get that conduct stopped, and what do we do to prevent people from abusing that right? We give the decision-maker the authority to either throw things out summarily and to levy costs against a party who's abusing a right of access.

I think that type of argument against the notion of a right of access is something you are always going to hear from the party who's doing very well without that kind of right existing, but for parties who are being affected day to day in the marketplace and presumably could not persuade a commissioner who is strapped for resources to take up every legitimate instance of what could be anti-competitive behaviour, that, to my mind, defines why you wouldn't have a monopoly in effect on the ability to enforce the legislation. It's almost axiomatic that, in a free and democratic society that we have, where at every other level we do give private interests access, we would not do that here.

The Chair: Ms. McGuire.

Ms. Marcia McGuire: Thank you for the opportunity to respond.

The phrase was just used that the party doing very well likes to refer to strategic litigation. I think that brings to light again the dichotomy that you have seen in your deliberations between large and small representation here around this table. But as you've heard today, we in fact represent more small business than large business, and we come from a very different perspective on the issue. We are not at all of the view that strategic litigation is only undertaken against large companies; we think this can happen to any company in the country.

Also, there was concern or the argument was made that the bureau can't fund all these cases. Well, we have to go back to first principles. What is the rationale for allowing private access? If it's the development of case law, I would submit to you again that this burden should not be put on the back of private business when there could be meritless cases going before them. Certainly the answer there, if you want a fairer response, is to fund the bureau appropriately.

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It's a very important question that you have to ask before you make or recommend any amendment of this nature. Are there cases currently being brought forward to the bureau that they are refusing to act on or that they find have merit and they don't have the resources to act on? The answer to that last one is to fund them appropriately. It's a much bigger issue if they are just refusing to act. Is it a communication problem back to the complainants? Are the cases in fact meritless?

So I don't think we can dismiss this and say strategic litigation is a term that's used by the big guy. We're not here representing the big guy, and I think it's very important to recognize that there are other solutions to this problem that have to be considered more seriously.

Those are my comments.

The Chair: Mr. Rajotte, your last question, please.

Mr. James Rajotte: Ms. McGuire, what about the concern, though, that Mr. Peirce raised in his answer, about the competition commissioner having a monopoly? Mr. Trebilcock raised this as well. Why should the commissioner have a monopoly on the enforcement of the competition law?

Ms. Marcia McGuire: What we are looking at is framework legislation for businesses to promote economic efficiencies and competition. This isn't just general tort law. In fact, some aspects of this legislation could be viewed much more in terms of criminal law, though it's not looked at that way, than another, and it's certainly something that has serious impact on businesses and the way they operate. I think there has been a reason why we've seen it as a role that government intervene in ensuring that the competitive environment stays out there and is maintained so that it is competitive. The Competition Act isn't designed to ensure that every small business is in fact successful; it's designed to ensure that a competitive marketplace is available.

If you look at the purpose of the act and at the significance it has for businesses and the business environment that you're creating in which these businesses have to operate, it's a very important screening function that is served by the bureau. I don't think the tribunal, which will be both judge and jury as to whether the case goes ahead and then to determine the outcome of it, is the appropriate route to implement. I know you've looked at models from around the world, and I can only submit, in line with comments that we heard previously, that there is no doubt that this line of thinking will go further.

The Chair: I'm going to have to stop you there, Ms. McGuire, and move on to Mr. McTeague, please.

Mr. McTeague.

Mr. Dan McTeague: Ms. McGuire, we've heard this kind of argument word for word from a handful of individuals who tend to perpetuate themselves as one group versus another. I think they might constitute themselves as another group of individuals. So I'm interested in correcting something that you said, first of all.

I think you should go back to the witnesses who have come before this committee. There are ample examples of cases where the bureau refused to take up cases. It obviously might ultimately be detrimental to the business, but in the spirit of keeping the competitive process open we've also introduced safeguards.

So I have a question for you. You say you represent small business. You also say we should go back to first principles. Tell me, Ms. McGuire and Mr. Beauchamp, how many members do you represent, and did you go back to first principles and consult with these individuals, including the real estate agent who just sold my home?

Ms. Marcia McGuire: We are a national body, and we have a board of directors that represents every region of the country. In fact, during the process of reviewing the private member's bill, as well as in this round of amendments to the act, we have certainly consulted every region of the country and have expressed concerns and given opportunity for feedback.

