THE STANDING SENATE COMMITTEE ON FISHERIES AND OCEANS
EVIDENCE
OTTAWA, Thursday, June 4, 2026
The Standing Senate Committee on Fisheries and Oceans met this day at 8:32 a.m. [ET] to examine and report on the independence of commercial inshore fisheries in Atlantic Canada and Quebec, and the policies and legislative tools used by the Government of Canada to preserve it, such as the Owner-Operator Policy; and to examine and report on the commercial fisheries licensing regime on Canada’s Pacific Coast.
Senator Fabian Manning (Chair) in the chair.
[English]
The Chair: Good morning. My name is Fabian Manning, senator from Newfoundland and Labrador. I have the pleasure of chairing this meeting.
I would like to ask all senators and other in-person participants to consult the cards on the table for guidelines to prevent audio feedback incidents. Please make sure to keep your earpiece away from all microphones at all times. Do not touch the microphone. It will be turned on and off by the console operator. Please avoid handling your earpiece while your microphone is on; you may either keep it on your ear or place it on the designated sticker on the table before you. Thank you all for your cooperation.
Should any technical challenges arise, particularly in relation to interpretation, please signal this to me or the clerk, and we will work to resolve the issue.
Before we begin, I would like to take a few moments to allow the members of the committee to introduce themselves.
Senator C. Deacon: Colin Deacon, Nova Scotia.
Senator M. Deacon: Marty Deacon, Ontario.
[Translation]
Senator Gerba: Amina Gerba from Quebec.
Senator Boudreau: Victor Boudreau from New Brunswick.
Senator Saint-Germain: Raymonde Saint-Germain from Quebec.
[English]
Senator Surette: Allister Surette, Nova Scotia.
The Chair: We have another senator joining us shortly.
On November 18, 2025, the Standing Senate Committee on Fisheries and Oceans was authorized to examine and report on the independence of commercial inshore fisheries in Atlantic Canada and Quebec, and the policies and legislative tools used by the Government of Canada to preserve it, such as the owner-operator policy.
On November 18, 2025, the committee was also authorized to examine and report on the commercial fisheries licensing regime on Canada’s Pacific Coast.
Today, under these mandates, the committee will be hearing from the following officials from the Competition Bureau: Mr. Bradley Callaghan, Associate Deputy Commissioner, Policy, Planning and Advocacy Directorate; and Mr. Shawn Hashmi, Team Lead, Competition Law Enforcement, Mergers and Monopolistic Practices Branch.
On behalf of the members of the committee, I thank you both for being here. I understand that you have opening remarks. Following the remarks, I’m sure members of the committee will have questions for you.
Mr. Callaghan, you have the floor.
Bradley Callaghan, Associate Deputy Commissioner, Policy, Planning and Advocacy Directorate, Competition Bureau Canada: Good morning, Mr. Chair and honourable senators. Thank you for inviting us to appear today. My name is Brad Callaghan, and I’m the associate deputy commissioner of the policy, planning and advocacy directorate at Competition Bureau Canada. I’m joined by my colleague Shawn Hashmi, who is the team lead of competition law enforcement in our mergers and monopolistic practices branch.
[Translation]
The Competition Bureau is an independent law enforcement agency tasked with protecting and promoting competition in Canada. We administer and enforce the Competition Act, a law that applies across all sectors of the economy.
To protect competition, we investigate allegations of anti‑competitive conduct, including abuses of dominant positions, price fixing and other cartel behaviour, and deceptive marketing practices. We also review mergers that may harm competition.
[English]
Our enforcement work is fact-driven and is conducted on a case-by-case basis. We take action where appropriate to address cases where competition is likely harmed.
We also advocate for government policies and regulations that support competitive markets. We recognize that the Government of Canada regulates the fishing industry with a range of policy goals, including social and economic sustainability. We have not conducted a detailed assessment of the various fishery licensing, ownership and operational models across Canada from the standpoint of their overall effects on competition. However, we still hope to help the committee apply a competition lens to its studies.
In regulated markets, the Competition Bureau strongly recommends that all policy-makers conduct competition assessments when developing or reviewing regulations. Competition assessments help policy-makers achieve their policy goals in ways that maximize the benefits of competition. To this end, the bureau’s step-by-step guide to competition assessment helps policy-makers identify competition issues at an early stage so they can consider alternative regulatory approaches that allow competition to thrive.
If there are ways to make the various fishery licensing, ownership and operational models more supportive of competition while still meeting the government’s overriding policy goals, we would support that. This committee is, of course, well placed to bring forward observations and recommendations in this regard.
[Translation]
The Competition Bureau continues to be concerned with affordability issues on everyday goods and whether competition issues are contributing to the rising price of food. We have studied retail grocery markets and continue active investigations in the retail space. However, we also know that each step of the food supply chain matters for competition, and we remain focused on understanding what additional issues may exist.
[English]
Before we proceed to your questions, I note that the Competition Act requires us to conduct our investigations in private and to keep confidential the information that we obtain. This means there may be limits on what we can say about specific matters, including whether certain investigations exist.
Thank you again for the opportunity to appear. We look forward to your questions.
The Chair: Thank you, Mr. Callaghan.
