Industry Committee on June 12th, 2024

[Dr. Sylvain Charlebois]

It's a wholesaler. It has 4,000 SKUs—15%. It's a very different model. My guess is that Costco has been friendlier to the concept than Walmart, for sure.

[Brian Masse, NDP, Windsor West, ON]

Thanks for that.

How long do we do this dance before potentially bringing in a code of conduct that's mandatory?

I'll highlight a couple things that didn't get mentioned yet. I like a lot of the ideas you presented. I'm not sure whether they'll be in the scope of this particular bill, but they're certainly good things to follow up on.

For example, grocery store apps aren't publicly showing the pricing difference when you use the app versus go into the store. You have to discover that yourself. I think that's a good example of where there should be a code of conduct.

There's also the shrinkage issue with regard to changing the distribution weight of products without notice on the product itself.

[Dr. Sylvain Charlebois]

One of our recommendations was to have the bureau collect data and democratize data. That's kind of what you're saying, Mr. Masse—allow the market to have a better sense of what's actually happening with prices, availability and quantities.

[Brian Masse, NDP, Windsor West, ON]

I know that I have limited time here. I'll get to Mr. Péladeau in my next round.

I don't want to take up the time of the committee to debate this, but I do want to put on the record here a notice of motion that I have that's come out of these hearings. That's one of the good things about this bill: It's brought some really good ideas. Mr. Charlebois brought some more today, but I'm acting on one the Competition Bureau put forth.

I'm going to read this notice of motion into the record to complete my time here. The motion is:

That, pursuant to Standing Order 108(2), the committee invite the Commissioner of the Competition Bureau of Canada, Matthew Boswell, and other experts on competition, including but not limited to, Department of Industry, industry stakeholders and external experts, unions, and academics on competition law and the economy in Canada, for no fewer than three meetings, to study the regulatory barriers to competition in this country that continue driving up prices for Canadians in their everyday lives.

I'll table that. If my colleagues want to look at it and if they have amendments, I'm open to that as well.

Thank you for the time and I'll get to Mr. Péladeau in my next round.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you very much, MP Masse, for putting your motion on notice, which I'm sure we'll have a chat about at another time.

We're going to go to the beginning of the next round, which is for five minutes of questions, starting with MP Généreux.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you, Mr. Chair.

Thank you to our witnesses for being here today.

Mr. Péladeau, you said earlier that in 2023, 80% of retail sales in Canada took place in stores. Were you talking about cellphones, packages or both?

[Pierre Karl Péladeau]

There are two options, honourable member. There's something called “bring your own device”, and there's also the option to buy a cellphone. Both options are available at retail locations.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

In Quebec, if I'm not mistaken, at Videotron, you have a sales network in your stores. You're also in shopping malls. You have quite a number of stores.

Does the agreement with Glentel apply specifically to western Canada and Ontario, or does it also apply to Quebec?

[Jean Péladeau, Vice-President, Operational Convergence, Quebecor Media Inc. and Freedom Mobile, Quebecor Media Inc.]

This agreement doesn't affect Quebec. Glentel—Loblaws, actually—has no Mobile Shop stores in Quebec per se.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

You mentioned 180 stores in the rest of Canada. I'm somewhat playing the devil's advocate here: Are there other networks you could partner with? For example, could Freedom Mobile partner with Costco or other chains where you could sell your products, to compete with the other three major players?

I have another question: Does this also affect Telus?

[Jean Péladeau]

I will answer you in stages. To answer your first question, we're in constant discussions with various partners. We're proactive. We're having discussions. Obviously, as we said in our opening remarks, ideally we're looking for neutral partners. To establish neutral partners, discussions must be held with potential partners, and we must also determine whether they're prepared to be neutral partners. We don't believe that a unitary approach where we sell only our products is the winning solution at the end of the day. Yes, we're in discussions with a number of potential partners.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

As I understand it, the agreement between Glentel, Bell and Rogers is exclusive, but it wasn't in the beginning. So it has become exclusive, and that's what you are challenging in particular.

[Jean Péladeau]

I'll come back to your second point later.

Our understanding of the agreement—we haven't received an official confirmation from Loblaws—is that Telus would also be excluded from this new exclusive agreement.

I'll give you the example of Manitoba. We just launched Freedom Mobile services in Winnipeg on May 23. In terms of our launch, we would have launched our services at just over 21 points of sale if we had included Mobile Shop stores. However, given that Mobile Shop has withdrawn, we were obviously not able to launch in the same way in this new territory. So we launched with only 12 points of sale. You can understand that having fewer locations has an impact on the performance we can generate in terms of sales in the territory in question.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I'm going to play devil's advocate again. Don't take it personally; I'm also in business.

My business is small compared to yours, of course, but I have never feared competition, nor do I believe that you fear it at all, Mr. Péladeau. Despite an agreement like that, you may be able to develop future networks or new networks that will help you realize more gains than you would have with them. If I understand correctly, Telus is also excluded, which means that you could enter into agreements with it that would help to generate sales in western Canada in particular.

I don't know if I'm talking nonsense. Perhaps you can tell me if what I'm saying makes sense.

[Jean-François Lescadres, Vice-President, Finance, Videotron Ltd.]

I can certainly answer your question.

