44th Parl. 1st Sess.
December 11, 2023 11:00AM
Madam Speaker, I appreciate the opportunity to present updates to Bill C-56, as they are timely and are required to better tackle the increasing cost of living by strengthening Canada's competition law. Two months ago, the government introduced Bill C-56, the affordable housing and groceries act. As members may recall, it was presented as a down payment of sorts on broader reform efforts with respect to Canada's competition law, with more comprehensive amendments to follow pursuant to the fall economic statement.
There has already been considerable debate in the chamber on this important piece of legislation, so let us talk about market studies, which are a key part of the legislation. Bill C-56 would provide the Competition Bureau with much-needed market study powers. It is important to ensure that the bureau would retain its independence while it does this. This is why we have supported an update that expressly confirms that the commissioner would be able to initiate a market study. This would remove any possible ambiguity over the market study process and would ensure that the bureau retains its discretion as an independent law enforcement agency. The update would ensure that the bureau would be able to look into specific market issues that it identifies as warranting scrutiny. The modification reflects the existing inquiry structure under the act, where it is already the case that either the commissioner or the minister may initiate an inquiry into potential anti-competitive activity, at which point the commissioner assumes full control of the investigation.
The government's proposal has taken these concerns into account by creating a framework that would balance the need for independence, the benefit of collecting information and the safeguards required to protect businesses and public funds. This is why both the commissioner and the minister would be required to consult before any study is undertaken. Requiring consultation would ensure that Canadians would benefit from a market study that has been thoroughly considered and appropriately tailored. The proposal made by the government to update Bill C-56's market study provisions would also keep the framework aligned with international precedents, with countries such as the United States, the United Kingdom and Australia all offering various forms of oversight to ensure appropriate use of market study power. Central to this is a test of the abuse of dominance.
In order to effectively address increasing prices, we need to enhance more than just the bureau's ability to conduct market studies. It is also important that the law be able to hold today's well-resourced and sophisticated businesses to account. In particular, we need to better address large players who, many believe, abuse their market power to shut out competition, especially given the clear concerns raised throughout our consultation about protecting competition in and contestability of these markets.
There are all different kinds of competition. We could talk about the fact that the big grocery chains have been recording record profits. One would think that if companies are posting record profits, they would be in a position to lower prices in order to attract more market share, but we did not see that, which suggests that something in the free market system is not working as we would normally expect it to work. There are other forms of potential anti-competitive behaviour. The ability to get shelf space in a major grocery store is a real competition, and the grocery stores have the hammer, to use a curling term, to find out who gets the market space. More and more, in my own personal observations when I go into grocery stores, I see the in-store brands taking more and more shelf space, with the other brands effectively being crowded out.
We believe there has been an unnecessarily high burden to prove behaviours clearly damaging to the public interest. This is out of line with our international partners, by the way, including the United States, the European Union and Australia. These jurisdictions better allocate the burden of proof and allow the agencies to act more easily where harm is apparent. This can include by requiring proof of intent or effects, but not necessarily both. The government's update to Bill C-56 would allow abuse of dominance to be established on the basis of either intent or effects, following the actions of a dominant firm. This would allow for more effective enforcement of the act where there is harmful conduct by large players. It would accomplish what the act is meant to do: stop big businesses from abusing their position to the detriment of competition. The detriment of competition is a detriment to the citizens of Canada.
As I noted before, the purpose of remedial orders is to protect competition in the market, not to punish its actors. Recognizing the lower burden involved in securing a remedial order that this change would bring about, the law would limit the remedy in these cases to a prohibition order. More serious remedies, such as monetary penalties and divestiture orders, would continue to require that both anti-competitive intent and effect be proven. This two-tiered approach would help guard against chilling, aggressive competition on the merits.