Senator C. Deacon: Thank you for being with us today. It is really important for us to have ideas about how to address some of the challenges we are seeing in fisheries on both coasts. For example, two of the key principles of fisheries have been that the fishers who have the licence are the fishers who fish that licence on the boat. That’s one. We call it “boots on the boat” or the owner-operator side of things. The other is fleet separation, where the processing plants are entirely separate ownership and control from those fishers. We are seeing that falling apart and collapsing on both coasts through controlling agreements and leasing back licences to fishers from a processing plant.
Those sorts of issues may have abusive dominance in those situations, which may fall under the act. But at this point, our concerns are in terms of how we move forward as a committee. I can’t speak for the committee, but that is my feeling. How do we move forward? How do we come up with conditions that are actionable that we can impose on DFO?
A lot of that is what you were relating to in terms of describing the steps involved in having a more pro-competitive application of the act. That affects all policies, regulations and practices across the whole department. Perhaps giving us guidance on what those four or five steps are when you are examining policy and practices as they relate to certain areas of the government — if you can help us understand that — it would unlock a lot of questions on the part of the committee, if we could see what is involved. It is a pretty simple process. You’ve been pushing it formally for six or seven years through your work, and it is still not getting traction with the Government of Canada that I can see.
However, there is a desire on the part of this government, based on what we saw with the whole-of-government approach announced in the Spring Economic Statement. This government is ready to do something on that. How do we help them? If you could explain that a bit more clearly to the committee, that would be helpful. Thank you.
Mr. Callaghan: We can do that.
Certainly, there are signs in the Spring Economic Statement that this government is committed to a whole-of-government approach to competition, and it is critical. To the first part of your question, senator, we do apply the Competition Act from an enforcement perspective, and that’s about evaluating the evidence we might see or collect in terms of potential abuse of dominance and things like that — a whole range of conduct, including reviewing mergers that might be proposed. That’s about applying the Competition Act.
The latter part of your question is about evaluating the effects of government policies for their effects on competition. That’s what the competition assessment that I talked about in the opening statement is really about. The work we have put into this step-by-step guide is based on international best practices. These are principles that the OECD has put forward and that many other countries are following. They are treating them more as mandatory parts of their policy-making process rather than one that can just be considered.
The idea, first and foremost, is to get a good understanding of the policy objectives of the government aside from competition. In the case of fisheries, we are not experts in this; our agency looks at things generally in terms of competition. We try to become experts based on the facts of the case.
Regardless, if the goals are about sustainability, for example, or local economies, you then look at whether those policy objectives are having impacts on competition. In a lot of circumstances, those can be unintended consequences. We recognize that policy-makers are not necessarily experts in competition, and we’re certainly happy to help as much as we can. Obviously, we only have so many resources, and there is a lot of policy-making being done in Canada. It is why we recommend pushing this forward such that it becomes everybody’s jobs.
If the Competition Bureau is in an advisory capacity long after policy making has been done, it can be much more difficult to try to address competition harms that might have been taking place for a long time. Once you can evaluate whether there might be harm to competition — for example, policies might be raising barriers to entry, making it hard for companies to come in, maybe tending things more toward concentration, or making it harder for customers to switch to other options or to get the information they need to evaluate their best choice — then you consider the alternatives. Is there another way to still get the policy objectives that are overriding in a way that is just less limiting or is more friendly to competition?
Then, finally, try to review these things on a steady basis. It might require some experimentation to try to get the right calibration in terms of a policy objective that’s as friendly as possible to competition. Regardless, review things to see how it is working because we know that’s important. We know that competition can deliver things that are so important to Canadians and to government, such as affordability and the productivity of our economy.
Senator C. Deacon: Generally, when you have a strong, robust marketplace — a marketplace where competition is free, and parties are not coerced or pressured in any way that might not be illegal but is still occurring — what are the benefits? Also, what harms could come from that?
Mr. Callaghan: The benefits are plentiful. When we have a more competitive economy, businesses are freer to enter and expand.
On the consumer side, we tend to have more competitive prices. For end consumers, that obviously means lower prices for them.
The issues being considered in this committee are often from the perspective of fishers who are on the selling side, so it would be about making sure they are getting as much of a competitive price as they can for their catch.
There is also an innovation aspect. We know that when markets are working as competitively as possible, the best ideas win out. This can be a messy process, and we want incentives in competitive markets that incentivize companies to invest. They are trying to win market share, so that process plays out.
Our role as the Competition Bureau is to ensure that such a rivalry can happen as much as possible, because we know that all of those benefits come from it: better services to consumers and more choice. All these things add up to a more productive economy, because the most productive and innovative firms are the ones that should win out.
Senator C. Deacon: Do you see it as benefits business-to-business as well as business-to-consumer?
Mr. Callaghan: Certainly. From the perspective of businesses, a competitive economy is one that allows them to enter. It really incentivizes them to win the fruits of their investments and innovation when they are competing the hardest on the merits.
Senator Surette: Thank you for your presentation. That was great — your answers to the first questions, there was a lot there.
In a fishery, there are many different components: harvesting and sustainability, which you mentioned; and there are the buyers, marketing, processing and licensing that you just mentioned. My first question is, in a very general sense, this: Has the Competition Bureau, in recent years, looked at any aspects or done any investigations regarding the fishery?
Mr. Callaghan: Owing to our confidentiality obligations, we can’t talk about investigations that we might have done, except for a few exceptions. When mergers do show up on our merger registry, that’s for notifiable transactions, and there is a list of deals that do go up there.
