INDU Committee Meeting

STANDING COMMITTEE ON INDUSTRY

COMITÉ PERMANENT DE L'INDUSTRIE

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 16, 2000

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I'm going to call the meeting to order. Pursuant to the committee's mandate under Standing Order 108(2), this is a review of the Competition Act.

I want to explain to our witnesses that we are anticipating a vote sometime this afternoon. The bells have not started, so we should start because we're probably going to be interrupted and have to go and come back. I apologize, but that's probably what's happened to some of our members. They're waiting for the bells, which may not start for quite some time, and we're going to run out of time if we wait.

We're very pleased to have with us this afternoon the Canadian Chamber of Commerce. We have Mr. Paul Crampton, a partner from Davies, Ward & Beck, Barristers and Solicitors, and Mr. Michael Murphy, the senior vice-president of policy. We also are very pleased to have with us Mr. David Robinson from the Campaign for Press and Broadcasting Freedom.

What I would propose is that we hear both opening statements and then we'll move to questions together, if that's okay. We'll begin with the Canadian Chamber of Commerce.

Mr. Michael Murphy (Senior Vice-President, Policy, Canadian Chamber of Commerce): Thank you, Madam Chair and honourable members. It's always a pleasure to be here. On behalf of the members of the Canadian Chamber of Commerce, I'd certainly like to thank you for the opportunity to appear before you today to provide our views on the four private members' bills before us.

As you noted, my name is Michael Murphy and I am the senior vice-president of policy for the Canadian Chamber of Commerce. With me is Paul Crampton, who is a partner with the law firm of Davies, Ward & Beck and the chair of our competition law and policy task force.

[Translation]

The Canadian Chamber of Commerce is the country's largest and most representative business association. We represent 170,000 members, 80 % of which are SMEs, through 350 local Chambers located in every province and territory and all federal constituencies.

The Canadian Chamber of Commerce is committed to promoting a positive environment which allows all businesses to prosper and create jobs. Our discussion of these bills takes this context into account.

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[English]

The importance of the changes you are considering through these four members' bills cannot be overestimated. We firmly believe that thousands of Canadian businesses from a wide variety of sectors will be affected. We believe changes of this magnitude must be carefully considered and all possible consequences should be addressed. We are here today to give you some of our preliminary thoughts about these bills and to suggest areas where you should focus your efforts.

I'll turn to Mr. Paul Crampton to outline our thoughts on these issues in greater detail. Following Paul's remarks, we'll be happy to try to answer any questions you might have.

Mr. Paul Crampton (Partner, Davies, Ward & Beck, Barristers and Solicitors; Canadian Chamber of Commerce): Thank you, Mike.

At the outset, I would like to echo Mike's thanks to you for having provided us with this opportunity to convey our views on some of the issues you are looking at today.

I'd like to underscore that in contrast to some representations we've made to you in the past, such as those with respect to Bill C-235 and Bill C-20, we have not yet had the opportunity to develop definitive positions or detailed comments on the potential Competition Act amendments that you are studying, nor have we had the opportunity to consult broadly within the chamber's membership. This is largely attributable to the fact that it's only within the last three or four weeks that we became aware that you are studying some of the matters we will address today. I really just want to emphasize that some of my remarks today, made on behalf of the chamber, are preliminary in nature.

In the ten minutes or so that we have left, I'd like to focus on the following six matters. The first is whether the problems that have been identified in this committee over the last two or three years can best be resolved through increased enforcement resources or amendments to the act. The second is the nature of the consultative process. The third is the proposed revisions to section 45, the basic conspiracy provision in the act. The fourth is the proposal to give the commissioner a unilateral power to issue cease and desist orders. The fifth is the VanDuzer report. Finally, the sixth is the proposal to create a private right of access to the Competition Tribunal.

I will turn to the first issue. At the outset, we'd like to state for the record that we recognize and endorse the efforts of this committee to search for ways to improve the Competition Act. Things can always be made better, and the Competition Act, which we believe continues to reflect the balanced and modern approach to competition law, is no exception.

Based on some of the evidence that has been placed before this committee over the last few years, we recognize that there may have been some cases where bona fide anti-competitive conduct was not appropriately addressed. In our respectful view, the problems in question had more to do with insufficient enforcement resources than with any fundamental inadequacy of the Competition Act. The chamber's position is that if the commissioner of competition were given more resources to enforce the Competition Act, instances of unaddressed anti-competitive conduct would be rare.

On April 13, the commissioner appeared before you and stated: “We definitely feel that our funding needs to be increased considerably in order to allow us to do our task.” Mr. Riis suggested that there might be a lot of support around this committee table for the commissioner's position. I would just like to underscore that there's also a lot of support in the business community and within the chamber for that position, provided that the additional funding is used for enforcement purposes.

The chamber's position, in a nutshell, is that the commissioner should be given the resources he requires to do his job before we jump to the conclusion that the act is in need of some of the changes that have been proposed.

Parenthetically, you should note that the fines obtained under the Competition Act last year exceeded $100 million. By contrast, the bureau's budget for fiscal 1998-99 was reported to have been $25.3 million. Clearly there's room for some of the money that's being generated under the Competition Act to be allocated to the improvement of the enforcement of that legislation.

In any event, we encourage you to be vigilant in resisting the temptation to introduce changes that would protect specific competitors as opposed to the process of competition. As we've seen in other jurisdictions of the world, efforts to protect specific competitors inevitably wind up harming customers, consumers, and businesses through higher prices while protecting the profits of inefficient participants in the marketplace.

