Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 42 - Evidence, December 3, 1998
OTTAWA, Thursday, December 3, 1998
The Standing Senate Committee on Banking, Trade and Commerce met this day at 11:00 a.m. to consider Bill C-20, to amend the Competition Act and to make consequential and related amendments to other Acts.
Senator David Tkachuk (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: Our witnesses today are from Industry Canada. I understand that you have an opening statement, Mr. von Finckenstein. The floor is yours.
Mr. Konrad von Finckenstein, Director of Investigation and Research, Competition Bureau, Department of Industry Canada: Thank you very much, Mr. Chairman. It is a pleasure to be here again and to talk to you about Bill C-20. I understand that you have heard from numerous witnesses, and we had people here sitting in the audience listening to those presentations. We have prepared a document dealing with each of the concerns raised by the witnesses and giving our response to those concerns. It has been distributed to you in both official languages or, if not, it will be immediately. I should like this morning to touch briefly on some of the key concerns without going into detail.
One of the concerns was obviously deceptive telemarketing.
[Translation]
One suggestion you have heard is that the definition of telemarketing should be more narrowly worded to cover only "live voice" interaction over the telephone. We tabled with you our draft guideline on the telemarketing provisions which indicates that the intention, under present circumstances, is that "interactive telephone communications" be limited to "live voice" communications between two or more persons. However, putting "live voice" directly in the statute would remove the flexibility needed to adapt to rapidly changing communication technologies, and to the notorious creativity of deceptive telemarketers, who victimize consumers and taint the reputation of legitimate telemarketers.
[English]
Senator Tkachuk, at the last meeting you mentioned that you thought that the definition of telemarketing was too broad. You gave a specific example suggesting that somebody who runs a store where your wife buys her clothes would phone you and offer to sell you a sweater for $800 for your wife's birthday. Would that person be telemarketing? I think not, because that person does not generally sell their product by telephone. In your example, it was not a practice, it was just an isolated call.
I am hearkening to this example because it illustrates so graphically what we are trying to do. By saying who she is, what she is doing and the price at which she is selling, she is complying with the act. Even if she were in the practice of selling, that is exactly what we want people to do. We want people who sell by telephone to be honest and to give the person at the other end an understanding of what they are doing, what they are selling and what the price is. It is as simple as that.
[Translation]
You have also heard arguments that there may be inconsistencies between the Criminal Code provisions dealing with lotteries, and proposed paragraph 52.1(3)(b) of the bill.
Some objections were raised. Senator Oliver has indicated a concern that a lottery which is expressly permitted under section 207 may now be illegal under the new telemarketing provisions. Similarly, the Canadian Bar Association has expressed concern that a marketing campaign that does not contravene section 206 may now be illegal for failure to comply with the new section 52.1 of the Competition Act.
[English]
To both of those objections, I have basically the same response. With this new act, we are trying to target specifically telemarketing where people use the telephone to sell. Right now lotteries are okay because they do not fall under section 206 of the Criminal Code or because they are authorized by section 207 of the Criminal Code. They can continue as they did before. However, if they use the telephone as a means of selling, they will also have to comply with the additional requirements set out in this bill. That is, they have to disclose what they are doing and they cannot insist on payment prior to the delivery of the prize.
Three questions were raised regarding the issue of wiretaps. First, is there a need for wiretaps? I think the witnesses before you, especially Mr. John Gustavson of the Canadian Direct Marketing Association, were pertinent to that question. They indicated that wiretapping is an essential tool to deal with deceptive telemarketing. Basically, we want to get the dishonest telemarketers off the market so that the honest telemarketers can thrive and conduct their business without being smeared by the dishonest ones.
Since telemarketing is an offence that occurs through the means of talking to somebody, having the ability in certain cases to wiretap so that you can register and record exactly what has been done is of paramount importance. As I said, the president and CEO of the Canadian Direct Marketing Association, whose members all sell by that means, has absolutely no problem with wiretapping because it would not apply in his case. It would be used for people who are deceptive telemarketers.
Second, have we had enough consultation? Mr. Norm Stewart, general counsel of Ford Motors, said to this committee that he thought that there was a level of consultation appropriate under the circumstances. I think he was quite right. The wiretapping amendments were discussed with representatives of small and large business consumer groups, seniors groups, members of the Competition Bar and direct marketers associations. True, it was not part of our general consultative panel, but the need for it became very clear as a result of the report of the Canada-U.S. task force on telemarketing. We put it in. We consulted as much as possible.
Moreover, let us not forget that this committee and the House of Commons committee are also a form of consultation. I find it difficult to accept there has not been enough consultation. There has been consultation, but in the parliamentary process, the primary consultation is through committees of the House and the Senate. We have had considerable discussion before both.
