Thank you to the members of the committee for this invitation.

Testifying before you is always a pleasure, especially when it comes to competition law.

However, I won't hide from you that I was surprised to learn that the committee had decided to study Bill C‑352, tabled by Mr. Jagmeet Singh in September 2023, since most of the provisions of this bill have been incorporated, in one way or another, into the bills tabled by the government, namely Bill C‑56 and Bill C‑59.

It is for this reason, and to better understand his concerns, that I listened carefully to Mr. Singh's testimony before this committee on June 3. It seems that three aspects of the Competition Act are of concern to him, as he makes three main proposals.

First, clauses 3 and 4 of the bill would modify the penalty imposed on those convicted under section 45 of the act. Second, clauses 8 and 9, which my colleague Professor Iacobucci has just discussed at length, deal with so-called “structural” presumptions linked to market share. Finally, the third proposal, and the least important, is to add, by means of clauses 7 and 10 of the bill, provisions to sections 90.1 and 93 of the act that take the wording of the exception provided for in cases of efficiency gains and place it instead in the main provision on the factors to be considered in assessing anti-competitive effects.

In this statement, I will focus briefly on the positive aspects of these changes and close with two remarks of a general nature on the competition reform process.

On clauses 3 and 4, I must confess that I am puzzled. In 2022, the Competition Act was amended to remove the previous $25-million cap on fines under section 45. This brought section 45 in line with section 47, which is the bid-rigging provision. It ensures that courts have maximum flexibility to set fines at levels that are proportionate in the circumstances to the gravity of the offence and the blameworthiness of the conduct.

Mr. Singh wants to reimpose an upper limit on fines. The previous $25 million would be reinstated, but then proposed subsection 45(2) would allow for an alternative, scalable penalty based on either three times the value of the benefit derived or, if that can't be calculated, up to 10% of the person's annual worldwide revenues. The objective is to communicate to courts the importance of imposing a quantum of fine that has enough bite to have an impact on the offender.

While I understand Mr. Singh's motivations, the modifications proposed will not produce the outcome he seeks and are likely to be counterproductive. The proposal is based on a misunderstanding of how criminal sentencing works in Canada, particularly the purpose of maximum sentences and how fines are calculated in cases of economic crime involving business organizations. I've done a lot of research in this area, so I'm happy to take questions on this. I would urge you to reject clause 3.

As for clause 4, I don't have any objection to it, but the provision—section 49 on financial institutions—has never been applied. I wonder why you wouldn't just have a fine at the discretion of the court given the size of financial institutions, relatively speaking, rather than having a $25-million maximum.

On clauses 7 and 10, I will say two things. I agree with the commissioner that reviving the old phrasing of the efficiencies defence may indirectly import back into the law some of the legal interpretations that came with that defence, such as an undue emphasis, in my opinion, on quantification and a judicial preference for a total surplus standard when assessing whether efficiencies are pro-competitive. However, I disagree with the commissioner that relying on the so-called basket clause, paragraph 93(h), is the best way to ensure that going forward, how we evaluate pro-competitive effects and how they're factored into merger law evolve in a manner consistent with the expectations that were created by the repeal of the efficiencies defence. I think this is an example of where enforcement guidance is going to be essential.

With regard to clauses 8 and 9, you have the benefit of two fine economic minds here, Professor Iacobucci and Professor Ross. They are better positioned than I am to speak to the frailties of relying on market share data alone as an indication of market power. I will simply echo the comments of my colleague from the Université de Montréal, Pierre Larouche—who appeared before you last week—that market shares are an incomplete picture and they can both overstate and understate market power. Bill C-59 also includes structural presumptions, but they are based on different measures than just market share.

This brings me to my final two points.

The first is that the debate over clauses 8 and 9 underscores a more fundamental problem, and it's one that Professor Larouche already talked about. I won't have time to get into detail here, but on the debate about what measures to put in the act, to me, they're secondary to whether or not we should have an act full of these kinds of details. There is a real problem with how the act is designed. I am a bit disappointed, I must confess, that this reform process didn't give an opportunity to start over with some basic general principles and develop a law that is far more rationally coherent and not with so many details and provisions from all over the place. Unfortunately, that's not what happened.

The final thing I want to say is that I hold out hope, but it's not going to happen this time around, that.... We still haven't really answered the fundamental question: What are we trying to do when we promote competition? We've skipped over the first question, which is, why are we doing this? That would inform the remedies we want, the choices we make, the emphasis we might put on different parts of law or what kinds of considerations would be relevant. Any discussion of the purpose clause ended with the Wetston consultation. Professor Iacobucci actually wrote about it. After that, there really wasn't much else there. There is no agreement on it, but I think it's an opportunity lost.

I'll stop there, but I welcome your questions in both official languages.

Transcript

Discussions (0)