I would welcome my colleague Mr. Hashmi to jump in on that.
It should be obvious just from where we’re coming from in terms of our expertise here, which is a little bit more general, that we take these as they come. It has been kind of limited, from our perspective, but when there have been notifiable transactions, we go through our process of reviewing those deals and making sure competition is not harmed.
Shawn Hashmi, Team Lead, Competition Law Enforcement, Mergers and Monopolistic Practices Branch, Competition Bureau Canada: Echoing what Senator Deacon was saying “boots on the deck” and the importance of looking at things from the harvesters’ perspective.
My colleague talked about competition, and, from my perspective, I always think of it in terms of alternatives. A lot of the discussion at the committee has been about the vertical relationships that exist between processors and harvesters, not simply in terms of buying and selling the catch, but in terms of the financial relationships for the leasing of quotas. It seems you have this issue where you have multiple vertical relationships that impact the ultimate important relationship, which is the landed price on the harvester. These other dimensions of these vertical relationships — whether it is the leasing of the quota or these financial arrangements — bind a harvester to a specific processor and reduce their ability to sell their catch at a competitive price.
When my colleague Brad talks about competition, I think about alternatives and these harvesters who are limited in their alternatives because they are bound to these exclusive arrangements with processors.
Taking a more general step back, senator, when we look at a potential merger, for example, between processors, we would look at the impacts of not simply looking forward to the distributors that they sell, which could impact Canadians — and that is important — but we would also look at the impacts on harvesters in terms of whether it gives the processors greater power to offer them a lower price for their landed catch or if it would give them greater power to increase the lease rate for the quotas.
We try to look at the impacts of mergers on multiple different dimensions and multiple different stakeholders, not simply the distributors that they sell to, but the harvesters that they work with.
Senator Surette: The Competition Act is not limited to which jurisdiction has responsibility. For example, with processing, in many cases, it is the responsibility of the province, and the licensing is the federal government. When you are looking at something like that, it goes across all levels, does it?
Mr. Callaghan: Both the purchase side and the sell side in terms of the impact of the transaction.
Senator Surette: Thank you.
[Translation]
Senator Boudreau: I would like to ask a question about the lobster fishery in the Atlantic provinces in particular.
I have always had trouble understanding why our fishers are asked to prepare all their equipment, prepare their boats, go fishing and bring back their catch without even knowing the price they will get per pound for the product they will deliver to the processing plants. It can sometimes take a few days to find out what price they will get for their catch.
I can understand that this was the case a few decades ago, when the fishery was very seasonal and the market conditions were unknown, but today, live lobster is sold year-round, and the market prices are known. The industry seems to have evolved, unlike the way that the prices paid to fishers are determined. Is this something you have studied before? Of course, it’s the processing plants that determine the price they will pay to fishers. To me, that seems to be an archaic system. Is that something you have studied at some point?
Mr. Callaghan: Thank you very much for the question. Since this involves somewhat technical language, I’ll answer in English. My apologies.
[English]
If I understand correctly, the question is about how we might evaluate the way the pricing is done for the sale of a lobster catch. Unfortunately, I don’t know that I am qualified, and I will certainly let my colleague jump in if he has experience on the merger side. I’m not an expert in terms of how the pricing is done, whether that is the result of policies from DFO or from provincial governments that determine how the pricing is done or whether that’s just the way it has developed in the market.
What we would say, generally speaking — and this goes to my colleague’s comments — the perspective we start from is that sellers try to use competition to work the best for them. Some of the issues that this committee has been dealing with in terms of financing arrangements or some of these controlling agreements are they can obviously weaken the bargaining position of a seller in terms of how they can make competition work for them. They obviously can’t make it work as well if their bargaining position is compromised.
But, unfortunately, senator, I’m not an expert. I think we would need to learn a little bit more in terms of how the pricing is done to give you a bit more of a qualified, specific answer on that.
[Translation]
Senator Boudreau: Thank you.
You mentioned that your bureau reviews a file when a transaction is made. Is that the only time? Do you receive complaints from the public? If there are concerns about a certain fishery or a certain transaction, for example, or about harvesters or processing plants, do you also review complaints?
Mr. Callaghan: Thank you very much for the question.
The bureau can review any merger in Canada. We have a slightly broader mandate. There are specific rules for certain transactions.
[English]
All mergers in Canada can be reviewed by the Competition Bureau. We have a unit that we have been growing over the last few years that started as our merger notification unit but has increasingly put an emphasis on intelligence. That is about trying to get a better understanding of what non-notifiable mergers we should be keeping an eye on and reviewing to make sure that they don’t harm competition in Canada.
We can talk in a little bit more detail about what the thresholds are for the deals that must be notified to the Competition Bureau. There are two thresholds that really need to be met. That has to do with the size of the parties in the transaction and the size of the merger, so the size of the assets that are being acquired.
Those are really to make sure we are seeing and getting an opportunity to evaluate the mergers that might have the most harm on competition in Canada. It doesn’t mean that they are the only ones. The bureau has shown that we treat situations seriously that we do become aware of that raise concerns. We have taken formal steps to go to courts to seek orders to compel information to make sure that we are on guard for those non‑notifiable deals that may raise issues.
