Madam Speaker, I come from a province that is very familiar with corporate capture and what can happen when one does not have a competitive market, especially to protect the smaller retailers and grocers, in particular. We are having this conversation. Competition is always better. This is a really big step forward, bringing us in line with some of our other nations as well.
Madam Speaker, today I rise to address this chamber with respect to Bill C-56, specifically its amendments to the Competition Act. This is the regime that enables the Competition Bureau to protect our economy from actors and acts that would unduly and artificially increase prices and decrease product choice for consumers. An empowered Competition Bureau means a Canadian marketplace that is more innovative, efficient, and, most important, affordable. In my home province of New Brunswick in particular, where household incomes on average are lower than in the rest of the country, we need to use every tool at our disposal to bring down food prices for Canadians and their families.
The series of proposals enclosed in Bill C-56 may be part of the response to a global inflation crisis driving up the costs of Canadian necessities, but they are also a long-awaited package that would better align our competition framework with international best practices.
The bill includes three significant changes to the Competition Act: the abolition of the efficiencies exception in merger review, the ability to compel information during a market study, and the ability to review agreements between non-competing actors that are designed to reduce competition.
The efficiencies exception, a defence that allows anti-competitive mergers to survive a challenge if the corporate efficiencies they are expected to generate are greater than the harm to competition, is unique among advanced competitive regimes. It allows a merger to proceed knowing full well that consumers may pay higher prices, to help the merging companies save costs.
The European Commission, one of the most active and visible competition authorities around, does not treat efficiencies in this manner. Our European counterparts will consider efficiencies as relevant only when those efficiencies are likely to benefit consumers; they never rely on corporate efficiencies to justify an anti-competitive merger.
In Australia, the law itself does not list efficiencies as a factor to consider in deciding merger cases. In fact, the Australian Competition and Consumer Commission has published guidelines stating that it will not clear anti-competitive mergers even if the new firm would enjoy a lower-cost structure.
Of course, the comparison often used, given our proximity, is the United States. The courts in our neighbouring jurisdiction have specifically ruled that possible corporate efficiencies from a merger cannot be used as a defence to justify an anti-competitive merger. Efficiencies must be pro-competitive and passed through in some capacity to the marketplace and not just the merging companies.
In this way, Canada is out of step, which is illustrated perfectly by the fact that the U.S. Federal Trade Commission has successfully challenged a Canadian merger that our own Competition Bureau could not, because of claimed efficiencies. For example, when Superior Plus Corp. was going to acquire Canexus in 2016, the bureau found that the competition would suffer materially in a number of markets. It predicted a lack of remaining competition and higher prices for consumers. Nevertheless, because of the provision in the Competition Act, the bureau had no choice but to refrain from challenging the transaction, as the efficiency gains could be shown to outweigh the anti-competitive impacts.
With no similar constraints, the United States Federal Trade Commission mounted a challenge because of what would be the resulting high rate of concentration in the sodium chlorate market. It also found evidence of the acquiring party’s desire to restrict output post-merger, an increased ability to collaborate with competitors, and its desire to neutralize Canexus as a disruptive lower-price alternative.
Without even delving into the important question of whether promised efficiencies are ever delivered, it should be clear that this defence can lead to detrimental effects on competition. It is about time that Canada joined the rest of the world in putting competition first.
I would now like to speak specifically about the market study powers. Our current market study framework is another area where we are out of step. The bureau can periodically study industries to better understand their competitive dynamics and make recommendations to government, such as the retail grocery market study that it released last June. However, the bureau has no means to compel parties to provide any information and instead relies on voluntary submissions, public data or information it already happens to have.
This is not the case in comparable jurisdictions, once again. In the United States, the Federal Trade Commission has the authority to demand a compulsory special report that answers specific questions about an organization’s business, conduct, practices, management and relationship to other parties. The European Commission can conduct studies into sectors or agreements across various sectors and can request necessary information or carry out inspections. The Australian Competition and Consumer Commission can also ask the treasurer to instigate a price inquiry that allows authorities to access information on a wide variety of topics.