As long as the process of competition is maintained and promoted, consumers, small businesses, and large businesses alike will benefit from competitive terms of sale for the final products they consume and the intermediate products they purchase as inputs when producing goods and services for domestic consumption and export.

Regarding item two, which is the nature of the consultative process, the chamber is pleased that this committee is consulting with a range of stakeholders regarding the potential amendments to the act that it is considering. However, a significant number of our members have expressed strong concern that the committee's consultation process, as well as the parallel process that's been initiated by the Competition Bureau through the Public Policy Forum, will not permit sufficient time for appropriate discussion and analysis by interested parties. Indeed for large organizations such as ours there's not even sufficient time to consult with our full membership.

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We understand this committee intends to report to the House before it rises for the summer in a few weeks. Presumably its report will draw largely upon what it hears in the two months or so between when it started its hearings a few weeks ago and when the House rises. We further understand your report may be an interim report and there may be an additional opportunity for stakeholders who appear before you now to appear again in the fall when Parliament resumes sitting.

However, we understand your report to the House next month, together with the report the Public Policy Forum intends to make by the end of September, likely will form the basis for a government bill that will be presented to the House for first reading sometime in the fall. It therefore appears the only opportunity interested parties may have to make detailed comments to this committee on the matters it is considering will be after a government bill has already been drafted and after it has received first reading in the House.

While we look forward to having the opportunity to appear before you in the fall to make more detailed submissions, many of our members feel strongly that a government bill should not be presented to the House until after the public has had an opportunity to more fully discuss and analyse the matters you're considering. Simply put, we all know there will be much less flexibility to accommodate the input from the public once a government bill has been laid before the House and has received first reading.

So to ensure there's an opportunity for full and meaningful consultation, we would encourage you to underscore in the report you lay before the House in a few weeks, first, the complex nature of the amendments being considered, and second, that the drafting of a government bill to amend the Competition Act ought to be deferred until after organizations and other stakeholders have had an opportunity to develop detailed comments, consult with their members, and present a considered view to the committee.

Turning to item 3, the proposed revisions to section 45, the initial feedback we've received from our members is that they are receptive to exploring what changes could be made to section 45, first, to reduce the chilling effect it currently has on a broad range of potentially pro-competitive conduct, and second, to make it more effective and enforceable with respect to hard-core cartel conduct.

Having said that, a strong view has already emerged in favour of a more careful and well-thought-out approach to this exercise. Virtually everyone with whom we've consulted so far has expressed grave concerns with the risks a hasty approach can entail.

Section 45 is one of the central pillars of the Competition Act, dating back to 1889. The amendment proposed by Bill C-472 would be the most comprehensive change to section 45 in its 111-year history. Its implications for Canadian competition policy are arguably far more important than any of the amendments in Bill C-20, which received significantly greater public consultation than what's currently being contemplated.

The risks of proceeding without carefully considering and assessing the implications of the potential amendments are, simply put, enormous. This is because competitors in many industries engage in a broad range of perfectly legitimate cooperative conduct, which may be chilled by any ambiguity that may be introduced by the amendments. Conversely, we may inadvertently reduce the risks associated with engaging in certain types of harmful conduct that should remain subject to criminal sanctions.

These observations shouldn't be misinterpreted as reflecting opposition to the principle of separating agreements between competitors into a criminal category that addresses hard-core cartel conduct and a non-criminal category that address everything else. This principle, which underlies Mr. McTeague's proposal in Bill C-472, holds some significant potential for improving the Competition Act. Our point is simply that the manner in which this principle is put into operation will need to be the subject of very, very careful thought, debate, and consultation.

Similarly, the proposal to exempt from criminal liability all agreements that are notified to the commissioner in support of a request for a clearance certificate requires further thought. The obvious drawback to such an approach is it would permit a cartel such as OPEC to announce to the world that it's going to increase prices and then to notify the bureau, the commissioner, just to avoid criminal liability. It can do that under the proposal.

On item 4, the unilateral power to issue cease-and-desist orders, this proposal has attracted unanimous and very strong opposition from the members of the chamber's competition law and policy task force. This is similar to another proposal in Bill C-26. It would undermine public confidence in the commissioner's review process by eradicating the fundamental distinction between investigator and adjudicator that's been enshrined in the act since the 1986 amendments.

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The chamber very strongly encourages this committee to reject the current proposals in Bills C-472 and C-26 to provide the commissioner with this sweeping power and to make it clear that any future proposals regarding similar injunctive relief should respect the fundamental division between the roles of investigator and adjudicator.

We have another couple of points in our paper that we'd like to draw your attention to. Maybe we can come back to them later.

On item 5, the VanDuzer report, the chamber is supportive of the recommendations to decriminalize price discrimination, predatory pricing, and vertical price maintenance, although some members have suggested there may be a continued role to play for a criminal predatory pricing offence limited to predatory pricing that is likely to substantially lessen competition and that is intended to have that effect.

Decriminalizing price discrimination, predatory pricing, and vertical price maintenance would make these provisions more enforceable, as the crown would no longer have to meet the criminal burden of proof, which is beyond a reasonable doubt. Decriminalization of these matters also would reduce the substantial compliance costs imposed on businesses by these provisions as well as the chilling effect these provisions currently have on a broad range of pro-competitive conduct.

The bureau has noted in the past—and many of the members of our competition law and policy task force have firsthand knowledge in this regard—that the current price discrimination provision in paragraph 50(1)(a) of the act does not in fact protect small and medium-sized businesses from discrimination and has served little useful purpose since it was enacted in 1935. It's for this reason that the bureau's 1995 discussion paper, as well as the 1996 report of the consultative panel on amendments, recommended repeal of the price discrimination provision.

