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]

Wednesday, October 17, 2001

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[English]

The Chair (Ms. Susan Whelan (Essex, Lib.)): I call the meeting to order.

We're here today pursuant to Bill C-23, an act to amend the Competition Act and the Competition Tribunal Act.

We have with us, from the Canadian Trucking Alliance, Mr. Graham Cooper, the senior vice-president, and Mr. Ron Lennox, the vice-president of regulatory affairs.

It appears there is a long line-up of witnesses trying to get through security downstairs, so that is something I guess we're just going to have to deal with in the coming days.

If we can hear your opening comments and not hold you up any longer, that would be all right.

Mr. Ron Lennox (Vice-President, Regulatory Affairs, Canadian Trucking Alliance): Thank you very much.

Thank you very much for providing the Canadian Trucking Alliance with the opportunity to speak here this afternoon. I'll start with just a little bit of background on exactly who we are and who we represent.

The Canadian Trucking Alliance is a federation of Canada's provincial trucking associations. Our headquarters is based here in Ottawa. We have offices across the country. Through the provincial associations we represent somewhere in the order of 4,000 motor carriers in Canada of all sizes—everyone from the very small companies to large multinational trucking enterprises.

The trucking industry itself is a very competitive industry on its own. There are somewhere in the order of 13,700 freight carriers in the country. In addition, there are somewhere in the order of 40,000 independent owner-operators. Most of our members fall into the for-hire carrier category. We generate somewhere in the order of $20 billion in freight revenues each year, but only about 80 or so carriers, according to Statistics Canada, have revenues in excess of $25 million per year.

During the 1991 to 1999 period, concentration levels in the trucking industry in Canada actually decreased. Carriers earning more than $25 million had a lower share of total industry revenues in 1999 than they did in 1991, while those earning less than a $1 million showed a slight increase over that 10-year period.

As Bill C-23 was referred to the committee prior to second reading we understand that the committee is free to study and amend any part of either act, including the possible introduction of clauses that are not already included in the bill. To that end, CTA would like to focus its comments on the issue of private right of access to the Competition Tribunal, for provisions that deal essentially with private matters between buyers and their suppliers, namely refusal to deal, tied selling, market restriction, and exclusive dealing.

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Under current Canadian law, only the Commissioner of Competition has standing to make application for civil review before the Competition Tribunal. No private right of application exists. It is our further understanding that clauses purporting to address this matter were contained in a private member's bill, Bill C-472. That bill served as one of the foundations for Bill C-23. However, the clauses relating to private right of access were not incorporated into Bill C-23, when introduced by the Minister of Industry earlier this year.

CTA believes that the private right of access provisions that were contained in Bill C-472 strike the appropriate balance between promoting competition, and safeguards to prevent strategic or frivolous litigation. Private right of access would deal with those situations primarily between buyers and sellers that were largely private and would otherwise not likely be picked up on the radar, or be an efficient use of the resources of the Competition Bureau. We believe this would help level the playing field, particularly for small business.

In conclusion, it is our understanding that several other jurisdictions have private access provisions in their competition laws. Further, we understand that only in the United States have there been problems associated with strategic litigation, but in other jurisdictions private right of access seems to have provided an effective avenue. Consequently, we urge the committee to consider changes to Bill C-23 to allow for private access to the Canadian Competition Tribunal.

Thank you very much.

The Chair: Thank you, Mr. Lennox.

Our other witnesses have now joined us, so we'll proceed with opening statements from the other witnesses. Then we'll move to questions all together.

We have with us from the Canadian Independent Petroleum Marketers Association Mr. Bob MacMinn, the executive vice-president, and Mr. Dave Collins, the president. I'm not sure which one is doing the presentation.

Mr. Bob MacMinn (Executive Vice-President, Canadian Independent Petroleum Marketers Association): I'll read.

Thank you, Madam Chair, members of the committee.

My name is Bob MacMinn. I'm executive vice-president and policy adviser for CIPMA, the Canadian Independent Petroleum Marketers Association. I have Dave Collins with me here today. Dave is the president of CIPMA, and also the vice-president of Wilsons Fuels in Halifax, Atlantic Canada's largest independent gasoline retailer. As a point of clarification with CIPMA, I'm the paid one; he isn't.

CIPMA represents independent petroleum marketers in the Canadian petroleum industry. Our members are all in the downstream area of the business. Simply put, we're the local gas stations and home heating oil distributors. All of our members are small to medium-sized Canadian businesses. Membership includes some names you may or may not recognize, such as Olco Petroleum, Acme Petroleum, Mr. Gas Limited, NOCO Energy, and Wilson Fuels, to name a few.

Our organization exists to represent petroleum marketers' issues. Independent marketers today represent approximately 12% to 13% of the Canadian petroleum products business. I might add that this is down dramatically from the early 1990s, when independent marketers comprised over 25% of the market.

Independent marketers are important to competition in that they can, when permitted to flourish, provide competition at the wholesale level of the petroleum business. We have the ability to switch suppliers relatively easily, and as a result, if there are enough of us, refiners are forced to compete with each other in Canada, thereby lowering wholesale prices and ultimately the retail prices consumers pay.

CIPMA believes strongly that we are entitled to purchase product in a competitive environment. While that is often taken for granted at the consumer level, it has often been overlooked at the wholesale level. A failure to do so weakens competition. After all, the wholesale buyer is just a more empowered consumer.

CIPMA has actively supported changes in Canadian competition law. CIPMA, formerly IRGMA, supported Bill 402 and Bill 472. We participated at the industry committee hearings into the Competition Act and the Competition Bureau, and were major stakeholders consulted during the public policy forum meetings that formed some of the foundation for Bill C-23.

We fully support Bill C-23, as presented at first reading, and support the additional amendment, as proposed, to give limited rights of access to the Competition Tribunal. Members of CIPMA are philosophically opposed to limiting anyone's access to a court of competent jurisdiction, namely the Competition Tribunal.

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We believe the proposed amendments are a very limited first step toward modernizing Canadian competition law. Other jurisdictions have seen fit not to limit access to the courts—namely Australia, Great Britain, France, and the United States.

In the U.S., antitrust actions can be brought forward by private firms, the federal trade commission, the justice department, and state attorney generals. The Canadian process, whereby the Commissioner of Competition acts as the sole gatekeeper to hear complaints, investigate, and later submit them to their tribunal, needs restructuring.

