Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 38 - Evidence
OTTAWA, Thursday, April 18, 2002
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-23, to amend the Competition Act and the Competition Tribunal Act, met this day at 11:30 a.m. to give consideration to the bill.
Senator E. Leo Kolber (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, we are privileged to have with us today the Honourable Allan Rock, Minister of Industry.
Good morning, Mr. Minister, and welcome to the committee.
Honourable Allan Rock, Minister of Industry Canada: Honourable senators, I consider it my privilege and I appreciate the opportunity to appear before this committee.
I know that honourable senators have worked hard on this proposed legislation and we are grateful for the time you have spent and the care you have taken with it.
The government regards this as an important bill from an economic standpoint, and from the point of view of consumers and businesses.
We hope that the bill will stimulate economic growth and create the jobs and prosperity that are the bottom line of what we want to do.
[Translation]
These objectives will serve to increase Canada's presence in the global market, to create favourable investment conditions, to boost innovation in Canada and to promote the existence of a fair, effective and competitive marketplace.
In this light, Canada's competition legislation has the advantage of stimulating the economy and giving consumers a wider selection of products, lower prices and better service.
[English]
Whether with respect to deceptive notices, international cooperation, limited private access to the tribunal, or measures to advance competitiveness in the airline industry, we believe that this bill is needed for the public interest.
I will touch briefly upon each of the elements. First, with respect to deceptive notices, as honourable senators know, a new criminal offence would be created to prohibit the sending of deceptive notices in any form, including electronic mail, while establishing clear criteria to allow honest businesses to pursue legitimate activities.
Canada has found itself in an unenviable position with respect to the sending of deceptive notices, and it is crucial that those be stopped through the development of strict legislation to ensure that information in the marketplace is clear and honest and allows consumers to make choices.
In terms of international cooperation, the global economy makes it important for us to adapt quickly to the challenges presented by a world without borders. As a result of constant changes, authorities must also change their ways when it comes to gathering evidence about practices in the marketplace, since a large number of cases now have an international component.
The addition of mutual legal assistance provisions will allow the Competition Bureau to address anti-competitive behaviour such as a multinational corporation's abuse of power or anti-competitive mergers involving several businesses located in different countries.
The approach we propose in Bill C-23 is even more important when you consider that implementation decisions concerning competition in Canada will be made in Canada.
As for limited private access to the tribunal, we have proposed what we regard as a balanced approach to allow Canadians to have access to the process while ensuring that there are strict protective measures in place to prevent abuse or strategic legal proceedings.
[Translation]
Mr. Chairman, allow me to insist upon the importance of granting private access to the Tribunal. The proposal you see before you is the product of extensive reflection and consultation. I strongly believe it is the most favourable possible result given the divergent interests of those involved.
The advantages of direct Competition Tribunal access are many. In Australia, private access has increased the effectiveness of their competition legislation and ensured closer adherence to the law. Any doubts brought about by the system currently used by the United States are unjustified, as the proposed approach is very different than the one used in the United States. For one, it is limited to certain practices and does not allow the awarding of damages.
Private access will allow small and medium-sized businesses to handle their own affairs and litigate private or local matters.
[English]
With respect to the airline provisions, as honourable senators will be aware, the industry was in a period of instability and uncertainty. In the spring of 2000, the government put in place a series of measures through Bill C-26 to address the situation. That bill was long debated in the House and Senate as well as by various stakeholders, including the airlines. Both the House and the Senate approved the measures.
Section 104.1 of the Competition Act came into effect in July 2000. In light of the critical situation of the airline industry in Canada, section 104.1 is an essential administrative tool to enable the commissioner to carry out his duties in an effective and useful fashion.
Since July 2000, we have witnessed the demise of CanJet, Royal, Roots Air and Canada 3000. The horrendous events of September 11, 2001, have compounded the situation and the industry is having trouble righting itself. The provisions of Bill C-23 would improve the special measures implemented to deal with the situation and will strengthen the policy implemented in 2000 with Bill C-26.
Bill C-23 contains a minor amendment to close the gap between the expiry of a temporary order and the filing of an application with the Competition Tribunal under section 79, the abuse of dominance element of the legislation.
Bill C-23 also includes a measure that will serve to encourage the dominant carrier to act in compliance with the Competition Act. This measure will allow the Competition Tribunal to impose an administrative monetary penalty against an airline that abuses its dominant position.
The proposal before you is not unique.