Mr. Dan McTeague: How many members of the real estate board across this country have you consulted, written to, or discussed this with? Did you talk to the Toronto Real Estate Board members in the Durham region? Did you, for instance, talk with the Vancouver Real Estate Board? Specifically, have you sent information to them explaining and outlining your position, your objections notwithstanding the safeguards, and were you able to do that in this period of time? It seems to me that the submission you just made today is the same one you made before the PPF. At that time, the PPF concluded there was room for consensus if the safeguards were put in place. Of course, we hear now that seems to be lacking.

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Could you specifically tell us if you have contacted your membership, your rank and file, or have just a handful of individuals among you made a decision on behalf of them, without them knowing? Don't you think they ought to be informed?

Ms. Marcia McGuire: Would you like to go first, Mr. Beauchamp? I'd be happy to respond, as well.

Mr. Pierre Beauchamp: The Canadian association is set up in such a way as to get its instructions from an assembly of boards that represent their members. In so doing, it mandates the board of directors of the Canadian association to represent their interests and adopt policies, decisions and positions that fit and follow the guidelines the membership would want.

Of course, we did not consult actively with 6,000 firms in Canada on a one-to-one basis. That is a physical impossibility. Our association, like all associations in Canada, operates on the basis of the mandate given to it by its members. In so doing, as was said by Ms. McGuire a moment ago, we have actively consulted, informed, and obtained ratification for the direction that is presented to you today by the board of directors of our association.

Mr. Dan McTeague: That sounds rather top-down, Mr. Beauchamp. Because you represent all these small businesses, you come here with the position that you speak on their behalf. I'm wondering if you would take the liberty over the next day or so, at least in the next week, of informing all 6,000. I would be quite prepared to lend you support to do that because I have access, as you know, to your membership.

Perhaps you could canvas them on what their positions are. If in fact they square with yours, then we could probably take the position you've taken as accurate, as opposed to the grain of salt you've presented us.

More importantly, on the question that has been presented by Canada Post, I find it passing strange—

Ms. Marcia McGuire: Madam Chairman—

The Chair: Just a second.

Mr. Dan McTeague: I'm going to finish my question here.

I find it passing strange that your own chairman, as former minister, was the last one to propose double damages to the issue of the Competition Act. Have you not been able to canvas the frustration members have felt over those who have brought the issues of priority post and cross-subsidization to our attention? How have you been able to respond to members of Parliament who have heard this concern, which the bureau has simply dismissed or not dealt with directly?

The Chair: Mr. McTeague, I'm going to let Ms. McGuire respond, and then we'll hear from Mr. Power.

Ms. Marcia McGuire: Mr. McTeague's position is very clear, as he was the member who presented one of the private member's bills. I hope that as you sit and listen to the views of those coming here, whether they be from large or small companies or business interests, you'll be able to hear that there is a divergence of views.

Mr. Dan McTeague: You haven't bothered to question your own membership on this, Madam McGuire.

Ms. Marcia McGuire: Excuse me.

Mr. Dan McTeague: You haven't bothered to ask your own membership here.

The Chair: Order, Mr. McTeague.

Ms. Marcia McGuire: That's not true.

Mr. Dan McTeague: Why are you asking me to make a decision?

Ms. Marcia McGuire: That's not correct. Why are you rushing it through?

Mr. Dan McTeague: We're not rushing it through. It's been around for 30 years, Marcia.

Ms. Marcia McGuire: I'm sorry there was the same divergence—

The Chair: Mr. McTeague and Ms. McGuire, please.

The question was whether or not you canvassed your membership. Either you did or you didn't. We heard how you did it. Fine.

Mr. Power.

Mr. Gerard Power: Thank you very much.

With respect to the comments made regarding Canada Post and its priority courier service, this was thoroughly investigated by the Competition Bureau over a period of several years. The Competition Bureau determined that there was no evidence of any cross-subsidization. They advised the complainant of that fact. So there was an open process. The bureau had the full cooperation of Canada Post, in looking at those things.

Furthermore, Minister Marleau, when she was minister responsible for Canada Post Corporation, asked the Canada Post Corporation board of directors to have an annual audit conducted to compare not only the priority courier service, but all competitive services, to determine whether or not there was the presence of any cross-subsidization. That audit is done by external auditors each year, and is included within the annual report of Canada Post Corporation, which is submitted to Parliament. It is also available to the Canadian public on the Canada Post website.