Private right of access would, in our view, motivate firms away from any anti-competitive activity and free up the Competition Bureau's investigative efforts.

We are told that opponents to private access fear the potential for abuse, in the form of strategic litigation. Quite frankly, we see this as an attempt to derail the committee from modernizing the Canadian competition law. Large firms that have come down against private access have abundant experience and capability to deal with all forms of litigation. In fact, our members are only too familiar with large firms threatening some form of legal action. It is a fact that exists in Canada today. These changes will not add to that burden.

Furthermore, adequate safeguards exist in Bill C-23 to prevent this activity. Those safeguards include that the tribunal has no power toward damages, can make summary dispositions, award costs, and give references.

I might add that in the highly concentrated Canadian downstream petroleum business, a decision to launch an action against one's suppler would be weighed very carefully. As the options for alternative supply are extremely thin, only the most egregious behaviour would even be considered to be worthy of jeopardizing your supply line.

As an organization, we applaud the minister for bringing forward this important legislation, and fully support the amendment introducing private right of access.

Thank you.

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

We are now going to turn to the

[Translation]

Association québécoise des indépendants du pétrole. Mr. Blouin.

Mr. René Blouin (Chief Executive Officer, Association québécoise des indépendants du pétrole): Thank you, Madam Chair.

Members of the committee, first of all allow me to introduce Pierre Crevier, who has accompanied me. Mr. Crevier is President of Pétroles Crevier and a member of the Economic Affairs Committee of the Association québécoise des indépendants du pétrole, referred to as AQUIP.

First of all, we want to thank you for giving us this opportunity to present our position on possible amendments to the Competition Act. We are making this presentation on behalf of the members of AQUIP, which represents Quebec-owned undertakings active in the importing, distribution and retail sale of gasoline, heating oil and lubricants. Retail sales by such Quebec businesses total more than one billion dollars every year.

The presentation that we made to this committee in March 1999 remains very relevant. We will avoid duplicating its contents in order to keep our presentation today short, but we urge you to look back at our earlier submission to get a better sense of the various facets of the oil and gasoline market as it operates in Quebec. We will simply repeat that Bill C-235, under consideration at that time, remains in our opinion the appropriate legislative measure required for banning unfair trade practices based on loss leaders, which undermine true competition of benefit to consumers.

However, we want to note that Quebec's Loi sur la Régie de l'énergie (Quebec Energy Authority Act), which forbids the setting of prices at the pump that are lower than the purchase cost, recently added to this minimum price the value of retailer operating costs, in order to put a stop to a price war in the Quebec City region. The Régie determined that these price wars were socially and economically harmful. Its ruling upholds the claims of independent dealers, as you can see from the press release appended to this presentation.

Our presentation today deliberately avoids legal theory, focusing instead on the concrete effects of these legislative proposals in the oil and gasoline sector.

For independent oil and gasoline undertakings in Quebec, Bill C-472, which would amend Bill C-23, is definitely a step in the right direction for those who want competition to flourish in ideal conditions.

Mr. Pierre Crevier (Member of the Economic Affairs Committee, Association québécoise des indépendants du pétrole): While in general we are pleased with the content of Bill C-472, we would like to begin by voicing some concerns we have about clause 77.1(1), which would close access to the Competition Tribunal except in situations of "usual trade terms". We put it to you that suppliers of petroleum products would only have to illustrate that they cannot supply products because of abnormal trade conditions to stall access to the Tribunal.

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We propose instead that the new provisions for access to the Tribunal provide for markets where trade terms are not usual. For example, should there be a relative shortage, supply should be provided to all undertakings on a prorated basis, in keeping with the way that the market usually operates. If, for instance, the amount of product available makes it possible to respond to only 80% of normal needs, the majors and the independents should each be able to obtain 80% of their regular supply. In this way, both types of undertakings would be subject to the same conditions and none would be forced into bankruptcy because of a lack of stock. Given the uncertain international situation at the moment, such a situation might easily arise.

Furthermore, rationing should not result in non-renewal of supply contracts on the pretext that the market situation is abnormal. On the contrary, we must ensure that abnormal market situations do not cause the elimination of efficient oil and gasoline businesses by depriving them of supply.

We therefore propose that the words "on usual trade terms" be withdrawn from the bill. In this way, the new provisions would also be applicable in ordinary circumstances, where they could be particularly useful.

We will take advantage of the question period to expand on our proposal with concrete situations illustrating the need for effective recourse in the event of abnormal situations. These risk destabilizing the market to the advantage of vertically-integrated oil and gas undertakings that are at one and the same time producers, distributors and retailers.

Mr. René Blouin: Lastly, we consider that all initiatives that make it possible to simplify the judicial process should be vigorously supported, and this is the case with Bill C-23, with Mr. McTeague's amendment. It must always be borne in mind that small and medium-sized businesses do not have the financial means or technical resources required to fight legal battles that drag on for too long. Access to justice must remain a central concern of our elected representatives. There can be no doubt that the bill will help to achieve this goal, although we are all aware that much remains to be done.

The proposals before you constitute a step in the right direction, and we hope that Parliament will follow up on them subject to the amendment we have suggested. Thank you.

The Chair: Thank you very much.

[English]

We're now going to move to questions and we're going to begin with Mr. Penson.

Mr. Charlie Penson (Peace River, Canadian Alliance): Yes, thank you. I'd like to welcome all the panellists here today.

The question I would have for each group that's represented is have you asked the competition commissioner to hear specific cases that he has turned you down on? Has he denied you access, in other words?

Mr. Graham Cooper (Senior Vice-President, Canadian Trucking Alliance): Not in our case, no.

Mr. Dave Collins (President, Canadian Independent Petroleum Marketers Association): I can speak to that. My name is Dave Collins and I'm vice-president of Wilson Fuel Company.

Back in 1994 and 1995 we made two submissions to the competition commissioner at that time, not Konrad von Finckenstein. We showed them where a major oil company was endeavouring to force us into price compliance on certain pricing practices we had on the street. We're a very low-cost operator.