The European Commission has similar powers and can impose administrative monetary penalties of up to 10 per cent of an airline's business.
Let me conclude by observing that the proposed amendments contained in Bill C-23 are necessary to promote a more competitive Canadian market and to ensure that Canada is able to keep up with the ever-evolving global economy and that our competition legislation remains current and effective. I strongly urge, with the greatest of respect, that this committee support this bill as sound policy in the public interest.
I thank you for this opportunity to appear before the committee. I would be delighted to receive any questions that you or your colleagues may have, Mr. Chairman.
Senator Oliver: Thank you, Mr. Rock, and welcome. In the last paragraph of your remarks you said: ``...to ensure that Canada is able to keep up with the ever-evolving global economy.'' I would like to ask you a few questions about competition law in general. We accept the principle that Parliament is supreme and that we need a parliamentary review of framework legislation like competition policy. A number of witnesses have appeared before this committee and said that one of the main problems with this bill is that there is nothing in it to give the Parliament of Canada an opportunity to ensure that it is current.
The last time we had a major revamping of competition policy in Canada was in the mid 1980s. There have been amendments to sections since, but no overall review. Witnesses have said that this particular bill is being used to regulate airline policy in Canada. As you stated in your remarks today, airline policy is in a state of flux and needs constant review by both the House of Commons and the Senate.
This bill needs to be amended to include a clause that states there will be a review within a two-year period so that parliamentarians will be able to ensure that Canada's laws are modern and will assist our companies in adjusting to the new global realities. What is your view on that?
Mr. Rock: First, allow me to stress that this bill is not about airline policy; it is about competition. Airline policy is established by the Minister of Transport and is quite different from competition law, which is a broad and general application.
Senator Oliver: What about proposed sections 104 and 103?
Mr. Rock: It may be that parts of competition legislation are directed specifically at an industry because of its unique dynamics, but I assure you that I do not regard this bill or the Competition Act as being about airlines. They are about competition in the marketplace.
I am persuaded that there are unique aspects to the airline industry that merit specifically fashioned sections to enable the Competition Tribunal and its commissioner to respond to urgent circumstances. However, senator, I do not in any way suggest that this proposed legislation is airline policy. It is quite the opposite; it is competition policy.
I will comment on your point about the review. I dare say that there is no piece of legislation that the House, and indeed the Senate, approves in which an argument could not be made for a built-in clause requiring review, either after a specific period or in general. Surely, nothing we as legislators do is exempt from the obligation of continuous reappraisal. In fact, one of the essential obligations of government, in my view, is to reassess on a real-time basis whether its legislation is pertinent to the changing social, economic and international circumstances that we all face. That does not mean, however, that every piece of legislation should have a standard clause requiring a review, otherwise we would do nothing else. I would not want to hobble your time or priorities as a legislature by imposing on you —
Senator Oliver: I am only talking about major framework legislation, which competition policy is.
Mr. Rock: ``Major'' and ``framework'' are in the eyes of the beholder. I do not for a moment deny the importance of competition legislation or the need for continuous update and review of it. However, I am reluctant to reflexively include a review requirement for fear of hobbling the parliamentary process with a constant exercise of formal hearings to reassess what was done in the past. I would rather it look to the future — that it be focused on the horizon rather than on the rear-view mirror.
This issue arose yesterday when the Minister of Transport appeared before your committee. I think the minister made the observation that it is open to this committee and to the Senate to recommend in its report following consideration of the bill that a reassessment take place within a specified period. The committee may wish to consider that. It is obviously well within the authority of the committee and the Senate to do that. Any such recommendation would be treated with the greatest seriousness because of our profound respect for this place and its powers.
Senator Oliver: As the minister in charge of the competition bill, how you would you respond to a request for a review within two years?
Mr. Rock: I would treat it with the utmost seriousness. However, I would oppose a formal amendment to the proposed legislation, which I think is unnecessary and ill-advised.
Senator Oliver: The two of us have in common the fact that we are both civil litigators. First, I am a little surprised that you are so happy that there is no award of damages for the reviews. As a litigator, could you tell me whether you really see no need for an award for damages? You are aware of the importance that those awards have in our civil litigation system.
Second, do we need to punish those who want to appear to have their rights considered by making them apply for leave first? Is the leave application really necessary?