We also submit that the promotional allowances provision in section 51 ought to be repealed, as recommended by the same consultative panel. We believe the same is true with respect to the provision in paragraph 50(1)(b), relating to geographic price discrimination.

Regarding vertical price maintenance, there's no rational economic basis for distinguishing between price and non-price vertical agreements, as exclusive dealing, exclusive territories, tied selling, and market restriction all often have the effect of increasing prices, albeit in a way that may in fact increase competition and efficiency. Accordingly, eliminating the artificial distinction in the act between price and non-price vertical restraints makes good sense.

Finally, horizontal price maintenance, we believe and submit to you, should be dealt with under section 45 of the act. Among other things, this would help to address the serious issues that have arisen in the context of planning strategic alliances and joint ventures that become difficult to implement if the parties cannot agree on the price to be charged for the products that are the subject of the alliance or the joint venture.

Finally, on item 6, private access to the Competition Tribunal, I just have two points to make. The subject of creating a right of private access to the Competition Tribunal for plaintiffs who believe themselves to have suffered harm as a result of conduct contemplated by sections 75 or 77 of the act has attracted strong feelings within the chamber on both sides of the issue. At this time the only matter in respect of which we've been able to achieve even a preliminary consensus position to convey to you today is that more consultation and debate are required before this proposal should be endorsed by the committee or reflected in any draft government legislation.

Thank you very much.

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

I hear that the bells have just started, but it is a thirty-minute bell, so I still propose that we hear Mr. Robinson's opening statement before. We'll break at fifteen minutes, go vote, and then return.

Just before I do that, I want to clarify the consultative process for committee members and for everyone involved so that we all understand. The committee is undertaking a broader review of the Competition Act than the Public Policy Forum. The Public Policy Forum was announced the second week of April. It announced the first week of May that it was extending written consultations until the end of June. It will be holding hearings sometime in the month of July. There's always the opportunity for organizations to write directly to this committee or to the minister himself through the months of August and September, before any legislation is drafted. So a major organization, within four or five months, should be able to have some opinions and some positions to put forward.

We may also have committee hearings in the fall if we're directed to take a look at whatever report the Public Policy Forum comes forward with. And again, we all know there's another process when legislation is drafted, but I don't anticipate legislation and the Public Policy Forum paper coming out at exactly the same time, so there should be a process and some time there as well.

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But just to clarify, we are interested in what people have to say and we do have an open-door policy as a committee, as does the government. There are other processes for consulting, but we do hope people will participate in hearings in July as well with the Public Policy Forum on those specific issues. So hopefully you'll have that opportunity again, and others will as well.

That being said, before we go to questions and comments, I'm going to hear from Mr. Robinson, and then we'll break for the vote and come back.

Mr. Robinson.

Mr. David Robinson (National Coordinator, Campaign for Press and Broadcasting Freedom): Thank you, Madam Chair. I'd like to thank as well the Standing Committee on Industry for inviting me to appear today on behalf of the Campaign for Press and Broadcasting Freedom as you study the Competition Act. My brief comments today will focus more specifically on the merger provisions of the act and their application to Canada's newspaper industry.

My name is David Robinson. I'm the volunteer coordinator with the Campaign for Press and Broadcasting Freedom. Formed in 1996, the campaign represents a common front of community groups, labour organizations, journalists, and others working in the media, as well as ordinary readers, viewers, and listeners who have become concerned about the increasing concentration and conglomeration of media ownership in Canada.

The campaign has been active in its short history in monitoring and tracking changes in media ownership, researching the impact of ownership concentration and conglomeration on both the quality and diversity of content, as well as working with other groups to defend the principles of public broadcasting.

I guess in assessing the application of the current Competition Act to mergers in the newspaper industry, the campaign would echo the conclusion reached by the Royal Commission on Newspapers in 1991 that competition laws may not in fact be the best way to regulate newspaper ownership. The campaign supports the Kent commission's recommendation that separate legislation governing newspapers be enacted that sets out limits on ownership as well as mechanisms to ensure greater diversity of ownership by Canadians.

Moreover—moving even further afield from the mandate of this particular committee before I come back to the key point—since concentration of ownership is increasingly embracing different types of media and multimedia, and given the technological convergence we're seeing between different media systems, we don't think it makes much sense any more to divide broadcasting regulation through the CRTC on the one hand from the Competition Bureau on the other. But in the absence of such initiatives for the moment, I guess we do believe there are some things we could do to the Competition Act that may in fact help us strengthen it.

In particular, drawing upon existing legislation—the mergers and monopolies legislation in Britain—we could put into the Competition Act an amendment that granted the Competition Bureau the authority to consider the impact of proposed mergers and acquisitions on the newspaper industry not just on the business competition, which is competition for advertisers, but also on editorial diversity, and I'll come back to that in a moment.

I also think—and it may not actually require a change in legislation—when assessing proposed mergers and acquisitions in newspaper interests, the Competition Bureau has thus far focused only on the competition for advertising, but there's also a need to look at the competition in the labour market. That is, when you have one employer, there's not much competition if you become unemployed and are looking for other employers to work for.