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The Chair: Just before I move on to Mr. Martin, I want to make it clear to people here who don't understand the committee process that this is the first reading of the bill. We are in no way, shape, or form rushing anything through. The bill will go through second reading and third reading. It will then go to the Senate, where it will go through the same process again.

There is no intent by this committee to rush anything through. We've been discussing the Competition Act for four years at this committee. I encourage people to follow the proceedings of this committee, if they think we're rushing anything through.

Mr. Martin.

Mr. Pat Martin (Winnipeg Centre, NDP): Thank you, Madam Chair.

Thank you to all the people who've made representations today.

I'd like to start by commenting on Mr. Taller's brief, from the Association of Canadian Travel Agents. In the recommendations for amending sections 78 and 79, I think I see something I can agree with, and I'd just like to flesh that out a little more.

I guess the object here is to change the terms “for the purpose of” and “with the object of” to language more like “with the likely effect of”. In other words, in trying to get into people's minds to determine what was motivating them, let's look at the consequences of what they've done. There's a point in law that a person can be presumed to have intended the probable consequences of his or her actions.

Would you see this change as giving the tribunal more tools to be able to...? Maybe you can just expand on what your motivation is, in asking for these changes in section 78.

Mr. Martin Taller: Thank you very much.

Just to comment on the issue of that very slight change, the motivation behind some organizations.... There are clear-out advantages for a business to do something strategically or competitively, to make changes in the way they do business. However, the issue is how they do it, how they maintain that presence, and how they increase their dominance in the small and medium-sized businesses.

I think this small change would certainly give the tribunal the opportunity to review that information and make a judgment. That's basically where we're coming from for that small change, but it's quite dramatic.

Mr. Pat Martin: You also point out there's a precedent for this type of language found in the guidelines dealing with the abuse of dominance in the airline industry. They already use language similar to “practices that will have the likely effect of”. Is that where you got that?

Mr. Martin Taller: Yes, that's partly it, and partly because of the rather dynamic restructuring going on in our industry right now, the current state of the airline industry within Canada, and the distribution systems that are currently working to maintain stability within our industry. So we feel we want to retrench and ensure that stability remains.

Mr. Pat Martin: Excellent. Thank you.

Do I have one more minute, Madam Chair?

The Chair: Certainly, Mr. Martin.

Mr. Pat Martin: I'm interested in what Canada Post had to say, as well. I was going to comment on the UPS issue as well, but you've dealt with that, I think.

Since you're one of the groups that opposes the idea of amending toward increased private access, and you're already being harassed and badgered by UPS in such a way, what other challenges would Canada Post contemplate? What other services that you currently offer do you think other people may come and badger you about, where you might find it a nuisance to have increased private access to the tribunal?

Mr. Gerard Power: Obviously, the UPS matter comes to mind.

Mr. Pat Martin: That's more under NAFTA than under our internal competition, isn't it?

Mr. Gerard Power: The UPS-NAFTA complaint is. However, a matter was brought to the Competition Bureau by some individuals, and subsequently one of the individuals commenced an action against UPS, claiming that UPS had encouraged that individual to bring the matter before the Competition Bureau, and in fact essentially that the individual's Canadian-ness had been abused by this U.S.-based competitor.

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So it's possible these matters come up—much as under the Access to Information Act, where Canadians from time to time lend their Canadian citizenship to foreigners. Indeed we could see this kind of thing happening, with large and very sophisticated global companies coming in and doing that.

Mr. Pat Martin: Is it only the parcel service you see other groups really being after? I guess that's the only profitable thing about Canada Post. You'd be left with all the less profitable things—delivering letters to family farms—and other people are after the more profitable side of your business. Is that the risk?

Mr. Gerard Power: That's very much the case. I would go further, though, to say that the universal service obligation Canada Post has, and that Canada has adopted pursuant to the convention of the Universal Postal Union, includes a parcel service. It includes ensuring that—to the most remote location in Canada—parcels are delivered. And the health of Canadians is dependent upon it: pharmaceuticals get delivered to people in remote communities not by the UPSes of this world, who don't want to go there, but by Canada Post. Greengroceries are delivered to northern communities not by UPS and not by Federal Express but by Canada Post.

Mr. Pat Martin: Good point.

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

Mr. Lastewka, please.

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

I want to go back to the Canadian Real Estate Association. I'd like you to expand on some of the discussion and feedback you got from all your branches on the reason they were against private right of access. Can you just share with us some of the discussions and the reasons that were brought forward?

