Industry Committee on June 12th, 2024

[Dr. Sylvain Charlebois]

Absolutely. I'll use as an example the Ontario Food Terminal, which I think is a great case study for Canada. It's been around for many, many years and has allowed new businesses to be created. It has also allowed food service and food retailers to connect with wholesalers and with farmers as well. That's just one example.

In fact, the Ontario government is about to conduct a review of the Ontario Food Terminal. It needs to continue to operate and it needs to be expanded. It's in Etobicoke, and there's no space, so something will need to happen there. I would say that there is a need for an Ontario Food Terminal in many different places in the country, including right here in the Atlantic. Here in Halifax there is definitely a need for that in order for restaurants, retailers and independent grocers to have access to some supplies.

Food distribution is a complicated issue in Canada. We have a lot of space, but distribution is very costly. We have to be strategic. The strategic establishment of food hubs would be critical to support retailing and food service at the same time so that consumers can actually have access to more local foods.

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

Great. Thank you.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Gaheer.

Next up is MP Garon.

You have roughly two and a half minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Mr. Chair.

Mr. Péladeau, I'll go back to Glentel.

My colleague Mr. Généreux asked some very interesting questions. I agree with him when he plays devil's advocate by saying that there's nothing to prevent you from selling your services elsewhere.

However, as an economist, I believe that the same business practice in two different environments can produce different results.

From what I understand, you're saying that you were a threat to the major players in the west, because you were anticipating price drops and that the joint venture form created by the big two, essentially, was explicitly intended to hinder your entry into this market.

Do you think that was the explicit purpose?

What do you think the effect is on consumers? What could be widely offered to consumers in Manitoba, for example, that wouldn't be now that Glentel has taken those shares?

[Pierre Karl Péladeau]

I'll start by answering your question, and I'll let Jean Péladeau give the details.

I would say that one doesn't preclude the other. Just because we're staying in the retail network doesn't mean we're going to stop marketing through other channels. Indeed, this is the case. Mr. Généreux was talking about Quebec. Here in Quebec, we also do a lot of sales at call centres, which isn't a widespread practice in other Canadian regions. More and more sales will be done through the web. Again, it varies from region to region.

However, that doesn't mean getting kicked out is a good thing. On the contrary, it will reduce the possibility for those who wish to continue. As the saying goes, shopping around is important in Quebec as well. It's important elsewhere as well. If you reduce customers' ability to choose, I don't see how that's going to help competition. That's definitely the case.

Now, is there an intent to harm competition? It's hard to say. I can't know, I don't have the tools to determine that. However, there may be reason to believe that these measures are indeed being taken to significantly curtail and reduce competition in the retail sector, which is the most important channel in the Canadian provinces.

[Jean Péladeau]

To continue in the same vein as his initial answer, it's clear that the decision to proceed with a joint venture of this type was a deliberate decision to curb our momentum in the market at this time and, precisely, to reduce the speed at which we are able to obtain market share from clients and offer our service delivery to Canadians.

That said, I would like to add a comment.

In his opening remarks, Pierre Karl Péladeau mentioned that we nevertheless contacted Glentel to discuss the situation and to tell them that we understand that they have a new agreement, but that we would like to partner with them and be marketed as a neutral retailer.

I will repeat what they said in English, since we were told in English:

“I don't think we have anything to discuss on the topic you wanted to chat.”

In other words, it's not even worth sitting down and talking about it. It was a total rejection.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, Monsieur Garon.

It's now MP Masse, for two and a half minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

This is for either of the Péladeaus. I'll let you choose.

In your submission to the Competition Bureau, you noted that the oligopoly could potentially or actually get to 62.5% of all third party retailers. Can you expand on your predictions and the percentage by which they could conquer the market?

[Pierre Karl Péladeau]

Mr. Masse, I'm sorry. It's not going to be either of the Péladeaus.

It will be Jean-François Lescadres. He's our CFO and VP of finance. He's well aware about it and will give you the proper and precise answer.

[Brian Masse, NDP, Windsor West, ON]

Fair enough. Thank you.