As the Kent commission on newspapers predicted two decades ago, concentration of ownership has increased sharply in the absence of restraining legislation in the face of ineffective competition regulation. Just 30 years ago, at the time of the first committee on the mass media, the Davey committee, independent daily papers controlled about 40% of English-language circulation and 50% of French-language circulation. Ten years later the Kent commission on newspapers found that the English percentage had dropped to 26% and the French to 10%. As you'll see in the brief we've handed around, when you look at newspaper circulation today, independents account for less than 4% of English circulation and just 4.4% of French.

We also find that concentration of ownership within chains has risen. In 1980 Southam was the biggest chain, commanding one-third of English-language circulation. Today Hollinger is approaching half of the English-language circulation. In the French-language market the situation is similar, with Quebecor holding about 45% of circulation. Overall today, the four biggest newspaper companies—Hollinger, Quebecor, Torstar, and Thomson—control nearly 90% of total circulation.

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Concentration has also unfortunately intensified at the regional level. Since the Kent commission's report in 1981, Saskatchewan, Prince Edward Island, and Newfoundland have joined New Brunswick as one-owner provinces. British Columbia is trying to catch up. It's approaching a near monopoly, with papers belonging to the Hollinger group accounting for 95% of weekly circulation.

This degree of concentration, of course, wouldn't have been allowed to occur if the key recommendations of Kent had been adopted.

At the local level, we have quite a variety of different markets, but the worst example of a monopoly is Vancouver, where the two local dailies in Canada's third-largest metropolitan market are now under the control of one owner. Additionally, Hollinger, which owns the two dailies, also owns most of the community papers in the market.

All of this we know, of course, and it raises the question of whether this really matters. In our brief we outline a number of reasons, drawing again upon the Kent commission's report, why we should be concerned about concentration of ownership. This isn't just concern about the editorial dictates of one particular owner. It is largely a function of the nature of chain ownership itself, of how chains rationalize resources, and how by their very nature they tend to lead to what Kent called “editorial concentration”, which is a kind of homogenization of content.

The other difficulty with the increase in concentration in ownership that we point to is that with fewer and fewer employers as a result of concentration, journalists who follow stories or write opinions that may offend the chain owners risk any hope of career development or improvement as well as any future employment if there are no other employers around.

A further consequence we've found—and it's been quite consistent, not only in Canada, but in other countries—is that in the case of small-market monopoly papers, there's very little incentive, without a competitor, to invest in improved journalism. We've seen in Canada, when chain ownerships take over small independent papers, a general weakening of quality, contrary to what many of the owners actually said would happen. A different case tends to happen in the metropolitan papers, but in the smaller papers there's a pretty consistent decline in quality and diversity.

Overall, throughout the process of increasing concentration, Canada's competition laws have proven to be remarkably ineffective in restricting this ownership concentration. I think this stems from the fundamental fact that competition laws are designed to regulate business competition, rather than the broader issue of editorial competition or diversity in editorial ownership.

In its review of the situation, may I remind the committee that the Davey committee concluded that the Combines Investigation Act of the time was geared entirely toward dealing with business competition in a narrow sense, but that “newspapers, emphatically, are not just another business”. The committee recommended instead the creation of a press ownership review board, which would be an adjunct to existing legislation.

Ten years later Kent broke completely from the competition framework in considering whether competition regulation could be used to tackle the problem of concentration. The final report of the commission concluded that competition laws, regardless of how strengthened, are simply inappropriate to the regulation of monopolies in the newspaper industry.

The public's interest in vigorous competition among newspapers is not one that can be quantified in dollar-and-cents terms. It has to do with the number and quality of independent voices finding expression.

I think the Kent commission recognized the fundamental issue, that the economic competition of newspapers is for advertising dollars, which make up about 70% to 80% of total revenues. In the event of newspaper mergers, however, advertising rates tend to be kept in line because of competition from other advertising vehicles—radio and television. Consequently, there's seldom been a case in which a merger of newspaper interests raised concerns in the Competition Bureau about the lessening of economic competition, even if it may in fact lead to less editorial competition.

For these reasons, we ultimately believe Canadians would be better served with separate legislation. However, in the absence of that, we do believe—again, drawing upon legislation that exists in the United Kingdom—the Competition Act could grant the commissioner the power to investigate whether a merger involving newspaper interests might be expected to operate against the public interest in terms of editorial diversity. As well, I think the commissioner could also be instructed to look at the impact on the labour market.

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Those are my comments for now. I know you have to rush off.

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

We're going to suspend now until after the vote. I'd ask members to return as quickly as possible after the vote. Thank you.

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The Chair: I'll call the meeting back to order.

We're going to start with questions.

[Translation]

Mr. Dubé, please.

Mr. Antoine Dubé (Lévis-et-Chutes-de-la-Chaudière, BQ): You said that within the Chamber of Commerce—Mr. Murphy is no longer here, but Mr. Crampton is—, you were a bit concerned about the consultation process and that necessarily, at this time, you only had, a preliminary position.

However, regarding what I'd call vertical integration, you said that there is no economic argument you can use against it. I'd like you to tell us a little bit more about this because you represent many small businesses. There are large ones, but also small ones. Small businesses often complain that some large ones get into everything, production, marketing, and so on. I'd like you to tell us more about your position because your presentation was very short on this subject.

[English]

Mr. Paul Crampton: Typically you have a supplier, and a supplier can engage in what we call vertical restraints. The vertical restraints might be exclusive dealing. I, as the supplier, can say to you, “You must deal exclusively in my products if you want my products.” Then I can say the same thing to somebody else. Typically that has the impact of giving the dealer who has the exclusivity an ability to be more insulated, I guess, from the forces of competition, certainly in what we call intra-brand competition.

