Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 42 - Evidence, November 26, 1998
OTTAWA, Thursday, November 26, 1998
The Standing Senate Committee on Banking, Trade and Commerce met this day at 11:00 a.m. to consider Bill C-20, to amend the Competition Act and to make consequential and related amendments to other Acts.
Senator Michael Kirby (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we are here for our last set of witnesses on Bill C-20, the Competition Act. Our first witness is Professor Jacob Ziegel, who is a professor emeritus from the University of Toronto. Some of you may recall Professor Ziegel. Welcome back again, sir. You know our format. Since we are kind of tight for time, it would be great if you shortened your opening statements. Over to you.
Mr. Jacob Ziegel, Professor of Law Emeritus, University of Toronto: Thank you, senator. It is a pleasure to be back. I feel like an old fixture. I hope that, like a fixture, I can serve a useful purpose. I prepared a short written submission, Senator Kirby. I hope the clerk has made copies available.
My submissions are summarized on pages 2 and 3. I will just summarize them and then provide some expansion of the summary. They are a mixed bag, but they are all somewhat technical, so I hope the committee members will bear with me.
My first submission is that I oppose the proposed new section 52.1 so far as it limits prosecutions for false and misleading advertising, for representations made knowingly or recklessly. I say that the existing provisions of the act should be retained, for reasons that I will explain in a moment.
Secondly, I support the new telemarketing offence provisions in the proposed section 52.1 but I also recommend a modest amendment in proposed section 52.1(3)(d). Third, I support the new regulatory approach in Part VII.I appearing in clause 22 dealing with the reviewable deceptive marketing practices, but recommend substantial improvements in the remedial provisions where a reviewable conduct has been proven.
Finally, I urge much more vigorous efforts to enforce the trade practices laws at the federal and provincial levels.
As the members will see, the first three of these recommendations involve somewhat technical but important issues. My last recommendation is of a broader policy orientation.
So far as the first one is concerned, I explain in my submissions that, for more than 100 years, the law of Canada, the law of England and other common law jurisdictions have accepted the concept of welfare offences, by which we mean offences of strict liability subject; in the case of Canada, to a defence of due diligence. Welfare offences are those where the object is designed to promote public policy in areas of marketing, health, safety and such like. All modern industrialized societies have a large number of such laws. Laws concerning misleading advertising and false marketing practices are usually characterized as welfare laws and are therefore subject to different standards of prosecution than apply to straightforward and more traditional criminal offences.
In the case of false and misleading advertising provisions, the law in Canada has long been that it is not necessary to prove guilty mind on the part of the accused person but rather to prove that the actual ingredients of the misleading advertising have occurred. Then the accused person can exculpate himself by showing that the offence occurred despite the fact that due diligence was exercised.
Now, the proposed new section 52 proposes to change all this and it requires that in future any false advertising-related charges must contain an ingredient of either guilty mind or recklessness. I examine this at some length in my submissions. I make several points. One is that this is an important departure of policy and substance in the administration of the act. If it is going to be done, it ought to be done consistently across the many hundreds of welfare laws that we have at the federal level, not to mention in larger numbers at the provincial levels. But this act does not do it. In fact, there is a striking contradiction within Bill C-20 because, while it signals the conversion of these misleading advertising offences to mens rea offences so far as misleading advertising is concerned, it reinstates and introduces for the first time the telemarketing offence, which is subject to the old regime of strict liability. That makes no sense to me at all. It seems to me that the drafters of the act were given two conflicting sets of instructions.
That alone would, I think, require explanation and justification. I have heard none, nor do I know of any reason why we should have one set of standards in the Competition Act so far as criminal prosecutions are concerned and a different set so far as other acts such as the Food and Drugs Act, Coinage Act, Safety Standards Act and so forth. Let me emphasize, I am not suggesting that everyone who is guilty of misleading advertising should be prosecuted. I am not suggesting that there is anything wrong with using the alternative machinery in Part VII.I, quite the contrary. I am saying that we need to retain the existing provisions as well as adopting the new provisions so that the Competition Bureau will have a full panoply of alternatives at its disposition. We do not need to change the existing provisions in order to add to Part VII.I.
I also note that the proposed new section 52 has a number of other objectionable features. It is going to make it difficult to prosecute successfully under the new provisions because it does not contain sufficient detail. The existing section 52 spells out in some detail various types of misleading advertising offences such as selling above the advertised price, switch and bait, referral sales, false testimonial claims, and so forth. The proposed new section 52 basically substitutes a simpler structure, which in one sense may be good. In another sense, it is going to make it much more difficult to prove the appropriate ingredients of a guilty mind or recklessness.
I notice also that one type of obnoxious technique known as referral selling crops up regularly both at the provincial and federal levels. It is currently prohibited in the Competition Act. For some reason or other, it has been totally eliminated as a result of Bill C-20. I know of no justification of it other than, I suppose, that some of the provinces have provisions of their own. However, if the benchmark is what the provinces are doing or not doing, then it might be argued that a lot of these misleading advertising provisions should also be left for regulation at the provincial level. That is not the general thesis of Bill C-20 and so I do not see why referral selling has been singled out as the victim of elimination in Bill C-20.
So far as new telemarketing offences are concerned, and I am going to emphasize this again, Senator Kirby, because it is an important point, these new telemarketing offences are offences of strict liability, unlike the other false and misleading provisions in the proposed new section 52. I appreciate that telemarketing lends itself to great abuses. I think we are all familiar with some of the many reported cases, so I have no difficulty in supporting these new provisions, subject to the observations that I have already made.
However, I have an observation concerning proposed section 52.1(3)(d), which deals with telemarketing sales and exorbitant prices. It says that there is nothing wrong with selling goods or services at an exorbitant price so long as payment is not required before the delivery of the goods or the services. I say this qualification of non-prior delivery is bound to provide a loophole for astute marketers and lawyers because there are a variety of ways in which one can construct a delivery so as to avoid the requirement under this proposed new clause. I recommend that the requirement of non-delivery be eliminated so as to avoid this potential loophole. Anyway, it seems to me rather curious to say that there is nothing wrong with charging exorbitant prices so long as you do not require prepayment. If exorbitant prices are objectionable, and under many of the provincial laws they are, then the time of payment should not matter.
Now, dealing with the new reviewable transactions, which are covered in Part VII.I, I have already said that I strongly support them in principle. Many years ago I was co-author with a former student of mine, Ron Cohen, of a Department of Consumer and Corporate Affairs report. In it, we strongly argued in favour of providing these alternative mechanisms for the enforcement of misleading and false marketing practices.
Nevertheless, I have some strong reservations about the remedies that are provided in Part VII.I because, in my view, they fall significantly short of what all the analysts in these areas have recommended over the years. These include the recommendations made by the task forces that were established in the 1970s and 1980s.
Let me just run through them.
The Chairman: May I ask you to be concise, because we want the opportunity to ask you some questions?
Mr. Ziegel: Absolutely. Bill C-20 has a very limited number of remedies under Part VII.I. They only permit the court to impose a monetary penalty, to make a cease and desist order, to require advertising of the court's order. There is nothing said in Part VII.I about restitutionary remedy, private rights of action, nothing in particular about class action remedy. All the reports in this area that I am familiar with have recommended these additional remedies because they are an essential complement to the other remedies provided in Bill C-20.
