Hon. Colin Deacon: Colleagues, “Capitalism without competition isn’t capitalism; it’s exploitation.”

This statement describes a central pillar of President Joe Biden’s economic policy. He goes on to say, “. . . Without healthy competition, big players can change and charge whatever they want and treat you however they want.”

Those of us who fly each week live the effects of that reality.

Conversely, competitive markets force companies to innovate so that they can deliver greater value and attract more customers. Robustly contested markets cause increases in business investment, efficiency, innovation and productivity. Competition creates better products and lower prices for customers. As a consequence, competitive markets drive companies to become stronger global competitors.

Business investment and productivity in Canada have been declining steadily over 20 years. The emerging consensus is that our outdated competition laws and policies shoulder much of the blame.

Colleagues, this is why I’m thrilled to rise to speak today at third reading in support of Bill C-56, the affordable housing and groceries act. I’m pleased to see the government follow through on Budget 2022’s “down payment” on competition policy reform. Bill C-56 introduces the most meaningful reforms to Canada’s competition laws since the 1980s. It will implement measures intended to increase the affordability of housing and increase competition across our economy, including in the grocery sector.

But, first, let me step back and give you some insight as to why I’m so passionate about competition law and policy reform in Canada.

When first introduced in 1985, the purpose of the Competition Act was to:

. . . maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices.

That purpose remains relevant today. The challenge, however, is that market realities have fundamentally changed in the ensuing 38 years, rendering many parts of the bill no longer fit for purpose. Our Competition Act dates from an era when it was assumed that fostering big, homegrown companies was a national economic priority.

This belief has been completely discredited by evidence, yet it lives on in our Competition Act.

For example, as a result of how we manage competition in the telecom sector, the 85% of Canadians who have smartphones pay some of the highest telecom bills in the world. Let me walk you through a few of the resulting inequities.

I use my Senate smartphone a lot. I am probably not alone. It only costs $30 a month thanks to the deal that the federal organizations have with Bell Canada.

Conversely, the cost of my personal phone is about $90 a month, about three times the cost of my Senate phone. I’m absolutely certain of one thing: Bell would never offer this $30 a month deal unless it was profitable to do so.

So those who can pay the most pay the least, and those who can pay the least pay the most. Bell has the luxury of engaging in price discrimination amongst its customers because our competition laws and policies protect oligopolies from robust competition, even made-in-Canada competition. If you think it is bad here in Canada’s South, I suggest you speak to one of our three senators from the territories.

I now want to cite a recent industry and merger example to further make my point. Over the last 18 months, we’ve seen large-scale corporate consolidation in realtime with Rogers acquiring Shaw for $26 billion.

When Rogers’ proposed $26 billion acquisition of Shaw threatened to further consolidate the market, Canada’s Commissioner of Competition, Matthew Boswell, dared to challenge the merger and defend the interests of Canadian consumers. Suddenly, in the midst of tribunal preparation at the bureau, Rogers and Shaw, Rogers committed to sell the wireless division of Shaw called Freedom Mobile. Rogers gambled that it could unilaterally predetermine its own remedy to the merger’s anti-competitive effects. It ended up working.

Rogers had received two credible bids for Freedom Mobile and, remarkably, the Rogers board accepted the offer that was a billion dollars less than an unsolicited offer from a more robust and completely independent competitor. The Rogers board would never have accepted a billion dollars less in that asset sale unless they were confident that the discounted sale price would ultimately deliver much higher returns well into the future because the asset was being sold to a weaker competitor.

Whatever their rationale, Canada’s weak competition laws were exploited by Rogers, allowing it to boldly and publicly choose its own competitor as a remedy to what many felt was an anti-competitive merger.

Ultimately, in January of this year, the tribunal ruled in favour of letting the merger proceed. Then, in August, the tribunal went so far as to determine that Canadian taxpayers pay Rogers and Shaw about $13 million because, under our competition law, as it currently stands, Canada’s Commissioner of Competition, in their opinion, had been too aggressive in his challenge of the merger.

Colleagues, our oligopolies have consistently benefited from legacy legislation policies across the whole of government. This problem is not limited to groceries or telecom — far from it.

Many of our oligopolies have become so dominant that they can just focus on serving the interests of their shareholders, without having to first concern themselves with the interests of customers. Indeed, the general state of competition in Canada is such that it has resulted in our country having accumulated one of the greatest regulatory burdens in the OECD. Ironically, the cost of adhering to Canada’s federal, provincial and municipal regulatory burdens are so great that regulations initially intended to protect citizens now do a much better job of protecting the interests of incumbent oligopolies. Our complex and cumbersome regulatory burdens can’t be afforded by innovative new entrants.