Similarly, if I give you an exclusive territory and I give some of the other members of this committee exclusive territories, that means that for my brand each of you doesn't have to face competition from other dealers, so there's no intra-brand competition. That enables you to invest more in promoting the product, in other forms of service, and in other forms of non-price competition.

Typically it will cost you something to engage in those forms of competition—to create more vigorous inter-brand competition—but as a result your price may go up a little. That's one of the types of pro-competitive price increases that we refer to.

So whether I say to you that you can have your own exclusive territory or that I don't want you pricing below a certain level, what I'm really trying to do is get you to invest in promoting my product so that we can expand the output of my product, expand my market share, so that you, through my distributor, can expand my market share.

Economically, there's not really a distinction, because at the end of the day you can have your price effect from a non-price-vertical restraint, though typically you don't see these distinctions being made in economics.

So all I was saying was that we agree with the VanDuzer report, which suggested that vertical price maintenance be moved over into section 77 or dealt with under the abuse of dominance provisions, because it makes more sense to do so and it would have a reduced chilling effect on a lot of pro-competitive price maintenance.

[Translation]

The Chair: Mr. Dubé, one last question, please.

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Mr. Antoine Dubé: According to the list of decisions taken by the Tribunal since 1988, only about 40 cases have been heard. Some plaintiffs even withdrew charges because of delays due to inquiries, among other things. About 40 cases in 12 years, that's not much.

The way I see it, small businesses, I believe, would wish that more cases be heard. This would create some kind of case law. Currently, it's as if the lack of resources.... In any case, people tell me that the Competition Tribunal is not efficient in this regard. What do you think about that?

[English]

Mr. Paul Crampton: You've touched on something that is a very real issue. We have a number of conferences at the University of Toronto where we gather in a neutral setting to think about broad public policy issues, and we've discussed this several times over the last decade, because a number of us are concerned that the Competition Tribunal hasn't had more of a role to play. A number of us think that part of the reason is that its procedures are too formal. You have full discovery, full cross-examination, and motions. It's not quite as swift as, say, the Australian practice. I've actually sat in on an Australian proceeding. It's a lot less formal, but you cut to the chase much more quickly.

So you're right, we need to find a mechanism for the Competition Tribunal to play a greater role in the development of Canadian competition policy. I don't have any quarrel with that.

I know the current chair has been vigilant in trying to streamline the tribunal's rules in order to make it more attractive for the director and parties to go to the tribunal. In fact, one of the suggestions here, which we haven't addressed, is that there be an ability to go and make a reference to the tribunal on narrow issues. That's something that several us have quietly been lobbying for behind the scenes for a number of years. That one is a good one.

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

Mr. Lastewka, please.

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

I was a little bit surprised when you mentioned in your report about not having enough time and so forth to provide some initial input on the various parts of the competition bill. Am I correct in saying that the chamber has an ongoing policy committee on competition that continues not only to provide information and guidance to its members and organizations but also to receive from time to time ongoing input into how the Competition Act should be changed? Is that not the process we have at the Chamber of Commerce?

Mr. Paul Crampton: Yes, and let me just explain. We have been aware that private access has been under consideration for sometime. This cease-and-desist power came out of the blue. This section 45 proposal that Mr. McTeague has come up with is one that some of us have been quietly lobbying for behind the scenes, but we were led to believe it was going to be for the next round of amendments, not this current one. So we were never presented with a proposal that we could look at so that, before we came here today, we could have an opportunity to develop some much more considered and thoughtful input. We've only had an opportunity to develop big picture comments. So this really came out of the blue when we found out that the bill had been introduced for first reading around April 6, I think it was.

Don't get me wrong. We think this bill has a lot of potential, and we'd love to work with you to make this concept work. I personally think it's a great concept. Having been in this field for 14 years, even on first reading I can see that it needs some work, and we'd be delighted to help you work with it. It's just that we haven't had this opportunity. We haven't been consulted prior to coming here today and prior to having had only a few weeks to look at that bill.

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Mr. Walt Lastewka: Madam Chair, was the request to the chamber to speak only on the bills or to provide preliminary input on the Competition Act? What was the request?

The Chair: It's on the overview of the Competition Act.

Mr. Walt Lastewka: Okay.

When I went through your report and in hearing Mr. Murphy and you speak.... You go to great lengths to say there was not enough time or an opportunity. It was my feeling that this would be an opportunity for you to bring certain points to the committee, as we study in parallel with the other policy group, in order that we be more in tune with what's happening in the marketplace.

Mr. Paul Crampton: I agree. I personally am probably better prepared than the other members of our competition law and policy task force. Unfortunately, in the short intervening period between when that particular bill was brought to our attention, which was approximately a week after it was presented, and now, we haven't had the opportunity to go out and consult broadly within the chamber. The chamber is a fairly large organization. I don't have a mandate to share with you some of my personal thoughts, because others haven't spent the same amount of time as I, who practice 110% in this field, have spent on it. So it's going to take time.

As far as the PPF process is concerned, you're correct, Madam Chair, that they did extend the time period for getting written comments to them until the end of June. But at the same time, they also clarified that they're only seeking at this point in time comments on the broad principles and not detailed written comments.

I understand there may be a technical session at some point during the summer. It's not clear to me whether we're going to be able to get into the nitty-gritty at that point or whether we'll have to wait until a first bill. But in any event, we haven't had that opportunity to do so before you—

Mr. Walt Lastewka: How long does it take for the chamber to consult with its members and come back, say, to this committee? How long would that take? Just give me an indication.