Third, are there enough safeguards to ensure that wiretaps cannot be too easily obtained? Mr. Kennish suggested that they are easily obtained. If you have any doubt, you can ask my colleague, Mr. Côté, who used to work as a prosecutor in the Montreal region. Wiretaps are anything but easy to obtain. You can get them only in instances when your existing tools are not sufficient. You have to convince a judge that you have tried other procedures, which have been unsuccessful, that the investigation is unlikely to succeed, or that the matter is urgent and that this is the only means of doing it. If you get it, the wiretap order is always subject to conditions. The judge will try to limit it as much as possible so that you get evidence only for the specific offence that you are going after.
Finally, when you try to bring the evidence into court, inevitably there is a challenge on the basis that the warrant was improperly obtained or that it was too wide. Safeguards are built into the Criminal Code. They would apply here exactly as they now apply to other crimes.
As I mentioned to you when I appeared before, there are other economic crimes such as false customs declaration and fraudulent bankruptcy for which you can right now obtain wiretapping. We are asking for the authority to wiretap in cases of conspiracy to fix prices and share markets, bid-rigging and telemarketing. The conspiracy to fix prices and share markets was specifically written into the act by an amendment put forward by the House of Commons committee, therefore limiting the scope as much as possible. In addition, we have issued guidelines which we have tabled with you and which we will consult on.
The last point I should like to mention is whistle blowing. That came up during the consideration before the House of Commons. A study by Mr. Justice Dubin suggested the means of putting forward the amendment if the government wanted to do so, but he did not feel that it was necessary. Mr. Mac Harb introduced that amendment, stating that after much consultation with many people in the community and across the country, he felt that such a provision was necessary. The committee accepted it. It was voted into the bill. As I mentioned, I think that that will have a considerable deterrent effect. It will be a signal that Parliament takes those matters very seriously and encourages people to come forward and report anti-competitive behaviour.
The Bar Association suggested that that might cause problems because the provisions say that an employer shall not fire an employee who acted in good faith, and how can an employer know whether an employee acted in good faith? Actually, that is looking at the wrong end of the problem. The problem is the other way around. If we, as the Crown, try to prosecute an employer, we need to prove, first, that disclosure took place, second, that the employer knew that the disclosure had taken place and, third, that the employer knew that the employee was acting in good faith. Only when we can establish all of those points can we actually successfully prosecute; so it would be a fairly blatant case. Of course, as for any other criminal offence, if there is any reasonable doubt, then there is no conviction.
This section actually puts a fairly large burden on the Crown to prove successfully that a whistle-blower has been fired. On the other hand, it is there as a warning to employers not to do this.
Will employees use this section opportunistically? I do not understand where that suggestion comes from. Employees are extremely reluctant to come forward and blow the whistle, because they fear for their jobs. There is nothing in the act that says an employer cannot fire an employee or discipline him for reasons other than whistle-blowing. All this section says is that, if an employee feels there is something that is anti-competitive and he reports it to the director, you cannot fire him for that or discipline him for that particular fact. That is all.
The last point I want to make is that this bill in its entirety was discussed on November 13 at the federal-provincial meeting of Ministers of Consumer Affairs; and of course several of those ministers are also the Attorneys General of their provinces. We explained the bill. We explained the wiretapping provisions. We explained the whistle-blowing provisions to them. There was general agreement and support for this legislation. We were urged to bring it forward very quickly in order to allow provinces to prosecute some of the telemarketing scams and to start a major advertising campaign to warn people about telemarketing.
Actually, as a result of this, a flyer will be issued that will be distributed all across the country saying, "Stop Phone Fraud. It's a Trap." We were complimented by the Ministers of Consumer Affairs and the Attorneys General for taking this step to educate the public and to combat telemarketing.
Those are my comments, Mr. Chairman. I will be glad to answer any questions you or your colleagues may have.
Senator Angus: I think this is a very helpful document that you have brought before us. I have a couple more questions on the whistle-blowing. I just want to understand the process. I am having the sense here that at least this committee is faced with a fait accompli. As originally produced in the House of Commons for first reading, the bill did not have the whistle-blowing provisions. I just want to be absolutely clear, sir, on the sequence. If I understood well this morning, and I think you said the same thing the other day, the former Justice Dubin did his study for you before the bill was originally drafted and put into the House. The idea was that, if you wished to deal with the whistle-blowing issue, he had proposals for a good approach to use. For some reason, however, you decided to leave it out of the bill.
One of the issues the Canadian Bar Association raised was that, whereas there was a lot of consultation and discussion about all the other parts of the bill, there was not on the whistle-blowing. I think you have contrary evidence on that. That really, to me, is not the big issue. The big issue is why you decided to leave it out that first time around. Why did you?
Mr. von Finckenstein: The sequence was as follows. We introduced the bill originally. It died on the order paper when the election was called. It was then re-introduced. There was considerable rumbling and various people asked us if there should not be a provision on whistle-blowing. I said, frankly, that we needed some research on it. We commissioned Mr. Justice Dubin. He produced his report, which said that there is enough relief under statute, under common law, and under collective agreement. He said that we do not need to be concerned about it. Out of an abundance of caution, I asked him to produce an addendum setting out what kind of amendment should be put forward, should it prove that the issue is of such concern to MPs and senators that they should like to do something about it, if for no other reason than to advertise the fact that they endorse whistle-blowing and that people who know about anti-competitive conduct should be concerned about it. Mr. Justice Dubin then produced a second report which said that if we proceed, we should restrict it as follows. That is essentially the provision that you see in the act right now.