Ms. Marcia McGuire: Some of the reasons the Canadian Real Estate Association is opposed to the private right of access are based on principles of what is best for Canadian law. Certainly we believe the commissioner plays a vital screening function. That probably is one of the paramount reasons: that the screening function the commissioner plays is a significant one.

We also looked at the reasons put forward when the private member's bill was introduced last year in support of the notion. There had been some work done on this. At the competition seminar in the fall there was a presentation, and a paper had been prepared. Mr. Russell Lusk was the chairman of that particular session.

The reasons put in support didn't appear to have a basis that couldn't be answered another way. So it's for all of the reasons discussed in our paper that our association is here with this position today.

Mr. Walt Lastewka: Okay.

I want to refer a comment to AT&T. Earlier today, we received this book, which is from the Competition Law Policy Group, and I notice both of you are not part of this. Have you ever been part of it?

Mr. Chris Peirce: I'm sorry, you're referring to what?

The Chair: Mr. Lastewka, the book is in the process of being published. They've given us a pre-publication copy.

It's a group, though, of competition law that represents a number of companies that sponsored the book.

Mr. Walt Lastewka: I noticed other firms similar to yours are a part of this competition policy group who are speaking against private access. You both are not part of it—probably because you're speaking for private access.

Mr. Chris Peirce: I'm not aware of the project you're referring to, Mr. Lastewka, but I can advise you that AT&T Canada—with the support of Call-Net as well—in 1999 wrote to the Minister of Industry of that time on its own behalf and on behalf of four other companies who are competitive telecommunications providers, urging him then to engage in a review of the Competition Act.

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We took part by way of written submission in the Public Policy Forum's consultation around the Competition Act and as well, for a time, took part in consultations being undertaken by various associations that then came to represent views on the Competition Act. But I think you'll find that obviously parts of the Canadian economy have been built up over the years by large, dominant providers. It's only in the past number of years that in a variety of those sectors of the economy we have tried to go from that type of monopoly or dominance to a situation of more even-handed competition.

On the road to competition, I would probably not expect—it would not be rational behaviour on their part—those parties who were the dominant or monopoly providers to favour something like this private right of access. I expect you're going to find differing views on issues like this. Frankly, if consensus is the threshold for action, you won't have action, because that's not a threshold you'll be able to obtain.

Mr. Walt Lastewka: One of the concerns that has been raised concerning private access is that it would be abused—that it wouldn't be on competition, but trying to find out the strategies and plans of other companies. Do you feel that you, or companies like yours, might want to play that game?

Mr. Chris Peirce: I think.... No. Practically speaking, what companies like ours want to do is compete in the marketplace. As you look at the charts we put in front of you, that's a difficult row to hoe in terms of winning individual customers. When you look at the profit picture of competitive providers in an industry like ours, we also don't have the resources to be devoting great time to figuring out the secrets of our competitors.

What we want is the ability to compete with someone who obviously and quite understandably is in a position of dominance because of where they've come from in terms of the history of that sector of the economy in Canada. I really quite firmly believe that this notion of abuse of a private right of access without more....

I think it's really incumbent upon the person or the party who would seek to prevent legitimate Canadian interests—or interests in the Canadian marketplace—from having access to a decision maker who is there to enforce the public policy of the government and the law of the land, to establish why Canadians should not have access to that type of remedy. To simply offer up phrases like “abuse” or “strategic litigation”, I would suggest is not enough.

Mr. Walt Lastewka: Mr. Taller, you had spoken in favour of private access to a limited extent. I didn't hear what you wanted to have any restrictions on, or how you favoured it—with what types of mechanisms. Could you expand on your thoughts?

Mr. Martin Taller: I'll try to be as accurate as possible. We really believe the safeguards that are existing out there now—for example the disposition and the awarding of costs—would really be helpful in controlling the abuse of private access. We believe in some ways the punitive side of disposition and awarding of costs would be the control mechanism for that limited access. We believe frivolous submissions would be held back in the way Mr. Peirce and Mr. Scott have indicated.

Mr. Walt Lastewka: Thank you.

Thank you, Madam Chair.

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The Chair: Thank you very much.

Mr. Volpe, please.

Mr. Joseph Volpe: Thank you, Madam Chair.

Mr. Power, I wonder if you'll forgive the tone of this question, but how many flights does Canada Post generate to deliver pharmaceuticals to northern communities or to remote communities on a yearly basis?

Mr. Gerard Power: Our network uses approximately 600 flights a day. Many of those flights are—

Mr. Joseph Volpe: Those are cross-Canada, transcontinental.

