Proceedings of the Standing Senate Committee on
Issue 12 - Evidence - February 15, 2012
OTTAWA, Wednesday, February 15, 2012
The Standing Senate Committee on National Finance met this day at 6:44
p.m. to study the potential reasons for price discrepancies in respect of
certain goods between Canada and the United States, given the value of the
Canadian dollar and the effect of cross-border shopping on the Canadian
Senator Joseph A. Day (Chair) in the chair.
The Chair: I call this meeting of the Standing Senate Committee on
National Finance to order.
Honorable senators, this evening we are continuing our special study on
the potential reasons for price discrepancies in respect of certain goods
between Canada and the United States.
Honourable senators will recall that some of our recent witnesses have
spoken about anti-competitive behaviour and competitive dynamics and
concentration in certain industries. Given that the Competition Bureau
contains the experts in Canada with respect to competitive behaviour in our
country, we thought it would be appropriate to invite the Competition Bureau
to provide guidance in some of these areas.
Tonight, we are very pleased to welcome Mr. Richard Bilodeau, Acting
Assistant Deputy Commissioner, Civil Matters Branch, Division B. He may get
a chance to explain just what that is. Mr. Matthew Kellison is also Acting
Assistant Deputy Commissioner, Civil Matters Branch, Division A.
Mr. Bilodeau, I understand that on Mr. Kellison's behalf you have a few
introductory remarks, and then it is our practice to go to a question and
answer dialogue if that is okay with you.
Richard Bilodeau, Acting Assistant Deputy Commissioner — Civil Matters
Branch Division B, Competition Bureau: Thank you very much, Mr.
Chairman, and members of the committee. On behalf of the bureau, I am
pleased to be here today to discuss the committee's study into price
discrepancies of certain goods between Canada and the United States.
My name is Richard Bilodeau. I am an Acting Assistant Deputy Commissioner
in the Bureau's Civil Matters Branch.
With me is my colleague Matthew Kellison, also an Acting Assistant Deputy
Commissioner in the Civil Matters Branch. Division A and B are the only two
divisions in the branch.
I want to take this opportunity to provide you with an overview of the
bureau's mandate and responsibilities and outline how they relate to the
topic of your examination.
The Competition Bureau is an independent law enforcement agency headed by
the Commissioner of Competition that administers and enforces the
Competition Act. Our goal is to ensure that Canadian businesses and
consumers prosper in a competitive and innovative marketplace. We deliver on
our mandate by focusing on our ongoing and principled commitment to three
enforcement priorities: To continue to achieve results for Canadians through
active, targeted and principled enforcement; to apply Canada's competition
laws in a progressive and transparent way that keeps pace with the changing
marketplace; and to cultivate a strong and agile enforcement capacity so
that we can deliver results that matter.
By taking consistent, targeted enforcement action, the bureau ensures
that it has the largest possible impact on promoting competition, innovation
and productivity in the Canadian economy.
The Competition Act applies, with very limited exceptions, to all sectors
of the Canadian economy, and sets out criminal and civil penalties for a
variety of specific anti-competitive practices. These include engaging in
misleading advertising and deceptive marketing activities; entering into
agreements with competitors to fix prices, allocate markets or restrict
output; and abusing a dominant market position.
We are also responsible for reviewing proposed mergers to ensure that
they do not substantially lessen and prevent competition.
The bureau's focus on principled enforcement has been bolstered by recent
significant changes to the Competition Act and Canada's competition regime.
These changes were the result of amendments that were passed by Parliament
in March 2009 and represent the most significant changes to the act in over
20 years. They modernized Canada's competition law regime and brought it
more closely into line with the competition laws of our major trading
Among other things, the amendments created a more effective mechanism for
the criminal prosecution of hard core cartel conduct, such as price-fixing
or market allocation, while establishing a new civil review process for
other forms of agreements between competitors that can be harmful to
competition; introduced a new two-stage merger review process to allow for a
more efficient and effective review; increased the penalties for deceptive
marketing practices and empowered the courts to award restitution to victims
of false or misleading representations; and authorized Canada's Competition
Tribunal to award administrative monetary penalties against companies who
abuse a dominant position in the marketplace.
These amendments strengthened the Competition Act and have played a key
role in the record number of litigated cases the bureau is currently
involved in. While the bureau always has a strong preference for consensual
resolution, when parties resist effective remedies, we will not hesitate to
seek those same remedies through the courts or the Competition Tribunal.
One such recent example that may be familiar to you is the commissioner's
December 2010 application to the tribunal to strike down restrictive and
anti-competitive rules that Visa and MasterCard impose on merchants who
accept their credit cards. These restraints result in higher prices for all
consumers whether they pay by cash, cheque, debit or credit because
merchants pass along some or all of the high costs they are forced to pay as
a result of Visa and MasterCard's anti-competitive rules. A hearing on this
matter is scheduled to begin in May.
The bureau has also challenged restrictive rules in the real estate
industry that harm competition and ultimately harm consumers. For example,
the bureau last year reached a resolution with the Canadian Real Estate
Association that fully addressed our concerns and that has had a positive
impact on the market for real estate services.
Last May, the bureau filed an application against the Toronto Real Estate
Board seeking to prohibit restrictions placed on realtors that dictate how
they distribute real estate information to their clients. These restrictions
are denying consumer choice and the ability of real estate agents to
introduce innovative real estate brokerage services through the Internet.
The hearing of this matter is scheduled to begin in September.
Furthermore, in November 2010, the Bureau began legal proceedings before
the Ontario Superior Court regarding what the bureau has concluded are
misleading claims by Rogers about dropped calls, in an advertising campaign,
promoting its Chatr cell phone brand. The bureau has also concluded that the
claims made were not based on adequate and proper tests. The bureau is
asking the court to order Rogers to stop the advertising campaign and
refrain from engaging in similar campaigns for a 10-year period; pay an
administrative monetary penalty of $10 million; pay restitution to affected
customers; and issue a corrective notice to inform the general public about
the nature and provisions of the order issued against them.
It is worth noting that while the litigated case continues, the Rogers
campaign was dismantled within a month of our filing.
The bureau is also seeking currently to block a joint venture of Air
Canada and United Continental that, if allowed, would harm competition, and
result in increased prices and reduced consumer choice on key transborder
routes of enormous importance to Canadian consumers and business travelers.
In June, we announced that Bell Canada had agreed to stop making what the
bureau had concluded were misleading representations about the prices
offered for its home phone, Internet, satellite TV and wireless services. We
found that the advertised prices were not in fact available, as additional
mandatory fees were hidden from consumers in fine-print disclaimers. As part
of that settlement, Bell agreed to pay an administrative monetary penalty of
$10 million, the maximum amount allowed under the Competition Act.
Finally, we recently sought refunds for consumers misled by false and
misleading representations in a consent agreement with the maker of Nivea
creams. As a result of this agreement, the product in question was
immediately removed from Canadian shelves and affected consumers were
provided refunds on the purchase price and shipping costs. As you can see,
when the bureau believes that the act has been violated, we will not
hesitate to take action to promote competition to the benefit of Canadian
This brings me to the issue this committee is currently examining. While
there may be a variety of potential factors contributing to a price
differential between Canada and the United States for any given product, it
is important to understand that the bureau is not a price regulator. We do
not determine what is or is not a fair price for any product or service.
In Canada, companies are generally free to set their own prices at
whatever levels the market will bear. High prices in and of themselves do
not fall under the purview of the act unless they are the result of
anti-competitive conduct. If high prices are the result of anti-competitive
conduct, such as price-fixing or abuse of a dominant position, we will not
hesitate to investigate and take the appropriate action.
The bureau's principled and targeted enforcement of the act strives to
ensure that Canadian markets remain competitive. The government's recent
amendments to the act have greatly assisted our ability to pursue anti-
competitive conduct as evidenced by the cases the bureau has brought forward
since the time of the amendments. Let me assure you that we are making every
effort to ensure that Canadians fully enjoy all the benefits and advantages
of competitive prices, service and product choices.
To conclude, Parliament has provided the bureau with a specific role, and
that is to the pursuit of principled enforcement action against individuals
and companies engaged in anti-competitive behaviour. As noted at the outset,
we are a law enforcement agency. We believe that we have the investigative
tools necessary to appropriately address anti-competitive behaviour in any
sector of the Canadian economy and even more so since the coming into force
of the 2009 amendments. We believe that consistent, targeted enforcement is
the most effective way for the bureau to positively impact the economy for
both consumers and businesses. We will continue to hold to account companies
that engage in anti-competitive conduct contrary to the act so that Canadian
businesses and consumers continue to prosper in a competitive and innovative
marketplace. I look forward to your questions.
The Chair: Thank you, Mr. Bilodeau. As I normally ask witnesses,
what is the total budget for the bureau, and how many employees do you have?
Mr. Bilodeau: I am not sure of the current budget. We usually have
between $45 million and $48 million approximately. In terms of total
employees, I would estimate it to be around 400 at this time.
The Chair: They would be full-time equivalent employees?
Mr. Bilodeau: Yes.
The Chair: If either of those turns out to be significantly
different from that, you will let us know?
Mr. Bilodeau: Sure.
The Chair: We will be getting the estimates for the next fiscal
year in the next short while as well. We will be looking at that when we
I will start with Senator Nancy Ruth.
Senator Nancy Ruth: It is fascinating to be a consumer of most of
these companies you are investigating. It was an interesting speech to read
and hear. I was curious about you said you believe you have the
investigative tools necessary to address the situations you are faced with.
What are those tools? How do people write in and tell you? How are you
watching the markets? How does that all play out?