Senator Angus: It seems ironic that you got ready, as you say, in the event that MPs and senators were not satisfied that the common law provisions and so on were sufficient but, in fact, we have not evinced any such concern at this level in the Senate and you, yourself, came forward I believe with the amendments in the other place at committee. I am just wondering what changed your mind.
Mr. von Finckenstein: No, the amendments were not put forward by me nor on our suggestion. They were put forward by Mr. Harb, member for Ottawa. I was asked my position and I said that I am neutral on this matter. I see the deterrent value. I see the consciousness-raising value, et cetera. I doubt that it will be used very often but it could quite conceivably be useful. How do you measure deterrence? That is a problem.
On the other hand, I do not want to create something that will cause employers a lot of harm or interfere with normal employee relations or cause me a lot of useless work. Given that the amendments are drafted the way Mr. Dubin suggested, let us create a criminal offence for absolute certainty and build in the proper safeguards. For instance, employees have to be acting in good faith; employees cannot use view this as a tool to maliciously damage their employers. On the other hand, the Crown has to be convinced and, clearly, you do not get into the area of restitution or something like that because that is a provincial jurisdiction and not a federal one. The amendments are drafted like that, and I said in the other place that I have no problem with them. The committee voted them into effect. They are now part of the law.
Senator Angus: You mean the proposed law.
Mr. von Finckenstein: They are part of the bill, I am sorry, you are quite right. Clearly, if this bill is passed with those provisions, we would, as we always do, hold consultations with members of the bar and probably draft guidelines saying how we intend to apply them. As I say, we have not done that yet as we have for the other ones because those are new provisions that came forward in committee.
Senator Angus: That is consistent with my understanding and what the bar told us. You remain neutral. Would you, the director, the expert and the future commissioner lose a lot of sleep if they were not in there?
Mr. von Finckenstein: No, I think that they are very good in terms of a deterrent. I do not endorse anti-competitive behaviour. I think it is useful to have them in there as a reminder that anti-competitive behaviour is not tolerated and that people who know about anti-competitive behaviour should report it.
Senator Angus: Are you still neutral?
Mr. von Finckenstein: I am neutral. I can only repeat that I think that those provisions will work as deterrents. I do not see that there will be many occasions when we will actually use them because of the burden of proof that I mentioned.
Senator Angus: You mentioned the other three key words for me: "burden of proof." I want to be absolutely sure where the onus lies because there are several steps, as we know from reading the provisions. In the first instance, the employee hears or learns what he or she thinks is anti-competitive behaviour and makes it known to you folks. Who has the onus at that point? Does the employer have to show that they did not engage in anti-competitive behaviour or is the onus on the bureau?
The example given to us was the employer talking to some third party on the telephone. Prices appear to be mentioned but the context, of course, is not known to the employee who overhears. In the belief that it is price fixing or anti-competitive behaviour, the employee blows the whistle and tells you folks, but does not have a clue what is being said on the other end. Who has the burden of proof at that point?
Mr. von Finckenstein: We would receive the information and then assess it. If we thought it were reasonable, we would talk to the employer or the other person, look at that industry, and see if there is sufficient evidence. There is always a problem talking about hypothetical situations. As an investigative agency, we have to look at those cases where there is sufficient evidence. We receive many complaints and a lot of information that frankly is not very useful and we disregard it.
In your example, there would have to be some mention of price fixing and some context -- fixing with whom, for what purpose, et cetera. That would tweak our interest and we might think there could be a conspiracy here. Then we might look at it. We might look at it by first talking to people in the industry. If we have sufficient evidence, we might make an enquiry. We might at some point in time issue a search warrant. It all depends.
Senator Angus: You might place a wiretap.
Mr. von Finckenstein: We likely would do nothing because there is not sufficient evidence to meet the minimal threshold.
Senator Angus: I understand. I have no problem with what you have said. I thought my question was fairly simple. Who carries the burden of proof? I do not know who better to answer, you or Mr. Côté. The bar told us that the potential exists for a business to be sidetracked for perhaps six or eight months trying to defend itself against a phony charge. This committee has tried very hard to bring out some public policies that will help the small and medium-sized businesses to get off the ground, to get going. It would be a great impediment if they suddenly had to stop because some disgruntled employee tried to stir up trouble.
Mr. von Finckenstein: Let us be a bit realistic. We are a relatively small agency charged with an enormous task, namely, to ensure the competitiveness of the Canadian industry as a whole. We do not go off holus-bolus. We are not in the business of harassing small and medium-sized businesses. Whenever we get information, we assess it. We go through several filter stages.