What we found is that this company, namely Petro-Canada, had taken the price of product to a price that at the time was 10¢ a litre below the cost of crude oil and left it there. They had an individual call my dealer, and then they parked one of their trucks on the mall parking lot where we were and said “Unless you stop...”. Of course, you never got any attribution for this, but the Petro-Canada truck was parked in the mall in front of my station and they said it must be stopped or this below-cost pricing would continue.

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We documented all this and we took it to the commissioner. At that time we met with the chief of the enforcement branch, a gentleman named John Bean, and he said there was no case because we weren't put out of business. He also went on to say, “Mr. Collins, competition can be rough.” I said, “What would it take for you to bring forth an action?” And one of the investigators said, and I quote, “Typically, we need a smoking gun, a dead body, and a confession is helpful.”

Mr. Charlie Penson: So, Mr. Collins, this would be the type of case that you would like to bring if there were a private action system available.

Mr. Dave Collins: Correct, because it's very localized in nature, and I think, which I didn't fully appreciate at that time, a one-off event in Halifax just doesn't cut it here in Ottawa.

Mr. Charlie Penson: So in your view, are there a number of cases that would be pending and pent-up that would come before the tribunal in the event that private access was offered?

Mr. Dave Collins: I think you would probably see an initial flurry and the tribunal would have to deal with that, but I think it would settle out. I get up every day trying to get new customers, not trying to decide who I'm going to go out and sue, to put it bluntly. And that event has now passed. I wouldn't drag up the past, but going forward, it would be nice to know I could do that.

Mr. Charlie Penson: I have another question. I have limited time, so I would just like to ask the other group if they have also experienced the same problem.

[Translation]

Mr. René Blouin: As you know, Mr. Penson, we represent undertakings that do business in a local or regional market. Our understanding of the way the Competition Bureau works is that it is more concerned with issues affecting the Canadian market as a whole. I think that this view was confirmed by the Commissioner who, in testimony before you, explained that he had neither the time nor the means to look at those kinds of issues, and that was why he was in favour of private access to the Competition Tribunal.

[English]

Mr. Charlie Penson: My follow-up would be that a number of people have cited Bill C-472 as a way to achieve this private access, but are you aware that in the penalties under Bill C-472 there would be damages, the possibility of costs awarded in frivolous cases or cases where those who bring them would lose, and also the possibility of the tribunal tossing it out? Does that satisfy your concerns? In other words, right now the competition commissioner makes that decision on whether to hear a case or not, but the tribunal will also have the power under Bill C-472's provisions to have summary disposition, which essentially means to toss it out. Does that satisfy you?

Mr. Dave Collins: Certainly. I think it allows us an access to a court of competent jurisdiction. Right now you go to a bureaucrat and lay it out, and if he so chooses or feels good that day he'll move forward. It's not as rigorous as the legal system, where there has to be some merit as to whether to toss it out or not. I think I have much more faith in the legal system than I do in a bureaucrat. In terms of my experience with them, I've mentioned the Petro-Canada case, and I had another case with Irving Oil Limited, and that one didn't go very far either.

I think it would be a step forward to be heard in front of a legal mind, yes.

Mr. Charlie Penson: With the anticipated number of cases that might come in a flurry—I think is what you described—it may still be a while to get to the tribunal. In the case of Air Canada on their seat sale, I think it was WestJet Airlines that asked the competition commissioner to hear this case. It went to the tribunal, and now you may know that this has been set back an additional six months, and the reason is these turbulent times.

I'm suggesting there's no perfect world out there, and people like WestJet Airlines are finding that to be the case, even though they got access to the tribunal.

Mr. Dave Collins: I agree. At least they had access. At least they have access, sir.

[Translation]

Mr. René Blouin: Mr. Penson, if I may, I can tell you what happens in Quebec as an example. There is legislation protecting competition in the petroleum sector, as you know, and we have access to an administrative tribunal which is called the Régie de l'énergie. Of course, going to the Régie de l'énergie is expensive and time-consuming. However, it is one option that we have.

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Although it is true that regional or local businesses do not necessarily have the financial means to seek this type of recourse, when we join together and we agree to divide up the costs among the members of an association, then these recourses become very feasible. For example, I can tell you that, despite the costs involved, we are currently doing this for the second time in Quebec.

[English]

Mr. Charlie Penson: Thank you.

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

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

Mr. Dan McTeague (Pickering—Ajax—Uxbridge, Lib.): Thank you, Madam Chair. I have a couple of questions.

I want to thank all of you for being here today. I wish we had an opportunity to talk a little bit about the security on the Hill here.

In the context of Mr. Penson's comments with respect to WestJet, I thought it was rather interesting that it took a year before WestJet was able to actually get its case to the tribunal. It was only because of the force majeure incident of September 11 that we now see the tribunal at least delaying the outcome.

I want to talk to you specifically, if I could,

[Translation]

to each of the people here, not only about the way they have experienced the situation, but also about the remedies that are currently contained in Bill C-23, with the amendment that I have proposed. These are the actual words used in my previous Bill C-472.

[English]

Right now the current types of remedies that are available are basically injunctive in nature. If one wants to seek some kind of compensatory response, they would have to get leave of the tribunal and of course go higher to receive those under the proposal.

I'm wondering if any of you have given any thought to the possibility of damages, given that there may be a discovery by the tribunal that wasn't otherwise detected, as Mr. Collins has pointed out perhaps in his instance.

We have a very narrow focus of just four areas: market restriction, exclusivity, tied selling, and refusal to deal. The questions I would ask of all of you here are, is that enough? Should there be more? Ought we to be able to give examples of where you have been subjected to potentially anti-competitive situations that fall in one of those four categories? Do you believe that we should also, as a committee, be looking at the idea of damages beyond what we have here today before us?

Mr. Dave Collins: Personally, and also on behalf of the CIPMA board, which we consulted prior to coming here, I think, as Bob said earlier, we philosophically rile at the fact that this is an aspect of the judiciary that we're denied access to. So I think what we would like to see is full private right of access to all aspects of the competition law. That way, at least if we're wrong then we'll be wrong and we'll have to live with it. But the reality is that I don't think any of us plan to run off and sue our suppliers just because we don't like the colour of their eyes. It's an expensive undertaking. But more in terms of just dollar outlays to lawyers, it's the time that it takes away from your business. That's really the hard part for most people to understand. I don't get up every day and say, hour one of the day, who are we going to sue?