Mr. Michael Murphy: I'll give you some idea. Obviously it depends on the subject. But when we're faced with what we would call framework-type legislation, anything that's as pervasive as this, which you see in other sectors—we're actively engaged in dealing with government on a wide variety of legislation—we typically call on two things.

We have a formal process whereby we can consult directly with our members, both corporate and our local chambers. Part of the strength of the positioning we ultimately come up with is that we have a chance to test it in every community in Canada, practically. We take the trouble to do that, and we do that through a formal resolution process we run. In the fall we'll have a chance to get some feedback on all of that. It can take days, depending on the issue, but it could also take some months, depending on the significance and the complexities involved. Given the significance of this and the amount of time we think it's going to take, I don't think it's one that we want to deal with too quickly.

Mr. Walt Lastewka: So how long will it take to get input on changes to the Competition Act?

Mr. Paul Crampton: We could be ready for the fall. If you had hearings in the early fall before a bill was presented, we could work hard over the summer and get detailed comments on—

Mr. Walt Lastewka: Would it be available by October 1?

Mr. Paul Crampton: Yes, we could do that.

Mr. Michael Murphy: We're definitely going to participate in the other processes the chair referred to earlier. So we're certainly going to keep working away on this. This isn't going to be the end of our participation, and I hope that would be welcomed.

Mr. Walt Lastewka: I mentioned to one of my colleagues that I've seen in Chamber of Commerce reports in the past about not enough time to provide input and so forth. It's almost the same wording. That's why I was asking about that. Being a past director of the chamber, I think I can ask that.

The Chair: Thank you, Mr. Lastewka.

Mr. St-Julien, please.

Mr. Guy St-Julien (Abitibi—Baie-James—Nunavik, Lib.): Merci.

The Chair: Sorry, Mr. McTeague.

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): You didn't see me here.

The Chair: I did see you. I skipped over your name.

Mr. Dan McTeague: Mr. Crampton, it's a pleasure seeing you again, and, Mr. Murphy, welcome. Mr. Robinson, I'll have questions for you as well, so don't feel left out, sir.

The Chair: You have five minutes.

Mr. Dan McTeague: Yes. I'll time it this time, assuming my watch works.

• 1700

Gentlemen, you've taken a very definitive position without elaborating at great length, but more consistent with some of the people who are for and against the proposals, most of which I have made and which are now the subject of the study. Tell me, how is it possible for you not to have consulted with your membership widely and yet come to these conclusions? Am I to understand that your organization is based on a few good, well-paid, well-heeled lawyers who obviously understand the Competition Act? Do you have an eclectic variety of small business, the kind that, for instance, Mr. Serré just pointed out to me a little while ago:

Chamber of Commerce Trade Show Attracts Large Crowd

Trade show featured over 70 booths boasting a variety of goods and services from vehicles to massages, landscaping, furniture repair, home renovations to insurance and much more

Who are you speaking for and why have you made the decisions that you have now? I appreciate the fact that you support some of what is being proposed here, but you've taken some definitive stances without wide consultation.

Mr. Paul Crampton: Actually they're not definitive. I tried to clarify at the outset that they were preliminary and specifically not definitive. We have some preliminary conclusions in respect of some matters, and in respect of other matters there are deep divisions and we haven't even been able to reach preliminary conclusions. So all you have—

Mr. Dan McTeague: Conclusions, notwithstanding the fact that you've not consulted widely.

Mr. Paul Crampton: They're just preliminary. In other words, we had a couple of conference calls with a number of people and we achieved a consensus on the calls, but then, as Mr. Murphy explained, we're going to have to circulate draft positions to a broader group, the 500 local chambers, for example, and elicit feedback on the draft positions before we can come back to you with final positions the way we did on Bill C-20 or Bill C-235.

Mr. Dan McTeague: That's why I asked the question then, Mr. Crampton. On Bill C-235 we won't revisit the issue, because I think the specific request of Bill C-235 is much smaller than what is being requested in Bill C-402 and Bill C-472. But it's fairly clear, after consultation with your own membership, that many were not aware of the position the chamber had taken. More importantly, many had in fact expressed support for Bill C-235. So I'm concerned that if you are coming here on behalf of an organization that has a fair deal of credibility, that those positions are in fact well canvassed. And I appreciate the question of time. I believe both you gentlemen spend a considerable amount of time on this issue, so the changes I have proposed would not come as a surprise to you.

Let me deal with the most important concern you have with respect to cease-and-desist. Is it your experience that in cases where an inquiry has begun, which is of course what the bill calls for in Bill C-472, as it does Bill C-26, the question of due process for a party that might be affected, might not be able to provide themselves effective protection from a predator and abuse of dominance situation where someone has in fact for some time calculated a practice or a policy aimed at knocking out a smaller player who has absolutely no recourse.... Or perhaps a question of timing, given small margins for small business, might mean that they're effectively sunk before your concerns of cease-and-desist would address the eclipsing of what is otherwise in many cases potentially effective competition.

Mr. Paul Crampton: You've put your finger on a problem. There is a problem with trying to get the Competition Bureau sometimes to move on a matter. They don't like to lose cases, and so they like to have all of their research and investigation done before they bring a case to the tribunal. So there have been cases, no doubt. I've heard of some of the cases that have been brought to your attention where the bureau hasn't moved as quickly as maybe it would have liked and certainly not as quickly as the plaintiff would have liked. There are other ways of addressing that problem, and it may be simply that we need to create a process whereby the Competition Tribunal itself can issue the order on an application by the director.