Senator Angus: I am just asking you about the onus, sir. The employee might be a disgruntled employee, but once this complaint is made, and let us assume for the sake of my question that it happens to be one without foundation under the terms of your legislation, the employer is put to great trouble and expense dealing with the thing one way or the other. All I want to know from the legal officer is whether the employee has the burden of proof or whether the other side has the burden of proof.
Mr. von Finckenstein: As in all criminal proceedings, the burden of proof rests with the Crown. We have to make out that an offence has been committed.
Senator Angus: In this case, is there any deviation from that?
Mr. von Finckenstein: No. Do you want me to repeat it?
[Translation]
Mr. François-Bernard Côté, General Counsel and Director, Legal Services: If I can answer that question, this is indeed a case of criminal prosecution.
Senator Angus: However, as you know, that is not always the case. Sometimes, the burden of proof is reversed.
Mr. Côté: You are correct. In some instances involving the interpretation of regulations, for example when the Supreme Court ruled in Wholesale Travel, the burden of proof was reversed. However, this provision respecting whistle blowing is of a strictly criminal nature. Prior to convicting anyone, the judge must have proof not only of the facts, but of criminal intent. Moreover, reasonable doubt, particularly as regards criminal intent, must also be on the side of the accused. The judge is not the only one involved in deciding whether or not to prosecute the individual. The Attorney General does not have to lay a charge simply because certain facts have been alleged. In the case Mr. von Finckenstein alluded to earlier, there may be a number of other reasons why the employer behaved in this manner and these are all elements that the Attorney General must weigh in the process of exercising his discretion. If a criminal charge is laid, the judge's ruling on the issue of reasonable doubt comes into play. There is no burden of proof reversal then. I do not see any reference to it in these provisions. Therefore, the general concept of criminal law prevails.
Senator Angus: I understand, but can you give us any assurances that as a result of these whistle-blowing provisions, no new criminal offences will find their way into the legislation?
Mr. Côté: All that I am aware of at the moment is the offence provided for in the proposed section 66.
Senator Angus: Does whistle-blowing come under civil law?
Mr. Côté: No, it is dealt with under criminal law. This proposed section would make it an offence to fire someone for reporting the anti-competitive actions of a Competition Bureau employer.
[English]
Senator Angus: I thought the director said that in Mr. Justice Dubin's opinion you were adequately covered under the civil law. Therefore, there is a difference here. That is the only point I wanted to make.
Mr. von Finckenstein: Mr. Justice Dubin was talking about such things disciplinary actions and reinstatement when employees lose their jobs. Here we are protecting the employee. Section 66.2(2) makes it a criminal offence for an employer to act in contravention of this act.
The Deputy Chairman: This whistle-blowing provision bothers me as well. I am not a lawyer. You are going to have to help me through this.
Am I not subject to prosecution myself if I wrongfully accuse another person of a criminal act, if I make a false accusation? For example, if I say publicly that someone was a thief or if I tell the police that my employer was price fixing, if I falsely accuse him, can he fire me for that?
Mr. von Finckenstein: Mr. Justice Dubin addressed that question exactly. You have to be acting in good faith. You have to be convinced that what you are doing is correct, that in effect your employer is breaching the law.
The Deputy Chairman: How do you know that? You have to read my mind.
Mr. von Finckenstein: In all of criminal law, you try to prove a person's intention; in your words, you have to read that person's mind. You are, in effect, surmising the intention from the surrounding circumstances.
The Deputy Chairman: I have to become a little policeman gathering evidence before I go forward because otherwise, if I just report, that puts me in rather a dubious situation, does it not?
Mr. von Finckenstein: The provision says that the employee must act in good faith and on the basis of reasonable belief. In the situation that Senator Angus posited, the employee overheard a conversation where people were talking about fixing prices for markets or about destroying documents so that the Competition Bureau does not get them. Something like that is an anti-competitive act and the employee would have a reason, although the information might have been taken out of context and might turn out to be absolutely nothing.
The Deputy Chairman: What happens with that?
Mr. von Finckenstein: Once the information is reported to us, if we think it warrants it we will look into it. If it turns out to be nothing, then that is the end of it. If it turns out that there is a first indication of a trail of evidence leading to proof of a criminal act, then we will complete the investigation. As my colleague pointed out, it is not our decision. The way the act is worded, there is an extra safety valve before anything would be referred to Justice Canada. The Attorney General decides whether, on the evidence that we put forward, the charge should be laid or not. Therefore, there are all sorts of built-in safeguards.
The Deputy Chairman: Even if you did not have that provision, if I were an employee in a company and I had evidence of criminal behaviour, would it not be my responsibility under the law to report that anyway?
Mr. Côté: I doubt that it is a legal duty in the sense that if you do not do it you will be subject to penalty, but it is a civil duty to report criminal activity of any kind.