So far as my last recommendation is concerned, you may have the most perfect bill in the world, but if the resources and the political will are not there for enforcement, then these provisions will remain a dead letter. Fortunately, we already have a good deal of legislation for consumer protection at the federal and consumer levels, but they have not fared well over the last 15 years. Rather, there has been a systematic dismantlement of the enforcement machinery. Things have been particularly bad at the provincial level, but there is nothing to write home about regarding the federal enforcement machinery, either.
Through this committee, I urge both the federal and provincial governments to take the legislation much more seriously and to remember that enforcement is at least as important, perhaps more important, than having the right type of legislation enforced.
If you would allow me a personal observation, it would be this, Senator Kirby. As someone who has appeared quite frequently before committees, my impression is that quite often a witness has gone to considerable trouble to make some submissions. However, when he looks at the committee's report, there is no reference to the submission that has been made, to the argument that has been brought forward. This leaves the impression that what the witness had to say was unimportant or that perhaps the committee had different priorities. I find this a very distressing experience. I very much hope that this committee, when it prepares its report, will take the submissions seriously, including, I hope, my own.
The Chairman: As you know, when you appeared before us regarding the Bankruptcy Act, we in fact took into account a lot of the points you raised, although we did not make all the amendments you recommended. We had conflicting opinions, as I remember, on a number of the issues you raised, but our report took them into account.
I want to make one comment and then ask you one question. You say at this point if regulatory offences are to be decriminalized, it should be done consistently across the federal statutes. I do not dispute that. Anyone who knows anything about how Ottawa operates knows that it is almost impossible to get anything out other than incrementally. However theoretically sound it is, it does not seem to work in the practical work of public policymaking. I do not dispute your point. I simply do not think that is generally "doable," just as an observation from someone who has been around the system for a while.
I will leave aside your regulatory philosophy question. It is interesting to me that you objected to using telemarketing, the selling of a product at a price grossly in excess of its fair market value. I do not know how anyone can really determine what the fair market value of something is. When I look at the price that you can buy any given product for, ranging from a big retailer like Wal-Mart on one end to other stores on the other, my instinct is that this particular act has dealt with that issue in an okay fashion, since it avoids having to decide what is grossly in excess of fair market value. I do not understand your objection on that point.
Mr. Ziegel: I think you misunderstand me. First of all, my criticism is not focused on the concept of exorbitant price. My criticism is that if you are going to use this benchmark of exorbitancy, you should not link it to the time of payment. If the objection is that consumers are being victimized because exorbitant prices are being charged, then the victim does not appreciate the exploitation.
The Chairman: How do you know it is exorbitant until you see the thing?
Mr. Ziegel: For example, if they are offering you gems, and several of the cases have involved the sale of gems, a layperson would not have a clue as to the true value of the gems until experts are consulted.
The Chairman: They take it to a jeweller and get it appraised.
Mr. Ziegel: That is what, in fact, has happened, along with a number of other items, as well.
The Chairman: I misunderstood what you said.
Senator Oliver: My question is in relation to the very last point you made about people who come to committees and make submissions and you wonder what happens to them. On a couple of occasions in your presentation and in your brief, which I very quickly skimmed, you say that you think that there are sections of this bill that should be amended. Have you brought any draft amendments that we could look at and perhaps incorporate in the report or make suggestions on?
Mr. Ziegel: As I say, for example, in the case of proposed section 52, I will leave it as it is. There is no need to make any changes because you are not forcing anyone to prosecute. You are simply saying that we have these provisions now. If in an appropriate case the Commissioner of Competition decides to use them, he will have them at his or her disposal. There is no need to do anything. You are adding Part VII.I and it may be fine. It may be that in most cases the commissioner decides that he prefers to proceed via this administrative route rather than the criminal route. I have no objection to that whatsoever. Why do you have to dismantle the criminal prosecution machinery? I do not find persuasive reasons. People object to charging misleading advertising without this guilty intent. I say you can make the same complaint about hundreds of other federal welfare offences.
Telemarketers can make the same objections about the new provisions dealing with telemarketing. There are striking inconsistencies there. I simply find the underlying philosophy is unpersuasive. It is also discriminatory because it is much easier to prove a guilty mind in the case of a small marketer than it is in the case of the large department store or other enterprises. I find that objectionable as well.
Senator Oliver: In the normal framework of the criminal law, if you had a clause that said no person shall knowingly or willingly do a certain act, that invokes what we call the mens rea, the mental element. It is a subjective element because you have to knowingly, subjectively do something. Then the other element would be the actus rea, which is the actual act that you do. Those are the two things that make up a crime. Could you look at proposed section 52.1 (4)? It says that in a prosecution for a contravention of this section, the general impression conveyed by a representation, and so on. Here they are talking about a general impression of one of these marketers.
Mr. Ziegel: Forgive me, which bill are you referring to?
Senator Oliver: The Competition Act.
Mr. Ziegel: I do not think you are referring to Bill C-20. You are referring to the existing act.
Senator Oliver: Yes, I am. I want to ask you if the general impression conveyed by a representation as well as the literal meaning thereof shall be taken into account, and what this does to the traditional doctrine of mens rea and actus rea when you are talking about a general impression conveyed.
Mr. Ziegel: As I said, under the existing act, it is well established as a result of a long series of decisions, including the very important decision of the Supreme Court of Canada in the Wholesale Travel case, that these are not, and were not, intended to be mens rea offences. That is why they call them offences of strict liability subject to a defence of due diligence.
Senator Oliver: Now under proposed section 52 of Bill C-20, they are, in fact, strict liability offences.
Mr. Ziegel: No, they will not be. That is precisely where the change is going to be made. If you look at the proposed new section 52 which appears on page 8 of Bill C-20, clause 12(1) says: "No person shall, for the purpose of promoting, directly or indirectly..." It says, "... by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading..." Here for the first time in the Competition Bill will be introduced the concept of mens rea or recklessness. If you compare this with the deceptive telemarketing offence at the top of page 11, you will find that these words are conspicuously absent. There, in proposed subsection 52.1(3), at the top of page 11 of the bill, simply says: "No person who engages in telemarketing shall make a representation that is false or misleading." It does not say "shall not knowingly" or "recklessly," right? So I am saying that you have a striking contradiction. You are saying that telemarketing is going to be a strict liability offence.
In other forms of false misleading advertising, mens rea or recklessness will become an essential ingredient. I find this striking. Presumably, the guys who are concerned about telemarketing appreciated the difficulty of proving the mens rea and so they consciously omitted it. I do not blame them. I say that your philosophy is at sixes and sevens. Make up your mind one way or the other. Within the same bill, within the same act, you should not be running with two different philosophies.
Senator Oliver: Are you recommending or suggesting an amendment?
Mr. Ziegel: As I said, my amendment would be to delete clause 12 entirely and simply say that you have the existing provisions in section 52 of the act that deal comprehensively with the criminal offences relating to false advertising and other representations. They have been there a good many years. You have accumulated a large body of experience. Unless you can show that there is something intrinsically inadequate in those provisions, let them be. You are going to have your new Part VII.I. It may well be that your enforcement will be through Part VII.I. I have no objections, but to the extent that you deem it desirable to continue to have criminal remedies at your disposal, there is no need to tamper with section 52(b).