Our fundamental concern is with the fusing or the eradication of the roles of investigator and adjudicator. That's a relatively simple problem to solve, I would have thought, and then perhaps your concern can be effectively addressed.

Mr. Dan McTeague: It's a nice concern for those who—

The Chair: Last question.

Mr. Dan McTeague: —want to keep things in terms of a rather lovely little environment where we make sure we're observing these certain traditions. But I think it does very little for small business, most of whom, I would argue, make up a significant portion of your chamber and who would take exception to that and do want an effective Competition Bureau that has some teeth, as do police in certain egregious examples of where they're able to arrest somebody until that person is brought before the justice and tried.

• 1705

My question is simple. Does the chamber have any problems whatsoever with the Competition Act, or are you here simply, as you have been in the past, to defend the status quo?

Mr. Paul Crampton: I wouldn't say we're here to defend the status quo. For example, on your proposal, which is at section 45, this is a very fundamental change that would be brought about to the act. I think a number of us think it's necessary. That's not status quo; this is a serious change we're talking about. And we would like to work with you to address that, to make the act more effective against hard-core cartel conduct while at the time reducing the chilling effect on a broad range of other pro-competitive conduct.

So we're not status quo, by any means. I think I recognized at the outset of our remarks that, yes, while the act does continue to reflect a well-balanced and modern approach, it can be improved, like anything, and we're quite happy to work with people who want to improve it.

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

Mr. St-Julien, please.

[Translation]

Mr. Guy St-Julien: My question is for Mr. Crampton of the Canadian Chamber of Commerce. I'd like to discuss with you the future of competition. You say in your introduction:

We firmly believe that thousands of Canadian businesses, from a wide variety of sectors, will be affected.

As far as I am concerned, I am interested in the future of competition within the Canadian oil industry. What's going to happen? We know that currently, in Canada, there are not very many refineries, only a few integrated refineries and distributors which control 70 to 75 % of sales in Canada. The Canadian Chamber of Commerce did not have much to say on competition within the Canadian oil industry.

I'd like you to comment on the current situation regarding the price of gas which has been going up and down for several months.

[English]

Mr. Paul Crampton: We haven't discussed this specific issue within the chamber. I'm aware that the Competition Bureau has investigated this specific subject on several occasions and has now asked another independent body to look at it, but I can't say the chamber really has a view.

I think the comments you quoted, if I interpret you correctly, were made in the context of saying that by safeguarding the process of competition you safeguard the ability and you promote the ability of small and medium-size businesses to source inputs for the products they sell at competitive prices. That was really the point I was making. It was in the context of encouraging you to focus on improving what the act can do to encourage and promote the process of competition as opposed to protecting specific competitors, which is an important point.

[Translation]

Mr. Guy St-Julien: But you said earlier....

[English]

The Chair: Monsieur St-Julien, you have one more question. Is this your last question?

[Translation]

Mr. Guy St-Julien: Yes, it's my last question. No problem.

You mentioned earlier that you got the opinion of the local Chambers which number about 500 in Canada. However, we know that some of your members, located in remote areas, such as Val-d'Or, Rouyn-Noranda, Amos and so on, told the Canadian government that there was no competition in the oil industry.

I'd like you to answer two questions. On the international level, what did you do regarding the embargo against Irak? And why did the Canadian Chamber of Commerce not say anything about the gas situation in Canada, especially when Europeans came to Quebec and Ontario with bank drafts to buy all the distillate which is a by- product of gas, diesel and heating oil? Why did the Canadian Chamber of Commerce not say anything regarding this competition which has been going on across the country?

[English]

Mr. Paul Crampton: It's not an issue that has been raised to the attention of our committee, that there may be concerns within the chamber. None have been brought to my attention.

Mr. Michael Murphy: I'll add that more broadly this is true as well. The chamber has—speaking as a senior member of the staff, I can tell you—a very broad list of issues that the members have asked us to spend our resources and time on, and that list just keeps growing. But this is not one that has popped up to the national chamber. That's not to say there aren't some local chambers that might have some comments on it, but it certainly hasn't made its way to the national chamber at this stage.

• 1710

The Chair: Thank you.

Merci, Mr. St-Julien.

Mr. Murray, please.

Mr. Ian Murray (Lanark—Carleton, Lib.): Thanks, Madam Chair. I'd like to ask Mr. Robinson a question.

You don't have a lengthy list of recommendations. I must say that as someone who represents a riding in the greater Ottawa area and has the National Post and the Ottawa Citizen, which are essentially house organs for the Reform/Alliance Party, greeting me every day when I pick up the newspaper, I can understand the concerns about concentration on the one hand. On the other hand, I very much believe in the free market and I'm not sure the suggestions you're making would address the problem. I think it always comes down to money in the end. If you have somebody who has enough money to start up a competitor newspaper in a certain market, they could probably do that if they're interested.

I also noticed your list of members in your organization. You have some fairly large outfits, such as the Canada Labour Congress, the Canadian Association of Journalists—I don't know how large that is in terms of membership or dollars—and the Council of Canadians. Maude Barlow manages to get published quite often. Have you ever thought about canvassing all of your members to see if they'd be willing to do a pilot project and try to start a newspaper in a market where you think there might be some chance of success? Perhaps Ottawa is a logical place to start when we have a very right-wing newspaper business. Is that something you've thought of?

Mr. David Robinson: As far as I know, this is an idea that people have kicked around for many years. The difficulty is that if you look historically at the transformation of the press in Canada, in the late 19th century we had literally hundreds of daily newspapers, most of them associated with the major political parties at the time, which were two. We also had a very robust working class press that was based around trade unions, particularly in southern Ontario. The old Knights of Labour used to publish daily newspapers.