Should you wish to bring the matter to the attention of the authorities, there are a number of safeguards that exist to ensure that you are not penalized in any way. Let us forget the whistle-blowing provision for the moment. At common law, a person who gives information to a law enforcement authority in confidence has his identity protected. It is up to you, the person providing the information, to decide whether or not you will seek anonymity or protection of that sort. That is an example of a way to protect you.
The Deputy Chairman: Yes. Therefore, I am protected now.
Mr. von Finckenstein: Senator, you are looking at one side of the situation. This section really is intended to address the case of an employee forced to do something that he knows is wrong because the employer tells him it is good for the bottom line. That is why whistle-blowing provisions are in this act and in other acts. We are trying to deal with coercion of employees.
The Deputy Chairman: I am very confused here. You tell me that I have an obligation and that I can seek anonymity if I see or have knowledge of a criminal offence within a corporation. You tell me that law will prevent someone from forcing me to commit a criminal act. I do not buy that because I believe the law already covers that. I think this is a further step causing what might be abuse of law and abuse of civil rights. There is no protection in this act against someone being mischievous.
Mr. von Finckenstein: With all due respect, senator, that is not the case here.
The Deputy Chairman: With respect to Senator Angus, you said that was the case.
Mr. von Finckenstein: My colleague said that you have a civic duty. He did not say that you have a moral duty. This law is designed to encourage people who feel that they are being asked to commit an anti-competitive act to come forward and report it secure in the knowledge that employers who try to punish or discipline employees for reporting would be criminally liable. That is what really it is. That is all that this section does, saying: "Employers, please, you know by law you are not supposed to break the Competition Act. If you do it anyway and an employee reports to the Competition Bureau, you cannot fire that employee." That is what it says, in a nutshell.
Senator Oliver: Senator Angus has very ably asked most of my questions; indeed, he has put them better than I could have. However, there are still a couple of things that trouble me.
At the beginning of your presentation today, you said that you have already drafted some guidelines on telemarketing but not on the issue of whistle-blowing. One of the things that Canadians have normally had in the law is some certainty as to just what they can and cannot do and how the law is going to be applied. Your insistence on all these guidelines suggests to me that the law, particularly in relation to proposed section 66 and the telemarketing, is so poorly drafted and so unclear that you have to come up with your own guidelines to explain how you are going to interpret it. What that does is present Canadians with a lot of legal uncertainty. In relation to whistle-blowing, proposed section 66 in particular, it causes great conflict; what is normally a civil law remedy for an employment problem is compounded by making it quasi-criminal.
In that regard, my first question to you is: Should not the law be clear, such that you do not have to bother with all these draft guidelines, the result of which is that you can have one guideline today and tomorrow you can have another one, thereby the uncertainty?
Mr. von Finckenstein: I completely disagree, and I will tell you why. The law should be as clear as possible, I agree with you. We are all making an effort to make it as clear as it can be. The courts, unfortunately, are needed because honest men can differ on how to interpret a section.
The bureau, in an effort of transparency, predictability and fairness, has adopted a policy, which is not required by law, to make the law more user-friendly, to inform and educate Canadians to help them comply, to be as open and transparent as we can. Therefore, regarding any section of the act, we explain how we look at it and how we interpret it. It helps primarily members of the bar to know where the bureau is coming from, what position they will adopt. If they disagree, obviously, we may in the end litigate, but it is very helpful for the bar and the public to know the various sections of the act, which are never so crystal clear that you can only read them one way. It is building certain discretion. In this case, it is our discretion of whether to prosecute or not. We explain those in our policies.
Senator Oliver: Am I wrong in assuming that you, as commissioner, have the power to change a draft guideline from day to day, so that today it could be one thing, tomorrow it could be another? Am I wrong in that assumption?
Mr. von Finckenstein: No, you are right. I could change that.
Senator Oliver: Exactly, and that causes the uncertainty.
Mr. von Finckenstein: Senator, as I mentioned to you, the law speaks for itself. The guidelines are not law. They are helpful in clarifying the position I take on the law. We have done that with regard to other areas the act, not only the one that you are amending, but also, for instance, the area related to confidentiality, how we treat a confidential document. It is set out in the act. Notwithstanding that, as a helpful guide to the bar, we issue an elaboration.
When I assumed this job, I said that I wanted to be as transparent as possible. I think we should be predictable; thus, people can know where I am coming from. To the extent that I can, I will explain what we are going to do. We should be fair and we should act quickly, because our activities can be costly to business. I am fully aware of that. There is an effort to do that, an effort to be the least intrusive as possible in getting people to comply with the Competition Act. If I do not want problems with them, I will conduct myself in such a way so as not to run afoul of it. That is why we are issuing the guideline, not because we must. There is no requirement whatsoever. The law speaks for itself.
We can go each time to the court and fight it out, but that would be a terrible waste of my resources and the resources of business. Therefore, I say, "This is the position I am taking. If you disagree with it, we will fight. If you agree with it, then let us work on it." It helps them, it helps me, and I have been complimented by the bar for doing it. For you to turn it around and accuse me of being vague, I must say I take some exception to that because the motive is not there.