Mr. Bilodeau: The best way to answer your question is to take you
from point A to point Z, if you want, of how we do our work. We become aware
of situations, anti-competitive behaviour, whether it is on the civil or
criminal side, primarily through complaints from either individuals,
business people that are in certain sectors of the economy that may be
either victims of this conduct or witnessing this conduct. When we receive
this information, these allegations, we initially start within a preliminary
investigation, try to determine whether or not the conduct could be reviewed
under the act, whether the act is what we refer to as being engaged. A lot
of times, complaints raise issues that do not fall under our purview and
would not be appropriate for us to get involved in.
We determine one of two things from our preliminary investigation. We can
determine that the act has not been violated or there is nothing
anti-competitive going on under the act. In some cases, if we determine that
conduct has or has potentially breached the act, if we have reason to
believe the act has been violated, we have the ability to go under what we
refer to as an inquiry. It is a formal step that the Commissioner of
Competition can take, and in so doing it gives her the ability to access a
number of investigative tools, formal statutory investigative tools. She has
the power at that point to subpoena records, to subpoena written responses
to question and to compel oral testimony. To do so, however, she must seek
the authorization of a court and she does require a court order. She also
has the ability, for criminal matters, to obtain authorization from the
court to conduct searches of businesses or individuals; and also in extreme
circumstances, for section 45, what we refer to as cartel cases and some
criminal, misleading advertising, she has the ability under the Criminal
Code to seek the ability to conduct wiretaps.
When we have collected all the evidence and collected documents, we will
sometimes engage the services of experts, industry experts and/or economic
experts to help us do our work. We will come to the conclusion whether or
not there is a problem that needs to be remedied; and at that point, if we
think the situation requires a remedy in the marketplace, as I said in my
opening remarks, we try to reach a consensual resolution. We try to sit down
with companies and say this is what we think you are doing that is
anti-competitive, how you are harming competition and consumers. We want you
to stop. If, unfortunately, they are not willing to agree to the remedies we
think are necessary to change their behaviour, as we have done in a number
of cases recently — Visa, MasterCard, Rogers, the airlines matter — we will
go to the Competition Tribunal or the courts and seek an order forcing them
to change their behaviour. That is the process, generally, from A to Z.
Senator Nancy Ruth: When someone tells you there is a problem, you
look at the two companies or groups of companies that are involved in
whatever it is, a cartel or whatever. What are your tests for deciding
whether the Competition Act has been breached and how do you judge what
remedy is appropriate?
Mr. Bilodeau: I will turn it over to Mr. Kellison in a second, but
the tests will vary depending on which sections of the act we are looking
at. If you are looking at a cartel, for example, it would be sufficient to
show there was an agreement between competitors to fix prices, allocate
markets. If we can demonstrate that has happened, then they have violated
Senator Nancy Ruth: You have to be pretty snoopy to find out where
those documents are to prove that, other than hearsay.
Mr. Bilodeau: Exactly.
Senator Nancy Ruth: What authority do you have to do that?
Mr. Bilodeau: As I mentioned, we could use the ability to search
businesses to obtain records they may have. It is very important in cartel
cases. As you would suspect, cartels do not do it out in the open. It is
very covert, and we need to use tools like search warrants, in some cases
wiretaps, to get that information.
We also have what we refer to as an immunity program. If a company is
engaged in criminal activity, like a cartel, they can let us know they have
been involved in a cartel, tell us what they have been doing and who they
have been doing it with, and that person can receive immunity from
prosecutions for basically divulging to us that the cartel exists. That
would be in the context of criminal cases, and Mr. Kellison can elaborate in
a civil context where he and I work, how we come to those conclusions.
Senator Nancy Ruth: Does one of you do civil and the other does
Mr. Bilodeau: We both do civil.
Matthew Kellison, Acting Assistant Deputy Commissioner — Civil Matters
Branch Division A, Competition Bureau: With respect to a lot of the
civil provisions, the act does have some criminal provisions dealing with
cartels, price- fixing, as Mr. Bilodeau mentioned, bid rigging, and certain
deceptive marketing practices. Most of the rest of the provisions of the act
fall under a civil standard, which means that usually, rather than having a
burden of proof beyond a reasonable doubt, we have a balance of probability
standard if we are choosing to litigate the matter in court. Where we are
dealing with a civil provision, usually there is a competition test. There
is a civil provision dealing with refusal to supply if, for whatever reason,
you are not selling to a customer or, in some cases, to a competitor. There
is a provision dealing with exclusive arrangements and tied selling
arrangements. There is the provision dealing with, generally, abuse of
dominance, which is a catch-all for a lot of things.
In the package of 2009 amendments, there is a new provision that deals
with collaborations between competitors. Before, any time two competitors
got together and agreed to do something, they might be subject to criminal
sanctions under section 45, which, depending on the nature of the
arrangement, could be far too much exposure. In a lot of cases, there may be
compelling reasons why competitors may agree to do something together —
joint research and development, for example — that has nothing to do with
In any event, all of these cases have a competition test. That means that
we need to show not only that the practice has occurred, but also that,
subsequently, it has an effect on competition in the form of, for example:
higher consumer prices, reduced consumer choice, depressed innovation in the
market, depressed product quality, or raised barriers to entry preventing
competitors from coming in. Those are the kinds of things we look at when we
look at whether or not a practice is having harmful effects on competition.
Senator Nancy Ruth: Of these 400 people you employ, some are legal
counsel, some are criminal, some are civil, and then have you all of these
investigators. Do you hire outside expertise if, say, you are doing
something that is related to IT companies? I would have no idea whether or
not it was harming the market or developing future products because I do not
have that expertise. How do you gain those kinds of things?
Mr. Bilodeau: We have a number of investigators who are divided
up. Mr. Kellison and I work in the Civil Matters Branch, and we have
colleagues who work in the Criminal Matters Branch. We have colleagues who
exclusively deal with misleading advertising, working in what we refer to as
the Fair Business Practices Branch, and we have a group that reviews
mergers. We develop our own expertise. We will conduct the initial stage of
an investigation ourselves, but we start from scratch. When we look into an
industry subject to allegations of anti-competitive behaviour, we typically
start from scratch, unless we have had prior experience in that industry. We
will be out talking to market participants. We will be collecting
information from suppliers, customers, competitors, and regulators,
depending on what kind of markets we are looking at. We bring all of that
back to the office when we are done. We put them all together, and we see if
the act has been violated. There comes a point in many cases — if they
become complex and serious — where we require the help of outside expertise,
whether it is industry experts or economic experts. The act is legislation,
but it has a strong economic component. It is often necessary to hire
outside economic help to help us understand the market dynamics, if you
like. That is a bit what the bureau is composed of. We have administrative
support and a branch that helps us out with our economics as well.
Senator Nancy Ruth: My final question is: We have heard in this
study that there are issues of competition in the distribution channels for
American goods in Canada, as well as issues of competition at the retail
level. When I say those words and ask those questions, does that relate to
you at all?
Mr. Kellison: I guess this is a good opportunity to clarify what
we do and what we do not do. Our mandate is, essentially, to ensure that
businesses and consumers prosper in a competitive and innovative
marketplace. That is our mission statement. We do that through our
enforcement of the Competition Act. While we would not directly regulate a
price and say, "This price is too high, and you should lower your prices,"
or necessarily say that this market is too concentrated and should be less
concentrated, we would ask whether any of those things are occurring as a
result of anti-competitive conduct of some of the types we have mentioned,
whether it be price-fixing, abuse of a dominant position, exclusive dealing,
or tied selling. We would ask, "Are the prices that we are seeing in this
market a result of that anti-competitive conduct? Has competition been
substantially lessened as a result of that anti-competitive conduct?" If we
determine, through our investigation, that it has, then we can go to the
Competition Tribunal, which is the court that generally adjudicates the
civil provisions of the act, and apply for a remedy. That can be as simple
as an order prohibiting the conduct. It can be any other order that is
necessary to overcome the effects of that conduct, which could even include
the divestiture of assets or shares. One of the remedies we can now seek,
thanks to the 2009 amendments, is administrative monetary penalties for
abuse of dominance, which is important in terms of giving the law some
teeth. In the past, if you were to engage in abuse of dominance, for
example, we could get an order prohibiting that conduct, but any money you
made breaking the law was yours to keep. We think that administrative
monetary penalties provide a deterrent to engaging in the conduct in the
first place. Those penalties are substantial. In the case of a first order
by the tribunal, it can be up to $10 million, and, in the case of a
subsequent order against the same company, it could be up to $15 million.
Senator Nancy Ruth: It seems to me that if Bell came back with $10
million as quickly as they seem to have from your speech, they are making
sufficient profits that it is not a penalty of too much consequence. Are
there sectors of industry or particularly groups of goods that you watch for
Mr. Kellison: I should say, generally, that we do not necessarily
engage the economy at a sectoral level. We would not, for example,
necessarily look at the entire retail sector, as a whole, and say, "What is
going on there?" When we investigate an allegation of anti-competitive
conduct, it tends to be occurring in a specific market, which may not be the
retail sector as a whole. It may be a narrow subset of the retail sector. It
may be with respect to a specific product; it may be in a specific area, as
opposed to nationally. With respect to a specific market, if we are faced
with an allegation of anti-competitive conduct, we will investigate it.
Where we find it is contrary to the act, we believe we have the tools, and
certainly the motivation, to seek a remedy against that type of conduct.
The Chair: Can I put you down for round two? Your last question
was two questions ago.
Senator Nancy Ruth: I know, but there is no standing brief for,
say, the cellphone industry or something.
Mr. Kellison: If we are faced with an allegation of
anti-competitive conduct in the cellphone industry, then we will look into
the nature of that allegation, the firms involved, et cetera.
In terms of whether we are monitoring sectors of our own volition —
The Chair: We are going on to Senator Ringuette, from the province
of New Brunswick.