Yes, to answer the latter part of your question, the public can complain.
We have an intake unit. Essentially, they can reach out to our complaints office, our info centre or our Merger Intel and Notification Unit. All that information is public. Their submissions are made under our confidentiality obligations to try to protect the information that we receive about them.
[Translation]
Senator Saint-Germain: Good morning, deputy commissioner and Mr. Hashmi.
Mr. Callaghan, I really appreciated your opening remarks. You talked about your concern about rising grocery prices for consumers, particularly when it comes to fish and seafood. I’d like to know what impact you think that has. Do you know the impact of industry concentration, particularly in the Atlantic provinces and Quebec? Does the impact potentially lead to agreements and a form of collusion through price fixing, or, on the contrary, does it make businesses more competitive? Is the situation the same in Quebec as in the Atlantic provinces?
[English]
Mr. Callaghan: We haven’t done a study that would let us give any kind of a pronouncement in terms of the evaluation of the level of concentration. That kind of work would be done in, for example, a market study. We can talk in a little bit more in detail about how those work. In short, it’s about us getting a sense of how competition is working in a sector overall. But concentration, obviously, can happen for a number of reasons. Sometimes it can be for pro-competitive reasons. If companies have found the best business model or a way to be working as efficiently as possible, it can lead to concentration because they can win market share.
What the bureau is on watch for is specifically market power and the ability to dictate prices or service levels beyond the constraints of usual competition. We’re watching for when that market power comes from anti-competitive conduct or from mergers that we are able to review.
It is not always the case that concentration is from anti‑competitive means. When we evaluate them under our sections of the Competition Act, asking, for example, has an abuse of dominance happened? Are there exclusionary practices? Is there cartel conduct, for example, collusion that is happening between the firms? Those really take fact-based investigations.
We would have to gather the information and look to see whether the evidence meets the tests that are put before us in the Competition Act. Generally speaking, concentration is worse than not. There is a reason in our merger provisions that we now have what are known as structural presumptions, basically, a starting point for when we go to prove our cases. It really looks at whether concentration has been significantly increased and the market shares of the merging parties are high in a sector.
There is a reason for that. It’s that we know that concentration generally puts firms in a worse place to be competing hard. It allows firms to be coordinating a little bit easier. All things being equal, we would rather that the concentration is not happening, but just to say, it’s not always the case that the concentration is coming from something that is nefarious or anti-competitive. That’s what we watch out for.
Senator Saint-Germain: Would you say on the Pacific side that the situation is comparable to Quebec and the Atlantic provinces?
Mr. Callaghan: We have been learning a lot from the testimony to this committee, and I want to try to be helpful today, but I do just want to reiterate we’re not experts really in it. We haven’t studied it at that overarching level to give an assessment about what is working well in terms of competition in the western versus the eastern provinces.
Senator Saint-Germain: You have the power of initiative to do so?
Mr. Callaghan: That’s true. We have market-study power. There is certainly a resourcing question. We are the only competition enforcement agency and promoter of competition in the country. We obviously have to make difficult decisions about where we can use our market study section. Just to give you a sense in practice, we’re at a point where we can do about one of those a year at the moment.
Currently, we’re focused on an issue that we think could be informative for this committee. It’s about financing for small- and medium-sized enterprises. We know that’s an angle that is important here because, just on the basis of what we have read in the testimony, it seems to be putting fish harvesters in a position where they are accessing that financing from their buyer ultimately. From what we can read, that seems to be putting them in a position where they can’t make competition work as well for them.
We are at the point now in that study of evaluation. We have been gathering our evidence, and we look forward to putting out our report this fall, which we hope will make recommendations on trying to improve competition in that sector.
Senator Saint-Germain: Thank you.
The Chair: Before we go to Senator Gerba, just to follow up on Senator Saint-Germain’s question, in order for you to do a market study, in some cases, that would be an issue you take on yourselves. But if some body such as ourselves — the committee — approached you and requested that you look into that, would that be something that you would entertain?
Mr. Callaghan: We would certainly entertain it. Let me start from the perspective of how they begin. The Competition Bureau can start a market study from its own perspective. There is a consultation that happens with the minister of ISED. But the minister can also direct the Competition Bureau to start a market study as well, and the situation reverses. We would have an opportunity to consult and give our views on our ability to do so. For example, there may be enforcement cases that could make that complicated.
Yes, we are always open to ideas about where our market‑study powers can be the most useful. So we would be happy to hear ideas from this committee that has heard a lot of evidence and understands these issues well.
The way we think about how we can choose a market study, technically speaking, is about what is in the public interest of competition; but practically speaking, it’s a lot of where we can get the biggest bang for our buck. Where we have at least a preliminary sense that competition issues exist, it’s impacting a large part of the Canadian economy and it’s touching on issues of importance. For example, right now, we’re very focused on affordability issues and the cost of everyday goods. Those are the kinds of considerations that feed into it.
We spell out how we evaluate whether a market study is a good candidate in a bulletin that is public on our website in our market studies bulletin.
The Chair: If you conducted a market study, would that be a public document at all times, or is it something that at times would be kept confidential? I am wondering from a committee perspective.
Mr. Callaghan: It is in a public report, Mr. Chair. So we conduct these transparently in terms of proposed terms of reference. The proposed terms of reference go out for public comment. So we would welcome views from anyone who may have something meaningful to offer in terms of the scoping of that study.
