CANADA House of Commons Debates VOLUME 137 Ï NUMBER 148 Ï 1st SESSION Ï 37th PARLIAMENT OFFICIAL REPORT (HANSARD) Monday, February 25, 2002 Speaker: The Honourable Peter Milliken CONTENTS (Table of Contents appears at back of this issue.) All parliamentary publications are available on the ``Parliamentary Internet Parlementaire´´ at the following address: http://www.parl.gc.ca 9169 HOUSE OF COMMONS Monday, February 25, 2002 The House met at 11 a.m. It has been pointed out by several members just how contradictory it seems for a act of parliament aimed at encouraging competition for Prayers the benefit of consumers to be used to enable Superior Propane to establish a monopoly or semi-monopoly in several markets on the grounds of gains in efficiency. PRIVATE MEMBERS' BUSINESS We ought perhaps to examine more closely the underlying Ï (1100) intention of Bill C-248. The bill would not allow gains in efficiency [Translation] to be used to justify a merger or proposed merger which, and I quote: COMPETITION ACT —will result or is likely to result in the creation or strengthening of a dominant market position. The House resumed from October 24 consideration of the motion that Bill C-248, an act to amend the Competition Act, be read the second time and referred to a committee. This is an attempt to disallow scenarios where a merger would result in a monopoly. Mr. Serge Marcil (Parliamentary Secretary to the Minister of Industry, Lib.): Mr. Speaker, I am pleased to rise to speak to Bill C- 248, an act to amend the Competition Act. We must be cautious when making reference to businesses with a dominant market position. Dominance pertains to the situation of a I want to thank my colleague, the hon. member for Pickering— competitor within a market, and not its behaviour. It is too tempting Ajax—Uxbridge, for his constant efforts on behalf of all Canadians to make a connection between dominant and large, and between to ensure that the objectives laid out in the purpose section of the large and bad. Abuse is the exception, not the rule. Competition Act are fully achieved. In particular, he dealt with the role of the act in preserving and enhancing competition in order to ensure that small and medium size businesses get a fair opportunity The Competition Bureau examines proposed mergers and attempts to take part in the Canadian economy and to ensure that consumers to predict future effects based on specific factors. It examines market get competitive prices and a choice in products. share, concentration, existing competition, and accessibility of the markets in question to new competitors. The bill before us today addresses directly those objectives and the way gains in efficiency are dealt with in the review of merger Dominance is not, in itself, a problem under the act. Let us not transactions. forget that anti-competitive behaviour is addressed separately under We have found that there is considerable support in the House for civil provisions. The Bureau does not oppose mergers merely on the the principles of this bill, the purpose of which is to clarify the clause conjecture that the merged entity might engage in anti-competitive in the Competition Act concerning the argument of gains in behaviour. However, anti-competitive behaviour will most definitely efficiency. The bill stipulates that consumers should benefit from a be contested under civil provisions. merger which results in gains in efficiency but that these gains should not be used to justify a merger which will result in the Our economy is not always able to sustain a great number of creation or strengthening of a dominant market position. competitors. Such is our reality. This compels us to ask whether it is This bill was triggered by the acquisition of ICG Propane by more important to have more competitors or more competition. Superior Propane. The Competition Bureau challenged the merger There is a difference between the two. because it would have created a monopoly in several local markets, particularly in rural and northern communities. The competition Regardless of their size, competitors are always welcome to our tribunal recognized that this would markedly reduce competition, markets, on the condition that they act fairly and respect the rules. A and at the same time that the anti-competitive impact of the merger merger must not be prohibited on the grounds that it will create a was offset by the gains in efficiency cited by Superior Propane, such bigger competitor. Size and success is a characteristic of a as savings in delivery costs and the operation of client information competitor; it does not mean that it is guilty of anything in terms centres. of competitive behaviour. 9170 COMMONS DEBATES February 25, 2002 Private Members' Business Ï (1110) In other words, we need more case law in situations like this to understand the implications. The purpose of Canada's competition policy is to protect competition, rather than protecting individual competitors, in order to ensure for Canadians the many benefits that come from fair and healthy competition. Among these benefits are greater choice, lower I want to look for a moment at the efficiencies defence as it was prices, better service and increased innovation. prescribed in the Competition Act. Section 96 specifies that a merger By now, those who are listening have probably concluded that this may be approved by the Competition Tribunal even if it substantially is a very complex subject. Efficiencies play an important role in lessens or is likely to prevent competition within a specific market, assessing mergers. Our colleagues on the Standing Committee on trade or industry as long as those advocating the merger can prove Industry, Science and Technology spent a great deal of time and that such a move would bring about or would likely bring about effort in understanding how efficiencies are treated and assessed. gains in efficiency that would be greater than those offset by the effects of any prevention or lessening of competition. The issue now is one of timing. The Competition Tribunal finished its hearings in October 2001, and is now in the process of reviewing its decision based on the instructions given by the Federal Court of Appeal. The tribunal's upcoming ruling will outline In other words, if two companies were set to merge and the clarifications on how to deal with gains in efficiency. However, it efficiencies were such where both could survive or both could fail if will be important to continue to examine the issue. Regardless of the there were no chance to merge, what would be the ultimate outcome tribunal's findings, I believe that we have heard convincing of the merger? It seems to me that at least there would be one merged arguments for a full and careful analysis of this very complex company providing a service that maybe no other company could question. The results may prove that the Competition Act requires offer if the merger were not allowed. clarification. I would like to thank the hon. member for Pickering—Ajax— Uxbridge for his tireless support in helping improve our Competition Section 96 further instructs the tribunal to consider whether gains Act. He has once again highlighted the important and difficult issues in efficiencies will result in a significant increase in the real value of involved in competition policy. exports or a significant substitution of domestic products for I would invite my fellow members to vote to have Bill C-248 imported products. The Competition Act is clear that a redistribution referred it to the Standing Committee on Industry, Science and of income between two or more persons or groups cannot be Technology for a more thorough examination. considered an efficiency defence. In other words, if a proposed merger will benefit one person or group to the equal detriment of [English] others, that cannot be considered an efficiency. Mr. Charlie Penson (Peace River, Canadian Alliance): Mr. Speaker, I am pleased to speak today to Bill C-248, an act to amend the Competition Act with respect to the efficiency defence on merger proposals. Bill C-248 would create two new subsections for section 96, subsections (4) and (5), to further instruct the tribunal on the This private member's bill seeks to clarify the Competition consideration of efficiencies in a merger case. I would argue those Tribunal's power to make or not make an order in the case of a instructions would muddy the waters and quite possibly stand merger when gains in efficiency are expected or when the merger merger review on its head. would create or strengthen a dominant market position. While I appreciate the intent of the hon. member in bringing forward this bill, I have great misgivings about reactionary legislation. As the member for Pickering—Ajax—Uxbridge has told the Currently, when considering gains in efficiency, the tribunal does House, Bill C-248 was drafted in reaction to the Superior Propane not discriminate between groups as long as one group does not case, which is the first and only time the efficiencies defence was benefit at the expense of another. That would be considered merely a successfully proven at the tribunal. The competition commissioner redistribution of income. appealed to the federal court, which ordered that the tribunal hear the case again. I understand we will have a final decision from the tribunal very shortly which should clarify this situation. However, proposed subsection (4) would require that the majority However, Bill C-248 seeks to change a law before we have heard of benefits derived from gains in efficiency be passed on to the last word or the interpretation of the federal court.