Senator Ringuette: Thank you, Chair. I guess I would be remiss if
I did not highlight the fact that the Competition Bureau is bringing Visa
and MasterCard before the tribunal for their abuse of their dominant market
position. I was under the impression that it was going to be going forth in
April, but now you indicate that it is in May. Why is it a month later?
Mr. Bilodeau: The tribunal had to move the start of the hearing by
two weeks, so we moved it from April 23 to May 8. That is the only reason.
Senator Ringuette: On a yearly basis, how many valid complaints
would you get? I know you get a variety of complaints, but you always have
to investigate and so forth. How many investigations would you do?
Mr. Bilodeau: It is a bit of a difficult question. We get
approximately 14,000 complaints a year.
Senator Ringuette: Fourteen thousand complaints.
Mr. Bilodeau: As you can suspect, the majority of those do not end
up being litigated. It does not necessarily mean that there is an issue.
I do not know how many of those 14,000 are investigated. I can tell you
how many we have taken forward, obviously, whether it is criminal, civil, or
fair business practices, and we can get you those numbers if you would like.
That number will vary from time to time, obviously. Cases may get resolved
or decided by the courts. We may close a case after we have investigated and
determined that there is no anti-competitive conduct or that there was not
price- fixing after all.
It is hard to quantify that number sitting here today; and I apologize
for that. We are very busy.
Senator Ringuette: In order to trigger an investigation, there
needs to be a valid complaint.
Mr. Bilodeau: Not necessarily. Complaints make up the majority of
the starting point for a lot of our investigations and cases. We have the
ability to wake up tomorrow morning and see something in the paper, bring it
back to the office, have a chat with my colleagues that there is something
going on in the market, and we will look at it. We can do investigations of
our own doing if think there is something going on in the market. You are
correct in that the majority come through complaints, typically from people
who are victims of that practice and are suffering from it.
Senator Ringuette: It is somehow unfortunate, but how can you do
otherwise, that your mandate is not proactive with regard to looking at what
is happening on the Internet in terms of misleading advertising or deceptive
marketing; at least I assume that. Do you have a unit or one or two people
whose job is to look at advertising on those sales channels on television,
Mr. Kellison: We look at online markets; and you mentioned
television. We look at that as well and at any sales or distribution channel
and any method of retail or advertising if we think there is a reason to
look at it under the act. Our Fair Business Practices Branch is very engaged
in dealing with online deceptive marketing, misleading claims and spam. We
have a number of international partners in fraud prevention that we work
with. Quite often we deal with scams, for example, which are not specific to
Canada and may be global. It may be a case of a U.S. company defrauding
Canadian consumers. I can assure you that we are very interested in
misleading advertising or deceptive marketing and we view online markets and
services just as seriously as traditional bricks and mortar ones.
Senator Ringuette: With regard to deceptive online marketing, have
you come across major price differentials that at the end of the day were
because of misleading advertising?
Mr. Kellison: So that I understand, is the question: Was there a
price differential resulting from misleading advertising?
Senator Ringuette: Yes.
Mr. Kellison: If that were the case, we would seek to address that
under the Competition Act. Misleading advertising generally can harm the
competitive process by misleading consumers and making them less able to
make informed choices about what they are buying.
Senator Ringuette: I am trying to discern if at any time in your
mandate you have identified price discrepancies between Canada and the U.S.
because of misleading advertising or deceptive marketing?
Mr. Kellison: When we look at misleading advertising, it is in our
interest to show a price differential; but it is not necessarily always the
case that we need to. For example, in our recent Rogers case, essentially
the government had taken steps to promote new entry into the cellphone
market, and those new entrants were being faced with what we felt was a
misleading advertising campaign by Rogers. Rogers said that its Chatr
wireless, which was introduced to compete in that market segment, had fewer
dropped calls than new entrants and that there would be no worry about
dropped calls for consumers who went with Chatr instead of a new entrant. In
that case, it was our view that those claims were misleading based on the
data that we looked at and that their claims were not true. Furthermore, it
was our view that Rogers had not done adequate testing of those claims. We
think those kinds of cases are important to the extent that a firm, for
example, could seek to prevent new entrants from acquiring customers through
misleading claims. That can have a knock-on effect on price to the extent
that you are harming your competitor's ability to compete and it may allow
you to keep your prices up. If we were looking at a price differential
resulting from that kind of conduct, we would certainly look at whether the
practice is having an effect on competition.
Senator Ringuette: What is the maximum penalty? You mentioned $10
million to Rogers and I think the same amount to Bell. What is the maximum
penalty that you or the tribunal can request?
Mr. Kellison: It depends on whether we are dealing with the civil
or criminal provisions of the act. Under the civil provisions of the act,
the administrative monetary penalties that the tribunal can order in the
case of abuse of dominance are up to $10 million in the first instance and
up to $15 million for a subsequent order against the same company. I believe
those amounts are the same in the misleading advertising context when
dealing civilly. When we deal with a case in the criminal world of price
fixing, bid-rigging and deceptive marketing, there are substantial criminal
fines. The 2009 amendments to section 45, the cartel provision, increased
the fine for cartel activity up to $25 million; and there is risk of jail
time as well.
Mr. Bilodeau: If I may add in the context of misleading
advertising, which is at section 74.01 of the Competition Act, the
Competition Tribunal or the court can order restitution for consumers harmed
by the conduct. That has been available since the 2009 amendments.
Senator Ringuette: In the case of abusive practice to dominate the
market, can the tribunal ask for compensation to consumers or is it just the
maximum $10 million?
Mr. Bilodeau: No. It is a monetary penalty only.
Mr. Kellison: That would be in addition to any other order made by
the tribunal to prohibit the conduct or require any other action on the part
of the dominant firm to take steps to remedy the effects that its conduct
The Chair: I need clarification on your descriptions of criminal
and civil. In the background that I am familiar with, a civil case is one
party against another party and a criminal case is the Crown against a party
or a group of people. When you talk about civil cases, you often refer to
administrative. Are you talking about administrative versus criminal process
as opposed to a civil case? Have I misunderstood what you said?
Mr. Bilodeau: In the context of criminal cases, you are correct:
The Director of Public Prosecutions will bring the charges against companies
that have violated the act. In civil cases, the Commissioner of the
Competition Bureau is the primary litigant against the parties, for example,
the commissioner versus Visa and MasterCard. When we refer to administrative
monetary penalties, we refer to penalties aimed at deterring future conduct.
The monetary penalties are in the context of civil cases and not present
under the Competition Act for criminal cases. In criminal cases, we simply
refer to them as fines.
The Chair: I understand the burden of proof difference; you have
Senator Marshall: I think my question is somewhat related.
What is the difference between Branch Division A and Branch Division B?
What are the other branches? I want a brief explanation. I would assume we
requested someone from your organization to appear, so why would you be the
one selected to appear here tonight with the knowledge of what we are
Mr. Bilodeau: Primarily, the bureau is divided for reasons of
administration. We do have legal services that on one side do civil cases
and we have legal services that do criminal cases. Those are separated. Our
civil matters branch enforces some of the civil provisions of the act,
including everything that has to do with abuse of dominance, price
maintenance and agreements between competitors that are not criminal in
nature. The criminal matters branch handles hard-core cartels and
bid-rigging. Those are the two things that they do primarily.
Senator Marshall: Do we have criminal matters branch A and
criminal matters branch B?
Mr. Bilodeau: The divisions themselves are basically
administrative divisions within the branch. We have about 40 people in our
branch and to make our jobs easier they just split everything in two, and we
have divisions that report to us at that point. It is the same in the
mergers branch where there are three divisions and fair business practices.
It is meant to be administrative divisions more than anything else.
Senator Marshall: Why would you two gentlemen have been selected
to come here tonight, as opposed to someone under the criminal matters
Mr. Bilodeau: A lot of issues that have come up through different
testimony touch on issues that the civil matters branch would look into, for
example, barriers to entry that exist because of anti-competitive behaviour.
We understand that credit cards came up a few times during the testimony of
several individuals and that is something that falls under the
responsibility of the civil matters branch. A lot of matters that came up
just seemed to fit better.
Senator Marshall: Earlier you gave an estimate of 14,000
complaints a year. We are also speaking about whether you were proactive or
reactive or both. For proactive, I had the impression that you are looking
at Internet sites and the shopping channel. Is that correct? Are you mostly
reactive to complaints or is there a proactive body?
Mr. Bilodeau: There is no proactive body, per se. We are primarily
reactive to problems in markets that are identified, and whether it is
merchants bringing to our attention credit card fees or real estate agents
complaining about certain rules and things like that, but we are generally
reactive to complaints brought to us. We can be proactive. Like I said, if
we are reading the paper one morning and we see something, or something
comes across our desk that would not come through complaints, for example,
then we can be proactive in that sense.
Senator Marshall: Would 95 per cent of your work be based on
Mr. Bilodeau: I would not know if it is 95 per cent, but the vast
majority would be responding to and investigating complaints.
Senator Marshall: For the work you do, what is made public? I
suppose the details of all your investigations would be made public, but
what is made public? Is it only your successful cases? I am just trying to
get a handle on where we go if we want to peruse cases that in which you
have been involved. What is there? Everything is not there. What is publicly
Mr. Bilodeau: One key element of the legislation in the
Competition Act, section 29, requires that our investigations and enquiries
be conducted in private and that the information we collect through
investigations remains confidential. The reason for that is we need people
to feel comfort in coming to us and telling us that there is a cartel going
on or a company is abusing its dominant position. It protects that process,
it protects them when they give us information, and it also protects them to
a certain degree from reprisals and similar things like that.