Mr. Rock: In response to your first question, the issue turns on how you see the role of the tribunal. I do not see it as a source of compensatory damages for an aggrieved individual party. Rather, I see it as an agency that regulates the marketplace in the broad public interest. The courts are in place to respond to individual claims for damages or redress in appropriate cases, and I would not want to see the tribunal's role changed in a fundamental way by empowering it to adjudicate on private interests and award individual compensation.
Turning to your second question, senator, in the House committee there was, as you are well aware, a real tension among competing interests. On the one hand were those who would prefer access to the tribunal by private interests, and on the other those who thought that it should be left to public authorities to determine appropriate cases in which the tribunal's process should be engaged.
There was broad discussion of ways in which access could be permitted while avoiding some of the pitfalls experienced in other jurisdictions, and particular reference was made to the United States. The result was that the House committee settled upon a package that allowed access that would be subject to conditions, including the power to award costs, which might be a disincentive for those who might otherwise resort to —
Senator Oliver: — frivolous actions.
Mr. Rock: That is right. The leave provision was part of the checks and balances package to permit access with an element of control to ensure that only serious questions were presented to the tribunal.
I see it in that context. While I might have my own quibbles with an aspect of the bill, I believe that overall, the House committee did an admirable job in dealing with competing interests to produce a result that will function well in the public interest.
[Translation]
Senator Hervieux-Payette: You state on page 5 of your submission that the European Commission has similar powers and can impose administrative monetary penalties of up to 10 per cent of an airline's business.
Do these powers apply only to the airline industry, since there are many airlines operating within the European Commission, notably Lufthansa, Air France and Al Italia?
Does this measure apply to this economic sector in particular or is it industry-wide? And if it does not, why have you not given any thought to having it apply on an industry-wide basis?
We hear claims that this sector is unique, but energy industry representatives also make the same claim, as do banking industry officials. Everyone believes their sector is unique.
Comparisons are difficult because no one carrier dominates the European Commission market, as far as I can tell. Therefore, the situations are not similar. Are the same procedures followed?
Mr. Rock: First of all, within the European Commission, only the airline industry is targeted. Secondly, I do think the airline industry is unique. Its assets can be moved anywhere in Canada. We can modify our approach or change an airline's policy in a matter of five minutes or two hours. We can change routes, move airplanes around, replace them with other airplanes and change the rules of the game. I am quite convinced that the airline industry is a completely unique sector of our economy. We need to bring in measures and we need powers to deal with unique circumstances arising within the industry. That is why we have put forward the measures in this bill. I admit other sectors may argue that they too are unique, but our experience in Canada over the past five or seven years clearly shows that these powers are needed. You have already heard the testimony of Mr. von Finckenstein who spoke eloquently of his experiences on a day-to-day basis. We included these measures in the bill to reflect the current reality.
Senator Hervieux-Payette: Could we get some information on how these procedures will work? Right now, all we know is that airlines will be liable for a monetary penalty of 10 per cent.
Does the Commissioner of the European Commission have the same power to make a ruling or to hear a grievance? It would be nice to have some background information. I am trying to imagine a scenario where a European airline might try to dominate the market through abusive practices. I am talking here about large airlines such as Air France, Lufthansa and others. I fail to see any similarities with the Canadian context. If we are to draw some comparisons, it might be good to know if other legislation grants similar powers. The European Union is important in that it is a federation with similarities to Canada. I would like to have more information to go on.
Mr. Rock: I will ask my officials to convey that information to you.
[English]
Senator Kelleher: This question comes courtesy of your colleague who appeared here yesterday. If you have any residual complaints, please express them to him, not me.
I put to him yesterday a question concerning the mutual legal assistance provisions of the bill. He said, ``Do not ask me, but I know a fellow who is coming tomorrow who will be happy to answer this for you.''
My question concerns those provisions. It has to do, although not primarily, with expressions of concern from one of your former commissioners or directors, George Addy. The concern is that some of the provisions of this bill could seriously injure domestic companies. For example, the provisions in 30(11)(3) can operate to give jurisdiction to a foreign judge to examine a Canadian citizen in the gathering of evidence. Jurisdiction can also be given to a foreign authority to examine a Canadian citizen in 30(16)(2)(b). The Canadian citizen is to be governed by the foreign laws of examination in subclause 30(17). The Canadian citizen can be liable to be found in contempt under 30(17)(4). The Canadian citizen can be arrested for refusing to respond in subclause 30(18).