As to whether such agreements could be reached, that's a possibility. That said, there's a clarity issue for the consumer. When consumers go to these stores, they get the impression that they are seeing everything available on the market when it comes to these devices. They have no idea that these stores are controlled by Bell and Rogers.

As was said a little earlier, is it really acceptable that two of the three companies forming an oligopoly be allowed to exclude a new competitor from their operations? Earlier, we talked about the Competition Bureau's powers. I certainly don't know the details of this bill either, but it seems absurd to us that anyone could do that. To us, that amounts to deceiving the consumer.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I completely agree with what you're saying. We're all in favour of more competition. In fact, Mr. Péladeau, you said that since you acquired Freedom Mobile, I think about a year ago, you've helped bring down wireless charges by about 23%.

What are your intentions? What have you achieved in terms of market penetration since you acquired Freedom Mobile?

[Pierre Karl Péladeau]

Mr. Généreux, we aren't the ones saying this, Statistics Canada is, so we're talking about a third party, which I assume is entirely objective.

In addition, you may recall that we made commitments to the government, to the department. We had a specific period of time to deliver a set reduction. We met all of those objectives in a shorter time frame than the one we were given and that we had to meet.

Of course, we'll continue to make move forward and ensure that we can offer new products. My brother Jean said so recently. We just launched Freedom Mobile products and services in Winnipeg. We would also like to be able to offer larger packages. I won't go into the details, but let's just say it would be difficult for us to go that far. The fact remains that, for the first time, we're offering people who don't use a lot of data a low‑cost plan they've never seen before.

We also intend to launch what's called wireless assemblies. People will have access to the Internet and cable TV. A new competitor like Freedom Mobile, which has been in the market for just over a year, or 14 months, will ensure that Canadians can benefit from new products at better prices.

[Bernard Généreux, Conservative, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I will now turn to Dr. Charlebois. I would like to know if the carbon tax is driving up the price of the food we buy in stores.

[Dr. Sylvain Charlebois]

As I said to Mr. Williams in response to a question, it's very difficult to create a coefficient that accurately measures the impact of this policy on retail prices. The situation is different on the industrial and wholesale side, where there is currently quite a significant price differential between the United States and Canada.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Généreux.

We have MP Gaheer for five minutes.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you, Chair.

Thank you to the witnesses for appearing before the committee to provide your input.

My questions are for Mr. Charlebois.

Sir, in your opening testimony, you spoke about supporting SMEs in the agri-food industry. I think you mentioned subsidies, but could you elaborate perhaps a little bit on what else you would like to see from all levels of government to support the agri-food industry?

[Dr. Sylvain Charlebois]

That's a very good question. Thank you.

Essentially, as Mr. Williams mentioned, I do consider processing the forgotten job of the entire food industry. I've always considered processing as the roots of the tree. We all see the tree, the branches and the leaves, but we never see the roots, and the roots will hold the tree up and straight. In Canada we've done a poor job of supporting SMEs in that particular node of the supply chain.

What I've seen over the years are SMEs dealing with listing fees, food safety compliance fees, R and D fees and lots of different things they need to pay but they never plan for. I do believe that there is something there that perhaps the government can do to support small and medium-sized businesses trying to venture into food processing.

We're really struggling with processing in Canada coast to coast, particularly in both the Atlantic and B.C. right now for different reasons. I don't think we've a done a good job supporting food processing in general and how we accompany these enterprises that don't necessarily have the resources to compete against the larger CPG companies that come from abroad.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Thank you.

I would assume that when you talk about processing, it's very capital-intensive, especially at the beginning, and that perhaps that's a barrier to entry for SMEs. What role do you think government could play? I think it would be hard to upfront that cost to set up a processing plant. What else could government do?

[Dr. Sylvain Charlebois]

It's more about regulations. I think some things could be revised in terms of leniency, for example, with approvals. Lots of policy-driven obstacles actually get in the way. I can think of how to have access to land, for example, or where to build, working with cities, access to water and treatment of water. I'm not suggesting we should be lenient on every front, but I do think costs are prohibitive for SMEs when looking at food processing.

Often the government will actually look at food manufacturing the same way they would look at car manufacturing or manufacturing in other sectors. The reality is that margins are incredibly low, which means that the margin for error is almost nil. That's why we're seeing a lot of plants, whether it's in Ontario or elsewhere, that are undercapitalized. They need to focus on automation right now. They need to focus on the use of robotics, and we're not seeing the investments. Even Cargill has one plant that is on strike right now in Guelph, and there's another plant owned by Cargill that could go on strike within days in Calgary. Cargill is a massive organization, with $170 billion in revenue last year, and it's hesitating to invest in Canada just because of some of the regulations we have.

I've actually had discussions with Mr. Champagne about this. Creating competition is a bit of a false narrative, in my view. I think what's important for governments to recognize is that it needs to enable conditions in order for competition to emerge. That's really the most important thing. We haven't seen that in the food sector.

[Iqwinder Gaheer, Liberal, Mississauga—Malton, ON]

Great. Thank you.

I do want to highlight that some of the things you talk about would be municipal regulations. I think all levels of government perhaps have to do a little bit more to create or to spur that environment for competition.

In your opening testimony, you also spoke about the food distribution networks. Could you speak about that in terms of perhaps bottlenecks being in place? What can we do on the regulation side to help food distribution networks?