Throughout the investigation, when we do our investigation, the fact that
we are investigating typically remains confidential and does not necessarily
go public. There are circumstances sometimes when a complainant will say
they have complained to us about something but that is someone else
basically divulging that. Matters will become public, for example, if we
file charges before the Competition Tribunal. When we filed charges in the
Quebec gas price fixing matter, that matter became public at that point as
well. Even though things become public and, again, if there are decisions
stemming from those cases before the tribunal or the courts, those
decisions, successful or not, will obviously be made public. That is the
nature of the process.
Senator Marshall: Will they be made public on your website or is
it just in the media?
Mr. Bilodeau: It will depend. If a decision is rendered by the
Competition Tribunal it will be posted on the Competition Tribunal's
website. The tribunal is an independent body that is not linked to the
Competition Bureau at all, is independent and has judges from the Federal
Court who preside there. The same thing would apply to court decisions. If
it is a superior court of Ontario, I would presume it would be on their
website if there is a decision there.
There is a lot of information on the Competition Tribunal website, but
what you will not see in regard to our cases are specific facts necessarily
because those are oftentimes protected by the judicial process. The majority
of the hearings themselves will be open to the public.
Senator Marshall: You are aware that we are studying the potential
reasons for the price discrepancies between Canada and the U.S. How do we
find out whether you have done any work in that area? Do we ask you or do we
pursue your website?
Mr. Kellison: Certainly we have a lot of information on our
website. There are the actual decisions on the Competition Tribunal website.
There are also a number of background documents that we provide in terms of
how we enforce the act, how we look at the provisions and look at markets.
Obviously we are putting out announcements and news releases when we file a
case and when we win a case.
With respect to an investigation, let us say we looked into a particular
allegation of anti-competitive conduct in a market and for whatever reason
it did not go anywhere. It could turn out that at the end of the day there
was no merit to that allegation or perhaps there was merit at one time,
circumstances changed, which can happen all the time, and it simply did not
support us pursuing that case any further.
In those cases, as Mr. Bilodeau said, we conduct our investigations
confidentially and so we would not necessarily post that on the bureau's
website. One of the reasons for not doing that is simply because we deal
with 14,000 complaints a year against every company you can name. There is a
reputational aspect to saying you are being investigated by the bureau and
we take that seriously. We would not, as soon as we get a complaint, say we
have a complaint against company X because there could be no basis for it
and no reason to involve them, for example.
With respect to mergers we review, for example, we have been putting out
position statements that outline what we looked at and why we made the
decisions we made. We are committed to being as transparent as possible
within the bounds of the confidentiality requirements we have under the act.
Senator Marshall: Have you done any work that we could reference
in relation to our study?
Mr. Bilodeau: We would not look necessarily at a price discrepancy
as being the element we would look at first. It is possible, in the context
of our investigations of anti-competitive behaviour, that we could notice
that there is a price discrepancy. Whether or not the price discrepancy is
because of the anti-competitive conduct would depend on investigation on a
case-by-case basis. We would not necessarily know that.
Mr. Kellison referred to how we determine whether the conduct has
substantially lessened competition. When we look at anti-competitive
behaviour, our assessment of whether or not there has been a substantial
lessening of competition is a relative one. It is not that prices are higher
in Canada than in the United States. It is more a question of whether prices
are higher because of the anti-competitive practice. If the practice was not
present in the market — "but for the practice" is a phrase we often use —
would the market be more competitive?
One of the ways we look at that is would prices be lower, would consumers
in Canada have more choice, would innovation be better and would the quality
be better? Obviously the first element we look at is price. It is in the
nature of an economic calculation such as ours that price is usually the
first thing we will look at in determining whether or not an
anti-competitive practice or an agreement has had an impact on that price.
Mr. Kellison: I think that is right. Just to follow up on what Mr.
Bilodeau said, when I said we do not necessarily regulate the level of
competition in a market or determine whether a competition is sufficient or
determine whether a price is fair, what we do when we investigate
anti-competitive conduct is essentially say if we took that conduct away —
this is the relative assessment he is referring to — what would happen to
those prices? We use price as shorthand for several dimensions of
competition, which could include quality, choice, innovation, levels of
service, and those sorts of things. That is the kind of assessment we do.
What we can do as the bureau is that if we think there is
anti-competitive conduct that is raising prices, we will seek to enforce the
act and take action against that conduct and eliminate it. Whether or not
that speaks to every possible factor that could be raising prices in a
market, we cannot really speak to every other factor. We can only speak to
what we do under the act, which is enforce the provisions of the act. I
understand that other witnesses before this committee have raised what some
of those factors may be. Our act allows us to focus on the anti-competitive
Senator Marshall: Do you produce an annual report?
Mr. Kellison: We do produce an annual report. Our reporting is
usually done through Industry Canada, which is our overarching department.
We contribute to the annual report that way.
Senator Marshall: What kind of information is in the annual
Mr. Bilodeau: Just to add on to that, it is the annual report of
the Competition Bureau that is tabled in Parliament on a yearly basis. It
would involve a description of all the cases we have had this year that are
public in nature. Obviously, as we have talked about and because of the
confidentiality aspect of it, there are limitations to that.
Senator Callbeck: I want to pursue this misleading advertising.
You pick up the newspaper and you see a product where it says save $500, pay
$1,000, previously $1500. You get a complaint from someone who has bought it
for $1,000 because their next-door neighbour bought it two weeks ago and it
was $1,000 then too. When you go to the retailer, what does the retailer
have to produce? Do they have to produce a sales bill where they have
actually sold that product for $1500?
Mr. Kellison: That is an interesting question. With respect to a
strict price claim, one of the things we look at is whether or not that
price actually existed. You are right. That could be one of the things we
would look at. The test that we use is basically, "Did you give consumers
the general impression that this product would be available at this price,"
if that is what we are talking about. To the extent we were looking to
investigate a claim of misleading advertising about a price, we would
obviously want to know whether or not that price was available. At the same
time, we would want to know, did you make any representations about when it
was available and when it was not? If you have one car on the lot that is
for sale and all the rest are full price and that is not necessarily clear
from the advertising material, then that is the kind of thing that could
Senator Callbeck: Let us say the regular retail is $1,500 and that
you can buy it for $1,000. They are promoting a savings of $500, but that
product was never sold for $1,500.
Mr. Kellison: I see. You are describing a situation where they are
saying this is the regular retail price. We have what is called ordinary
selling price provisions in the act to deal with that sort of thing. There
are some dimensions as to if you are going to claim this is the ordinary
price, how long it has been available for and whether or not you actually
did sell it that price. That is something we can look at.
Senator Callbeck: That was my question, if they had to show a bill
sale that they actually sold it at that price.
Mr. Kellison: One of the things we would want to look at is, if
you were advertizing this as the ordinary selling price, how many days of
the year was it for sale at that price? Can you characterize it as the
ordinary price and then say you are discounting it below that? If you are
saying it is the ordinary price because you charged it for a day, then the
whole rest of the time it was at the discounted price, can that price you
are saying is the regular price be characterized as the ordinary selling
price? That would be the kind of assessment we would do.
Mr. Bilodeau: If I could add, in that context or any context that
we have an investigation, when we are investigating a specific company or
companies, it is normal for us to either go to them voluntarily or use our
subpoena powers to require them to produce to us documents that will help us
understand the situation in the marketplace. In that context, it could be
sales information. In other contexts it could be agreements they have with
suppliers. It could be cost information. It depends on a case-by-case basis
what kind of allegations we are looking into and what facts we need to
collect as part of the investigation to support the allegations or disclaim
Senator Callbeck: Another question is on abusing a dominant market
position. How do you define "dominant?" In Canada, they tell us the top
four retailers have 28 per cent of the business, compared to the United
States where the top four retailers have 12 per cent.
Mr. Kellison: It might be helpful if I explained what the abuse of
dominance provisions of the act entail. Section 79 of the Competition Act is
our abuse of dominance provision. Essentially, we have to show three things
under the act before the tribunal would grant an order. We have to
demonstrate first and foremost that someone substantially or completely
controls a class or species of business. That is what the law says, which I
will shorthand and just say someone is dominant. We have to show that they
have engaged in what we call a practice of anti-competitive acts.
Subsequently, we have to show that those acts have resulted or are likely to
result in a substantial lessening or prevention of competition, which as I
have mentioned is substantial effect on price, on product quality, on
consumer choice, on the ability of consumers to switch from one product to
Your question is about when is a firm dominant. Dominance, the way it is
traditionally been looked at by the bureau and by the courts, is based on
two factors. One is market share, as you mention. The other is barriers to
entry. The reason why barriers to entry are important is because, for a firm
to be dominant in the sense they have market power, they have the ability to
raise their price and keep it there above what you would probably see in a
competitive market. They may be able to do that if they have a large share
of the market but, at the same time, we look at entry barriers. If you have
90 per cent of a market, for example, but as soon as you raise your price
someone comes in and takes that away, that may be sufficient to prevent you
from raising your price. So market share is a necessary part of market
power. It is not always a sufficient part. We need to show that we have
these barriers that basically entrench that market share and allow you to
raise your prices. In terms of the kind of market shares we would look at,
traditionally, in the cases that we have litigated before the tribunal,
those market shares have been very high.
Senator Callbeck: Like what?
Mr. Kellison: Most of the cases we have taken have been in the 80
to 100 per cent range, in terms of market share when we are dealing with
single firms. That said, that does not imply that that is the threshold
necessarily. The courts have said that, above 50, you are in the
neighbourhood. We have said basically that we will not look at something
below about 35 per cent, but there is a lot of room there in terms of the
kind of market shares we would look at.
Mr. Bilodeau: It will vary depending on the market and the market
participants, how aggressive some of the competitors are, and also what kind
of anti-competitive practises we are looking at in the market. It is not a
hard and fast rule. We have to look at the market dynamics. You could have a
market share at 40 that is troubling because of market dynamics and one at
60 that is not because they have different dynamics.