Senator Oliver: I did not accuse you of being vague. You have already admitted that you can change it from day to day, and that causes uncertainty.
Mr. von Finckenstein: I have not changed a single one.
Senator Oliver: I am talking about uncertainty.
Mr. von Finckenstein: Senator, we consult at great length on these. It is not something we dream up, it is something that we want to do, which makes good sense and good governance. It is an effort to try to deal with uncertainty that is inherent in the law. You are a lawyer, I am a lawyer. We know that no matter how well and tightly it is drafted, it is always possible to interpret things differently. I want people to be aware that this is how I interpret them.
Senator Oliver: The Canadian Bar Association sent a letter to Senator Kirby, the chairman of this committee, on November 18. On page 4 of that letter, they presented a series of scenarios about problems they saw with proposed section 66. In hearing your presentation, the concerns they raised about proposed section 66 were not answered. I would like to read two paragraphs, and ask you to comment on them today, for the record.
I am referring to page 4. I will read paragraphs 5 and 6. Paragraph 5 reads:
Employees may use section 62.2 opportunistically. The remedies in employment relationships are civil. By introducing criminal penalties, the law may expose employers to inefficiencies arising from employees' belief that they cannot be disciplined for substandard work. Although they must be shown to have acted in good faith and on reasonable belief, the difficulties of proof may cause employers to keep employees and contractors whom they would otherwise dismiss, rather than risk criminal prosecution.
Paragraph 6 reads:
Employers should not be required to continue to deal with employees or contractors in whom they have lost confidence. An employee's complaint to the Commissioner will generally sour the work environment. An employer acting in good faith should be entitled to terminate an employee either with notice or damages in lieu of notice. This legitimate action by an employer would no longer be available because section 66.2 would create a criminal offence for this conduct.
I would like those two paragraphs to be addressed so the record will be clear.
Mr. von Finckenstein: As for the second one, I absolutely agree. Employers should be able to deal with their employees and contractors on the basis of merit, if they are not performing properly, et cetera. I do not see anything in proposed section 66 that impedes an employer from doing that.
Senator Oliver: On the basis of civil law rather than criminal law is what they are saying.
Mr. Von Finckenstein: I said the principle was there. Now the question is how you read proposed section 66. As I mentioned earlier, senator, I think before a charge can be laid under it, the Crown has a considerable row to hoe. It must establish that the disclosure took place, that the employee did it in good faith, and that the employer knew that the employee acted in good faith and, notwithstanding, disciplined him. The Crown must prove that. My investigation has to reveal all these facts. If it does, I then refer it to the Minister of Justice, who will then decide whether to lay a charge or not. If all of these things are taking place, then it goes before a judge.
To the extent that there would be any reasonable doubt, obviously, no conviction can be rendered. It strikes me that this concern is overstated. What clearly is here is that it is a penalty that is available but only for cases where employers dismiss an employee who has reported an anti-competitive conduct in good faith and on the basis of reasonable fact, and the employer, notwithstanding, knowing that the employee acted in good faith and had reasonable grounds, fires that employee. If he fires him because he is a tardy employee, it has nothing to do with this. That is why I think it is overstated. This section was drafted very carefully following Mr. Justice Dubin's precepts so as to be exactly what it is, that is, a warning to employers. I do not think it is much more than that.
Senator Oliver: I think it imposes an unduly heavy burden on employers who normally run their businesses pursuant to the civil law, or in Quebec it would be the civil law, but here you are imposing another burden, a criminal burden, on them.
Mr. von Finckenstein: Employers are subject to criminal law regarding all sorts of activities.
Senator Oliver: Not in relation to their employees.
Mr. von Finckenstein: I am sorry, I am not an expert on employee relations. You are probably right. I do not know.
The Deputy Chairman: I have a couple of questions on the telemarketing aspect. I think the definition is fairly wide, but for my own self-interest, I want to understand why you need these added powers. Suppose I am defrauded by a telemarketer, that somebody phones me and talks me into buying something that I do not get. I have paid for it with my Visa card but the product never comes to the door so I am defrauded.
The way it sits now, I go to the police and tell them I have a problem. I explain that I bought a product by Visa, that I was solicited on the telephone, gave my Visa number, but received nothing in the mail. I tell the police that I have been trying to phone the people from whom I bought the article, but cannot reach them. Do the police start an investigation? Could they get a wiretap? Suppose the police discover the identity of the person or company that has committed this fraud. Could they now get a wiretap because I went to them and complained?
Mr. von Finckenstein: Are you suggesting this scenario under Bill C-20?
The Deputy Chairman: No, without the bill. Suppose the police had evidence that a certain company was committing fraud. Can they not get a wiretap now?
Mr. Côté: To answer your question, you have to look at section 183 of the Criminal Code. Fraud, section 380 of the Criminal Code, is one of the offences listed in section 183 as being an offence for which you can apply for an authorization to intercept private communications.