The work, obviously, is conducted confidentially. We want people to be assured that if there is confidential information that could be informative about how competition is working, that is protected. But these conclude in a public report, and it’s really aimed at, generally speaking, policy-makers. In these studies, we try to give an overall sense of how competition is working and whether there may be steps that governments can take to try to encourage more competition.
[Translation]
Senator Gerba: Thank you for being here. Over the course of our study, a number of witnesses have stated that the significant increase in the value of fishing licences represents a major barrier to the entry of new fishers and the maintenance of an independent fishery. Those concerns have been raised as much on the Pacific coast as in Quebec and the Atlantic provinces.
For the Competition Bureau, is the value of licences and the accumulation of licences by a limited number of players a competition issue? If so, how can it be resolved?
Mr. Callaghan: I will reiterate that this is not an issue that we have studied in depth.
[English]
When we think about it from a perspective of whether these issues, in a case of an enforcement context — for example, in the case of a merger — we would try to get the information to understand how it works. We don’t want to go too far in terms of making a pronouncement of our views on these things without having the proper information. So not having done a study on it, we would look at it on a case-by-case basis if it came up in an investigation.
I don’t know if there was anything else you want to add.
Mr. Hashmi: What we know is really the work of this committee, all that you have done and the background reading that we have looked at. We hear about the need for greater transparency; we would certainly advocate for that.
The senator asked about distinctions between the West Coast and the East Coast. One thing that does stand out is the fleet separation and the fact that there is vertical integration allowed on the West Coast and not on the East Coast. While vertical integration is not always bad — there are, in fact, efficiencies sometimes associated with vertical integration — it also can lead to anti-competitive conduct and anti-competitive effects, whether it’s excluding rivals or impacts on price.
Generally, in the course of our reviews of mergers as well as conduct, we do look at vertical relationships, including vertical agreements. Those are things that I wouldn’t say set off alarm bells, but it is something that we do look at because there is the opportunity for abuse when those relationships exist.
[Translation]
Senator Gerba: During our studies, we also came to understand that controlling agreements threaten the preservation of owner-operator status, which is at the very heart of Canada’s commercial fishing model. From the fishers’ perspective, have you observed that you aren’t conducting any specific studies?
As our colleague asked, are there any complaints? Have you observed any anti-competitive practices caused by these controlling agreements?
[English]
Mr. Callaghan: We wouldn’t be able to confirm whether we have received complaints. Those are treated as confidential under our provisions of the Competition Act.
What you’re describing and what we have seen in the testimony just go back to something we have talked about earlier, more from a general perspective about the importance of being able to make competition work for you on the selling side.
From the perspective of the fish harvesters, if they are in a vertical relationship, tied in some way, whether that’s through financing or some of these controlling agreements that we have heard mentioned, it can, in theory, compromise their bargaining position.
Instead of being able to play off a number of different buyers to sell their catch and get the best price that they are able to get from an open market, if they are in an arrangement where they must sell either a certain amount to their lender, effectively, one processor, rather than being able to play off different processors against them, it puts them in a worse position to make competition work for them.
That’s not to say that there is conduct that meets one of the sections of the Competition Act. We have specific tests that we have to meet. For example, in an abusive dominance context, we’re looking at whether there is a dominant firm: basically, a big firm that is doing something bad, anti-competitive, that’s leading to a reduction in competition.
Clearly, we have an issue that we can see from the testimony here about the bargaining dynamic between those different levels of the supply chain. But the Competition Act does not really deal head-on with imbalances of bargaining power. We might use that as an indicator to try to get a sense of how competition is working. For example, in a merger review, how my bargaining dynamics change because, let’s say, processors amalgamating or joining together may be in a better position to put downward pressure on the price that they are ultimately paying. But that’s about the competition between processors.
It’s just to say that it’s just the act that we apply. It’s what we look out for. It doesn’t necessarily deal with imbalances of bargaining power. It’s really focused on when anti-competitive conduct is putting firms in a position to weaken competition.
[Translation]
Senator Gerba: Thank you very much.
[English]
Senator M. Deacon: You indicated you have been following the testimony in the last while. I was paying very close attention to the language and response in Senator Saint-Germain’s question and the chair’s follow-up. I understand the study, and, of course, one a year, and I’m sure there are cross-sectional demands and interesting areas to do that.
I’m going to ask a question that is pushing a little bit too hard. I don’t know; you tell me.
We have learned a lot in this testimony. I’m aghast, particularly with the differences between Atlantic Canada and Pacific Canada.
My first question is about Pacific Canada. Does the Competition Bureau have concerns about this concentration of fishery licences on Canada’s Pacific coast that is potentially crossing into and enabling anti-corruptive behaviour enough that warrants some sort of next-step action?
Mr. Callaghan: Thank you for the question. At the risk of repeating myself, it’s just an issue that we are getting more familiar with. It’s not something that we have studied to a degree that we would make a comment on right now.
As I said in our opening, we are focused on affordability issues, particularly in the food sector. We have started from the perspective of what has been playing out in grocery stores over years past, but we know that every step along the supply chain is important. We have been thinking a lot about that.