The difficulty was that in the transformation from newspapers that relied mainly on subscriptions for their revenues to newspapers that relied on advertising, a lot of businesses didn't want to advertise in the Knights of Labour magazines and newspapers, for obvious reasons. Those journals were effectively priced out of the marketplace.

We face the same kind of difficulty now. For instance, if the Canada Labour Congress were to investigate the possibility of setting up a daily newspaper in Canada, first of all, there's a very high entry-level cost, as Mr. Black at the National Post is finding out in terms of the losses he has to assume. So you need a huge capital investment. He's also able to rely upon an infrastructure that's already in place through the Southam-Hollinger chain.

Also, to have Ken Georgetti and folks in the Canada Labour Congress go out and try to attract advertising dollars I don't think is going to be that successful for them.

Mr. Ian Murray: I'm sorry to interrupt you. I asked about the Canadian Association of Journalists. Would most newspaper journalists belong to that association?

Mr. David Robinson: The Canadian Association of Journalists is a voluntary organization, so it's their professional association, which they choose or choose not to join.

Mr. Ian Murray: You've touched on the quality of journalism in your paper, and it's something that concerns me as well. We notice reporters becoming essentially columnists now. Headlines are not reflecting what's in the body of the story. The content of newspapers at times is almost an insult to our intelligence. There must be somebody within your organization who feels strongly enough about this that they could, perhaps within the environment in which they work, address some of these problems.

Mr. David Robinson: I think so. The Canadian Association of Journalists, along with other organizations, has launched a very interesting project at Simon Fraser University called NewsWatch Canada, which we work on quite closely together. NewsWatch Canada essentially is a group of academics at Simon Fraser that monitors blind spots and biases in the media, but also tracks changing patterns of ownership and so on. So there is that kind of critical stuff going on.

I agree with you, there is a need for our organizations to do much more. The difficulty is always a question of resources and person power and so on. I think you're absolutely right, it's incumbent on us as well to push these issues more into the public domain.

Mr. Ian Murray: Thanks.

The Chair: Thank you.

Mr. Robinson, your first recommendation is similar to one we received earlier today. We posed a question to them with regard to the merger. We have a couple of different processes under the Competition Act, one of which we went through last year with regard to the banks. That resulted not in the Competition Bureau looking at public interest, but in their report going back to the finance minister and the finance minister having the final say. I'm not sure if that works for the heritage minister, because of the potential conflict because of the fact that newspapers in a sense evaluate what we do. I'm wondering if you've given any thought to another body, another process.

• 1715

Mr. David Robinson: Yes. I think I said at the outset that ideally we would like to see something that was not necessarily embedded within the competition framework. Historically, if you look at it, the regulation of various competition acts hasn't had a very positive impact on checking the growth of newspaper ownership concentration.

Looking at some of the recommendations from the Davey committee as well as the Kent commission.... I understand Tom Kent will be here tomorrow. We can maybe ask him more questions specifically about that, about what kind of body would be needed in order to do this. I certainly think we do need something like that.

The Chair: Thank you.

[Translation]

Mr. Dubé, another question?

Mr. Antoine Dubé: My question is for Mr. Robinson. You state, in the introduction of your brief, that you share one of the conclusions the Kent Commission arrived at in 1981, that the Competition Act might not be the best tool to reach your objectives. I understand your organization was created in 1996. I'd like to know why you decided to do something today. Your group did not come together because of the current review of the Act since it exists since 1996. What happened in 1996 for you to react?

I am going to ask you my second and third questions right away. Among the various groups in your organizations, are there some from Quebec?

Third, if you compare with what happens in other countries, what is the level of concentration here compared to major countries such as the United States or France? If you have any information on this, I'd like to know.

We don't have any more time, I think. Thank you.

[English]

Mr. David Robinson: I'll try the last question first and work backwards.

Canada tends to be have one of the highest newspaper ownership concentrations. We have one company, for instance, controlling about 40% of the daily circulation, both French and English, across the country. In the U.S., the top 10 companies control a similar amount. If you look at it, in the U.S. many of the newspaper chains are very regionally concentrated, so it's an equivalent degree of concentration if you assume that the U.S. market is 10 times the size of Canada's.

In France, there's also a very high degree of concentration. In Britain, I think the four top newspaper chains control about 62%. So it's still not quite as high as in Canada, but again it's a larger market and very regionally concentrated as well. The British situation is a bit different because of the existence of both the national and what they call the provincial press.

In terms of the first question, how we were born or why we were born, it was essentially in 1996. It was the Hollinger takeover of Southam that brought groups together to talk about the need for a new regulatory framework or the need for reforms to promote and protect diversity of ownership in newspapers. A lot of the organizations that are part of what we do—we're not a membership-based organization; we're more of a coalition—are from Quebec and have members in Quebec. The provincial situation there, of course, is quite similar to what it is in the rest of the country as well.

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

I have to apologize to the witnesses. The bells are ringing, which means we have another vote, and this time it's only a 15-minute bell so there's about 10 minutes to go on the bell. I want to thank the witnesses for being with us. We can't come back afterward, only because we're anticipating 30 votes, which could take 45 minutes if they're applied and it could be a long night if they're not.

I want to thank you. We do appreciate your participation today. If you have any written comments, if you'd like to follow up with us within the next two weeks, we'd appreciate that. We do welcome your comments as well in the fall, when we look at this issue again.

The meeting is adjourned.