Senator Callbeck: You mentioned here that, because of the
amendments to the Competition Act, the bureau has played a key role in a
record number of litigated cases. What is the number? How many?
Mr. Bilodeau: I can tell you, in the civil matters branch, we have
two cases that are currently being litigated, the Visa-MasterCard case and
the Toronto Real Estate Board case. Last year, we also had the CREA real
estate case that was litigated and eventually resolved. In the mergers
branch, we have two cases being litigated currently. One is a merger of a
waste company out in British Columbia. That hearing before the tribunal is
over. We are waiting for a decision from the tribunal. There is the Air
Canada and United Continental matter in the merger branch as well that is
being litigated. In fair business practices, the key one there is the Rogers
case that is being litigated. There are a number of other smaller cases. I
do not profess to know all of them. It is not my area of expertise. There
are a number of criminal cases as well before the courts. The Quebec gas
price-fixing is before the courts. There are a number of cases in Quebec in
the construction area as well. All branches of the bureau currently are
pretty active. As I indicated in my opening remarks, our focus is on
enforcement. The 2009 amendments gave us an increased ability to take cases
and to challenge anti-competitive conduct. It is the best way we can make
sure that Canadians are benefiting from competitive prices. In the Visa/
MasterCard case, we talked about the retail market. It is attacking the fees
that Visa and MasterCard charge to merchants. If those fees are high, they
are being passed on to consumers. The reverse is also true. If merchants pay
lower fees because we are successful, those will be passed on to consumers.
Even though we may not be, in the Visa/MasterCard case, looking at
consumers, we are attacking rules that will eventually benefit consumers if
we are successful.
The Chair: I have three senators who want to participate in
dialogue. I am going to ask those three senators to get their questions on
the record. If you are able to answer any or all three of them in the three
minutes that we have left, that would be great. Otherwise, we would be
pleased if you could provide us with a written answer that will be
circulated to every member of the committee.
Senator Peterson: How many times have you investigated the oil
companies and what have the results been?
The Chair: There are not going to be any answers now; you just put
your questions on the record.
Senator Peterson: I just put my question in.
The Chair: That is it?
Senator Peterson: I thought that was a pretty succinct question.
It needed a quick answer.
The Chair: Thank you very much. We almost got an answer on that.
Senator Peterson: He was starting.
The Chair: I saw it coming.
Senator Buth: There is considerable concentration in the retail
book sector. I am wondering if that is a sector you have ever looked at.
Also, when you look at anti-competitive behaviour or prices, have you ever
taken a look at the impact of the Canadian dollar and the appreciation of
the Canadian dollar on prices?
Senator Gerstein: I will follow Senator Buth on that. We are
really focused on the fact that in the past 15 years the Canadian dollar has
appreciated by 50 per cent against the U.S. dollar. In paragraph 8, you
state, "While there may be a variety of potential factors contributing to
price, our job is not to decide what a fair price is and only to see if it
is as a result of an anti-competitive conduct." In a polite way, are you
basically saying to us that the issue that we are studying is really not
The Chair: You have a couple of minutes. Will you try to answer
those questions now?
Senator Buth: Especially the book one.
Mr. Bilodeau: In terms of the last question, I do not think that
is what we are saying. You have to look back at what our role or our mandate
is — to enforce the Competition Act. To the extent that we investigate
competitive practices that lead to higher prices, which could be a higher
price than it is in the United States, we can take action in regard to those
anti-competitive practices to deal with and remedy that conduct. To that
extent, we do have a role in making sure that Canadians benefit from having
no anti-competitive behaviour at all in any industry.
The Chair: How about Senator Buth's questions?
Mr. Kellison: In answer to your question about the books market —
I like the lightning round we are having — I will try to address it in the
limited amount of time we have. We have heard that. We know that the book
market has come up in discussions of this committee, and I do think that
that is a topic you should raise to our colleges from Canadian Heritage,
who, I understand, are next. As I said, if we saw, for example, that any
price differential in the book market was the result of anti-competitive
conduct, we would seek to take action against that conduct. The fact, in and
of itself, that the book market is, in the view of some people, very
concentrated is not sufficient to raise issues under the act. Some markets
are concentrated, some are not. It is hard to say. Mr. Bilodeau was talking
about market dynamics. Sometimes we can see a market being vigorously
competitive with two firms, depending on their products and how they compete
with each other. Sometimes we can see a market being less competitive with
several more firms. Dealing at a very high level, it is difficult to say why
any particular market, with the market share that you see in that market,
would be more or less competitive. As I have said, we do not really make
that kind of absolute assessment. We say, "Is there conduct occurring that
is resulting in a price differential?" If so, we will take action against
The Chair: Senator Peterson had a short question. Are you able to
answer, Mr. Bilodeau?
Mr. Bilodeau: I can tell you that we have conducted six major
investigations into the price of gasoline over the last 15 years. Prior to
that, going back to the 1980s and 1990s, we had 13 trials involving our
former criminal price-fixing provision. Eight of those resulted in
convictions. Right now, we have a number of gas price-fixing cases in
Quebec. I think 29 charges have been laid, or something like that number. We
have been able to get approximately $3 million in fines. We have had
imprisonments totalling 54 months. Individuals, as well as companies, have
been charged. It is a market we have looked at. Obviously, it is of interest
to Canadians, and we have looked at it often. It is a market that we have
taken action in the past on.
Senator Peterson: When the price of oil goes up, the price of
gasoline goes up immediately. When price of oil goes down, it does not go
down. They say it takes us a while to get all the oil that is there out of
the system. It has to work both ways. Why you let them get away with one and
not the other is beyond me.
Mr. Bilodeau: Is that a question?
The Chair: Only if you have an answer. Our time is up. I have two
senators on round two. I will ask them to put their questions, and then, if
you could provide us with a written reply, that would be appreciated.
Senator Ringuette: This committee has requested to put forth its
report in June. I believe that the Visa and MasterCard issue is a very
important component of the difference in price. I was wondering, if the
tribunal only hears your case in regard to MasterCard and Visa in May, when
do you expect to have a reasonable decision from the tribunal so that we can
include that in our report?
Mr. Bilodeau: The hearing is scheduled from May 8 to June 21. We
do not expect the decision to come from the bench, so it will take a couple
of months at least before we get a decision. To give you an example, the
merger case that was heard finished in early December. We do not have a
The Chair: There is one other point that we should clarify for the
record. We have been told that in certain industries — certain markets —
there is more competition in the United States, which helps keep the price
of the product down. There is less competition in Canada. That it was
alluded to in terms of percentages. As long as the Canadian marketplace is
not involved in an anti-competitive activity, you do not look at the market
across the border to say, "Why is the price less in the United States than
it is in Canada." Is that correct?
Mr. Kellison: In a very general sense, we do not monitor
international pricing trends. What we would do, though, is, as you have
said, if we determined that a price differential or even just any price,
regardless of where the United States is, was being affected by
anti-competitive conduct, we would deal with that conduct.
That said, as we have mentioned, there could be other underlying factors
contributing to a price differential that have nothing to do with
anti-competitive conduct, whether they be tariffs, taxes, regulatory
barriers, or that kind of thing. However, if we were looking at a market and
investigating an allegation of anti-competitive conduct — specific conduct
in a specific market — we generally would inform ourselves about what is
going on in other jurisdictions, in terms of whether that conduct is
happening there too, whether it was stopped and, as a result, prices went
down, or whether there are any other relevant experiences we can draw from
that. As I said, that is with respect to specific conduct.
The Chair: Unfortunately, our time it up, but it has now become
clear to us why they sent the two of you along to help us out. This is a
very helpful discussion we have had. The frustration we have is that we keep
hearing from witnesses saying it could be any of a number of factors. We
would like to try to reduce that number of factors so that we can understand
the significant ones in different industries. That is what we are working
on. When you go back and talk to your colleagues in your divisions A and B
or elsewhere, if there is any other information could you give us that would
help us come to some answers in that regard, that would be very much
appreciated. Please feel free to contact us at any time. Mr. Bilodeau and
Mr. Kellison, thank you very much for being here.
In the second session this evening, we are pleased to welcome officials
from the Department of Canadian Heritage, who will take their seats
promptly. Yesterday, we had an interesting discussion on discrepancies in
book prices between Canada and United States. We are hopeful that officials
before us this evening can offer some further insight into the Canadian book
retail sector generally as well as some of the specific legislative
provisions that may affect book prices.
I am pleased to introduce Ms. Helen C. Kennedy, Deputy Director General,
Cultural Industries; and Ms. Carla Curran, Director, Book Publishing Policy
Ms. Kennedy, I understand you will be providing opening remarks, after
which we will have questions.
Helen C. Kennedy, Deputy Director General, Cultural Industries,
Canadian Heritage: Thank you, Mr. Chair. Now that you have completed the
introductions, which were lovely, I want to say that we have come here
tonight at your invitation to provide you with some background information
on the Book Importation Regulations and how they work in Canada. We will do
our best to answer any questions you might have on the subject.
We have circulated a deck that you can take away with you. We hope that
you will find our presentation useful.
First, we thought it would be helpful to situate this regulation within
the Canadian book policy framework. We are starting with the federal
government's general objective with regard to books, which is to provide
readers around the world with access to a wide range of books by Canadian
The department is responsible for three key measures. The Canada Book
Fund provides over $30 million to the book publishing industry to support
Canadian publishers in producing Canadian books. The fund also provides
support for promotion, digital initiatives and international marketing.