There is more work to come from the Competition Bureau. There’s nothing specific that I can say today, but I would say that we’re very engaged in understanding more about how competition issues are playing out throughout the food supply chain. It’s not feasible for us to be an expert in all of these things. We have multiple departments that are focused on how things are working in these areas such as Agriculture and Agri‑Food Canada and the Department of Fisheries and Oceans.
We are focused on competition. It’s a narrow focus, but we’re alive as to whether there may be issues. We need to understand more.
We’re certainly open to hearing the views of this committee about where the bureau can be bringing its resources, but not in a position to comment today to say that it has reached a level of concern, because we just don’t have our own evidentiary basis to say that today.
Senator M. Deacon: Thank you for that. It is, Mr. Chair, the wonder. This is part of this committee’s work. When we look beyond the horizon of this committee, we’re getting some pretty strong testimony. This is emerging as an issue from other parts. That’s part of my thinking.
That’s the Pacific piece. When I look at the Atlantic piece, we know that controlling agreements are prohibited in Atlantic Canada and Quebec by regulation. However, the testimony that we have all been listening to says that these still take place. They are still happening. They still take place. They will continue to take place.
Can these controlling agreements constitute anti-competitive behaviour under the Competition Act?
Mr. Callaghan: We would really have to see the facts to know that. Our general understanding about this, which is really at a starting point, is that these are arrangements, as my colleague was mentioning, between the fish-harvester level and the purchaser level: the processors or the buyers.
There can be issues that do come up from time to time. One of the theories that we would think about in this area is what is known as a foreclosure theory. Basically, that’s an idea about whether someone at the purchasing level, for example, has an ability and incentive to foreclose inputs in a way that would harm their rivals and harm competition. We don’t have the facts to make a comment today on whether these things are, by nature, anti-competitive or not. We would really have to gather more facts to get a sense of it.
Senator M. Deacon: Thank you for that. I know they are not easy questions, but I think the gathering of more facts will be a key part of this. Thank you.
Mr. Hashmi: In our act, there is an acknowledgment of exclusive arrangements and exclusive dealing, and the anti‑competitive implications of those, but as Brad said, we would have to look into that more to understand it. But, certainly, we can take action when we understand that there are exclusive arrangements and you have a dominant firm involved.
As Brad was saying, we have to understand the level of concentration. Are you dealing with a dominant firm? We have to assess the conduct of the acts and whether these exclusive arrangements are being forced on the harvester, and then we have to look at the impact on competition.
We want the harvester to have as many options as possible. We don’t want them to be bound by these exclusive arrangements. Obviously, that can impact the landed price and other parts of the business as well.
Senator M. Deacon: Thank you.
Senator C. Deacon: Maybe it would help if you had examples from past cases or other industries that reflect or echo some of the things you’re hearing. That could be helpful to us as well: just similar incidents or similar realities and the effects they have had, even outside of Canada, as examples, just so we can really understand whether or not what we’re seeing is something that could qualify as an issue for the bureau.
Senator Osler: Apologies for not introducing myself earlier. I’m Senator Flordeliz (Gigi) Osler. I’m a senator from Manitoba. Even though we are a Prairie province, we have a significant northern coast on Hudson Bay. Our provincial government says that we have a unique maritime identity.
Thank you for the questions that we have heard so far and your answers. My question may build a little bit on Senator Deacon’s question.
Based on your past reviews and potentially even witness testimony that this committee has heard in this study, are there any legislative, regulatory or policy changes needed for the Competition Bureau to monitor the fishery’s industry-related transactions, or is there an ability to change what you already view within your scope of control?
Mr. Callaghan: Our investigative powers are appropriate for an agency that oversees the entire Canadian economy. We can go to court to compel information for the cases that we are investigating.
I wouldn’t say there are specific concerns about our ability to investigate. Obviously, probably like most enforcement agencies in government, we would never complain about more resources to do that work. The encouraging thing is that we have just come through a few years of significant modernization of the Competition Act. That’s on the back of a lot of advocacy from the Competition Bureau to push forward modernization. I think the bureau is certainly much more well placed now with the sections in the Competition Act. That includes everything from our investigative powers, the ability to do the market studies that we have been talking about this morning on a formal basis, to compel information to inform those studies, and then the sections that we’re applying when we try to prove harm before the courts.
For example, these presumptions that we start from in our merger cases are a total change from where we started in the past, where, really, it was a much more limited role for the weight that we could give to concentration and market share. Now, it’s kind of central. It’s the starting point for proving these cases before the courts.
Our focus, just acknowledging that we have had this modernization, is on applying the modernized act and trying to give guidance to the marketplace about how we are going to use these new tools. We’re focused on action.
Senator Surette: My questions had to do with the controlling agreements, but I think we have gone through much of that. The only clarification is that it doesn’t have to be a big processor or a big buyer that is into controlling agreements. It could be a harvester that has the means where they could purchase a boat and then another boat, and then it builds. Controlling agreements are hard to find or to get to the bottom of. We’ll leave it at that.
Just to bring the conversation to a different level, at the ground level, we hear a lot about price fixing, especially in the lobster industry. As you probably know, the lobster industry is divided into lobster fishing areas, or LFAs, which are different areas open at different times. In many cases, there are limited buyers for the lobster. We have heard a lot about price fixing.
If you investigated that issue — we talked about the scope of what you look at — would you be looking at an entire province, not a certain zone or a certain region, in order to start your investigation? At what point would you start an investigation?