Senator Tkachuk: I want to ask you a question on the concept of telemarketing. When they define telemarketing for the purposes of this act, I think they mean the practice of using interactive telephone communications for the purpose of promoting directly or supplying use of a product directly or indirectly. Does that cover inbound calls, 1-800 numbers, in other words, when people are led to call a number because of a direct mail letter or a television advertisement?
I will give you an example. You get a letter in the mail and it says that you are going to win a prize. You can win a million dollars or a car or whatever, and you have won. If you phone this 1-900 number, they are going to tell you what you won. So you phone the 1-900 number. Off comes $19.50 from your credit card and you have won a $10 coupon to something. You did not win the million dollars or the Mercedes Benz. Is that telemarketing?
Mr. Ziegel: I am no expert in telemarketing. What you are really asking me is the meaning of the word "interactive" in line 2. I suppose if you are phoning and you are interacting with a telephone number at the other end -- and I emphasize that I am no expert in this area -- I would be inclined to interpret the words "interactive telephone communications" as meaning that it involves at least two lines or two sets of messages operating at different ends of a telephone line. So you are not just speaking to yourself. I have some doubts about using the word "interactive." I do not know why you cannot simply use the word "telephone" communications, but I leave this to the experts. Perhaps they were worried that you could have a situation where somebody places an order by telephone and takes the initiative himself or herself.
Senator Tkachuk: What about the case of a TV ad that says you are going to get rich, you are going to make millions of dollars if you go into real estate, so you phone in and they send you a book and you have paid $300 for it?
Mr. Ziegel: That does not differ from any other kinds of advertising, so that raises a question of what you mean by "interactive." How does it differ? You may have perfectly legitimate advertisements that you see in the newspapers and a flyer, or hear on the radio. Presumably, the focus is something that is generated through telecommunications.
Senator Tkachuk: I am trying to get an idea of how this is going to be interpreted. In other words, if I dial into the Internet, is that a telephone call? What I am getting at is how far will the departmental people or the people administering this act go and use the judicial process to tap into telephone lines? It is not just telemarketers, any company can use 1-800 lines for what may be deceptive advertising. Perhaps you dial into the Internet and you interact with someone and they tell you the same thing that they would tell you on the phone, that you are going to win lots of money, or we have these wonderful gems, so give me your credit card. That is interactive. You have dialled a number but you are not speaking. Nonetheless, to me, it is a phone call.
Mr. Ziegel: I do not quite understand your concerns. Are you worrying about whether the definition of telemarketing is too broad or too narrow?
Senator Tkachuk: I am asking you. I do not know how broad it is because I am not a lawyer and I am just trying to figure out whether interactive telephone communications means actually speaking, the Net, 1-800 numbers or every facet of electronic communications.
Mr. Ziegel: Lawyers have no monopoly on wisdom, senator.
Senator Tkachuk: I am trying to get your wisdom.
Mr. Ziegel: I have no technical competence to interpret the word "interactive." I am not sure how much it adds to the meaning of the words "telephone communications." I would have thought that if one omitted the word "interactive," it would not substantially change the meaning of using telephone communications for the purposes of promoting, et cetera.
The Chairman: Professor Ziegel, thank you very much for coming.
Senators, our next witness is Mr. Larry Wagg from the Congress of Union Retirees. Welcome, Mr. Wagg. Thank you for coming forward.
Mr. Larry Wagg, Vice-President, Congress of Union Retirees: We want to thank you for this opportunity to appear before your committee. I do not know how profound our remarks will be this morning. You are probably aware that the Congress of Union Retirees of Canada, of which I am the first vice-president, and Ms Mary Eady, my colleague, who is the Ottawa representative, presented a brief to the Parliamentary committee of the House of Commons. We did that jointly with the National Pensioners and Senior Citizens Federation, of which we are the largest affiliate. Early in June, we "lobbied," if that is the term, to appear before the Senate committee. That did not happen, so we lobbied again in September.
We support the bill but we still have some questions on a couple of areas.
We have a brief submission, which Ms Eady will make, and then we will answer your questions.
Ms Mary Eady, Ottawa Representative, Congress of Union Retirees of Canada: The Congress of Union Retirees of Canada was established at its founding convention in 1993 in Toronto. Its purpose is to knit together various organizations that have been formed among retired union members across Canada whose unions were affiliates of the Canadian Labour Congress.
Other purposes of the organization are to monitor collective bargaining trends, and social, economic, education, legislative and political events of interest to retired union members and their spouses. Another role we play is to petition legislators for the introduction and enactment of legislation on measures to improve the health and welfare of all retired persons consistent with the policies of the Canadian Labour Congress.
Since its founding, CURC has grown in membership to some 500,000 affiliated members. We have every expectation to reach 1 million within the next two years, with affiliates in all regions of Canada from coast to coast.
We are pleased to have this opportunity to present our views again on Bill C-20. We are particularly concerned with the clauses dealing with telemarketing fraud. We are also concerned that adequate funding be given to the agency charged with enforcing this act and its accompanying regulations. Without this funding, in our opinion, the provisions, however good, will be without meaning.
As we stated before the Standing Committee on Industry last May, we have concerns about the growing number of items being offered through the Internet. I was interested in the discussion with the previous presenter about whether the current act would cover the items that are offered through the Internet and the World Wide Web. At the time we raised this with the committee in May, we were given to understand that it did not include Internet fraud. We ask that this be given consideration because this form of marketing, in our view, is the wave of the future. There is little point in introducing legislation that deals more with past practices than what will likely happen in the future.
We were advised that another group in government was considering the Internet situation, but in our opinion it might be more logically dealt with in this instrument.
As I understand it, Internet use does involve a the employment of a telephone line, but it is not a direct telephone line. The use must have a service provider who makes the link.
I am not a technician in this area, as you can tell, but I think it is important to understand the current technology and what is coming down the road in order to ensure that the law will cover what will happen in the future. Having had some experience in provincial government, I know how slow and difficult it is to introduce and adopt new legislation.
Finally, I would like to plead, as we did before the commons committee, that when the regulations are drafted and ready, we be consulted because, from my experience, the regulations, "put the meat on the bones" of the act. They can be critical in terms of how the law is applied and how it is understood by the citizens. It is important that there be public understanding of what the law provides.
Mr. Wagg: I went through the bill. It is very difficult for a lay person to understand it. I understand that it takes a group of six complainants before the tribunal will hear a formal complaint. It has been argued that this is to prevent frivolous charges. If that is so, then seniors are at a particular risk. Do six individual complainants trigger the enforcement mechanism? Could these be months apart?
Bear in mind that many victims are too embarrassed to report an incident. Many seniors live alone. How can we assist them when they need help? Many seniors groups across Canada conduct educational programs as parts of their outreach program. Funding should be available or the purchase of educational material.