The ones that trouble me as much as any of them are the mutual legal assistance provisions that allow sensitive commercial material to be submitted to foreign authorities. The present brawl between Bombardier and Embraer and whether sensitive, commercial material of Bombardier could end up in the hands of Embraer comes to mind. Things are pretty competitive out there.
I am wondering if we should take a second look at these provisions to see if any of my concerns are valid. If they are, maybe we require legislation or something to plug these possible loopholes.
Mr. Rock: If I can respectfully say so, it is your obligation to take a second look, and that is exactly what you are doing. We are grateful for that.
Once you take that second look, I suggest that you will be satisfied that these provisions are reasonable and necessary if we are to achieve our purpose.
First, I want to say how grateful I am to my colleague, the Minister of Transport, for preparing the way in this line of inquiry; I welcome it because it is central to the bill, and it is my bill.
Let me respond to your question not only as someone who engaged for 22 years, as Senator Oliver has said, in civil litigation before the courts of Canada, but also one who has had the privilege of serving for four years as Minister of Justice, whose responsibility it is to negotiate these mutual legal assistance treaties with other nations.
I will start from our broad public purpose here. That is to enable Canada to work with other nations on what is increasingly an international issue. That is to say, competition law in the global marketplace is a growing area. There is a requirement to give effect to domestic competition rules in the context of international commerce.
We have come to the conclusion that Canada can no longer act alone. The cooperation we often need and depend upon from other countries should be put on a formal legal basis. We should have just as rational, predictable and functioning systems for working with governments in the competition area as we do in the criminal, immigration and other areas. That is done through treaties.
I am familiar with Mr. Addy's testimony, and I have great respect for him, given his achievements, experience and perspective. I must say that the force of his testimony, particularly in relation to the Brazilian example, surprised me. I do not agree with it.
If you take into account all the clauses as they appear in the bill, there is a systematic and methodical process that would have to be followed before any decision is made in a particular case. First, the Minister of Justice is responsible for negotiating a treaty, and would only do so if satisfied that the legal system of the other country is substantially similar to our own. If there were Canadian nationals in that other jurisdiction subject to that legal system, they would face a process that would be enlightened by the same recognition of rights and due process as we have here in Canada. There is no treaty with another country unless it has a substantially similar legal system.
Second, even after that treaty is in place, resort to it is always protected by the judicial process. A judge would have before the court, the question of whether the Canadian would be obligated through the tribunal to make information available to another state.
All of this would be determined on notice to interested parties, who would have full opportunity to make submissions. The court would have its own tests with respect to the rights and privileges of citizens, the economic interests that are affected, and the broad purposes of the Competition Act in coming to its own conclusion. There is more detail, however. I asked officials to write a detailed response to this question because I know it is on honourable senators' minds. I am happy to furnish that detail, but my conclusion, which I offer respectfully, is that you should take a critical second look at this mechanism. That second look will disclose that there are safeguards, that a responsible approach is being proposed, and that there are opportunities everywhere along the line to test and evaluate whether the rights of Canadians are being respected and whether exchange and disclosure is consistent with the public interest. These clauses will introduce in the competition area the same kind of regime that has been in place for many years in other areas, with full respect for Canadian interests here and abroad. Let me furnish the detailed responses to you at your convenience so we do not take the time here.
That is the conclusion at which I have arrived, having studied these clauses.
Senator Kelleher: I do not disagree with the principle you enunciated, of the need to have this form of legislation in place because of globalization, but we must be sure that there are adequate safeguards. When, as you said, a respected gentleman, namely, former commissioner George Addy, raises concerns, then obviously it raises concerns in my mind as well. I would welcome the additional information. I know that you are interested in this bill moving along. Therefore, before our committee comes to any decisions, it would be helpful to have that information as expeditiously as possible.
Mr. Rock: I have it here. I will have the clerk hand it to you and you can let me know if it is sufficient for your purposes. It is quite extensive and it will save time. Rather than having me read it into the record, I will hand it to you and you will let me know if it is helpful.
The Chairman: I suggest we get that copied for all honourable senators.
Senator Oliver: It should be tabled as part of our record.
Mr. Rock: That material is only available in English because it was prepared in English and time did not permit its translation. I will ask officials to make it available in both official languages at the earliest possible moment.
Senator Tkachuk: I want to follow up on Senator Oliver's question on proposed sections 103 and 104. I was not satisfied with your answer and I will try to be more specific.