Mr. Callaghan: It’s always based on the facts, obviously. If there is information that is brought to us that raises concerns, it wouldn’t be an immediate exercise of how narrowly we might define a market. That’s a very important exercise for some parts of our work, in particular, merger review and anti-competitive conduct, like abuse of dominance. That’s the test we will ultimately have to make before the courts.
If there is conduct of concern or allegations of price fixing or companies colluding to try to harm competition, those are concerning allegations that I think we would want to know more about and gather the facts.
I would make one comment about our ability to address these things under our cartel provisions, our criminal provisions, on the purchase side. We are more limited there. Our cartel provisions only apply to the sale of the product, so price fixing for the sale. They don’t apply to the buy side. It’s very limited in terms of what we can do on the buy side. It really has to do with labour conditions. There are provisions against what are known as no-poaching agreements or wage-fixing agreements. I’m speaking generally here, obviously, to answer the question, not about the purchase, for example, of seafood in general.
That doesn’t mean it’s not something that the bureau would look at. For the situation that you’re talking about, we would be thinking about it from the perspective of another section of our act. It’s subject to a competition test. This is about anti‑competitive agreements, and that’s a section that has also been strengthened as a part of this modernization. We can now look backward on past agreements for up to three years, I believe. Our powers are certainly stronger, but we do have to prove a competition test. That is that these agreements have led to a substantial harm to competition, essentially.
Senator Surette: So there are no damages with price fixing.
Let’s say you would investigate something like this, and you write your report at the end of the day, I assume. There’s a report that will come out, and the report has recommendations. Are there any consequences? Is there any enforcement?
Mr. Callaghan: To distinguish two things, the conduct that we were talking about in terms of allegations of price fixing would not be part of a market study. The purpose of market studies is really to kind of get a sense of how competition is working overall in a market and to make recommendations to policy-makers. This is just a quick aside about enforcement work.
In terms of allegations of price fixing, that’s really something we would evaluate to see whether it meets the elements of an offence or cartel offences under the Competition Act or anti‑competitive agreements. We would bring that forward to the courts to address the harm. That’s really the purpose of the enforcement work.
Back to the market studies and your question about whether there are any consequences, it’s a good question. We obviously always hope that our recommendations to policy-makers are followed. It speaks to the importance of the evidence that we can gather because we think that it can be the most persuasive as possible if it’s based on good evidence.
Ultimately, they are not binding on governments. It’s a suasion exercise. We are asking governments to consider the ways that they can improve competition from those recommendations, and we try to work closely with policy-makers afterwards and follow up, but they are not binding.
Senator Surette: Thank you.
Senator C. Deacon: This has been a great class in competition law and its limitations, so thank you very much for your clarity on this.
You don’t have any buy-side enforcement or investigative authority. What is the rationale for that? Is it just an oversight?
Mr. Callaghan: I wouldn’t characterize it as an oversight, senator. I think it is something that has been considered. ISED, as the policy lead for competition matters, did, as you know well, a very comprehensive consultation on the future of competition law in Canada that led to a lot of these changes. I know it’s an issue that they considered carefully.
The bureau did advocate for changes to this section. At the time, we were looking to introduce more protections for the buy side, going beyond just wage fixing and cartels. There was a time when the Competition Act did address both the buy side and the sell side for cartel agreements.
I’m not speaking for ISED, but that’s one of the rationales that’s part of the discussion about why it is not treated as a criminal offence per se. It is because there can be some pro‑competitive rationales. The example that often comes up is buying groups. These are a countervailing measure when you have an imbalance of bargaining power. You can see, for example, in the grocery sector, groups that may need to come together to try to get a more competitive price.
Buying groups like that do come up as an example where there can be some pro-competitive rationales for it. Again, I won’t speak for ISED as the policy lead, but I know it’s something that they considered carefully.
Senator C. Deacon: One of the key issues that we found is that there is a lack of transparency in ownership, control agreements and whether ownership is domestic or foreign. There is a complete lack of transparency with many of these licences on the basis of privacy concerns. But we can’t understand what those privacy concerns would be. These are public assets that are licensed to Canadians or foreigners. We should understand the basis of that.
There is a lack of transparency and standardization of lending agreements to fishers. For me, that’s an obvious one. If the agreements were standard such that, in order to qualify, it must look like this, it would certainly make a big difference.
Could you just speak to the issue of transparency? Then I want to ask a quick question about study powers.
Mr. Callaghan: The question certainly raises something about the ability to detect conduct that could raise competition concerns. For us as a competition agency, we have a lot of investigative powers. We can think about the prevalence of these things from a competition perspective, but if it is something that’s specifically prohibited by another department, I don’t know what their investigative powers are. I’m not qualified to comment too much on that, but there may be helpful ideas around other parts of government about how you can put these kinds of things in the public eye.
One thing that we’ve been following very closely — this may seem like a loose connection — is that, in the grocery sector, there is conduct called “property controls,” which is basically limitations on how grocers may be limiting the use of shopping malls and things like that, which can restrict competition. We are investigating our own cases in this area, but provinces have also been taking measures to try to uncover where these things may be happening.