Enforcement is another concern for us. As we said at the parliamentary hearings, to us, "a crook is a crook." We happened to follow a lawyer for the Bay who was decrying the fact that his president, who had to go to court, was in the courtroom with hookers, drug dealers, and others. That was our remark then and it is still our belief.
We are concerned that the non-criminal mechanism could turn into a slap-on-the-wrist approach. Our justice system all too often treats white collar criminals differently for reasons that are not discernible to me. The effect of that is to allow this type of criminal to stay in society and, in too many cases, repeat their actions.
We would commend the clause of the bill that permits judicial authorization for interceptions of private communications in relations to conspiracy, bid rigging and deceptive telemarketing. Being the type of organization we are, we had to struggle with that because of the civil liberties concerns, but the common good, in our opinion, overrides those concerns.
Senator Oliver: I was happy to hear you talk about the need for education. Witnesses from the Canadian Direct Marketing Association told us that a large component of their work is education. They told us that their association fulfills its educational role by offering seminar series, holding semi-annual conventions, sponsoring trade shows, running industry awards, and developing post-secondary education programs. That organization is helping to educate groups, and it would be available to seniors.
Mr. Wagg: About a year and-a-half ago, representatives of the ministry and representatives of the Canadian Direct Marketing Association held what you would call a "seminar." There were video presentations and so forth. No doubt they are trying to educate people, but I do not discern any effect in most of the seniors organizations that we are involved with that have any direct contact with that marketing group. The ministry did distribute the videos. That was two years ago, and I do not know whether there was follow-up.
The Chairman: Mr. Wagg and Ms Eady, thank you very much for assisting our committee.
Senator, our next witnesses are Mr. Warren Stellman and Mr. John Kohos from Normak Business Communications in Montreal. Perhaps you would give us the highlights of your brief and then we will move to questions.
Mr. John Kohos, Normak Business Communications: On my way here, recognizing that we were to have about 10 minutes, I promised myself that if I ever found a way to successfully make a case in ten minutes, I would write a book about it. Perhaps I will do that on the way back.
Ladies and gentlemen, let me start by saying that we support the intent of the bill. Nevertheless, we came here to ask for an amendment that will delay this bill for at least six months so that a proper review can take place. We came equipped with some good reasons to offer you. We passed out a short brief. The first part, the actual presentation, is less than two pages in length. It is as much as we could prepare in the time we had, and it is probably more than I can cover in 10 minutes.
The second part illustrates the very good reason why we believe Bill C-20 should be studied much more carefully before it is turned loose. We believe that, before you pass Bill C-20, you should consider who will be chosen to enforce it. In effect, these people will become the system if this House, for example, does not take on that role.
When we have completed our presentation, we will leave you a copy of the text of our brief so that you may review it.
I hoped to have something in your hands before today but we had less than 12 days to prepare. We only saw the final submission last week. Frankly, we were a little disappointed and maybe a little unnerved when we did see it because it is the same document that was presented to the committee of the House of Commons. Nothing has been changed at all, despite concerns that were expressed by a wide variety of people about issues such as arbitrary wiretapping, vague language, questionable powers, and the proposal that a person could be considered guilty for the act of another person which may only take place in the future.
I did have the opportunity to speak to one of the members two nights ago, and he wished me luck with you folks. He also gave me an excellent piece of advice, which I have had some time to think about. He advised me to prepare myself to respond to the two principal arguments that he says have pushed the bill as far as it has gone already. The first one is that somebody is out there ripping off grandmothers. The second is that you have to trust the system.
We have no argument about the grandmothers. Somebody is ripping them off. We are telemarketers. We are in the industry. It is something we are confronted with every day. We know it is a fact. Other law enforcement people, people who have been victimized, they are also aware of it. We support the notion that something has to be done about it. However, if we pass this bill as it is written, we will have to worry not only about our grandparents, I suspect that we will also have to start worrying about our grandchildren because of what it is we are going to pass into law.
Then we turn to the second argument about trusting the system. We are giving wide powers and trusting that people will know how to use those powers. In effect, we are giving a big stick and a gun to law enforcement and saying that we should not worry because they know what to do with them.
I will give you some historical background to explain what has drawn our attention and our concern to this matter. We have been operating for most of the past decade and we now have approximately 15,000 customers. We have never been convicted of a crime. We have never been accused of a crime. We have never had a judgment issued against us. No judge has every been asked for one.
When we commenced our operations, we gave $5,000 to the Montreal Better Business Bureau and told them to use it at their own discretion if they believed any consumer issue was not resolved to the consumer's satisfaction. To date, they have never had to use a nickel of that money. We recently sold one of our companies to Bell. In a nutshell, that is who we are.
As to the issue of the wide powers and trusting those who will enforce them, I want to tell you about one particular personal experience. Some time ago an Ontario policeman flew to Montreal and walked into our bank. He flashed his badge and he told our banker that we were under investigation for racketeering. He then suggested that the bank could be implicated as an accomplice for serving us. Now, more than a year later, our bank still charges us $1,000 a month above and beyond the regular charges for banking just for the implied risk that we may be involved in some fantasy litigation.
Following that incident, this same Ontario policeman walked into our American bank in Vermont with a local policeman in tow. They flashed their badges. They scared the banker so thoroughly, he not only closed our accounts, he kept $50,000 of our money for more than a year just in case something was actually coming over that hill. Nothing every did. There were no charges and no investigation.
The Montreal Better Business Bureau is now trying to give us back the $5,000 I mentioned, and they want to kick us out because the Canadian Better Business Bureau is threatening sanctions if they renew our membership. We did nothing. According to them they are cooperating with the same Ontario policeman. I do not know if I have to name this person. I suspect this committee has heard the name of the person I am talking about, the person who has been on the front of this "phone busters" operation.
The Canadian Better Business Bureau is cooperating with this particular Ontario policeman. Their organization wants no part of the adverse pressure being generated against anything that can be branded as telemarketing.
Some time ago I had an opportunity to ask this policeman why he was doing this to us. He told me he wanted us to help him get somebody in the telemarketing industry, somebody he has since arrested. I saw it on television. They hauled him away in handcuffs; there was a big hoopla; and the fellow went down. He wound up paying a fine in the $20,000 to $30,000 range, went home and took a shower and went to his son's bar mitzvah. They wanted to get this guy and they felt that we could help him. When we refused, he threatened to brand us as criminals until we did help him. Then I threatened to report him and he threatened to investigate me personally.
The Chairman: Can we come back to the bill, if you do not mind? I understand that this is a big issue for you, but our purpose is not to hear individual cases. If you have specific comments on the bill, I would be happy to hear those.
Mr. Kohos: With due respect, senator, the reason I am describing this particular case is not because I am here to fight that case, it is to demonstrate the remarks in my presentation regarding the powers granted by the passage of this bill, the way in which they will be granted, and what they will allow.
We were told that we would have to address the argument that sometimes you have to let the system work. In order to trust the system and let the system work, we have to be certain that those people in enforcement who will be using the statutes we hand them, the powers we hand them, will act in a responsible fashion and in good faith. In fact, there is a danger that the measures we will put in their hands will become a tool which they can use to pressure innocent people, to punish people without the benefit of a trial. That is a large part of our concern.