The Deputy Chairman: Yes. Is there really anything on the phone that you cannot get a wiretap for now? Is there any criminal act that I would commit on the phone that you could not presently get a wiretap for?
Ms Nicole Ladouceur, Acting Deputy Director of Investigation and Research, Fair Business Practices Branch, Competition Bureau, Industry Canada: Perhaps the experience might help out for an answer with respect to this situation. As François Côté pointed out, the fact of the matter is that with respect to telemarketing, the fraud provisions of the Criminal Code have not proven to be particularly useful or helpful in convicting these individuals.
The Deputy Chairman: I did not say that. You can get a wiretap for them, though. Why do you need these new powers? Is it to fish?
Ms Ladouceur: No.
Mr. von Finckenstein: It is not at all to fish. You have to start out at square one, senator. The proposed legislation before us creates a new offence that says that if you have a practice of telemarketing, i.e. you are selling regularly through the telephone --
The Deputy Chairman: I am selling socks on the phone.
Mr. von Finckenstein: Yes, you are selling socks on the phone. If so, you have to follow certain things. You must disclose who you are, you have to say what the price is, and you have to give a reasonable indication of the value. That is what the proposed act stipulates. If you do not do that, then you can be liable to an offence. Fraud is very difficult to prove, so rather than doing that, the proposed legislation puts the onus on you.
The Deputy Chairman: It should be difficult to prove.
Mr. von Finckenstein: We say telemarket as much as you want, but please tell us who you are, tell us what the product is you are selling, and do not ask for payment in advance.
The Deputy Chairman: If I get a call from The Bay telling me to come down to the store on Saturday for a sale, is that telemarketing? Suppose someone says: "Hi, my name is Dave. I am calling from The Bay. You are on my customer list. We have a big sale on Saturday. Come down to the store and buy something." Is that telemarketing? According to your definition, it is.
Mr. von Finckenstein: Is this a practice? Is this the business of The Bay?
The Deputy Chairman: Of course, it is.
Mr. von Finckenstein: Do they phone all customers?
The Deputy Chairman: I am asking you: Is it telemarketing under your definition?
Mr. von Finckenstein: Do I think it is interactive phoning you?
The Deputy Chairman: No, no, just a minute. In your discussion, you do not talk about a closed sale. You say telemarketing means the practice of using interactive telephone communication.
Mr. von Finckenstein: It is interactive.
The Deputy Chairman: If I phone you and I tell you to come to The Bay on Saturday because there is a big sale and my name is Dave, and you say, "Thank you very much. I think I will be there," is that telemarketing?
Ms Ladouceur: There is the interactive aspect, that is correct. There is the phone call. There would also have to be representations made with respect to the sale of a service or a product. In your example, there is simply an invitation to attend a promotion. There is no specific representation made with respect to a service or a product.
If the conversation went on in an interactive fashion and in fact there were specific representations, as they do sometimes with respect to the sale of credit card insurance or very specific products, then it could be considered a form of telemarketing. We would then go back and look at whether or not there was appropriate disclosure. "Hello, this is the Bay calling." They have identified first of all on whose behalf they are calling. "My name is so and so." Again, a second requirement under disclosure has been met. "I would like to sell you credit card insurance." All of the three conditions would have been met.
The Deputy Chairman: I understand all of the conditions of what a telemarketer does. A telemarketer phones. He is selling a product and he wants to close the sale. Your definition here, from what I can gather, exposes that a little further. If I am calling from the Bay and my name is Dave and I am asking you to come down, you may say to me, "Oh, do you have coats for sale?" I say, "Yes, they are on sale, too." "Oh, that is great. I think I will come down Saturday." Is that a telemarketing operation? That is all I am asking.
Mr. von Finckenstein: Assume it is. So what? You have complied with the proposed legislation. There is no problem. How do we get to the wiretapping?
The Deputy Chairman: Have I complied with the proposed legislation if I tell you my name is Dave and I am calling from the Bay? I do not have to give a last name?
Ms Ladouceur: No.
Mr. von Finckenstein: The point is you are not trying to deceive anybody. You are not doing any selling illegally. Senator, the persons who we are after are the ones who are saying, "Hi, I am Dave. You have won a million dollars. How do we get that to you? Do you want it by cash or do you want it by transfer to your bank account?"
The Deputy Chairman: I would like it by cash.
Mr. von Finckenstein: That is the sort of thing we are referring to.
The Deputy Chairman: I would like it in small bills, in my Swiss bank account.
Mr. von Finckenstein: You see what it is basically about. The theory behind all of this is telemarketing is a perfectly legitimate commercial activity. There are lots of people who do it successfully. All we are saying is follow minimum disclosure requirements so people know what they are dealing with. Those who do not are liable to an offence. Those who are actually in that business of illicit telemarketing, we will go after with all our powers. In the cases where our powers are not sufficient and we cannot get the credible evidence in any other way, and assuming we meet the criteria of the Criminal Code, we may apply for a wiretapping order.