In that context, they can be buried in land registry offices, registered on title, or in commercial agreements. What the Province of Manitoba has done — and it is early days here — was to put a law in place that actually requires these things to be filed. So they’ve declared as void any future property controls. For those that are existing, they must be registered, and it gives the public an opportunity to then challenge them. It is on the companies to justify a pro-competitive rationale for them. So that is a possible interest test, but it includes competition. I raise it only in the sense that there may be inspiration for governments in terms of how to uncover some of these things that may be hard to get at.
Senator C. Deacon: With regard to the study capabilities that you now have and the ability to compel information, do you have a checklist of what we could be looking for or what we could put forward in our report if we wanted to get on a list of studies that you might consider in the future?
This is an $8-billion to $10-billion export industry in this country per year. It is crucially important to rural and remote communities on our coasts. Also, the proper management of this industry is critical to ecosystem maintenance.
That falls well outside of your scope of responsibility. What do we need to put in place to have the best chance of falling under your scope of responsibility?
Mr. Callaghan: Yes, I would point to our Market Studies Information Bulletin. That was updated once we had these formalized powers for market studies. We’ve done market studies for a long time, but since the modernization of the Competition Act, their powers have been formalized. We now have this process where we liaise with the minister. In the bulletin we spell out the things we would consider in determining whether to go forward on a market study. I recommend that.
Senator C. Deacon: Thank you very much.
Senator Boudreau: I would like to go back to controlling agreements. I want to piece together a few thoughts and make an argument against some of the concentration that’s happening in the industry.
On the East Coast, we have a federal regulatory framework around owner-operator fleet separation policies. That has been well established. The basis of the owner-operator fleet separation framework is that the profits stay in the local communities. That’s why those policies were put in place. It’s so that profits stay in the communities and are reinvested in those rural and coastal communities.
However, over time, we’ve had a significant number of harvesters that, for different reasons, have entered into controlling agreements with processors. Maybe when those processors were owned and operated locally, it wasn’t as significant an issue because the profits were still invested in the communities — just by the processors instead of by the processors — but now, we’re in a situation, at least, in New Brunswick, where a lot of these processors are being concentrated and sold to outside interests. Those profits are completely leaving not only our communities but our province. I would refer to that as the vertical integration that Mr. Hashmi was talking about earlier. Based on federal regulations, that should not be permitted.
When you are looking at these transactions — and I know you can’t talk about specific cases — it seems obvious to me that, when it is a company from outside New Brunswick purchasing a processing facility from New Brunswick, it goes against the federal policy because those profits are leaving our communities. They are leaving our province. So how can you say that it checks all the boxes if — in my opinion — it clearly goes against the federal framework that’s in place?
Mr. Callaghan: I will just start, and my colleague may have more to add on here. I would just start by saying that our federal policy is competition. That’s not to say that there aren’t other issues that are the focus of those policies at the Fisheries and Oceans. This goes back to our role and mandate and understanding the core policy objective of the DFO. There may be ways to achieve those provincial objectives that are not our focus. If a thriving local economy is coming from competition, that’s where the Competition Bureau comes into play.
By the same token, the source of that competition is not something that really falls within our mandate. For example, with regard to the role of a foreign investment or foreign acquisitions, we really view that as follows: If it is more competition, it is more competition. That’s the act that we apply. I recognize that it is a very live consideration for this committee. The foreign aspect is something that’s dealt with another part of ISED that applies the Investment Canada Act, and it may very well be part of specific DFO policies, as well.
Our focus is really about the role of competition. Some of these policies from DFO may be very competition-specific — again, it is not something that we are experts in — but if there are aspects that are not working well and are really pro‑competitive policies from the get-go, that’s something we would take an interest in.
If it is something that’s focused on another policy objective, for example, protecting a local economy, our role is to advocate to make sure that can still happen, and we encourage as much competition as possible.
Senator Surette: I have a quick question.
If I understood properly, you cannot tell us what you have been investigating in the fishery in the past or at present. If this committee wants to study any issue, we can present you a long list of issues, and then you pick and choose which you think are a priority. Is that how it works?
Senator C. Deacon: You will never know.
Mr. Callaghan: Yes, we can always be on the receiving end of information. That’s a big part of how the Competition Bureau does its work. As I said earlier, complaints are a big part of how we do our work. We receive a lot of complaints. There is a triaging exercise in terms of what we can focus on. We are about 500 people, and we are enforcing an act that applies across the entire economy, but we try to pay attention to trends. When things get to a level where there is enough evidence to suggest that the Competition Act is engaged from an enforcement perspective or where the issues are important enough that we should be doing a market study, we obviously treat those things very seriously.
The Chair: In closing, I want to say that when one of the senators suggested that we have the Competition Bureau come before our community, knowing the limitations under which you operate, I was wondering about the purpose of doing so, but I must say this has been a very engaging conversation. It has given me a few things to think about in regard to the concerns raised to this committee by witnesses we’ve had. We are trying to find avenues to address those concerns, and there is no doubt in my mind that the Competition Bureau will be one of those avenues. How we go to you with those concerns will be debated and determined as we go forward, but you have certainly given us great information here this morning and some insights into the possibility of a way we could address the issues that have come forward from previous witnesses.
On behalf of the committee, I thank you for taking the time to join us here this morning. It has certainly been an interesting conversation. Thank you to our senators and visiting senators here. They all want to be part of the Fisheries Committee, but we are limited as to how many we can have around the table. Thank you, all.
(The committee adjourned.)