Our contention is that the bill is not a constitutional instrument. We do not think it will pass muster. We do not think it will survive the Oakes test, which has three parts. The first, which it does pass, is the qualification that it must have an honourable objective. We agree with that.
However, it must also be well-designed to meet that objective, and it must do so with a minimum of side effects. The simplest school book example is that you cannot yell "fire" in a burning theatre because of public safety. It is a restriction, but it is a reasonable restriction. It avoids panic. If we were to rewrite the law so that instead of saying you cannot yell "fire" in a theater, we were to say, to accomplish the same end, you could not yell at all or even speak in a crowded theater, assuming there is no fire, we would not only have accomplished the task that we set out to do, we would have gone far beyond it, and we would have abridged other rights unnecessarily, and so it would fail the test.
We suggest that, in this case, the bill clearly goes over that line. We think its creates a legal hybrid that does not exist in this country. We believe it is incompatible with the laws in this country, and that it should be reviewed.
I am not a lawyer and I do not make many presentations like this. I have done a tremendous amount of work to collect and present our concerns in an organized fashion, and I would very much just like to go through the rest of them.
Senator Tkachuk: Give me one specific example of the claim you are making.
Mr. Kohos: I have not yet made it. All I have done so far is give you some background on our company. I have attempted to share a certain amount of history with you which I have tried, as creatively as possible, to link to specific references to the content of the bill.
I mentioned that a policeman threatened to investigate me personally because I said that I would report him for his behaviour. He did call me back 20 minutes later to tell me that my 70 year old father is a professional gambler, which he is. Obviously, I already knew about it. In any event, he has been making good on his threat. We are still paying the price. As far as we are concerned, we would be giving this individual a loaded gun and a licence to use it.
Then we come to the question: What systems shall we trust? According to the bill, I can be fined or jailed and have my business shut down over an offence that has not even been committed. This can be done based on the mere likelihood that an offence, or an act potentially leading to an offence, either directly or indirectly, might be committed in the future, either by some other person who need not be identified or by one that will never be prosecuted. This law will require no perpetrator, it will require no victim, it will not even require a crime to have been committed, and yet it carries criminal penalties.
I have a severe problem with what looks to me like a fast-end run around the Charter of Rights and Freedoms, albeit for a goal. It is as if someone is saying: "All you innocent folks need not worry. We know who the guilty party is. We know it is a blank cheque, but we know who the guilty party is."
If you are an employee, such as a director of a company, and if you do something which is either an offence or may lead to an offence, or you may be likely to do something or are about to do something that may constitute an offence or may lead to one, then you can be held to be guilty.
Senator Oliver: What clause of the bill is that?
Mr. Kohos: It is in our presentation. It relates to the amendments. We have not an opportunity to go through the entire bill.
The Chairman: Are you a member of the Canadian Direct Marketing Association?
Mr. Kohos: We were a member in good standing of the Canadian Direct Marketing Association for a number of years. We have never had an unresolved complaint against us. In fact, I believe we are the only telemarketing company that has ever been a member of the Better Business Bureau and the Canadian Direct Marketing Association. As I mentioned, however, we were forced to quit because we were told that they were being pressured.
It is proposed that section 52.1(7) shall provide that:
... in the prosecution of a corporation, it is sufficient proof of the offence to establish that it was committed by an employee or agent, whether or not the employee or agent is identified.
Then the proposed section 52.1(8) provides that a director is, and I quote:
... a party to and guilty of the offence and is liable to the punishment provided for the offence, whether or not the corporation has been prosecuted or convicted.
It states that a director is a party to and guilty of an offence on behalf of his company, even though his company has never been prosecuted or convicted.
Senator Oliver: However, the proposed subsection (7) states:
... unless the corporation establishes that the corporation exercised due diligence..
Due diligence is a factor.
Mr. Kohos: That is acceptable.
Senator Oliver: The due diligence defence is available.
I have two short questions. In this document you handed out, you have a definition of telemarketing. Where did that definition come from? It says: "Telemarketing is the systematic use of out-bound live voice interactive telephone communications to sell products or services directly to persons neither initiating nor requesting such a solicitation." Whose definition is that?
Mr. Kohos: That is a definition we have put forward, and we have followed it up with the report that everything else is business or talking on the phone.
Senator Oliver: You use the word, "directly" but Bill C-20 uses the words, "directly" and "indirectly." Why did you not include the word, "indirectly"?
Mr. Kohos: I chose to take out "indirectly."
Senator Oliver: You say, "... to sell products or services directly..." not "indirectly."
Mr. Kohos: The question is: What do you mean by "indirectly"? How indirect does it have to be?
Senator Oliver: You also use the words "live voice"? Can you tell me what that means and why you use it?
Mr. Kohos: Yes, sir, I would very much like to explain this. In attempting to narrow this definition, we are not taking a side step. What we are attempting to do is give you what should be the definition of telemarketing.
Senator Oliver: Please address my question on "live voice." I do not have much time.
Mr. Kohos: We are a telemarketing company. What we do is precisely this: We pick up the telephone and we contact a person who has not asked us to contact them. However we came by the information, their names and phone numbers and so forth, is not at issue. There are a lot of professional services for information today. We pick up a telephone; we call them; we speak to them; we offer them a service, and we try to give them a reason. We try to, in effect, sell them on the idea that they should buy a product or service that we offer today rather than tomorrow. We do that directly. That is where the protection has to be. People who do what we do must be controlled in their behaviour, obviously, and that is the purpose of the bill.
I also have a computer company. If somebody calls my shop and speaks to one of my technicians and then later claims they have been misled by some information given over the phone that may or may not have had something to do with having purchased something from us or having been misled into purchasing something and so forth, how would that be telemarketing? If I call a pizzeria that is listed in the Yellow Pages and order a pizza, is that telemarketing? If I send somebody a fax, is that telemarketing?
You have to focus on the fact that, in telemarketing, a pressure factor is involved. Somebody you do not know calls you on the phone and puts you on the spot.
Senator Oliver: You told us that you have never committed a crime, that you have paid $5,000 to the Montreal Better Business Bureau, and that you have 15,000 customers. What do you do for your 15,000 customers?
Mr. Kohos: We certainly sell them a product. We sell them promotional items.
Senator Oliver: What constitutes a client? Do they pay you a fee?
Mr. Kohos: No. We call them on the phone as a merchant, as a service provider, because we personalize all the products we sell. We make them an offer and they purchase from us.
Mr. Warren Stellman, Normak Business Communications: We sell advertising, specialty gift products, promotional products, all customized and personalized. We do most of our business around Christmas. We sell individual gifts.
Mr. Kohos: We call them on the phone and get their attention. We try to persuade them to buy a product from us, and then we hang up the phone. We recognize the fact that, sometimes, in the heat of the moment, somebody buys something and, when they cool down, they may not want it. That is where a lot of the controversy comes in.
Forty-eight hours later, we have a young lady who calls the customer back. That is the only job. She goes through every detail of the sale: "I want to confirm did you purchase this, yes or no? Is this what it should say on it? Did we spell your name right: Yes or no?" We go through every last little detail with them. In fact, all of the calls are recorded for the purpose of customer service and in case somebody comes back and says that we spelled a name wrong.