[Jean-François Lescadres]

Basically, we're talking about the Mobile Shop here, which is clearly like the situation we're going through right now. This way of proceeding, of excluding competition, was already taking place in a lot of stores.

It was taking place actually in Costco, which we just talked about. Their store is called WIRELESS etc., or SANS-FIL etc. in Quebec. There were already stores that were distributed by GLENTEL and were excluding Freedom Mobile products.

There are other models like WOW! Mobile, which is also a joint venture, this time between Telus and Rogers. That's another case of two incumbents going together and excluding other brands from what they're selling.

I don't want to repeat myself. As Pierre Karl said before, we can't think of any other example in the world of two players in a oligopoly putting their forces together to exclude the other ones. We searched. Do we have anything comparable? We still haven't found anything comparable to that.

[Brian Masse, NDP, Windsor West, ON]

Very good.

One of the challenges that we've had over the last number of decades is that, basically, new entrants have been swallowed up and their brands sometimes have been kept the same in name, or they've been altered. The end result is that I'm not sure there's quite clear customer education and acknowledgement that some of these companies are basically just offshoots of Bell, Rogers and Telus.

if you have a position on this, I'm wondering at this point in time whether or not there should be more truth in advertising so that those types of entrants and market providers should also have to identify publicly on their advertisements whom they're owned by.

[Pierre Karl Péladeau]

MP Masse, that's a good idea, but why not go up the food chain and just prohibit that kind of situation?

[Brian Masse, NDP, Windsor West, ON]

That's fair enough.

[Pierre Karl Péladeau]

If you block the retail channel, which is one of the most important ones, whatever you advertise or not.... We've been seeing Bell advertising.... We can't see, so how large the advertising will need to be is, I guess, a bit too much and it's too complicated. I'm not sure that you're going to be able to have the results you're looking for if you prohibit the situation entirely.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Masse.

MP Vis is now up for five minutes.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Mr. Charlebois, I'm really happy to have you here today. I follow you on Twitter.

I think you're a breath of fresh air in the academic community, especially because you talked about food hubs. I come from the Fraser Valley, and we've started one in the Abbotsford-Mission area. Your comments on scaling up food processing are especially relevant where I live.

Earlier this year, I went to the Fraser Valley's Mainland Milk Producers Association meeting, where we had Phil Vanderpol appear. He put up on screen during his presentation what it actually costs to build the new butter factory we're building in my riding. Basically, it's not even feasible anymore to do the project he started a few years ago, mainly due to the increased input costs, the high production of labour and the lack of a competitive taxation system as it relates to investing in equipment.

Specifically, to help food producers who want to process, what can we do, from a taxation perspective, to incentivize the purchasing of that new equipment you talked about when you mentioned that we need more automation?

[Dr. Sylvain Charlebois]

That's a great question.

I recall seeing the government in Quebec provide a financial incentive to Kraft Heinz to build a ketchup plant in Montreal. Why not do that with Canadian companies?

You see, in the last decade or so in America, they've been able to build over 4,000 greenfield food processing plants. During the same period in Canada, we have built fewer than 30.

When building new plants, it is quite costly because you're often confronted by a government, sometimes at the federal level—actually, a lot of the time, it's at the federal level, because if you want to have a federally licensed facility, you have to deal with the CFIA. There are a lot of costs involved and inspections. There's a lot of bureaucracy involved.

I think at some point, we need to decide whether or not we want to support processing and new ventures along the way. Your butter example is under supply management. Of all places, we should invest in supply management.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Yes.

[Dr. Sylvain Charlebois]

In Kingston, Ontario, we allowed China to build Canada Royal Milk to manufacture baby formula. That is a sign that we're not doing a good enough job to vertically integrate in this country. We're allowing other countries to invest in our own country to do the work we're supposed to be doing.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you for that.

Can you say anything specifically...? I totally agree with you on the CFIA. It does not seem to want to work with our existing processors, and it actually makes their job quite hard.

Do you have any concrete recommendations about how we could reform the way the CFIA conducts its inspections?

[Dr. Sylvain Charlebois]

I could provide you with some detailed recommendations, but not at this time.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you so much. I look forward—

[Dr. Sylvain Charlebois]

I can, after the—