Furthermore, the department ensures the application and implementation of
the federal policy on foreign investments in the book industry,
simultaneously applied with the Investment Canada Act. Finally, we ensure
the enforcement, with Industry Canada, of book importation regulations under
the Copyright Act, the subject of this evening's presentation.
These measures seek to ensure the vitality of the Canadian book industry
because it plays a role in providing Canadian books to readers.
Approximately 80 per cent of books by Canadian authors are published by
Canadian publishers within Canada.
The Canadian book industry is substantial, representing in the order of
$2 billion in revenues. It includes not only publishers but also
distributors, wholesalers and retailers. The slide sets out in broad terms
what each player contributes to what has been referred to as the "supply
chain" in the Canadian book industry.
You will note that the slide contains a definition of "exclusive
distributor." This concept of exclusive distributor refers to a distributor
who is actually licensed by a publisher to be the only importer or supplier
of that publisher's books to retailers and institutions, such as libraries,
in a given territory. If you look to the back of the presentation, you will
see a list of some foreign-owned and Canadian-owned exclusive distributors.
These distributors provide a variety of services to their publisher clients,
including logistics and fulfillment, things like transportation, inventory
and data management, warehousing, customer account management and marketing
Many of our largest foreign-owned publishers first began operations as
the exclusive distributors of their parent companies' titles in Canada, and
the revenues from distribution on an exclusive basis helped to fund the
creation of Canadian publishing programs and continue to support them today.
According to Statistics Canada, foreign-owned publisher contributions, for
example, invested over $0.75 billion into their Canadian operations in 2008
and, in a typical year, generate 44 per cent of their revenues through the
sales of books they publish in Canada.
Before we get into some of the mechanics of how the regulations operate,
we thought it would be useful to provide the committee with some history on
how those regulations came into being.
A number of years ago, concerns were expressed — mainly by distributors
and publishers — about a practice known as buying around. Buying around
occurs when a retailer or other buyer imports copies without sourcing
through a publisher or exclusive distributor in a given territory.
This practice was troubling because it compromised the territorial rights
holder's investment in a title and resulted in lost revenues for the
The government of the day agreed that this was an issue and committed to
addressing it. It chose to do so through amendments to the Copyright Act.
When the act was amended by Parliament in 1997, one of the changes provided
exclusive distributors of books access to remedies in the act when buying
around occurred. These remedies included certain abilities to sue and to
obtain a court order for the seizure and detention by customs officials of
illegally imported shipments of books.
Two years later, the current regulations came into force following a
consultation process in which English- and French-language industry
stakeholders took part, as well as those representing various sectors of the
The following slide sets out some of the key considerations at play in
the development of the regulations, including how close Canada is to the
United States, which of course makes buying around more feasible. It also
explains why the issue does not tend to be as big in the French language
market, which is more distant from other French language book markets
internationally, giving distributors greater obvious distance from competing
There were also concerns about recognition for the fact that exclusive
rights holders had invested in a title and played a role in marketing books.
The interests of retailers and consumers were also taken into
consideration. For example, at that time, retailers were concerned that
exclusive distributors were not offering them appropriate or competitive
prices or adequate services.
Finally, there was recognition of the higher cost of doing business in
Canada's relatively small market in areas such as transportation, labour,
taxes and economies of scale.
What do these regulations do? This slide attempts to boil down the
regulations to their essence and to give you a sense of what they actually
say. At root is the concept of balance — an attempt to balance the interests
of different players whose collective actions serve to bring books to
The bottom line is that if an exclusive distributor wishes to be able to
rely on the remedies we talked about earlier, it must meet certain notice,
service and pricing provisions. You see some of them there. We give
examples. They will vary depending on the market and are specified in detail
in the regulations.
The pricing provisions are particularly relevant and essentially set a
ceiling on how much the exclusive distributor can mark up the price of a
book he offers to the retailer. Also taken into account in this calculation,
as specified in the regulations, are the exchange rate and any applicable
discounts. These discounts are negotiated between distributors and retailers
and typically range from between 40 to 48 per cent.
Finally, I would point out that the government does not play a role in
enforcing these regulations. The onus is on the distributors to pursue the
remedies made available to them under the Copyright Act.
The following slide is where we try to give you an example of how the
ceiling for books imported from the United States works. If you will bear
with me, I will try to walk us all through this. Again, it is an example.
An American title has an SRP, which stands for suggested retail price,
for the United States of US$14.99, let us say, set by the foreign publisher.
If the Canadian dollar is at par, the suggested retail price for the
Canadian market must be no more than $16.49. If the exclusive distributor in
Canada offers that book to a retailer at C$16.49 or less minus those
applicable discounts but the retailer decides to source the book from a
competing supplier, the exclusive distributor can access the remedies in the
act. If the exclusive distributor sets the suggested retail price above
C$16.49 minus the applicable discounts, the retailer can legally import the
book directly from a foreign supplier, for example, an American wholesaler.
These provisions, it is important to note, apply only to books that are
physically imported by exclusive distributors. They do not apply to e-books,
imports by individual consumers or books published in Canada. Ultimately, it
is the retailer who sets the actual price for consumers, which can be
affected by a number of considerations.
In conclusion, again, the regulations seek to strike a balance, providing
access to legal remedies for distributors who have negotiated exclusive
rights for the distribution of books in Canada while setting service
standards and limiting how much the distributor can increase the suggested
retail price of the book for Canada.
These requirements must be respected if the exclusive distributor wishes
to benefit from the provisions in the Copyright Act. Again, it is the
retailer who sets the actual price for consumers, taking into account a
variety of factors.
Thank you for your attention. The presentation was somewhat technical,
but I hope that the information we have provided is satisfactory.
The Chair: Thank you very much, Ms. Kennedy. We learned about the
Book Publishing Industry Development Program yesterday. Can you tell us a
little bit about that and just how that fits in with what you have had to
say and how that fits into the scheme that has been devised to protect the
U.S. publisher of books that cannot control their market in the U.S.?
Ms. Kennedy: What you were referring to is what we currently call
the Canada Book Fund.
The Chair: I think that is right. I think it changed its name.
Ms. Kennedy: It was renewed, reformulated and rebranded and
announced in 2009. It provides over $30 million in financial support to the
Canadian-owned section of the book industry. It provides most of its funding
through a formula that is designed to reward the sales of Canadian
publishers of Canadian books. It also provides support for marketing and
promotion and some digital initiatives. As I mentioned before, it is a fund
that is available to the Canadian-owned publishing sector.
The Chair: I was looking for the fund in the estimates to see how
much it was. However, I could not locate it, and it might have been because
the name had changed. Are you able to tell us how much is appropriated for
this particular funding on an annual basis?
Carla Curran, Director, Book Publishing Policy and Programs, Canadian
Heritage: It is $39.5 million.
The Chair: That is Canadian dollars?
Ms. Curran: Right.
Senator Peterson: I want to talk about this 10 to 15 per cent that
had been put on, because yesterday we had the book people in and they
basically say that this regulation stipulated the importer can charge a book
seller the price of the book, country of origin, plus the difference in
exchange rate, plus an additional 10 to 15 per cent depending on the country
of origin. They go on to say all it does is allow publishers to receive an
additional 10 to 15 per cent of pure profit from their product before risk
losing a sale to parallel importers. They also go on to say that the 10 to
15 per cent primarily leaves the country. Then they went on to say that,
with the stroke of a pen, a change in regulation can save Canadian students
tens of millions of dollars each year without any cost to the public purse.
When I asked them who was stroking the pen, they said Canadian Heritage. I
would ask you, could you stroke the pen?
Ms. Kennedy: The reality is that changing regulations would
involve a process. It is not just the stroke of a pen. Changing regulations
would involve a formal process of consultations with the various parts of
the industry. We talked earlier about when these regulations were first
established that there was a consultation process that involved
representatives from all sectors of the industry in both the French and
English language markets. It is not our understanding that a stroke of the
pen would be sufficient to change or to repeal the regulations.
Senator Peterson: You would consult with the very people who are
collecting this 10 or 15 per cent? Is that what you do?
Ms. Kennedy: I cannot comment on the government's intention on
this, but, yes, the normal process for making changes to regulations would
involve consultations with affected parties.
Senator Peterson: They are the people getting the money. It is
strange. There is nothing to gain. They say themselves they do not need
this, but because that is sitting there, they are allowed to do that. That
is just manna from heaven. Why would they not do it, just tack it on, get
the money, put it in the bank and everyone is happy? Well, they are happy,
but not the students.
Ms. Kennedy: That is right. The regulations, as we pointed out, do
allow the exclusive distributors to set the Canadian list price as much as
10 per cent higher than the U.S. list price, factoring in the exchange rate.
The price paid for a book in Canada, including any markup applied to the
foreign list price of an imported book, flows to the various participants in
the book industry, whether that be the retailer, distributor, publisher or
author, based on negotiated terms between the parties. To understand those
relationships in finer detail, we would encourage the committee to seek
additional information from representatives of those industry groups; that
would be helpful to the committee.
Senator Peterson: The campus stores had tried to meet but were not
able to. Do you think it would be advantageous for someone to set up a
meeting to discuss this? We could do something with this, could we not?
Ms. Kennedy: It would be helpful to the committee to understand
those relationships in finer detail. As I mentioned, the money flows through
to the various participants in the book industry — retailer, distributor,
publisher or author — based on negotiated terms between those parties. If
the committee is trying to understand what is going on and what those
business relationships and the money flows are, we would encourage you to
seek additional information from representatives of those industry
Senator Peterson: Why do publishers put both prices on the backs
of books — the U.S. price and the Canadian price. In the United States they
do not block out the Canadian price, while up here, they try to block out
the U.S. price.