The reality of the day is we tend to be people who occasionally worry about having been sued. I've been sued by pretty much all the major oil companies on some issue or another, and I'm also happy to say they've always lost. But the reality is that we, as a small business, have been been subject to strategic litigation. That is a tool big business uses on small business to either force them into compliance or to discipline them in some way or to slow down their progress. So I would like simply to have access to the courts on anti-competitive activity.

Mr. Dan McTeague: On that very point, Mr. Collins, we have heard from witnesses who have come forward, particularly those who represent, in a cross-represented way, the Canadian Chamber of Commerce and the Canadian Bar—and we will certainly hear from others—who have suggested that rather than this being an opportunity for small business to access something that might illustrate competitive harm, it would be used against them, and they wouldn't have the resources to defend themselves, and notwithstanding of course that the summary disposition is there. Are you not afraid? Is there any merit to what they're suggesting, that somehow they are concerned for your safety and your future?

Mr. Dave Collins: No. I'm pretty sure Exxon can take care of themselves.

I don't think we've ever seen an anti-competitive case brought in any jurisdiction by a larger firm against a smaller firm. By its nature, it's smaller firms that require the protections the competition law has.

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I think the reality of it, and the reason the law exists, is that typically, the smaller firms are the more efficient players. In many cases, there are various tactics used to make that smaller player less efficient, to try to drive their costs up to make them less of a competitive threat. Those are what we see in the business; those are what we deal with, and that's what we would like assistance with in getting off our back.

My feeling is if you put private right of access in, a big business, realizing there is a strong possibility, if their behaviour is indeed anti-competitive, that they'll face a judicial review, won't behave that way. As I said, I think the pent-up flurry will dissipate right away, because I don't think the big businesses will then behave the same way. It'll change the behaviour right away.

Mr. Dan McTeague: To what extent have you consulted members within your organization to discuss a private right of access that is, in all admission, a very restrained form of private access, which is being suggested here today? Is it simply a group of you, one or two, who do a conference call—as we heard yesterday from witnesses—as a means of plumbing the tens of thousands of members they have, or have you talked to some of your dealers, some of your friends, representatives, enemies, whatever the case may be?

Mr. Dave Collins: In our group we have a barely hierarchical kind of structure, so we talked to all of our members, and they in turn, before they gave us an answer, would have talked to their various dealers and the principals in their companies to make sure it came forward. All of them said, “David, this is really just a no-brainer. We just want access to a judicial body to take matters forward if indeed some problems were to arise.”

Mr. Dan McTeague: Mr. Cooper.

Mr. Graham Cooper: Our situation is somewhat analogous. We represent, as Mr. Lennox mentioned in his opening comments, approximately 4,000 carriers directly across the country. We indicated to them a couple of weeks ago that we had taken a look at Bill C-23 and the previous provisions under Bill C-472 and felt that this was something worthy of support, for a couple of reasons, not the least of which, and perhaps the most important—and I would echo as well what Mr. Collins has said—being that the mere fact of having a right of private access may act as a deterrent to anti-competitive behaviour, or at least one would hope. The majority of our constituency, of course, tend to be small businesses, so they view having that safety valve, if you will, as being a positive step.

Mr. Dan McTeague: In that context, Madam Chair, my final question is that the Canadian Chamber of Commerce today referred to that as a sort of discipline and a chill on investment. Notwithstanding the confusion over what their consensus was, I'm just wondering, do you see this private right of access, in a very limited and restrained way, as a chill on investment in Canada for your members?

Mr. Graham Cooper: Frankly, no. There may be some other context that I'm unaware of behind that comment. I suppose if large companies who are looking to invest in Canada and intend to participate in anti-competitive behaviour realize there may be some restraint on them, then perhaps that would be some sort of limiting factor on investment. But perhaps those are the kinds of companies we don't want investing in this country anyway.

Mr. Dave Collins: We have an affiliate that manufactures oil-fired furnaces. We export a lot of what we make into the United States. As a new entrant into that business, we have all the protections of the American law, and it's a really growing aspect of our business. People accept our products. We don't get hit with the same kinds of behaviours, the below-cost selling bouts. In fact, in our case, it's really nice to have those protections, the same sorts of laws.... Give us the American laws and we'll grow, I guess is the simplest way. We'll invest in Canada. Right now, as a small business, if you want to start something up, the American market is far more interesting to enter, not only because it's a bigger market and there are greater incomes, but you have less risk with trying to deal with the low-cost selling.

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I don't think we've seen a dearth of companies coming in. Take a look at your best buyer if you're Wal-Mart. It's the wild west show here with respect to competition in Canada—the deepest pockets win. So if you're an American firm, you can come across the border and price anybody you want out of business, and carry on.

So I think it's quite the opposite. I think it will encourage domestic investment. I know in our business it's going to encourage domestic investment.

The Chair: Thank you very much.

Thank you, Mr. McTeague.

[Translation]

Mr. Bergeron, go ahead.

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

First of all, I would like to thank the witnesses for accepting our invitation and coming here today to talk to us about this proposal to reform the Competition Act.

Indeed, I think that we are fortunate to have the opportunity to discuss this issue with you, especially because the gasoline price increases of the last few months have, in my opinion, thrown some new light on the importance of legislation like the Competition Act in such a situation, for the general public.

From listening to the presentations, I gathered that for both the Canadian Independent Petroleum Marketers Association and the Association québécoise des indépendants du pétrole, one of the aspects that may raise a problem—although, generally speaking, you seem to agree with most of the provisions of Bill C-23—is the one that limits access to the Tribunal to situations where there are “usual trade terms”. You would prefer having access to the Tribunal in all situations, which could, in your case, deprive independent petroleum businesses of their supply. That's fine, as far as that goes.

However, you have no doubt realized, given the questions asked by our colleagues so far, that parliamentarians seem to be concerned about the possibility that such a change in the proposed text might give rise to abuses and, possibly, to bottlenecks as far as access to the Competition Tribunal is concerned.

So, what do you think about the possibility that there might be abuses and, perhaps, bottlenecks, if access to the tribunal were extended to any situation that might have the effect of depriving you of your supply of petroleum?