All of the above jurisdictions have serious sanctions for failure to comply, ranging from the ability for the enforcers to conduct a much wider study to fines based on the company’s annual turnover. Moreover, these studies have proven to be a valuable tool for market insight. The USFTC, when faced with the novel problem of serial acquisitions by dominant tech platforms, launched its version of a market study to compel information on relevant mergers.
Similarly, in 2022, the United Kingdom’s competition authority concluded a market study in the music and streaming industry to better understand why there had been a 40% revenue drop over 20 years. The retail grocery code that is currently in effect in the U.K. is also the direct result of recommendations by the competition authority after a detailed market study. Also, the Government of Australia, in response to ballooning electricity prices, ordered a price inquiry that resulted in a series of high-impact recommendations to government, many of which were directly related to enhancing competition.
Canada has had five market studies since 2007: retail grocery, digital health care, financial technology, self-regulated professions and the generic drug sector. Were the bureau empowered with the ability to compel information from elected companies, it is not difficult to imagine just how much more fruitful these studies really could have been.
Lastly, the third reform in this bill concerns agreements in restraint of competition that are made between parties who are not competitors. Sometimes this is called “vertical collaborations”. This has been identified as an issue relevant to restrictive clauses made between commercial landlords and supermarket tenants to keep grocery competitors out of the property, thus limiting competition. The Competition Act has a number of provisions that could apply to some vertical collaborations, but will not necessarily if the specific facts do not quite line up perfectly with the statute. Its most basic provision on anti-competitive collaborations meanwhile is limited to those between real or potential competitors or horizontal collaborations.
Once again, we are the outlier in this approach. Our peers in the United States, Europe and Australia can examine vertical agreements that limit competition, such as by restricting distribution channels or territories of operation. In one notable case, the United States’ Department of Justice challenged Visa and Mastercard for their contract terms with merchants that limited consumer options. When our own Competition Bureau tried to mount a similar case, the limits of the Competition Act meant it was forced to bring the case under an ill-suited provision, and it lost. The Competition Tribunal could not issue an order, even though it recognized the competitive harm. It was a viable lesson in the importance of a modern legal framework that reflects how today’s marketplace operates.
We have seen that it is time for Canada to join the club, so to speak, and emulate the best practices of our peers. This is why I encourage my colleagues to join me in supporting this bill’s passage.
Madam Speaker, I thank the hon. colleague for his kind words. I certainly paid attention, and I pay attention to all the happenings in the House.
Consultations began on this quite some time ago. I think it is important to look at the process when we bring in legislation and involve multiple provinces and territories, and have conversations with retailers and everyone who is going to be involved in what we are trying to achieve here.
There is never a better time to put forward legislation. I am glad that we are certainly stepping up and acting because, as we have clearly stated in this House, affordability and grocery prices are what we are hearing from all of our constituents. As I said, we have to use every tool at our disposal. I am happy to see the legislation now, and again, those consultations began quite some time ago.
Madam Speaker, I thank my colleague for his question.
We were already hearing from developers across the country about how this was going to incentivize them to really increase that stock and supply. The biggest thing we can do right now on the federal side is to look at those rising costs for rent and homes. It is specifically an issue in my riding as it is for every member of the House.
I have had these conversations with developers, and they are looking for tools. They are looking for that support from the government. This is one really important measure that could help with that densification and increase that stock. That is the biggest thing we can do to bring down prices. It is not going to happen overnight, but we are working as fast as we can.
Madam Speaker, there is a combination of things. Again, this is a multi-faceted issue that is impacting Canadians right across the country. We absolutely have to look at the non-market rentals. We have to ensure that we are looking at models like co-ops. We have to look at every available tool that we have.
However, the private sector does have a role to play. I know that there is certainly lots of vilifying of developers that is happening. I can point to some examples in my home riding. We have an incredible developer, whose name is Marcel LeBrun, who has been integral in putting forward really inclusive and creative ways to deal with our housing crisis.
It is going to take a combination, and we certainly need to bring the developers into that conversation while protecting those who will be impacted by the housing crisis in the country.