Ms. Curran: Dual-pricing on a book is a long-standing industry
practice. My understanding is that it was done at the request of retailers
in the past. It has been a tradition in the book industry to have both
prices; but it is being done somewhat less so now. Occasionally, we see
books that do not have both prices but if the foreign publisher anticipates
having a book distributed in the Canadian market, they do not have to do a
separate print run when both prices are on the back of the book.
Senator Peterson: Why put it there at all? They always have a
sticker with the price as well as 30 per cent stickers. I do not know why
they put it on there, because it antagonizes people.
Ms. Kennedy: I suggest you ask the publishers.
Senator Ringuette: Ms. Curran, you mentioned that putting two
prices on the backs of books is usual practice and that it was requested by
the retail sector. Is that an assumption or a fact?
Ms. Curran: It is something that I have been told by people in the
industry; but you would want to check it.
Senator Ringuette: On slide 4 you identify the interveners in the
book industry — the publisher, distributor, wholesaler and retailers. On
page 10 with regard to Canadian owned, you say "some are also publisher
distributors, for example . . . ." Some of them remove one of the
additional partners in the chain. For example, if a publisher wants to have
an exclusive distribution network with a certain entity, why should we
reinforce that exclusive privilege, given the 10 per cent?
Ms. Kennedy: As we explained at the beginning, the original
rationale for the regulations had to do with creating a balance between
giving the exclusive distributor, who had negotiated exclusive rights for
the Canadian territory, rights under the Copyright Act, and the desire to
have adequate service standards and to create a ceiling on the price — any
markup — that the exclusive distributor could apply to the book that he or
she was importing. That is the basis of the rationale.
Senator Ringuette: I understand the rationale. It might have been
a good rationale when that legislation was put in here. Today, we are
looking at global purchasing power. I do not agree that we would be
reinforcing market exclusiveness. We just heard witnesses from the
Competition Bureau. An exclusive market logically leads to price fixing and
so forth. Certainly, we have an issue with legislation and the way it is put
together in terms of the end result for consumers.
Ms. Kennedy: The other factor I should mention with respect to the
original rationale is the role that the exclusive distributors play in the
Canadian market and the services that they provide. Their physical presence
is part of the relationships that build the industry as a whole. They have
investments and jobs and, as we mentioned earlier, they invest in publishing
Canadian authors. That is another factor under consideration.
Senator Ringuette: Correct me if I am wrong, but I think Canadian
Heritage has another specific program to encourage the publishing of
Canadian writers. Am I wrong?
Ms. Kennedy: We have the Canada Book Fund, which supports the
publication of Canadian books by Canadian publishers.
Senator Nancy Ruth: Ms. Kennedy, I want to go back to the 10 per
cent. You suggested that we hear from others to give us more detail. Are you
telling me that the 10 per cent is split on the basis of an agreement
between distributors, retailers, wholesalers and the others? Do they make
the decision about how the 10 per cent is factored?
Ms. Kennedy: If there is an exclusive distribution arrangement and
if it is covered by these regulations, the price of the book can include
that 10 per cent.
Senator Nancy Ruth: In your deck you say, "The suggested retail
price (SRP) for Canada of books imported from the U.S. must be no more than
10 per cent higher" Have you ever seen it less than 10 per cent than the
original SRP? Then you go on to say, "converted to Canadian dollars at the
prevailing rate of exchange." If the prevailing rate of exchange is par or
the Canadian dollar is worth more than the U.S. dollar, there should not be
a price differential on the American book imported into Canada. Is that
Ms. Kennedy: No.
Senator Nancy Ruth: Why is that? It is conditional upon
"converted to Canadian dollars at the prevailing rate of exchange."
The Chair: You can convert and take advantage of any exchange rate
difference and 10 per cent is added on the top.
Ms. Curran: Yes.
Senator Nancy Ruth: Have you ever seen it less than 10 per cent?
Ms. Kennedy: I do not recall.
Senator Nancy Ruth: It is 15 per cent in Europe.
Ms. Kennedy: I cannot say one way or the other, senator.
The Chair: I think Senator Nancy Ruth was getting to this next
question. What if the regulation changed so there was not this artificial 10
to 15 per cent additional amount that can be put in there? What would happen
to the market?
Ms. Kennedy: I have to be honest, I cannot speculate right now. We
would have to do a considered assessment of that. I would not want to
speculate and mislead the committee on that.
The Chair: We are trying to determine if we should have a
recommendation to do away with this. Is this really needed to have a market
in Canada? In effect, what we are doing is protecting the U.S. publisher,
even though that publisher may sell the books loosely. There are all kinds
of opportunities for someone from Canada to bring them in at discounted
prices, but they cannot do it because of these regulations.
Ms. Kennedy: If the exclusive distributor wants access to the
remedies in the act, he or she complies with the regime set out in the
regulations. There are business decisions and choices that are made in all
of this. I think we would have to look at what the range of impacts from
changing these provisions would be.
The Chair: Have you done any speculating, study or predicting?
Ms. Kennedy: We have not done any speculating. The department is
not currently conducting what we would call a formal review of the
regulations. As I mentioned before, changing them would require a formal
process. I cannot comment on the intention of government, for example, to
review the regulations or not, but, in the context of our continuous
assessment of policy measures, the department has contracted with
independent researchers to conduct a study on the relevance and
effectiveness of the regulations in both official-language markets in
Canada. The study in still in progress and is expected to be finalized in
the coming months.
The Chair: Given that regulations flow from legislation and that
we have new legislation related to copyright before the House of Commons
now, is there a basis for these regulations to continue in that proposed
Ms. Kennedy: The Copyright Act does include the provision that
anchors the regulations. The act that is going through the legislative
process does not contain amendments that affect these regulations.
The Chair: That was not my question. You have already answered my
question. With the new legislation, there is still a basis for the
regulations to continue.
Ms. Kennedy: The provisions in the act have not been affected by
the current bill.
The Chair: That was my question. Thank you.
Senator Runciman: I am still confused by this. I am not sure why
we are in the business of setting prices for a consumer product. I really go
along with what Senator Nancy Ruth was suggesting earlier.
I live in a border community and I buy a lot of pocket books. We have
seen the Canadian dollar reach parity — a 30 per cent increase over the last
year or two — and there has been no real benefit to Canadian consumers. It
just strikes me as a strange position. We had the booksellers here yesterday
indicating that they are on the front line, and they are the people who are
facing the wrath of purchasers. Business is suffering as well. Plus, you can
look at the textbook side of things and university student costs as well. I
still do not understand — and I guess this is not your role to play — why we
are in this business and why Canadian consumers should not be able, in some
way, shape or form, at least in this one area, to benefit from the
appreciation of our dollar.
The Chair: That was somewhat of a statement, but if you would like
to react to it with another statement, that would be okay.
Ms. Kennedy: It is very difficult to isolate the impact of these
particular regulations on the price of books because there are, obviously, a
variety of factors at play when it comes to what retailers choose to charge
consumers for books. I appreciate the senator's points, but these particular
regulations are permissive and allow for a markup. It is a limited one;
there is a ceiling there, obviously. It cannot be higher than what the
regulations provide. It is difficult for us to isolate the impact of that
specific measure on the price of every single Canadian book sold to
Senator Runciman: This may have been asked earlier. I could not be
here earlier, but I know that Senator Marshall raised it yesterday. It was
pointed out by our witnesses yesterday that this is not the same regulation,
if there is a regulation, that applies to magazines.
Ms. Kennedy: That is right.
Senator Runciman: Is it a different regulation?
Ms. Kennedy: These regulations do not apply to magazines.
Senator Runciman: When we see the stark differences in pricing, is
there any role that government plays in that at all in the magazine sector?
Ms. Kennedy: Not that I am aware of, senator.
Senator Buth: Maybe I will go about this question in a different
way. I expect you will give me the same answer. Maybe I should not have made
that comment, but do you think that, if this regulation was eliminated, we
would see the loss of distributors in Canada?
Ms. Kennedy: It is not appropriate for me to speculate. However,
the impact of the elimination of these regulations on the distribution
sector would be something we would need to assess if we were looking at that
as an option. You are right; we would need to assess what we think the
impact would be on all the players, including the exclusive distributors.
Senator Buth: Do all of these distributors that you have listed,
like Random House of Canada and McGraw-Hill Ryerson, meet the notice,
service and pricing provisions under the act? It is a voluntary thing,
Ms. Kennedy: Yes, it is a voluntary thing, and we do not have good
statistics or data on the extent of buying around, that is, people operating
outside of scope of those regulations.
Again, I think the industry players might be better placed to provide
senators with a sense of how much buying around they think is happening or
how much commercial activity is occurring outside the scope of these
regulations for other business reasons.
Senator Buth: Who would be the largest distributors in Canada? You
have five of them listed: Random House, McGraw-Hill, HarperCollins, Penguin,
Ms. Curran: Of the large players, I do not know which one would be
the largest. Random House is very large. HarperCollins also does quite a lot
of distribution in Canada. On the Canadian side, according to a study we
undertook in 2007, Rain Coast Books is the leading English-language,
Canadian-owned, exclusive distributor.
Senator Buth: They are Canadian owned, but they are importing
foreign books. The same regulation could apply for them.
Ms. Curran: Yes. Rain Coast Books is just a distributor, not a
publisher. It was in the past, but it is not now.
Senator Marshall: Ms. Kennedy, when you were going through the
deck and talking about the 10 per cent ceiling, you gave the example of the
$14.99 and the $16.49. Then you said that if the Canadian dollar is at par,
the suggested retail price for the Canadian market must be no more than the
10 per cent. How does the department measure or ensure compliance with that
Ms. Kennedy: It is not the department's role, actually, to monitor
or enforce those regulations. The onus is on the distributors themselves to
pursue or to take advantage of any of the remedies available to them in the
Copyright Act if they become aware that buying around has occurred when they
have been complying with the terms in the regulations. No, we do not monitor
or run after people or enforce those regulations.