Mr. René Blouin: First, I will tell you that I do not think there is a danger of bottlenecks or abuses because, as you know, this is not the type of action that can be initiated recklessly, if only because of the costs and efforts that would be required on the part of our organizations. We do not have the means to launch frivolous cases. Therefore, it has to be for something very serious. It has to be a case that is supported by facts, and we have to have the evidence that will allow us to support our cases before the tribunal. If the initiative was immediately recognized as being frivolous, I think that the tribunal would not even accept it. However, it is very important to have this type of recourse available, and I will ask Mr. Crevier to explain, in concrete terms, why it is so important.

There have been situations in the past, in Quebec, where we could have used a tool like this. It was not possible and this led to unacceptable situations. I will ask Mr. Crevier to at least give you an overview of some concrete cases that arose.

Mr. Pierre Crevier: This happened some time ago, but we still remember that, after the first oil crisis in 1972, at the end of our contract renewals, there were three out of four suppliers who did not renew contracts with our members, saying that they did not have any more product available. However, their retail network was operating at full capacity at that time. In fact, we managed to sign a contract with a fourth supplier, but two or three months later, that company had to be sold because there was not enough supply for all our clientele.

There was a second oil crisis in 1979, and the situation repeated itself with a national supplier. It decided to get out of the Quebec wholesale market and, overnight, it refused to renew a single contract with its clients, who then had to struggle to locate supplies left and right, at much higher cost than the competition. This is the kind of thing that can happen. We need more rapid, direct access to the Tribunal in order to settle problems such as this.

Mr. Stéphane Bergeron: I believe that this is something we should examine closely. The cases that you refer to seem to speak volumes. A few minutes ago, I heard my friend Mr. Penson refer to provisions that were contained in Bill C-472 to allow the imposition of compensatory measures in frivolous or improper cases. However, in order to reassure some of my colleagues, would you be prepared to have such a guarantee or such a provision included in Bill C-23, for the specific purpose of avoiding improper or frivolous cases?

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Mr. René Blouin: If we keep in mind our experience with those things in Quebec—because we now have legal mechanisms we can use—it is impossible to launch frivolous cases of that nature. If you knew what legal measures this involves, will all the legal fees, research and effort it requires of an organization, you would understand that no respectable board of directors would ever accept to launch frivolous cases because, first of all, it would be an entirely useless expenditure of energy and money and, secondly, because it would lose the case. In such cases, we try to build jurisprudence in order to improve the situation. Pursuing frivolous lawsuits would be almost suicidal for companies like ours. Thus, this is not only excluded from our planning, but it would even be stupid because we would be harming our own productivity.

So, I cannot exactly conceive how provisions like those could lead to frivolous lawsuits to the point of overwhelming the courts with untenable cases. I think that this is an invalid hypothesis because we have neither the means nor the intention of—

Our organizations are respectable. We have been there for decades; in our case, it has been 40 years. The companies we represent are serious business. In Quebec, we represent Couche-Tard, we represent Sonic, we represent Pétroles Crevier Inc., we represent Pétro-T. I even have forgotten some of them. I do not want to forget some, but I could name an entire list for you. Thus, our organization does not represent frivolous companies. We do not act in a frivolous way, and I think that this kind of view is unrealistic and will not get us anywhere.

Mr. Stéphane Bergeron: You understand, Mr. Blouin, that I did not necessarily mean the enterprises you represent with your association, but, obviously, if this kind of provision were ever introduced—

Mr. René Blouin: Other companies will not be able to afford that. A small company cannot do that all by itself.

Mr. Stéphane Bergeron: I find the arguments convincing. Now, I would like to come back to the case raised by Mr. Crevier a few moments ago. I know that this does not directly concern the Competition Act, although such situations could conceivably lead to unfair competition. It was also pointed out that a probable or possible solution to our problems of these past months caused by the increase in gasoline prices would be to split oil-refining operations from distribution. Do you think that this should eventually be considered by Parliament?

Mr. René Blouin: The kind of law you mention is quite widespread in the United States, it is called the divorcement law. This kind of law will even forbid the participation of multinationals in the retail market. In Connecticut, for instance, this has been banned since the late 70s. There are less stringent, but similar, laws that forbid a multinational that has a gas station location in a city from having another one within less than four or five miles to ensure diversity in competition.

Of course, this kind of law is efficient in preventing amalgamated companies from using the profits they make in refining and on the crude-oil market to temporarily deprive retailers of their profits, eliminate companies that have no refineries and then take over the market, as happened in California. And what is happening in California now? In the United States, it is the state where consumers pay the highest prices, and the Government of California just carried out a broad public investigation. One of its main conclusions was that independent companies must be reintroduced into the market to ensure a revival of competition, because a handful of refiners in control of the market have now raised prices to the highest level in the United States.

• 1615

Mr. Stéphane Bergeron: Mr. Blouin, you just mentioned the fact that Quebec sets a minimum price. Other observers have raised the possibility of eventually setting a maximum price. How do you react to this proposal?

Mr. René Blouin: When Quebec first did that, it was following the example of some 20 American states which have this kind of law, some of them more stringent than the law in Quebec.

Let us take, for instance, the law in Wisconsin, to the south of Ontario. This law bans the sale of gasoline below the price at the refinery loading ramp, plus taxes, plus transportation, plus 9.18% of the total I just mentioned, the price at the ramp, plus taxes, plus transportation. The retailer's operating costs are also included. No one is allowed to sell below that price.

In Quebec, a person cannot legally sell below the cost at the refinery loading ramp, plus taxes, plus transportation from the refinery to the gas station. If there is a crisis in some region, we must appeal to the Régie de l'énergie. If it judges that the situation is unacceptable and that multinationals are waging an unfair price war, it can add a percentage of operating costs it has determined to ensure that in that region, independent companies are not pushed out of the market and so competition can survive.

We had a case like that last year. We went before the Régie de l'énergie, and we won our case. The Régie de l'énergie handed down a decision that included the value of operational costs for a three-month period and it did not accept the arguments that the multinationals introduced in opposition to our request.

[English]

The Chair: Thank you.

[Translation]

Mr. Stéphane Bergeron: Would it eventually be possible to establish a maximum price?

