Industry Committee on June 12th, 2024

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

Thank you.

The reason we're here today and have this bill before us is because the leader of the New Democratic Party, Mr. Singh, talked a lot about grocery stores having excess profits. To this day, I have not received a definition of what an excess profit is and what an excess profit would specifically be as it relates to grocery stores and the purchasing of food.

Given that you're one of the leading experts in the country, can you tell us what an excess profit is?

[Dr. Sylvain Charlebois]

No, I cannot. I've asked the same question of Mr. Singh. I don't think there should be a definition. We should remind ourselves as to why companies exist in the first place—to make profits.

I think what really needs to be underscored here is our ability to foster innovation and to support competition, but also to regulate. I actually do think a lot of the anger out there coming from Canadians comes from a place where they don't feel protected. This is why I think this bill is really important—to empower the company to do its job.

We have a bread price-fixing investigation that has been going on for nine years, and it's still not done. Canadians have every right to feel angry and skeptical about what's going on. What we've seen in recent days from the Competition Bureau about property controls is a breath of fresh air. I think we need to see more of that.

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

Thank you.

I appreciated your comments during your exchange with Mr. Gaheer about ensuring that we have the conditions to foster competition. I don't believe we have those conditions, especially in the retail grocery store sector in our country. That is why I am pessimistic about any of the provisions our party has even agreed to support to reduce the costs that Canadians are seeing at the grocery store. I think it's going to take a while to see competition come forward in this sector.

What are a couple of key things that come to your mind about ensuring that the conditions for competition emerge?

[Dr. Sylvain Charlebois]

Address interprovincial barriers as soon as possible. We need to deal with that. Talk to any agri-food company, including in your own riding, I suppose, in the Fraser Valley. It is easier to do business with the United States than with other provinces. That's a really big problem.

In Nova Scotia, right here, we have lots of great businesses, but they can't expand, because of some of these barriers.

That's certainly the one thing I would do as quickly as possible.

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

Thank you.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Vis.

Next is MP Turnbull for five minutes.

[Ryan Turnbull, Liberal, Whitby, ON]

Thanks, Chair.

Thanks to all of the witnesses for being here today. This is an important conversation, as are many that we have here at the INDU committee.

Mr. Péladeau, I'll start with you, perhaps. I note that a recent media article just yesterday reported that the Federal Court judge ordered both parent companies, Loblaw and Sobeys, to hand over documents to Canada's Competition Bureau, which is consistent with the new power that our work together in Parliament gave to the Competition Bureau. This is to compel documentation and do deeper market studies, which I think we've all noted is a good thing, but also to investigate cross-industry collaborations that would be considered anti-competitive.

I think you're dealing right now with a very similar situation. In this particular one that I'm referencing, it's property controls. Can you speak to the fact that the Competition Bureau now has this new power to investigate and compel documents, which is being upheld by the courts? I'm sure you can agree that, in your circumstance that you've brought to this committee, this is a positive development in the bureau having more teeth to address the issue that you've come here to speak about.

[Pierre Karl Péladeau]

Yes, the more tools you can offer the Competition Bureau to investigate a specific situation, the more efficient they will be to make sure that anti-competitive measures will be prohibited and sanctioned. I would say that the best is to come, if they have the capacity to do so.

I reiterate that on top of that, at the end of the day you need to have the leadership, which is paramount to make sure that the law will be applied. If they don't have something that will force them to act, it's a question of priorities. They'll go on regarding the means they have and the priorities they establish. Therefore, if in some aspect of the daily life of consumers in Canada, they consider this not to be important, then it's not going to be on top of the file, and you'll wait until it's the pleasure or the sentiment of the management of the bureau to consider it.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you for that.

Mr. Sylvain Charlebois, I'm going to ask you a similar question about Bill C-56. The example that I have given is a recent report where the Federal Court judge has upheld in a way the new powers that Parliament has given the Competition Bureau.

We know, or at least the Competition Bureau suspects, that there are anti-competitive practices within those property controls that are embedded and that, in some cases, Loblaw and other companies have substantive stakes in the REITs that control the plazas and shopping centres.