The government already took an important first step to address this concern by positioning penalties to serve as more effective compliance measures against abuse of dominance. We did this through the 2022 amendments to the Competition Act that removed an ineffective and outdated cap on monetary penalties. We introduced a more principled approach that could better accommodate larger volumes of commerce. Firms engaged in anti-competitive conduct can now face a penalty set at up to three times the benefit obtained for their anti-competitive conduct, to ensure that it is not profitable to them. While this was an important update to move away from the outdated and ineffective fixed penalty system, the old fixed amounts of $10 million, or $15 million for a second order, still remain in the law. This is in the event that they are still higher than the new proportionate maximum. However, it is possible that these fallback numbers could still be too low to act as a deterrent in certain cases where abuse by a big business is significant but caught early, and thus benefit derived from it is still modest.
As everyone here knows, competition is a driving force behind innovation and efficiency in our economy. It ensures a healthy, fair and vibrant marketplace. This is what the free market system is supposed to nurture and protect. Of course, competition is instrumental in bringing down prices. The fact that we have not seen prices fall in spite of the dominant profits being recorded by big grocery and some of the producers but that we see things like shrinkflation and skimpflation creeping in, where we are paying more for a smaller or inferior product, means that something is not working. When something is not working between what the market price is and what Canadians value, then we think it is the job of government to come in and close that gap.
For Canadians, the updates to Bill C-56 would mean more choice and better affordability. When someone needs to pay their bills, the exact motivations or mechanisms behind anti-competitive conduct do not matter. The effect of paying higher prices remains the same. What does matter is that businesses can be held to account. It matters that the law can impose meaningful penalties to ensure compliance. It matters that the Competition Bureau has the information it needs to study problems in the market.
The updates to Bill C-56 have been prioritized because they are the most directly related to addressing the issues identified in the grocery retail sectors. In fact, if we look at the whole landscape, particularly the concerns about inflation, the two big players to this point, at least in the retail market, have been gas, oil and diesel, and grocery. We have seen the market handle gas and oil, because the prices have been dropping at the pumps, which is a welcome sign for most Canadians, and probably one of the main reasons inflation in Canada has dropped to well less than half of what it was about a year ago. However, the thing to remember is that the provisions in Bill C-56 now, and what is coming, would apply to all sectors of the economy. As such, they would have a broad and, we hope, positive impact.
These changes would also be just the first steps in responding to the issues that have been identified by the stakeholders and the public in our comprehensive consultation on Canada's competition law. As the government announced in its fall economic statement, it intends to introduce significant additional amendments for the consideration of Parliamentarians in the coming weeks. Perhaps in the question period to come, some of the hon. members here in the chamber can suggest some additional amendments that we should consider in the coming weeks.
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Madam Speaker, to be honest, the hon. member's question is key. The first thing we have to do is really get a firm grasp about what is causing prices to be so high. Hon. members would point to the carbon tax, but there was a report out of the University of Calgary that said, no, that was not really it.
We would point to the war between Ukraine and Russia, with Ukraine's exports of grains being greatly reduced because of the conflict, which has had a chilling effect on the availability of food around the world that then had an effect on prices. However, it is anti-competitive behaviour at a time when all of the major grocery chains are recording record profits that suggests there is something not working properly in the free market system. That, I think, is the purpose of the Competition Act amendments.
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Madam Speaker, the fact is that two years ago we would not have foreseen the situation we face today. The fact is that this is going to be long term. It will intentionally be a forever measure to deal with anti-competitive behaviour in whatever sector it arrives. It is necessary right now to deal with groceries. It will certainly be fundamental in dealing with some of the issues on housing, which the hon. member presented, but it is also going to have to be nimble.
Over the course of the years to come, the House will have to sit down and consider what is going on in the day, look at the Competition Act and make the changes necessary to ensure that basically everybody in the market is getting a fair shake. That means not only the producers, the grocery stores and the farmers, but also the consumers.
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Madam Speaker, as I said, I believe it is appropriate to introduce targeted measures for the market, but not in a context where the work is not being done to ensure that housing is being built and that the necessary resources are available for not-for-profit organizations that have a mandate to build other kinds of housing.
I think this government has a habit of focusing on what amount to market mechanisms and ignoring its responsibility to invest in non-market housing. The government's highest duty lies precisely in that type of housing, because the other players in the economy will not be interested in that type of housing, which does not make a lot of money.
Yes, we can build more housing that turns a profit, but the government must also focus on non-market housing.
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