Mr. René Blouin: As I see it, there is a maximum price in Quebec. The law has provided for a maximum price. However, it is much more difficult for a government to apply this. With laws like the ones I mentioned, namely the laws in the United States or in Quebec, you have a known base for price-setting. What kind of maximum price can you impose? Will you leave a margin for retailers? What will you set as a maximum price? This takes political decisions which are more arbitrary and more difficult to implement. If the law forbids selling at a loss, everyone knows the rules and knows what to expect if they do not follow them.

[English]

The Chair: Thank you very much.

We're going to move on to Mr. Lastewka, please.

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

I wanted to get a better understanding from the Canadian Trucking Alliance. I think you started your remarks saying you're the sum of the provincial trucking associations under the Canadian trucking banner. Is that correct?

Mr. Ron Lennox: That's correct. We represent seven provincial and regional trucking associations, those being the Atlantic provinces, Quebec, Ontario, Manitoba, Saskatchewan, Alberta, and British Columbia, the provincial trucking associations from across the country. Individual carriers don't belong to the alliance directly. They belong to one of the provincial associations. We represent their views on national issues.

Mr. Walt Lastewka: I wanted to make sure it was straight in the minutes.

You mentioned that in some cases private access has benefit and elsewhere it does not. I wasn't sure what your thoughts were on how and where it worked, and how and where it didn't work.

Mr. Ron Lennox: I guess the place we looked to was the United States. In our view, it's an area where it's not working as well as it should. They have a rule of treble damages. It's not something we had supported or do support in our submission.

If the situation arose here in Canada, under legislation passed by Parliament, I would think it would mean a bit of a rush to the Competition Tribunal for exactly the wrong reasons. It would be the strategic litigation type of situation that of course we're trying to avoid.

Mr. Walt Lastewka: Mr. Collins, do you belong to the Chamber of Commerce?

Mr. Dave Collins: No, we don't. We belong to the Truro Chamber of Commerce. I think that's how it comes through on the Canadian Chamber of Commerce.

Mr. Walt Lastewka: When the Truro Chamber of Commerce asked for input, did you give your input on it?

Mr. Dave Collins: We didn't receive a request for input.

Mr. Walt Lastewka: Did you receive anything from the national Chamber of Commerce?

Mr. Dave Collins: No.

• 1620

Mr. Walt Lastewka: Mr. Blouin, in your remarks you mentioned some examples. Could you table some of the examples you were going to mention under questioning? I want to ask you now for some examples.

[Translation]

Mr. René Blouin: Examples of what?

[English]

Mr. Walt Lastewka: I thought you mentioned in your testimony that you would give examples under questioning.

Mr. René Blouin: Yes, we did.

Mr. Walt Lastewka: You did.

Mr. René Blouin: Mr. Crevier did when he explained in 1972 he had to quit business because he had no supply. He had problems in 1979 too.

Mr. Walt Lastewka: Any other examples?

[Translation]

Mr. René Blouin: Any further examples, Pierre?

Mr. Pierre Crevier: There are examples that do not apply so much to the non-renewal of contracts as to product allocation at certain times when the product was not accessible in Montreal because of the winter cold. There were shortages, and they had to set an 80% quota. We are convinced that during the 80% cut, the major company retailers were still working at full capacity, without suffering from these cuts.

At those times, we had to reduce our clients' inventories. We were fortunate that these were only brief periods of a week or two in the two cases I mentioned. In the first case, the problem was caused by cold weather on the St. Lawrence River. In the second case, it was the January 1997 ice storm in Quebec. I do not know if you are aware of this, but in January 1997, there was an ice storm and supplies had to be rationed. In both cases, our supply was reduced, but we are sure that the multinationals were still running their heating oil and gas station retail networks at full capacity.

[English]

Mr. Walt Lastewka: Why do you think the larger corporations and companies are against having the right to access?

[Translation]

Mr. René Blouin: We have experienced that in Quebec, and you must always keep that in mind. The large oil companies, particularly in the past few years, have been making money ever since the oil prices went up, and they always use the money to try to drag out legal procedures as long as they can, hoping that we will run out of steam along the way, because legal procedures are extremely expensive. For example, the first time we went before the Quebec Régie de l'énergie, the first hearing cost our association $350,000. Why was it so expensive? It was so expensive because the lawyers for the multinationals just kept on going, one after another, somewhat like parliamentarians at the end of the session, filibustering and ensuring that the debate would be so long that we wouldn't have the money to keep on going much longer and that we would have to give up along the way.

You see, as long as they have recourse, it suits them to do this. The more recourse they have, the more it suits them to do this. And the more money they have to keep us from exercising our rights, the more they will use it. These tactics are part of this line of reasoning, and I am not surprised that they are opposed to this kind of recourse. When it comes down to it, what do they have to fear?

[English]

Mr. Walt Lastewka: Anyone else?

The Chair: Would anyone else like to respond?

Mr. Dave Collins: I think they fear it's an extra amount of accountability for their businesses.

Mr. Walt Lastewka: Do they view it as if there could be a lot of frivolous accusations?

Mr. Dave Collins: I think they would like the committee to believe that.

I think the problem is it will force them to be more accountable in the way they conduct their business than they have in the past.

• 1625

Pierre talked about some issues with respect to restrictions on supply. These have been going on for ages. In fact, this year, with Superior Propane, there were a number of restrictions placed on when we could load fuel from the Imperial Oil rack.

I could go into great detail, but some time ago Imperial Oil sold their propane loading rack in Halifax to Superior Propane under the understanding that Esso could sell through that rack to other customers such as ourselves. That proceeded along this year until we picked up a couple of large accounts from Superior Propane, and then our ability and our loading times at that rack were severely curtailed, so that actually getting access to those products became exceptionally difficult simply because they denied us the time to get our trucks in underneath the rack to load. We've now compensated by going all the way to Quebec City and bringing propane back from there.

Right now, would that get the light of day with the competition commissioner? No. It's a little local issue, and you solved it and it's over with. But we would like private right of access. I don't think Superior Propane would behave that way if they knew they had to face the potential of us proceeding directly on private right of access. I think they would have conducted themselves differently and I would never be talking about it today.

Mr. Walt Lastewka: Thank you.

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

Mr. Strahl, please.

Mr. Chuck Strahl (Fraser Valley, PC/DR): Thank you. This has been very interesting testimony. I'm enjoying this as an alternate to what we had the other day.