Why did you feel the need to increase the powers of the commission by strengthening 104.1, while at the same time you added 103.3, which provides for similar powers without the industry-specific monetary penalties?
Mr. Rock: First, section 104.1 was adopted by this Parliament in 2000. Experience has revealed a slight gap, which is to say that the duration of the order was not sufficient to deal with those circumstances in which the commissioner did not have all the information necessary to come to a conclusion. Therefore, as reflected in the bill before you today, it is proposed that the duration be extended in such circumstances. The policy of the interim order was determined by Parliament in 2000. That section has been in place since then and has been used on one occasion.
The amendments proposed in the bill before you today are complementary and are intended only to overcome perceived shortcomings in the policy that was approved in 2000.
The committee will be aware of the court case in which the constitutionality and the appropriateness of section 104.1 in the circumstances of a particular case were before the court. The court adjudicated on those questions and determined that the section was constitutional. The court rejected the attack on the commissioner's decision to invoke the section on the circumstances of the case.
Senator Tkachuk: We have been following this issue because we are examining competition framework legislation. Now we are suddenly examining transport policy at the same time. Minister Collenette implied yesterday that it was convenient to put it in this bill. I am not sure, however, if he would have put it into an agricultural bill that was flying through the House of Commons and you managed to intercept it. It is a disorganized way to develop transportation policy.
Could you tell me if there are other examples of industry-specific provisions in federal legislation of which you are aware, outside of public safety issues? This is competition, not public safety. Are there precedents for including an industry-specific clause, as you have regarding the airlines in this bill, which is general framework legislation? Are there any other examples of this?
Mr. Rock: I do not want to answer your question casually. Let me put my mind to that and give you a considered response. I will now contradict myself by saying that the Criminal Code applies generally, but there are specific provisions about specific activities. Sometimes the generality must be applied in the specific context.
If a dominant air carrier engages in practices that are intended to lessen competition or harm a competitor, the steps taken to address that are not airline policy, but competition policy in the context of the airlines.
This is not airline legislation; this is competition legislation. Experience in Canada has shown that competition policy must be crafted to deal with the specific exigencies of a particular industry. It is for that reason the Minister of Transport was here yesterday and we are now talking about airlines — not because we are trying to create transport or airline policy, but because we are trying to bring the principles of competition policy to a particular sector. This bill is not directed at Air Canada. It could just as easily be directed at CanJet or any other airline that assumes a dominant position and then tries to exploit it through unlawful means.
Lastly, the decision about whether to grant the commissioner this authority was made two years ago by the Senate and the House of Commons.
Senator Oliver: It was changed. Bill C-23 gives him more power without judicial review. That is what is wrong with it.
Mr. Rock: That may be, but it is not as if we are saying today, ``We wonder what will happen if this power is conferred. We wonder how it will be used.'' We are able to respond to that question. It has been in place for two years and we have seen how it is used. It has been used sparingly and, according to the court, responsibly and effectively. The power of the commissioner to make an interim order on his own motion has been there since 2000. It has been exercised on one occasion, attacked in court, examined judicially, and found to be constitutionally sound and appropriately used. I would hope that would give comfort to honourable senators in this context.
Senator Tkachuk: Perhaps I am reading it incorrectly, but in the Competition Act, are there any other industry- specific provisions, for example, for the grocery business or gas business?
Mr. Rock: I will have to review the act in greater detail to do justice to your question.
Senator Tkachuk: Do you think that is important information for a minister to have? You spoke about putting something very specific in the Competition Act, and that is fine if that is to be government policy and you enunciate that that is the way you will govern it. Could you or one of your officials tell me if there are other industry-specific provisions of which I am not aware? Could you also tell me whether it will be the policy of your government to include industry-specific provisions in the Competition Act when the need arises?
The Chairman: There are others in the act — travel agents, sport, et cetera.
Mr. Rock: There is nothing in this proposed legislation that would change competition law for airlines. The competition law for airlines is the same as it is for every other sector of the economy. The process and procedure for airlines is different because we are empowering the commissioner to make interim orders in certain circumstances and for certain durations. The process changes for airlines because of their unique circumstances; the law does not change. The dominant carrier in the airline industry faces the same law as the dominant supplier in the supermarket industry or in the gas market or in the department store business.
Senator Tkachuk: Can they exercise this provision in the grocery business?
Mr. Rock: I have not made myself clear, senator. The underlying policy of competition law remains the same, but this proposed legislation and the year 2000 legislation provide specific procedures so that the law can be invoked, enforced and applied in the airline industry.