The Chairman: Thank you very much, Mr. Kohos. We appreciate you taking the time to appear before us.
Senators, our next witnesses are from the Canadian Bar Association, Mr. Tim Kennish, who is the Executive Member of the Competition Law Section, and Ms Tamra Thomson, the Director of Legislation and Law Reform. Welcome.
Mr. J. Tim Kennish, Executive Member, Competition Law Section, Canadian Bar Association: Ms Thomson will make our opening presentation.
Ms Tamra Thomson, Director of Legislation and Law Reform, Canadian Bar Association: Mr. Chairman, honourable senators, the Canadian Bar Association is very pleased, as always, to appear before this committee today to speak on Bill C-20, an act to amend the Competition Act. The CBA is a national association representing over 34,000 jurists across Canada. The brief before you today has been prepared primarily by the Competition Law Section, with input from our Media and Communications Law Section.
One of the primary objectives of the CBA is to work toward improvement in the law and in the administration of justice. It is in that context that we make our comments before you today. You have received a copy of our brief and our letter.
Mr. Kennish, a member of the executive of the Competition Law Section, will make the substantive remarks today.
Mr. Kennish: Mr. Chairman, honourable senators, I wish to thank the committee for inviting us to make known our views on Bill C-20. The Canadian Bar Association has had extensive involvement in the evolution of the present bill from its early days when it was in the form of ideas and a discussion paper, through a consultative panel's review and the presentation of the bill. We presented a comprehensive brief to the House committee and we have this paper that you have before you today.
My comments today, as well as those of our association, will be focused on two areas, namely, the so-called wiretap and whistle blower provisions. Our prior submissions covered a broad range of areas. Attached to our letter is a copy of the submission that was presented to the Industry committee. If there are any questions relating to that submission, I would be happy to try to deal with them later.
We recognize that all of our comments on these provisions cannot be accommodated. We also want to make the point that there are many issues in Bill C-20 that we consider as being very positive and constructive developments. The two matters I want to talk about are issues that we feel reasonably strongly about with respect not only to the content, but also the process.
Starting with the process, I would comment that, historically, the process of making amendments to the Competition Act has been quite a deliberative one. The two major changes to the legislation in 1975 and 1985 were preceded by a lengthy discussion and debate where public interests were well represented. That approach has been largely followed in regard to Bill C-20, with a few exceptions that are the subject of our comments.
The wiretap provisions are really an amendment to the Criminal Code to extend the authorization to have the interception of private communications applied to three areas of the Competition law enforcement. One is deceptive telemarketing. Another is agreements relating to conspiracies contrary to section 45 of the act. The third is really a subset of that, the bid rigging provisions of the act.
In this case, an extensive consultation process was not followed. The proposed amendments were added to the bill prior to its presentation to the House. While there was some limited consultation on a private basis with some individual stakeholders, that was on a basis where those consulted were asked not to discuss it and to keep the matter confidential. There were relatively few people involved then and there was limited time to reflect.
We think it is unfortunate because this is an extreme and intrusive enforcement tool. In a 1990 Supreme Court of Canada case, Mr. Justice La Forest described it by saying, "One can scarcely imagine a state activity more dangerous to individual privacy than electronic surveillance."
In the course of the discussion about the eventual content of Bill C-20, there were a number of matters that were identified as being somewhat controversial or more problematic. Basically, most of those have been set aside for further or more deliberative consideration. This is what we think would be useful in regard to both of these provisions, however, they are being moved forward.
Because of the absence of a broad discussion in regard to the wiretapping provision, we do not think that there is a clear case for its use in the circumstances. The first, and perhaps foremost suggested application of its use, is in the telemarketing area. It is acknowledged that it possibly has a greater legitimacy there, given the nature of the offence, which is primarily by telephone communication in any event. However, there is no experience with the enforcement of the provision without support of the wiretapping process. As is mentioned in our brief to the Industry committee, the telemarketing provisions themselves are extremely comprehensive and broad in their application.
Second, section 45 of the Competition Act, which is the main conspiracy provision, is not in itself a black and white offence that one simply will violate or not. It has a rule of reason standard in it and the quality of its legality depends on several surrounding facts. It could potentially cover many circumstances that may or may not be unlawful.
The bill was amended to restrict its application to four areas where there are agreements relating to prices, the quantity or quality of production markets, channels or methods of distribution. Notwithstanding that narrowing of scope, I think it still has potentially potentials too broad for its scope of application. It could, for example, authorize the invocation of this authority to look at agreements or discussions amongst the parties regarding the use of a common delivery system or entering into arrangements amongst competitors outside their area of competition.
Finally, while bid rigging itself is an offence, it is one where it is not an offence if the parties who have collaborated in making a bid, or proposing to make a bid, have made it known to the person to whom they are making the bid. It is another one in which I question its potential use. Section 45 has been in the act for over 100 years without the apparent necessity for this enforcement assistance. The bid rigging provision has been in the act since 1985, at least. Many people have raised the question. Why, all of a sudden, do we need this now?
The director has issued a guideline that is intended to indicate that this authority will only be used in exceptional circumstances and that, in applying it, they will be guided by the principle of minimalization. While it is comforting on its face, it is in the form of a guideline. When we are talking about criminal provisions and an intrusive enforcement tool, I have a strong preference for the rule of law. The guideline itself was recently re-issued. The facility of amending the policy approach in enforcement is obviously much easier than changing laws.
While it has not been my particular experience, I understand from others in the association that wiretapping authorizations are relatively easy to get. In these cases, of course, there is no advance notice. Later, the other party finds out that an order has been obtained, and there are limited grounds to object to the use of the obtained evidence on the grounds that the authority may have been improperly issued.
While, obviously, there have to be grounds -- and they are mentioned in the submission -- it is not a remedy of last resort. My experience in regard to other procedures under the act, such as search and seizure and subpoena processes, is that they seem to be relatively easy to obtain as well.
The Law Reform Commission had recommended that a minimalization principle be incorporated in this law. That recommendation was not followed. I believe the U.S. law in this area does have such provisions.
I will briefly go on to the whistle blower provision. If you have understood our reservations about the wiretap because of the lack of consultation, you will recognize that, in regard to the whistle blower provision introduced by the Industry committee in the House of Commons, an opportunity to discuss it was effectively pre-empted. It is our opinion that this legislation proposal, while it is undoubtedly well intended, is quite misguided and provides a prospect for criminal sanctions being imposed on an employer in respect of otherwise completely lawful behaviour.
To start at the beginning, Mr. Justice Dubin, a respected judge, when asked to express his views on the desirability of such legislation, concluded that it was not necessary. There are two aspects. One is the right of an individual to present his concerns to the director in confidence. There is quite a bit of scope for that in section 29 of the act and under the common law, as I understand it, due to his police informer status.
This provision goes beyond the confidentiality provisions in section 29 of the act, where, in regard to matters the director is otherwise required to keep confidential, he can disclose them for the purposes of the administration or enforcement of the act to other Canadian law enforcement agencies. Apparently, that is not permitted in regard to the disclosure of the identity of a whistle blower in this context.