The Deputy Chairman: Do you have to disclose wiretap after the fact? Is there provision in the law? Let us say I get wiretapped. Do you have to tell me after a certain period of time?
Mr. Côté: Yes, senator. The numbering has changed. I am just trying to find the appropriate section. Under section 193, I believe, of the Criminal Code -- I may stand to be corrected on the numbering; the numbers have changed -- once the intercept is done, there has to be a notice sent to all of the people whose private communications have been intercepted. The time to do that is 90 days after the period has ended. In exceptional circumstances, for a long and ongoing investigation, that 90-day delay period may be substituted by another longer period, always under the control of the judicial officer, to make sure that the notice is given, but at a time when it will not jeopardize the ongoing investigation.
The Deputy Chairman: Can I sue you if you have wrongly done this? If you are just fishing, could I sue you? Do I have some legal recourse if I think you unjustly wiretapped me?
Mr. Côté: Yes, absolutely. If I have done that, the legal answer to that is that it is a violation of one of your Charter rights. Under section 24 of the Charter -- there are two subsections there. Under subsection 1, there is a clear indication that whoever has had his or her Charter right violated may apply to courts for remedies. The remedy, of course, if you have been wronged, is to go to a court and sue the government for either the damages that you have sustained or for a punitive damage in certain cases. Yes, you can sue me and my boss.
The Deputy Chairman: I can sue the government?
Mr. Côté: You can sue the Queen.
The Deputy Chairman: I wish to thank the witnesses for their attendance here today.
Honourable senators, we talked about reporting the bill to the Senate with observations. I believe that everybody has a draft of these observations.
Senator Callbeck: Mr. Chairman, I have two motions that I want to make. The first would be that Bill C-20 be reported without amendment. The second would be that the statements of observations be appended to the report.
The Deputy Chairman: Are you speaking of the present observations?
Senator Callbeck: Yes, but these are two motions, so I have given you notice. I have two motions. I would like to move the first one.
The Deputy Chairman: You want to move the observations first in order to discuss those?
Senator Callbeck: I have two motions, which I have given notice of, and I would like to move the first one; that is, that Bill C-20 be reported without amendment.
The Deputy Chairman: Honourable senators, is there any discussion? Is it agreed, honourable senators?
Some Hon. Senators: Agreed.
Senator Callbeck: We have an abstention.
Senator Kelleher: I am abstaining because, unfortunately, I was not present when these matters were discussed. I did not hear the evidence. As such, I do not feel that I should vote either way.
The Deputy Chairman: Motion carried.
Senator Callbeck: Mr. Chairman, my second motion is that the statement of observations on Bill C-20 be appended to the report.
The Deputy Chairman: Does anyone second the motion?
Senator Hervieux-Payette: I second the motion.
The Deputy Chairman: Is there any discussion?
Senator Oliver: I read them and I think they are terribly drafted. I do not like them. Senator Angus has read them. He cannot be here, but he does not like them. They do not reflect the evidence. We would like them redrafted to more clearly reflect what this committee heard. We would like some time to do it.
Senator Callbeck: Where are the problems?
Senator Oliver: They do not reflect the evidence. I thought that the Canadian Bar gave some evidence here and they made suggestions that there should be amendments. I do not see that reflected in these observations. There are several other drafting problems with them. They do not reflect what this committee has heard.
Senator Stollery: Therefore, you will be voting against them; you will be voting against the motion.
Senator Oliver: Do not speak for me.
Senator Stollery: I am assuming that because you do not like them.
Senator Oliver: You do not speak for me.
Senator Maloney: You are not his attorney.
Senator Stollery: No, I am not, but the motion has been put.
The Deputy Chairman: Senator Stollery, if the motion has been put, we can have discussion.
Senator Oliver, please continue.
Senator Oliver: Senator Stollery does not believe in discussion. He belongs to a different school, if it is a school.
Senator Stewart: Do we have copies of the proposed interim report?
The Deputy Chairman: Yes. The report was distributed this morning, I understand.
Senator Stewart: I seem to have misplaced my copy.
The Deputy Chairman: Does anybody wish to go in camera?
Senator Stewart: Perhaps it perhaps would be more effective if we were to go in camera while we are drafting; otherwise, we will have a very long and possibly misleading record. We can then end our in camera session and proceed to deal with Senator Callbeck's motion.
Senator Oliver: I would like it if someone could go and get Senator Angus.
The Deputy Chairman: I believe someone has. We are going to go in camera. If Senator Angus arrives, he will be able to come in.
The committee continued in camera.
Upon resuming.
Senator Callbeck: Mr. Chairman, I move that the observations be appended to the report.
The Deputy Chairman: Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
The Deputy Chairman: Carried.
Shall I report the bill?
Hon. Senators: Agreed.
The Deputy Chairman: Carried.
The committee adjourned.