Mr. Gerard Power: —both transcontinental and those going into northern communities. Every community does not have a flight every day. However, from key staging points—at the end of the road network, in essence—from those points on we use commercial aviation to fly these products north. However, we don't charter or own aircraft, unlike some postal administrations, such as Brazil and so on, which has its own fleet of aircraft. We are not an airline. That is not the business we have.

Mr. Joseph Volpe: So if I phrased my question differently and I were to ask you what percentage of all of your expenses are dedicated to flying pharmaceuticals and greengroceries to remote communities in Canada's north, what would the answer be?

Mr. Gerard Power: I would not be able to provide you with that information. I don't have that at my fingertips in terms of knowing the percentage of our costs. What I can say, though, is that our competitors come knocking on our door and ask us to carry things for the last many miles to remote communities—either directly or indirectly through other players in the market.

Mr. Joseph Volpe: So I should go to them to ask them how much it would cost them to do it.

Mr. Gerard Power: That is one possibility. Since there is no obligation on the part of other carriers to take items to those communities, unless it is lucrative business that not only pays its way but also generates sufficient contribution to their bottom line to justify dedication of management time and resources and other resources to the activity, as opposed to another activity, they would not engage in it. However, the universal service provider does.

Mr. Joseph Volpe: But the Government of Canada backs up those expenses. That's the difference between, I suppose, Canada Post operating as a crown corporation at arm's length from the government and any business that wants to go and deliver the greengroceries and the pharmaceuticals to the far north.

Mr. Gerard Power: The Government of Canada does not provide Canada Post with any measure of assistance in moving pharmaceuticals. What happens—

Mr. Joseph Volpe: Then the decision, Mr. Power is strictly economic.

Mr. Gerard Power: The decision made by Canada Post is not a strictly economic decision to do that. In the legislation setting out the objects of the corporation is the requirement to provide basic customary postal service to all Canadians.

Mr. Joseph Volpe: And in the course of that, it can then engage in whatever practices it requires in order to ensure there's profitability, even at the expense of its competitors, so that it can fulfil that mandate. That's what I thought I heard you say.

Mr. Gerard Power: No, we cannot do that, because Canada Post Corporation, unlike some other posts, unlike the United States Postal Service, is subject to Canadian competition law. Therefore, the Competition Bureau is able to come along and ask whether you are engaged in an activity of abusing your dominant position of tied selling or any other activities that are proscribed by the Competition Act. We do have to communicate with the bureau on those issues on an ongoing basis.

Mr. Joseph Volpe: I'd like to pursue that, actually, even a little bit more, because Health Canada provides the pharmaceuticals and assumes the expenses for delivery thereof, as well as the issue of greengroceries. A good portion of the cost is borne by the private enterprises that undertake to provide greengroceries to remote areas.

I'm imagining that Canada Post must make a little bit of profit. Otherwise it's not worth while having other people pay the freight or make the profit. It doesn't make sense to me. Why does it make sense to Canada Post?

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Mr. Gerard Power: The Department of Indian Affairs actually sets the policy for what items will be carried as air stage items. They in turn contract with Canada Post, and the contract with Canada Post provides that we will carry these items on a cost-recovery basis. So we do not make any profit. There is no contribution to the overhead of the company for the carrying of these items.

The Chair: Last question, please, Mr. Volpe.

Mr. Joseph Volpe: Okay, I'm going to ask my last question to Mr. Beauchamp.

The Chair: Okay.

Mr. Joseph Volpe: I'm glad that Mr. Power said that Canada Post doesn't lose money on the delivery of altruistic services.

Mr. Beauchamp, a few years ago all of the small businesses in the real estate industry were really owner-proprietor operated—small brokers. They did their own business and they might be able to hire an agent or two. Then along came Century 21, Remax, HomeLife, and a whole series of others. They introduced a market concept that has seen the elimination of those small brokerages. In fact, many of the brokers are essentially in the employ of these large franchises. Is that an accurate understanding of how the real estate business is organized? And if it is or if it isn't, is there any chance that some of those brokers might feel that the presence of a Century 21, Remax, HomeLife, and so on is deleterious to their abilities to operate as small brokerage houses?

Mr. Pierre Beauchamp: Thank you for your question. I think you have described about 20 years of evolution in the real estate industry in Canada.