Senator Tkachuk: Okay. Is your answer ``yes'' when asked if your government's policy will include industry-specific provisions in the Competition Act in the future? In other words, will there be a special provision for grocery stores and gas companies with different penalties from those for airlines?
Mr. Rock: If I, as the Minister of Industry, am persuaded that the purposes of our competition policy and law cannot be achieved unless specific remedies or procedures are put in place for a particular sector of the economy, then I will look at amendments that will allow us to apply the same law effectively across the economy.
Senator Tkachuk: The government's aim is to prevent a monopoly and, as you said earlier, to stimulate the airline industry and provide more competition. Do you consider Air Canada a monopoly now?
Mr. Rock: That is a legal question upon which there can be divergent views. The Minister of Transport has told the committee that Air Canada enjoys 80 per cent of the market. You might hear divergent views from law professors and you might have your own view. My purpose and interest is not to decide fine legal questions, but to ensure that competition law and policy are in the public interest. Officials have said, from their experience in a situation in a particular industry, that there are factors and circumstances that warrant unique remedies. It is for that reason that I support this bill.
Senator Tkachuk: The government made changes to the Canada Transportation Act to allow, as Mr. Collenette said yesterday, either the merger of Canadian and Air Canada, and/or, later on, the purchase of Canadian — Onex was a participant — and Air Canada was the successful purchaser. It seems to me that at the time, the government decided that the union of these two airlines was okay and that the purchase of one airline by another was also okay. Either one guaranteed that there would be a monopoly in the country governing some 80 per cent of the airline industry. Why has there been a change of heart? Why is there automatic fear two years later? Did the government not know at the time what would occur through that purchase?
Mr. Rock: Your question commingles legal and economic principles to the point where one is distorting the other. We did not direct Air Canada to purchase Canadian Airlines or merge; Air Canada made that business decision.
Senator Tkachuk: I understand that.
Mr. Rock: How Air Canada carries on business is up to them, except and until it collides with the criminal law. That is the same for all airlines. Our position is to make sure there is a competitive marketplace. That is what the Competition Act is about and that is what these amendments are about. It is not as though we agreed to something two years ago and now we are not agreeing to it.
Senator Tkachuk: The government made a provision to allow that to happen.
Mr. Rock: It was always the law in Canada, at all material times, that you are not allowed to abuse a dominant market position, and that remains the law. My only interest is to have a vigorous, competitive marketplace. Senator, this proposed legislation is intended to ensure that our competition law is effective in dealing with marketplace practices.
The reality that Air Canada bought Canadian Airlines was neutral in relation to competition law two years ago. As long as Air Canada, or any other airline, behaves itself in the marketplace and in accordance with the principles of the competition law, they are free to do business; it is a free country, as they say. We do not want a dominant position to be abused by anyone — CanJet, Air Canada or anyone else. Therefore, we want to make certain our competition law remains updated and effective; that is why we brought in these amendments.
Senator Tkachuk: I am still not convinced. Perhaps this is not the place to debate this, but I am trying to obtain information and I am having a difficult time.
Mr. Rock: What information do you want, senator?
Senator Tkachuk: I want to know what your policy is on competition. My point is that the government took action to allow the merger, which would not have happened without the government's approval. Take bank mergers. Yes, it is a free country, but not so free that a bank can gobble up another bank, because you would take action to prevent that. It was a deliberate government decision to allow either the merger or the purchase of Canadian by one entity, i.e. Onex or Air Canada, if it wished to get into the game, which it did. Therefore the government created a situation where one airline would have 80 per cent of the travel marketplace. When that happened, the government said, ``Well, gee whiz, we have to fix this.'' It was fixed before, when we had all those airlines.
Mr. Rock: I have the same concern about your question. You are mixing apples and oranges. You are talking about airline policy, to which the Minister of Transport can answer, and how we respond to the purchase of one airline by another, and then you are talking about competition policy. I am not here today with proposed legislation that deals with airlines. I am here with proposed legislation that deals with competition policy. Whether or not one airline purchases another, they have to comply with our Competition Act, which forbids abuse of dominant position. I am here to tell you that our competition law, having regard for the realities of the airline sector and how quickly things change and can be adjusted, requires a quick response from the commissioner and the tribunal.
It was provided in the legislation of 2000. We are improving it with the bill before you today.
