Thank you for the invitation to speak with you today about this bill.

As everybody here knows, some of the proposals in the bill are already law and other versions are in other bills. Some of what's been passed already I have some hesitations about. Maybe I'll close with a couple of observations there, but I'll focus my remarks on the things that I think are still in play in this bill.

One thing it proposes is defining the financial penalties associated with cartelizing or conspiracy under section 45, which includes the possibility of fines up to 10% of the worldwide revenues of a firm convicted of price-fixing. My general approach to competition law reform in the last couple of years has been to support things that improve enforcement of the law—that is, stricter enforcement of good substantive law is welcome. I was supportive when the government increased the bureau's budget. I've been pleased with the expansion of private rights of action, including, importantly, the possibility of damages for private litigants. Increasing administrative monetary penalties also, in my view, has been a positive development. Greater financial penalties and damages and increased deterrence of anti-competitive conduct, in general, will improve competition law enforcement.

Especially in this area, when it comes to price-fixing cartels, which are quite difficult to detect, I'm a supporter of strict penalties for price-fixing—that kind of offence. I therefore tend to support what's in Bill C-352 for that. It defines these penalties in a way that is trying to encourage them to be higher than perhaps they've been in the past. It authorizes stiff penalties for that kind of conduct and I'm supportive of it.

As to the second topic I want to talk about, I'm a little less supportive of what's in the bill. It concerns the emphasis on market structures in evaluating mergers. In my view, it's not a good idea to put into the statute market share thresholds for evaluating mergers. There are two basic reasons why I'm reluctant to support that kind of move.

First, market shares are inevitably imprecise. They're not tightly connected to competitive outcomes in any given case. On the first point, it's not that markets have some sort of objective truth to them such that analysts can sweep away the dust and see the contours of a market. Rather, markets are crude heuristics that roughly capture the sources of competition. In the case of a merger, it's about the sources of competition on the merging parties. There will often be alternative, entirely defensible definitions of the market that could lead to very different market share calculations. There's inevitably a kind of arbitrariness to market definition and, consequentially, market shares.

How does one measure output? Do we measure revenues? Do we measure units sold? Do we measure capacity? When measuring output, over what time frame do we measure it—last year's numbers, last week's numbers, three months or the last decade? Importantly, how close a substitute do two products have to be to be included in the same market? Are Coke and Pepsi, Coke and ginger ale, or Coke and beer in the same market? There's no right answer to those questions. It's a question of judgment. They could even vary case to case.

Second, market definition does not fully account for intramarket product differentiation. Two firms could have very similar products and compete quite vigorously within a market, while two other firms may be defined in the same market, but their products are differentiated in a way that suggests they don't compete quite as vigorously. The kind of binary, in-or-out nature of market definition at least has the potential to be a bit misleading. There's no correct way to define the market. There's therefore no correct way to define market shares.

Moreover, setting aside the messiness of market definitions and market shares, concentrated structure, just as a conceptual matter, does not necessarily imply weak, competitive performance. Causation, for example, could run the other way. You could have intense competition, especially in a market where there are scale economies. You could have intense competition weeding out weaker suppliers and leading to more concentration. It's not that concentration is lessening competition; it's that competition may be lessening concentration. Existing market shares may not predict the future. There may be very low barriers to entry, for example. A concentrated market may not necessarily pose competition concerns. A firm may have a large market share now but a relatively weak product in the face of innovation, so predictably it will be less important over time.

For all these reasons, I think market structure, as I said earlier, is a useful heuristic when evaluating mergers. It's a good tool to look at when evaluating mergers. I support what the bureau has done historically. They have put out guidelines that rely in part on market share just to give the public a sense of the likely approach of the bureau to a particular merger. However, putting market shares in the statute gives them a kind of legal significance and potentially a pivotal legal significance—certainly Bill C-352 does—that in my view is misplaced.

I'll conclude my time by identifying two elements of Bill C-352 that have already passed that I have some hesitations about. One is calling excessive and unfair prices an anti-competitive act. I have a concern about that. For one thing, high prices don't undermine competition. They're not anti-competitive in and of themselves. Second, it is going to be very difficult to know what excessive and unfair is going to mean.

The other concern I have is that, as a consequence of, frankly, our case law, the latest statutory amendment to take out the competition test for finding an abuse potentially catches conduct that is harmful to competitors but is good for competition and good for consumers. I'm a little worried that abuse has become a little too easy to establish as a consequence of those changes.

I will stop there. Thank you.

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