Second, it imposes a criminal liability on employers who take reprisal actions in regard to an employee who has made a disclosure or has refused to do anything that he considers to be contrary to the act, and where the employee is acting in good faith and with a reasonable ground for thinking that there may have been a problem.
The association's submission details a number of situations where we think the application of these provisions could be problematic. It goes back to a point I made earlier. The provisions of the act are complex. It is difficult for employees to make these judgment calls and, also, they may well be acting in good faith. They may think there is a reasonable concern but it may be quite misguided. We have detailed some examples in the paper.
The possibility extends to the whistle blower provisions also applying to the civil provisions of the act, which are recognized to be economically complex issues. That is why we have the competition tribunal, an expert body, deliberating over those kinds of issues.
To conclude, we are suggesting the deletion of both provisions from the present bill, with a view to having them considered further in the ongoing review of the act, which the director has indicated will now be a regular thing. There are a number of other agenda items, which they are continuing to consider.
Senator Meighen: Welcome, Mr. Kennish and Ms Thomson. This so-called last moment situation seems to confront us frequently. By everybody's admission, there have been extensive consultations. In fact, there have even been amendments to the bill, as I read it in here, when it died on the order paper for the last time. However, as I understand your submission, there are two serious reservations with regard to the wiretap and the whistle blowing area, along with a number of other less fundamental concerns that you have outlined in your brief.
If we were not able to reach a consensus here with respect to the amendments you suggest, do you feel that the bill, as it is now proposed, is preferable to be enacted into law or to be left to wither?
Mr. Kennish: As I said, we think there is a lot in this bill that is helpful. There are technical amendments and other provisions that are positive changes. In this case, the wiretap provision is probably one of the most significant provisions of the bill. It is regrettable that it has come up at the last minute and there was not the proper consultation.
Yes, I would like to see the bill go through. In regard to these provisions, we think they should be hoisted and given more consideration. We are not necessarily saying that they should be killed inevitably. We are saying there has not been the kind of discussion anywhere that there has been in regard to most of the other provisions in the act.
Senator Meighen: I appreciate that. With respect to wiretap, if I could wave a magic wand and convince you that authorizations would be henceforth more difficult to come by, would that allay your concerns? I think you alluded to the ease with which authorizations can be obtained.
Mr. Kennish: That is part of the concern. I think there is also a question of whether this enforcement assistance is really required. I guess I would say that, if we had to pick and choose, the telemarketing provision is probably a better application for this tool than the other areas we are questioning.
Senator Meighen: Just because it is of personal interest to me, I have a question on the possible conflict between subsection 1(3)(b)(i) and section 206 of the Criminal Code. According to your brief, you see a possible conflict. I suppose judicial interpretation is not necessarily inevitable. Personally, my work involves section 206.
Mr. Kennish: You work more on it than I do.
Senator Meighen: It is the provision dealing with lotteries and contests. You say that skilled contests that require consideration to enter are permitted under section 206. I would not dispute that, although there are some that are not permitted if the prize consists of goods, wares or merchandise. Leaving that aside, is this a clear conflict, in your view, or a possible conflict?
Mr. Kennish: I would have to defer to what we have said in the submission. I have not reviewed it recently.
Senator Meighen: I was trying to get some free advice from you.
Mr. Kennish: I can call you later. Right now, I do not have an answer.
Senator Tkachuk: I am concerned about the telemarketing definition. It relates to your concern on whistle blowing and wiretapping. I asked a previous witness about this. Telemarketing would be defined for the purpose of proposed section 52.1(1) to mean:
In this section, "telemarketing" means the practice of using interactive telephone communications for the purpose of promoting, directly or indirectly, the supply or the use of the product or for the purpose of promoting, directly or indirectly, any business interest.
The previous witness who just appeared before us said that telemarketing is the systematic use of out-bound live voice interactive telephone communications to sell products or services directly to persons, neither initiating nor requesting such a solicitation. I would add to that, "and inviting a response." To me, that is telemarketing. You are telephoning someone unsolicited and offering to sell something. You want to close the sale or get a response. You get the credit card number, sell the product and then mail it.
It seems to me that this could be like talking on the telephone. For example, I am talking with Don Oliver who is a lawyer. We are talking about one matter when Don reminds me that I have not written my will and that his law office does wills. He has thus initiated a business proposition to me over the telephone. According to the definition, in the casual interactive telephone conversation he immediately falls under this provision of the act.
That is why I asked about the Internet and chat lines. Someone could initiate a wiretap or someone could whistle blow on Donald for selling me a will over the telephone. Frankly, I find this very frightening.
Mr. Kennish: In regard to that provision, that is really one of the burdens of our submission, including the fact that it has not previously had any enforcement experience. However, we think the language in the telemarketing section is so broad that it is going to potentially expose a great deal of activity to this kind of action.
Senator Tkachuk: You will have to help me because I am not a lawyer. It seems to me that the way this provision is written, an aggressive bureaucrat could attack anyone and he could find a reason for doing it. There could be many problems associated with the whistle blowing. You could be dealing with people who just do not like someone. There is a problem now with the media being so big and so powerful. The investigation of a matter is often just as harmful as the actual offence. In other words, the papers carry a story about a business being investigated. In the meantime, the business loses customers. The business goes bankrupt and, six months later, it is reported that there never was anything to substantiate the charge.
Mr. Kennish: It is a concern. The Competition Bureau recognizes to a certain degree its power to cause harm. Part of our comment is we would prefer to see the safeguards in the legislation as opposed to guidelines that are non-binding, that cannot be revised and are not subject to change.
Senator Angus: That is on the wiretap.
Mr. Kennish: Yes, on that part. They have issued guidelines explaining the application of these other provisions as well, which raise similar issues.
Senator Tkachuk: Would it be a good idea to make the telemarketing definition a little more explicit?
Mr. Kennish: We pointed out that, if the Internet is not to be part of the scope of this section, the definition should be amended to state live voice interactive telephone communications.
Senator Tkachuk: This includes 800 calls. This is very serious. As an example, I receive a call from the store that sells my wife clothes. They remind me that it is my wife's birthday and that they have an item they know she will like; that it only costs $850. Is that telemarketing?
Mr. Kennish: I would say it is for the purpose of promoting a product.
Senator Tkachuk: However, in this example, I know the caller and I say, "You are telephoning me again. You telephoned me before for our anniversary." She is telemarketing. She telephoned me and is inviting a response. Does she have to go through all this?
Mr. Kennish: The language here is drawn and cast in broad terms. I think there is a potential for including situations that you would not expect. It suggests that you are going to require enlightened enforcement. I think the resources of the bureau will limit them to the more serious areas. However, I think there are concerns about the potential for its use outside of those areas that we would think are the principal concerns.
Senator Tkachuk: There are other examples. Companies are calling customers to cross-sell products. If you have an Esso credit card, you get a call that they have insurance that protects your credit card. They are cross-marketing products all the time by telephone, yet they are telephoning someone they know, a person who uses their services. I think that is telemarketing. They are inviting a response. It seems to me that there are all sorts of human behaviour on the telephone; someone is selling somebody something, somewhere, all the time.
Mr. Kennish: With respect to this whole area, I would refer to our submission. I am not the author of this particular part of the paper. The Industry committee received the submission that is attached to the paper you have. It contains our comments on the bill as well as some suggested revisions to the telemarketing provisions.