Mr. Collins, you mentioned that basically you were told you needed a corpse, a smoking gun, and a few other things in order to get a response out of the tribunal.

Mr. Dan McTeague: The bureau.

Mr. Chuck Strahl: Okay, the bureau.

Did you get a written response when you applied before, when you were turned down?

Mr. Dave Collins: Yes. After the meeting I got a very dry letter saying they've declined to take up the issue.

Mr. Chuck Strahl: They don't give you a list of reasons?

Mr. Dave Collins: None whatsoever.

Mr. Chuck Strahl: I think I know the answer to this, but maybe as a discussion point.... There was some discussion from the former commissioner suggesting that he was in favour of a right to private access, but at the very least, we needed to look at other alternatives, one of them being to demand a written response, with the reasons, within a certain timeframe, to people who have applied, like you. Would that satisfy your concerns? Is that a step in the right direction, or just a kiss-off from someone who doesn't really want to get into it?

Mr. Dave Collins: I prefer the latter. I think the problem is that you have someone who currently acts as a gatekeeper to a part of the justice system. For the competition law, there's one court of competent jurisdiction, and that's the Competition Tribunal. You have a gatekeeper, and he says he's interested or not interested in this. But it's not going to do anything for you, because he'll make up a reason why he doesn't want to do it.

Mr. Chuck Strahl: All right, but a crown prosecutor does that in the justice system. You bring evidence, you bring a charge against somebody for something, and they look at the evidence and say they don't think there's enough to proceed and here's why. They might not tell you why, but the argument is that sometimes there's litigation that is vexatious or frivolous.

So if you had answers in writing, with reasons, from the commissioner, from the gatekeeper, would that go some way toward looking after that concern, not just getting blown off with a simple form letter but getting at least not a ruling, but a well-documented explanation?

Mr. Dave Collins: Sure.

I think they're mixing the criminal and civil there. On a criminal case, that's fairly clear; that is what a prosecutor does. But what we're talking about here in competition law is civil matters. This is company versus company, and why we have a bureaucrat in there saying yes, it is, or no, it isn't....

I don't think we want to abdicate their role with respect to criminal conduct. What we're talking about today with Bill C-23 and with the rights to private access are simply civil matters. I don't understand why the committee wants to prevent two companies from dealing with it where we deal with all other civil matters.

Mr. Chuck Strahl: I don't think the committee wants to do that; maybe the permission—

Mr. Dave Collins: Yes. Or why you don't give us permission to do that.

• 1630

Mr. Chuck Strahl: Part of the presentation was about the effectiveness of the Quebec law in fighting, in this case also, petroleum refiners throwing their weight around, and that it was very effective. It was very specific to the petroleum industry, as you've already mentioned. It talked about the price, plus the taxes, the cost of distributing it, and so on.

Is it possible that we should be asking all the provincial governments to enact similar legislation? Is that a more effective way? Is it more reasonable or more cost-effective perhaps?

The concern is that it costs $1 million or more to go through the commission. Would it be better to go through provincial legislation?

[Translation]

Mr. René Blouin: Well, we are not constitutional experts; we are here to defend our companies. When the time came to get legislative provisions that had to do very specifically with the powers of Quebec, we went to Quebec City. Now, since we are discussing these issues here, I suppose that these are issues that come under federal jurisdiction. Let's leave it to the constitutional experts to determine which level of jurisdiction should apply in this case. If it should be the federal level of jurisdiction, well, I think it should apply.

Don't forget one thing: the legislation that was passed in Quebec and the legislation that was passed in several American states has to do with sales prices and cost prices; we wanted to ensure that there would not be any unfair competition. However, we are talking about supply today, which is a different matter.

Why is it that in the oil sector, there is more government intervention in the United States than in other sectors of the economy, where we are seeing more of a deregulation? It is simply because the oil industry is the only sector of the economy where the same companies extract the raw material from underground and refine it. The manufacturers control 95% of the wholesale market and 80% of the retail market, at least that is the case in Quebec. You don't have that kind of situation in other industries.

For example, hardware stores do not have iron mines and do not manufacture their hammer heads. They are retail distributors, as are our members. We compete with the people who supply us at the same time. That is why we have to have at least some guarantee both for sales prices, so that there isn't any cross subsidization between upstream and downstream, and for supply, so that they don't turn off the tap on us, which would bankrupt our companies.

[English]

Mr. Dave Collins: Many of our members operate in other provinces. I don't think we want to deal with one provincial law in one province, and another provincial law in another province, on a matter that logically—this is competition law—is federal in nature and cuts across a lot of industries. So I don't think we want to see anything unique with each province.

When you see unique provincial pieces of legislation coming up, that's because there's a crisis of competition in that province. So when you've seen provincial legislation such as the Quebec law, or those of Newfoundland or Prince Edward Island, that's actually a stunning indictment of the failure of the competition law, that the provinces are actually bolting and using their constitutional authority to preserve and encourage competition in their markets.

The Chair: To clarify, the Supreme Court has ruled that the competition law falls under the trade and commerce power and is under federal jurisdiction. That's why we're dealing with it here today.

Mr. Chuck Strahl: I don't dispute it at all.

The Chair: Okay.

Mr. Chuck Strahl: I just wondered about the efficacy of—

The Chair: Before you move on, I want to know if Mr. Lennox or Mr. Cooper have anything to add. No?

This is your last question, Mr. Strahl.

Mr. Chuck Strahl: Okay, thank you.

My last question is just on the legislation itself.

Is everyone satisfied with the protection or the provisions in the legislation as far as the secrecy or confidentiality of the information that would go forward to the Competition Bureau or to the tribunal is concerned? Are you satisfied that won't be used in some way against you, if you get into the middle of this mess?

Mr. Dave Collins: Yes.

Mr. Graham Cooper: I believe it's satisfactory.

[Translation]

The Chair: Mr. Blouin?

Mr. René Blouin: There is no problem.

[English]

Mr. Chuck Strahl: Thank you.

• 1635

The Chair: Thank you very much.

Mr. McTeague, did you have another question?

Mr. Dan McTeague: Yes, Madam Chair, and it's going to be a very brief one building on what Mr. Lastewka asked.

Mr. Cooper, Mr. Lennox, Monsieur Blouin, and Monsieur Crevier, are you part of any type of chamber or board of trade? Are there members within your organization who are members of a board of trade or chamber of commerce?