Senator Marshall: You have the regulations. The department really
does not know the extent of compliance or non- compliance, does it?
Ms. Kennedy: That is right. We do not have the ability to take the
data we have now and disaggregate within the import activity that is
measured to distinguish what is happening within the scope of the
regulations and what is happening maybe outside of the scope of the
Senator Marshall: Based on what you know, are you aware of
examples of non-compliance? You do not monitor compliance. You do not
determine compliance. Do you have any knowledge or any general feeling with
regard to whether that rule is being complied with?
Ms. Kennedy: I will ask Ms. Curran to take that question because
she has long-standing experience in the sector.
Ms. Curran: I guess what I would say is that, to date, our
understanding is that you will see books where, at the end of the day, the
price that is actually available may seem to be more than the 10 per cent.
That does not necessarily mean that the distributor priced over the 10 per
cent. If the distributor does price over the 10 per cent and the Canadian
dollar is at par, the retailer has options. They can decide to purchase the
book from a different supplier, usually outside Canada, and can try to get
the book cheaper. At the end of the day, the extent to which the markup on
the book happens at the end, we do not really know to what extent it is
affected by the 10 per cent.
Senator Marshall: It just seems odd to me that there is this 10
per cent rule set in regulations, yet there is no monitoring with regard to
whether it is being complied with or not. I find that unusual.
Just to go back to the legislation, I was always under the impression
that federal legislation was reviewed every five years. Is that not correct?
Ms. Kennedy: It is not in this case, although I think the current
Copyright Act that is going to the bill does contain a provision, if memory
serves, that would allow for review of the copyright legislation on a
Senator Marshall: This regulation has been in place since 1999.
That would be 13 years. Has that been there for 13 years and never been
Ms. Kennedy: Not, as we said before, in the formal sense of
launching a review of regulations, no, not to my knowledge.
Senator Marshall: It is odd that you would have a regulation in
place that you do not monitor to make sure that it is being complied with,
and in 13 years it has not been reviewed.
To go back, one of the earlier questions focused on the implications of
removing the 10 per cent price ceiling. Would you have any information at
all with regard to what you think the implications would be of removing
Ms. Kennedy: No. Like I say, we are undertaking a study now that
is looking at the relevance and effectiveness of the regulations, but I do
not have anything now to give the committee that would take an isolated
approach to exactly what would be the impact of removing simply that
particular element of the regulations for the Canadian industry.
Senator Marshall: When you talk about the study of the
effectiveness of the regulations, have you laid out how you will determine
Ms. Kennedy: As I mentioned, the study is under way. It is not
final, it has to be said. We are expecting it to be finalized in the coming
months. At that point, we will be in a better position to see what the
findings are with regard to the regulations. As I said in my presentation,
it is part of our ongoing work we do to assess our policy measures in the
department, and obviously we wanted to take a look at this one.
Senator Marshall: Are the terms of reference done for that study?
I have to go back on the comment I have made a couple of times. If you are
studying the effectiveness of the regulations that you are not monitoring
for compliance, I would think it would be difficult to determine the
effectiveness of that.
Ms. Kennedy: Again, the consultants will be talking to people in
the industry who will be able to help with the questions that he will be
asking around those issues. I would point out that the regulations do not
require us to monitor compliance for these regulations.
Senator Callbeck: I am looking at page 4. You talk about the
publishers, the distributors and the wholesalers. If a book is coming in
from the United States, there has to be an exclusive distributor or, if it
is a fast-selling title, it can just go to a wholesaler, can it?
Ms. Kennedy: There does not have to be an exclusive distributor.
What occurs is that a distributor negotiates exclusive arrangements with the
publisher. That is what happens. Do not forget that this is only covering
the physical importation of books, so it is not covering other forms, as we
said before, e-books or individual consumers who may be buying books. It is
the business negotiations that occur between the publisher and distributor,
and both agree that it works for them, essentially.
Senator Callbeck: I thought there had to be an exclusive
Ms. Curran: No. It is possible for a foreign publisher to decide
that the book will be distributed in Canada in a nonexclusive way. Sometimes
publishers will go to a foreign wholesaler that has sales representation in
Canada to have the book distributed in Canada. By and large, most of the
books that are physically imported into Canada are distributed in Canada by
Senator Callbeck: But they do not have to be?
Ms. Curran: They do not have to be.
Senator Callbeck: Regardless whether it is a wholesaler or
distributor, the 10 per cent applies?
Ms. Curran: No, it only applies to exclusive distributors because
that is a specific right that the exclusive distributor has for the
distribution of the title in a particular territory.
Senator Callbeck: A publisher, you say here, buys a range of fast
selling titles, but can they buy other books that are not fast-selling?
Ms. Kennedy: Which page are you looking at?
Senator Callbeck: I am looking at page 4.
Ms. Curran: Wholesalers.
Senator Callbeck: What did I say?
Ms. Curran: Publishers.
Senator Callbeck: I am sorry.
Ms. Curran: Yes. It is the nature of their business. They can buy
other types of titles, but they are typically set up in their warehouses to
be able to deal with smaller volumes that move quickly of a vast variety of
Senator Callbeck: Any book can go through a distributor or
Ms. Curran: Yes.
The Chair: Presumably these fast-selling titles could also be
remaindered books or discounted books in the U.S. that the wholesaler brings
in and sells. We see all kinds of books selling at a third of their original
price and that kind of thing as well.
Ms. Curran: Yes.
Senator Peterson: Can we have clarity on that 10 per cent and that
it goes directly to the publisher? Do you have clarity on that?
Ms. Kennedy: No.
Senator Peterson: Where does it go?
Ms. Kennedy: As we said before, in terms of the total price of the
book, including any of the markups or discounts that have been applied, the
money flows are split between all the players in the production and
distribution chain, right from the publisher to the retailer, the
distributor and the authors. It is difficult for me to say of the 10 per
cent how much goes here or there. My best advice to the committee is to seek
more clarity on that from the industry players.
Senator Peterson: It would seem unusual that the government would
impose itself to help the process along. They can look after themselves;
they are big players. They have managed to negotiate this, and they do not
want to give it up. Do we have any idea how much money we are talking about?
Ms. Kennedy: We will get back to the committee with our statistics
that indicate how much the importation of foreign books represents in terms
of revenues in the Canadian industry. I think we can get that statistic.
Senator Peterson: How much money are you getting from this
regulation? How much does that come to?
The Chair: That would be importation by exclusive distributors.
Senator Peterson: Someone must know the number. It is probably a
lot of money.
An Hon. Senator: Did you mumble $8 million?
Ms. Kennedy: No, I did not mumble $8 million. We will look into
providing that number. We will get back to the committee with what we can in
terms of the statistics on importation of books and any detail we can
provide within that.
The Chair: That would be good; thank you.
Ms. Kennedy: You are most welcome.
The Chair: You can deal with the clerk of the committee.
Senator Buth: This is a strange regulation, I find, in trying to
understand it. Would it be fair to say that the regulation has been put into
place for the express purpose of putting conditions on the ability for
buyers to do a buy- around?
Ms. Kennedy: Yes. As I said in the beginning, historically
distributors and publishers were concerned about a practice they called
"buying around," which in legalese is called "parallel importation." The
government-of-the day decided it was an issue to be addressed and did so in
the Copyright Act. Under the act if a distributor, who has negotiated
exclusive rights with a publisher in another country to bring the book in
and to supply the Canadian market, complies with all the notice, service and
pricing conditions placed in the regulations, then that buyer has access to
those legal remedies if a retailer or another institution buys around you to
another foreign supplier. If that buyer does not comply with those terms in
the regulations and if that retailer or other institution wants to source
the book from somewhere else, it can do so; and the buyer has no recourse to
those remedies in the Copyright Act.
Senator Buth: It essentially protects exclusiveness.
Ms. Kennedy: Yes, it protects the rights that have been negotiated
for the Canadian territory in this instance.
Ms. Curran: The maximum 10 per cent is designed to protect the
retailer and the consumer in relation to that market exclusivity held by the
Ms. Kennedy: If it is over 10 per cent, someone can buy-around.
Senator Buth: I think I understand; thank you.
Ms. Kennedy: That is gratifying. After a long day, that is good to
hear because it is complicated.
The Chair: There is no buying around the Senate.
Senator Ringuette: When will your study on the issues we are
discussing tonight be completed? We have to report to the Senate by June. I
have a feeling that in order to give due process, we should look into your
Ms. Kennedy: At this time, we estimate that we will have the study
within the coming months. I do not want to be too specific in case I mislead
the committee and give a deadline that does not happen. I know you have a
schedule. We are expecting it to be completed within the coming months.
Senator Ringuette: Are we looking at mid-April, the end of April
or the beginning of May?
Ms. Kennedy: We are thinking it will be in the summer at some
The Chair: That will be another source of information. There seems
to be, and I think you have detected that from the questions, some concern
about this provision that seems contrary to an open and free market. We have
not seen enough background information as to why this would be desirable or
important. If you have any other information along those lines, could you
send it to the committee? It would be helpful. Our inclination seems to be
moving away from supporting this, so we are giving you an opportunity to
help bring us around.
Ms. Kennedy: It will provide you as well with the historical
information and the considerations.
The Chair: That would be helpful.
Ms. Kennedy: We will do that.
The Chair: Thank you, Ms. Kennedy and Ms. Curran. There is
interest in copyright matters here. Maybe we will lobby our leadership to
have the copyright bill sent to this committee when it comes to the Senate.
Then we will have all kinds of fun.
That concludes our work for today. On behalf of the Standing Senate
Committee on National Finance, I thank you very much for coming from
Canadian Heritage to help us out.