Senator Angus: I read your letter very carefully, particularly insofar as the whistle blowing provisions are concerned. I found your comments to be most persuasive. Being a lawyer, I was very interested. Two days ago, when the director appeared before us, I listened carefully to what he said. He confirmed that these provisions were introduced after the fact, after the first reading of the bill; that effectively there was not the same opportunity to discuss these provisions. He talked about Justice Dubin. He talked about the bar, and that he had gone to Toronto. Do I assume that means you?
Mr. Kennish: Not in regard to the whistle blower provision. As I understood it, it saw the light of day at the Industry committee. I am not sure it is even being put forward by the bureau.
With respect to the wiretap provision, that was a bureau initiative. I think it was prompted by an agreement Canada entered into with the U.S. in this area in November of last year. Therefore, it came late in the process. They included it in the bill. They talked to a number of stakeholders, but I was not one of them. However, that is not the reason. What it did was it prevented us from taking the temperature of the profession and, in particular, of the people who practise in the area affected. We did not get their views and we still have not done that. What we hear is people are not in agreement that they support what you are being asked to consider.
Senator Angus: I know one lawyer in Toronto by the name of Mr. Hunter who used to have the same job, I believe, as the director who, in future, will be called the "Commissioner." I am sympathetic to the views you have expressed. You gave very good examples of how horrible injustices could occur if somebody, in effect, squeals or innocently, not hearing both sides of the conversation, thinks that price fixing is going on.
I understand the director knows about these representations that you are making and that he has not expressed any concerns about them. Are you really as concerned as it appears in your letter? Does the Competition Law Section generally share those views?
Mr. Kennish: As a group, we have not dealt with it beyond recommending that more time be given for considerations on the wiretapping provision. In regard to the whistle blower provision, I am not sure there is a difference of view. As I said, I think it was intended to assist people who find themselves in an awkward position; those who think they have been asked to violate the act with a potential for personal liability exposure and the possibility of facing reprisals if they report it.
We are pointing out the overkill. There is protection already for these people. The situation is not easy for employers if you are going to create that kind of situation in dealing with employees.
Senator Angus: Senator Meighen indicated earlier that we often find ourselves in a last moment situation after extensive consultation on a bill. However, you are putting very thoughtful issues before us. Sometimes there is negotiation. You have made many points. In your brief and in your letter you talk about the two sections, the whistle blowing and 47, which I think have had a good airing. You have pleaded your case in different fora, but you have lost your case on the whistle blowing.
Would I be right in thinking that, if you had a wish list and you could only have one thing listed in that letter, it would be the whistle blower issue?
Mr. Kennish: No, we feel more strongly about the wiretap provision.
Senator Angus: I know it is listed first in your letter.
Mr. Kennish: Yes.
Senator Oliver: He said there is no clear case for its use.
Mr. Kennish: We do not think the case has been made out.
Senator Angus: Are you not as worried about section 66?
Mr. Kennish: We have made a recommendation that, if the section is going to be continue to be law, a revision be made to take away some of the problems that we see in its application so that an employer would not be subject to criminal prosecution if he acted with a reasonable appreciation that he was violating the law.
Senator Angus: That would go a long way to alleviate that problem.
Mr. Kennish: We think that it would go a long way to deal with it.
Senator Kenny: May I ask how long it takes to get the temperature of a group.
Senator Oliver: It takes six months.
Senator Kenny: Does it take that long to canvass your members?
Mr. Kennish: No. We have committees in all areas. We get people together and have them provide an opinion. We can then present our views on issues within a couple of months at the most. In some areas, there is a wide body to consult with. In other areas, it is much more limited, depending on the subject matter.
Senator Kenny: Is two weeks unreasonable then?
Mr. Kennish: We have been able to form this view on very short notice. We think our input as well as the input of more people should be hoisted and reconsidered more fully.
Senator Oliver: In the letter dated November 18 that the Canadian Bar Association sent to Senator Michael Kirby, it is stated that, in relation to wiretap, you urge the Senate Banking Committee to recommend deletion of clause 47 from Bill C-20. Is that what you are saying today?
Mr. Kennish: That is right.
Senator Oliver: In addition to that, with respect to whistle blowing, 66.1 and 66.2, you recommend that they be deleted from the bill and forwarded to the Competition Bureau for consideration and public consultation in the next round of amendments for the Competition Act. Is that correct?
Mr. Kennish: That is correct.
Senator Oliver: If both of those clauses are deleted and the bill is otherwise passed, do you feel that the bureau would have authority to fight some of the telemarketing frauds that we have read about in Maclean's magazine and heard about elsewhere? Would they have the necessary power and the strength?
Mr. Kennish: That is a slightly different side of the issue. What we are saying is that we are not aware of the need for this. I am not aware of the need, however, I cannot say that there is no need. I am just saying that, through experience with the provision or otherwise, no case has been made out for it. To my understanding, wiretapping is not a tool that is extensively used in the anti-trust area in the U.S.
Senator Oliver: The final question I want to ask you concerns the use of the word "guideline." When you were giving your direct evidence, you said you personally have a strong preference for the rule of law. What is the difference between a provision not being in a statute and the bureau having the power to make guidelines from time to time? Can you explain this to us?
Mr. Kennish: The guideline is a statement of the enforcement policy of the bureau, and it is subject to change with their views of what is appropriate enforcement emphasis. In addition, in regard to a number of the provisions on which they have issued guidelines, they are not the only people who can enforce the law. There are private damage action provisions that can be taken in regard to most of the criminal provisions. In regard to certain criminal provisions, private citizens can bring actions. Therefore, the guidelines do not necessarily speak definitively on the issue because other people will not be subject to the constraints of those guidelines. That is one thing. Then the guidelines specifically state these are non-binding and they are general.
Senator Oliver: Would your preference be to have the provision in the law?
Mr. Kennish: Yes, in regard to the wiretapping provision in particular, because it is such an intrusive tool.
Senator Oliver: Finally, can you explain what you mean by "hoist"?
Mr. Kennish: I mean pull it out, delete it from the bill. I apologize for being colloquial.
Senator Oliver: Do you mean suspend it for a period of months or take it out completely?
Mr. Kennish: I would delete it from this bill, proceed with the legislative process and with a direction to the Competition Bureau to have it considered in the next round of amendments.
Senator Oliver: Would it be sufficient if these provisions were only suspended while you and other stakeholders met with the bureau to see if you could work out language that would be more suitable?
Mr. Kennish: I think that is a somewhat unusual process. It would not be the preferred way, but you would be more familiar with the process than I.
The Chairman: Senators, in light of the comments that we have heard today from a number of witnesses, I think the best way to proceed would be to ask the staff to summarize those comments. We would then have a record that we can use in discussions with the representatives from the Competition Bureau. If the senators agree, I would prefer to not proceed with the witnesses from the Competition Bureau now. We can proceed with them a week from today, at which time we will have a record of all the comments made today. Is that all right?
Hon. Senators: Agreed.
The Chairman: I would like to suggest that we proceed to an in camera meeting.
The committee continued in camera.