Mr. Graham Cooper: In our case, Mr. McTeague, we as an organization are not part of a board of trade or chamber of commerce. It's quite possible that some of our members may be, because we do represent, as I mentioned earlier, 4,000 members.

Mr. Dan McTeague: Okay.

[Translation]

Mr. Blouin.

Mr. René Blouin: I would say that most of our members belong to their local chamber of commerce and generally speaking, the local chambers of commerce defend small businesses. We do not belong to the Chambre de commerce du Québec nor to the Canadian Chamber of Commerce because these organizations defend the big companies first and foremost. It's understandable. They are the members that provide them with the most money and they are the most influential, and that can be seen from all the positions that they take.

In Quebec, the local chambers of commerce defend us vigorously, and on a regular basis, unlike the large chambers of commerce, which always adopt the position of the large oil companies.

Mr. Dan McTeague: Did the position taken yesterday by the Canadian Chamber of Commerce and its other comments not reflect the concerns of your members or their position on private access?

Mr. René Blouin: They certainly didn't. We have been fighting for years, trying to get the legislation to allow us to exercise our rights. Every time legislation appears, we support it. Sometimes we even try to have it created. Obviously, our members are completely in agreement with this kind of legislation.

[English]

Mr. Dan McTeague: Finally, I just want to be certain, because this will come back to you time and time again as people who represent small and medium-sized enterprises, are you comfortable and do you accept or reject the view that private access, as it is currently written and contemplated in Bill C-472, will create an unusual, onerous monetary burden on all of you such that it will be impossible for you to get that access to begin with? Is this a valid assumption by those who have made this position and who will certainly be coming before the committee to again apparently speak on your behalf rather vicariously?

Mr. Dave Collins: When a company fights for its life, most of the resources it has left will fight for it. Most small entrepreneurs have a lot of passion and drive. I don't think that they won't use every available alternative. If they run out of money, it's not just happening to one of them; it's happening to a whole collection of them. They'll band together. We've seen that time and time again. Look at us as trade associations. Why are we banded together? It's to lower our costs, to be heard. The same thing will happen with the Competition Tribunal.

[Translation]

Mr. René Blouin: Mr. McTeague, our association deals directly with small companies. They do not operate like big companies do. We deal directly with the executives. When the executives feel that they should turn to the courts, but do not feel able to do it themselves, they systematically ask their association to do it for them. They want to pool their energy and money so that they can bring these matters before the courts. That is what we do.

The money issue must always be taken into consideration. It discourages frivolous applications to the courts. We are able to organize and get together to use the legal means that are available to us when we are dealing with a serious situation.

[English]

Mr. Dan McTeague: Thank you.

The Chair: Mr. Cooper.

Mr. Graham Cooper: Let me just add one further thought to the good points that have been raised by the other gentlemen. The issue of cost and time is clearly important, and if there were a crisis situation such as Mr. Collins referred to, no doubt there would be some joining of resources. But apart from that, if we assume for a moment there will not be hundreds of companies and organizations dashing to the tribunal, the fact that there is this right of private access is in itself an important factor. I think that's what we, as representatives primarily of small business, are in favour of at this point.

The Chair: Thank you.

Mr. Rajotte, please.

• 1640

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

I'll try to be brief here. Most of my concerns and questions have been answered.

One of the comments that struck me—and I forget which witness said this—was that when a case was brought forward to the competition commissioner years ago, the commissioner's response was that he had neither the time nor the means to pursue such cases. Is there a concern at all at the Competition Tribunal that such a backlog will develop that they will not have the time or the means to address cases?

Obviously, being able to dismiss frivolous cases constitutes a necessary safeguard, but there will be many genuine cases brought forward. Is that a concern of any of your associations?

[Translation]

Mr. René Blouin: I would say that courts and tribunals are there so that people can use them. Once a lawsuit becomes serious, the tribunal's duty is to hear it. If the Competition Tribunal needs a few more resources, it will obtain them to meet the requirements of the act.

Furthermore, you must not think that the Tribunal will be flooded with applications of this nature. There will not necessarily be countless serious applications of this nature, and it will be up to the tribunal to determine whether they are frivolous or not.

[English]

Mr. Bob MacMinn: Our view is that would have to be a bridge we would cross when we came to it. Our understanding is that nine cases have been tried since the formation of the tribunal, so perhaps the resources there are underutilized now.

The Chair: Mr. Lennox or Mr. Cooper?

Mr. Graham Cooper: We're certainly not experts in the field. I would only suggest to you that if the commissioner himself is proposing that right of private access may be the solution to the problem, he's certainly much more knowledgeable in this issue than I am, so maybe there's something to what he's saying.

Mr. James Rajotte: One other concern was brought forward yesterday, ironically, by an association largely representing large businesses. One of their arguments is that the private right of access may actually favour large corporations or big business, because they would use it as a means to actually try to eliminate competition.

I believe, Monsieur Blouin, you mentioned how companies use the legal process to drive out competitors, and you talked about one hearing which cost $350,000. Now, this is an argument the other side of the argument is using, and I just want to give you an opportunity to respond to it. Will this be a situation where large companies use private right of access against their smaller competitors?

[Translation]

Mr. René Blouin: No, that is not possible. The current bill simplifies the procedure. It will no longer be necessary to first go before the Competition Bureau and then before the Competition Tribunal. One step is being done away with. In serious cases, which are not frivolous, this will be one less step for us, a very expensive step. When we appear before the Competition Bureau, we have to use lawyers and prepare files, and that is another step. So the way I see it, this bill will streamline the procedure and make it less expensive.

[English]

Mr. James Rajotte: So it would be less expensive than it is now?

[Translation]

Mr. René Blouin: Yes.

[English]

Mr. James Rajotte: Those are all my questions. Thank you.

The Chair: Thank you, Mr. Rajotte.

I want to thank the witnesses very much for being with us today. We do appreciate your time. We apologize for any delays you had getting into the building, but that's something we'll be living with, I'm sure, for some time to come.

We look forward to meeting with you again in the future. If you have any further comments as we continue our hearings on Bill C-23, please don't hesitate to send them to us via the clerk.

We're going to allow you to leave now and we're going to continue as a committee. We have some other business.

[Proceedings continue in camera]