In our Banking Committee, I like to ask economists at our big banks about the importance of competition. They reliably and ironically describe robust competition as being central to improving innovation, productivity and prosperity in Canada. And Bank of Canada Governor Tiff Macklem consistently describes robust competition as being a crucial ally in the long-term fight against inflation.

Colleagues, you have likely heard me say before that you can never regulate a company into becoming customer-centric. Only competition makes that happen. We desperately need to change course if we want to protect our future prosperity.

Now I would like to climb off my soapbox and speak directly to the competition-related elements in Bill C-56.

In November 2022, ISED initiated a consultation on the future of Canada’s competition policy. The public consultation garnered considerable interest with over 130 submissions from identified stakeholders and over 400 members of the general public. Collectively, these submissions proposed over 100 possible policy reforms. There were also round tables and one-on-one meetings held with stakeholders.

In September, the results of this consultation were published in a What We Heard report, and the amendments to the Competition Act in Bill C-56 all flow from that consultation. The amendments incorporate additional measures through an agreement with the NDP, but all of these align with the consultation report.

The amendments are as follows: First, the Competition Bureau will now have the power to initiate market studies that examine inefficiencies that may be due to weak competition. Importantly, the bureau has also been provided the authority to compel the production of information from the related businesses. Prior to this amendment, when conducting a market study, the bureau could only politely ask the related businesses to hand over non-public evidence.

We wonder how that might work in police investigations, for example.

This lack of authority was illogical and completely out of line with practices in our peer nations.

Indeed, in their submission to the Canadian consultation, Assistant Attorney General Jonathan Kanter, responsible for enforcement of antitrust law in the United States, and Federal Trade Commissioner Lina Khan wrote:

The Competition Bureau, like the FTC, has the authority to conduct market studies. Unlike the Competition Bureau, however, the FTC has the authority to use compulsory process in the aid of such studies.

They continued, writing:

These studies allow the FTC to gather information and documents outside the enforcement context and can play a key role in identifying and analyzing emerging competition trends and issues. . . .

An amendment in the House’s Finance Committee broadened the power of the Commissioner of Competition to initiate market studies without a directive from the minister — this was an important change — although the terms of reference will have to be coordinated and approved by the minister.

Second, the efficiencies defence will be eliminated. Canada has been an outlier with this clause. It prevents an anti-competitive merger from being legally challenged if the merging parties can hypothetically demonstrate that the merger could produce economic efficiencies, yet they are under no obligation to deliver on these efficiencies. No other peer jurisdiction has allowed this.

Third, the amendments expand the competitor collaboration provisions to include collaborations among parties that are not direct competitors. An example of this relates directly to groceries.

Under current rules, a grocer who owns a mall can prevent a competitor from opening a rival store nearby. Even worse, the contractual obligations can outlive the closing down of that grocery, creating a food desert. These amendments would allow the Competition Bureau to prosecute this practice.

Fourth, the Competition Bureau will be enabled to go after big corporate players who abuse their dominance to engage in anti-competitive acts, such as squeezing out small players. The amendment adds “. . . directly or indirectly imposing excessive and unfair selling prices” to a list of acts:

 . . . intended to have a predatory, exclusionary or disciplinary negative effect on a competitor, or to have an adverse effect on competition . . . .

Some have interpreted this amendment as putting the Competition Bureau in an uncomfortable position of enforcing price controls, but the preamble prevents that risk.

Lastly, the administrative monetary penalties, or AMPs, for anti-competitive acts are increased from $10 million to $25 million — and from $15 million to $35 million for subsequent orders. It has generally been understood that the current penalties amount to a business expense for large players. The most troubling recent example relates to Facebook’s penalty for its commercial deception in the Cambridge Analytica affair. In Canada, the maximum penalty could only be $10 million, while in the United States, the same infraction garnered a $5-billion penalty from the U.S. government.

Some have expressed concern that these amendments are occurring on a piecemeal basis. That’s fair. Regardless, I’m fully supportive of these meaningful changes, but I look forward to examining much more closely those included in Bill C-59.

Colleagues, competition is about much more than just low prices. It is about a free, fair and democratic society. As monopolies emerge, governments are forced to create regulations to combat the harms from those monopolies. These regulations get embedded, making it more difficult for new entrants to disrupt a market, and entrenching that monopoly.

Remember one truth if you remember nothing else: You can never regulate a company into becoming customer-centric. Only robust competition can do that.

If we want Canada to emerge from the pervasive slump of low productivity and command-and-control regulations, we must reform our competition laws. Bill C-56 is an important first step. These amendments are crucial and widely supported by thought leaders and the Competition Bureau alike. This truly is the beginning of a generational change.

Thank you, colleagues.