That has nothing to do with whether one airline can purchase another.
Senator Tkachuk: Yes, it does. If a Minister of Transport makes a decision that creates a monopoly, the minister in charge of the Competition Act should point out to the Minister of Transport that a monopoly is being created and that is not allowed. You do not think that the Minister of Industry at that time should have said, ``Just a minute, you are creating a monopoly that will have 80 per cent of the marketplace''? That was your government's policy.
Mr. Rock: The Competition Act was in effect at that time and remains in effect today. We will be vigorous in ensuring that it is respected, so that no matter who owns what, there is competition in the marketplace and opportunity to compete. That is what this bill is all about.
Senator Tkachuk: We obviously agree to disagree.
[Translation]
Senator Poulin: At the beginning of your presentation, you spoke of the importance of competition and you listed all of the reasons why that is true, particularly in terms of service to the public and to Canadians from coast to coast. I was struck by one comment. According to industry representatives, it is important that amendments to the existing Competition Act be adopted as soon as possible in light of the changes that are occurring.
I also know that the success of Canadian businesses is important to you. Does this legislation contain a provision targeting our carriers, whether it be a dominant carrier or a minor carrier, which could lead to the demise of a dominant carrier?
[English]
Could we be jeopardizing Air Canada's future success story? We know that we are in a transition period. We know that, for many reasons, the last three years have been a difficult period. Is there anything in here that could jeopardize the success of Air Canada? We would like the airline to succeed as well as any other airline company.
[Translation]
I would like all carriers to succeed in the Canadian market. First of all, the bill does not target Air Canada alone. It focusses on the Canadian market as a whole and applies to all airlines in Canada.
Secondly, I do not see a single provision in this bill that jeopardizes the success of Air Canada or of any other carrier for that matter. All airlines must comply with the Competition Act. This bill proposes major amendments to the Competition Act and to my knowledge, all carriers are operating within the law.
As I said, these procedures and provisions would target only those carriers engaging in unlawful practices. I do not believe the bill poses any kind of threat to the success of either Air Canada or any other carrier operating in Canada.
[English]
Senator Tunney: I almost had my question answered through the intervention of Senator Poulin, but I just want to put it to you this way. I am not talking about airlines. I am talking about competition anywhere.
Do you have to be careful that you do not apply competition rules so strictly and narrowly that you interfere with the survival of the companies on the one hand in trying to benefit consumers on the other hand? Perhaps I need to put it a little differently. Could you be coming down too hard on companies who are engaging in competition to prevent them from manoeuvring to lessen competition? That would likely be of benefit to consumers. On the other hand, could you be so strict that companies might not survive? Is it possible to be either too strict or too loose?
Mr. Rock: You are right, senator, that the important thing at the end of day is to have a marketplace where entrepreneurs can invest and succeed and the consumer gets the advantage of competition. At the same time, there needs to be a vigilant regulator who operates on a set of clearly defined rules to intervene responsibly, in the public interest, when someone is misbehaving or not respecting our rules.
If I may say so, your question goes to the enforcement of the act. That has to be done in a way that is not oppressive, but at the same time, respects the public interest. It is a question of balance.
Senator Fitzpatrick: This is really supplementary to Senator Tkachuk's question, which may help me clarify your response in my mind.
Minister, you were saying that an airline purchasing another airline is really a case of buyer beware. There are certain rules under which you need to operate, if you become a dominant carrier, which are set out in the Competition Act. These rules are clearly set out so that you know that ahead of time, and this is a Competition Act response to what might be unfair activity by an airline. I do not know if that helps or not. It would help me if you would respond to that.
Mr. Rock: You put it very well, senator. I agree.
The Chairman: Did the government actually suspend the Competition Act to allow Air Canada to buy Canadian?
Mr. Rock: It was always understood that the combined airline would do its business in way consistent with the principles of competition.
The Chairman: The fact is that it was suspended.
Senator Oliver: Minister Collenette suggested that yesterday in his testimony.
Mr. Rock: I took the sense of the senator's question to be, were we contemplating a monopoly that would be inconsistent with the act? Senator Fitzpatrick said it very well. It was buyer beware. They were assuming a position in the marketplace that brought with it certain obligations. Those are clearly spelled out in the Competition Act. We assumed that they would meet those obligations.
The Chairman: Thank you, minister. Honourable senators, could we stay in camera for a few minutes?
The committee continued in camera.