You're right in suggesting there are large franchisors that operate in Canada. You're incorrect in suggesting that the franchisees of those franchisors do not operate as individual, independent business people, who have a choice to make decisions on their own, to operate with that franchisor or not to operate with that franchisor. In fact, I could argue that some of the larger firms that were maybe around ten years ago no longer operate in exactly the same fashion. I think the franchise business is thriving in Canada—is operating well and is serving consumers well—as are independents who do not belong to franchise operations.

At the same time, I can suggest to you, as I explained in our paper, that we still represent independent individuals, whether they operate within a franchise network or on their own.

The Chair: Thank you.

Thank you very much, Mr. Volpe.

I just have two brief questions before we wrap up here.

First, Mr. Power, you said in your opening comments or in your opening statement that “The Bureau currently weeds out hundreds of frivolous complaints each year”. How do you know they're frivolous?

Mr. Gerard Power: From the dealings that we have with the bureau on an ongoing basis and from the presentations that officials of the bureau make at various conferences involving legal professionals, it's clear that they take their responsibilities very seriously and that they proceed with the valid complaints, where they believe there is clear and cogent evidence. So from the information in their annual report, in terms of what is being dealt with, it is effectively the frivolous complaints, such as the one brought by UPS, through a dupe, against Canada Post. It's those frivolous complaints that are being thrown out by the current process.

The Chair: But I think you're making a large assumption that all the cases that aren't being heard are frivolous, and I have to disagree with you on that, based on the testimony we've even heard from the commissioner himself that this is not in fact the case. So I have to say that I take exception to the way it's presented in your brief.

My second question is to Ms. McGuire. You quoted the Public Policy Forum in your opening comments and you said that no consensus could be reached on private access. But if I recall the Public Policy Forum report correctly, their statement went on to say that consensus could possibly be reached if safeguards were put in place. You failed to mention that very important point, and I wonder why.

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Ms. Marcia McGuire: Thank you, Madam Chairman. I'm very pleased that you raised the point for me. It actually brings me back to an earlier comment you made, because I am not suggesting that you're not trying to engage in a thoughtful process, as I'm sure you are. But when I talk about rushing, I look to something else the Public Policy Forum discussed, and that was changes to section 45. Because a similar result was found in their conclusion, they've decided to go to a white paper.

The Chair: Ms. McGuire, my question was very specific.

Ms. Marcia McGuire: Yes.

The Chair: You talked specifically about the fact that we couldn't achieve a consensus on private action, and you've quoted the Public Policy Forum. The Public Policy Forum very clearly stated in its report that they believed it could be achieved with proper safeguards. We now have an amendment in front of us that has a number of safeguards, which I don't believe you've addressed—

Ms. Marcia McGuire: And I'm suggesting, Madam Chairman, that the process that has gone through in the past for thoughtful competition law amendments isn't served by not putting them forward in a discussion paper like a white paper, and that to do it this way—

The Chair: With all due respect, Ms. McGuire, there is not—

Ms. Marcia McGuire: But you've said yourself—

The Chair: There is not any one way of doing competition law process. Having been a member of this committee for four years now and having been through Bill C-20 and then through several rounds of Competition Act proposals by private members' business—

Ms. Marcia McGuire: But we submit there's a better way.

The Chair: I appreciate what you're saying, but with all due respect, there is not just one way in which amendments to the Competition Act have occurred over the last 20 years. We've had a lot of work done on the Competition Act. I would suggest that it's important for us to look at all the options and to also remember—

Ms. Marcia McGuire: But Madam Chairman, there haven't been a lot of changes to the Competition Act over the years. There was a big one in 1976 and again in 1986, and in 1988 there was a small one. We saw a number of private members' bills that died. There was an amendment a couple of years ago. We've had a thoughtful process normally. What I'm suggesting is that if there are ways to satisfy concerns of businesses such as ours or businesses that we represent in our presentations, then why can't we engage in a fuller dialogue?

The Chair: Ms. McGuire, you and all members of the public have been invited to engage in this process, since it began at this committee four years ago—

Ms. Marcia McGuire: And we have.

The Chair: No. In fact this is the first time you've been at the committee to talk about the Competition Act. We've had several rounds of discussion. We did an interim report on the Competition Act where part IV section 72 was discussed, and that was on private access. So with all due respect, there has been a long engagement. As we heard from earlier witnesses, it has been discussed for 30 years.

That being said, we're going to adjourn. We will meet again this afternoon at 3:15 to hear from our Australian witness. Thank you.