Essentially there are covenants and requirements within there. There may be ways that they are blocking—or it's embedded in those contracts that they are blocking—competitors from operating within those same plazas.

Can you speak to the fact that the Competition Bureau now has this new power? Do you see this as a positive sign that an investigation can go deeper into what's really going on in those collaborations that may be anti-competitive?

[Dr. Sylvain Charlebois]

I would say that it is a step in the right direction, for sure.

Here's what I think is going on here. On the one side, you have grocers who I think firmly believe that what they are doing is right and legal, because a lot of people know that these things have been going on for a very long time.

I have been studying food distribution for 25 years. I don't remember the first time I heard about these practices, and these practices have been normalized over the years. Now what we're seeing is a public that has become less tolerant of some of these practices. They have come to light because of higher food prices, and people are expecting something different.

That's where I think the Competition Bureau has a role to play to really set a different tone to create that cultural shift within the industry, saying to grocers that while this was probably socially acceptable in the past, it is not anymore.

[Ryan Turnbull, Liberal, Whitby, ON]

Yes.

[Dr. Sylvain Charlebois]

I think that's what Mr. Péladeau is talking about, that leadership that could bring grocers to realize that they are not in Kansas anymore.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

I think that's a good sign, and it's good to hear that both witnesses today agree with that change.

One other notable change in Bill C-56, a government bill, is the repeal of the efficiencies defence, which, under merger review for a long time, was used as a way to justify mergers that would otherwise be considered to substantially lessen competition.

Would you agree that repealing the efficiencies defence, which is a tool that was used to justify mergers that often increased the concentration in markets, is a good thing for increasing competition?

[Dr. Sylvain Charlebois]

I would say yes. I believe that the food distribution landscape in Canada would be very different today if that had happened, I would say, before 1998, when Provigo was acquired by Loblaws; and in 2005, I believe, when A&P was acquired by Metro; and in 2013 when Sobeys acquired Safeway.

Those three specific acquisitions wouldn't have happened if Bill C-56 had been approved or ratified before 1998.

[Ryan Turnbull, Liberal, Whitby, ON]

Just building on that, I know that the really reputable lawyers and witnesses we had earlier in the week spoke of Bill C-352 as perhaps inadvertently reintroducing the efficiencies defence back into competition law, and that's something that hasn't been done. It's one of the questions that still sits. There were three questions, and maybe if I get another chance to ask questions, I will focus on the other two.

I think you would agree, based on your testimony, that reintroducing the efficiencies defence back into competition law would be going backwards in time and not be conducive to increased competition.

[Dr. Sylvain Charlebois]

I would agree, Mr. Turnbull. I think it would be a step back, for sure.

I'm not a legal expert, and I just want to make sure that people know that. I look at food distribution as a social scientist and economist.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you, sir.

[The Vice-Chair, Conservative, Rick Perkins]

Thank you, MP Turnbull.

MP Garon, you are up next.

[An hon. member]

[Inaudible—Editor]

[The Vice-Chair, Conservative, Rick Perkins]

No, you're right. It's MP Williams. I'm sorry. I was too far down the list already.

[Ryan Williams, Conservative, Bay of Quinte, ON]

You're doing a great job otherwise, Mr. Chair.

[The Vice-Chair, Conservative, Rick Perkins]

MP Williams, you're up next for five minutes.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you, Mr. Chair.

Mr. Charlebois, the Grain Growers of Canada revealed today that the capital gains inclusion rate changes will increase taxes by 30% on family-run grain farms—30%. They talked about this being an impact on those farms as a whole. The question I have for you is this: Do any increases on farms like those of the grain farmers of Canada find their way down to the grocery stores, yes or no?

[Dr. Sylvain Charlebois]

Is that for the capital gains tax specifically, Mr. Williams?

[Ryan Williams, Conservative, Bay of Quinte, ON]

Yes. The Grain Growers of Canada specifically revealed that the capital gains inclusion rate change will result in a 30% increase of taxes to those farmers.