44th Parl. 1st Sess.
June 3, 2024 11:00AM
- Jun/3/24 7:16:25 p.m.
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Madam Speaker, today at the Standing Committee on Industry and Technology, we welcomed Pierre Larouche, a world authority on competition law. He has been a professor at the Université de Montréal for seven years, but he had a long career in Europe and has trained other leading figures in competition law in Europe. He told us that, in Europe, the average profit margin in the grocery sector is about 3%.
Our neighbours to the south might want to set up shop here in Canada because the average profit margin in the U.S. is 2%. It is not surprising that they can survive with such low margins, because it is a volume market there. We have very few players, yet they feed an entire G7 country. Profit margins are high. That is a symptom of the lack of competition. There were a lot of companies 25, 30 or 40 years ago, whereas there are very few today, and they have higher profit margins than our neighbour to the south. This is reflected in prices and possibly results in higher prices for consumers.
The NDP got it right: Food and rent are the biggest household expenses. It is important, here at the federal level, that we study this issue within the context of federal jurisdiction. Competition falls under federal jurisdiction.
Now, it is worth noting that some progress has been made. Bills have been introduced. The Canadian competition regime was partially reformed this year and changes were made to the rules around competition. The commissioner of competition has been given the power to investigate for the first time, as well as the power to subpoena. In the future, the commissioner's office will be able to initiate its own investigations, particularly in the food market, and it will also be able to force companies to hand over documents. Canada's competition regime was extremely outdated. It still is in many respects, but we are moving from the Stone Age to the Iron Age, to some degree, in terms of competition statutes in Canada. In the past, the commissioner might tell a company that he wanted to see its numbers, but all the company had to do was not answer the phone, and that was the end of it.
The commissioner's investigative power was expanded. He was given the power to subpoena. The definitions of anti-competitive practices, including for commercial leasing, was changed. From now on, grocery stores will no longer be able to strike a deal with a shopping mall owner, where the grocer agrees to operate its store in the mall, provided the mall owner does not rent any space to another business that provides food or grocery services. These are anti-competitive practices. Canadian law had not been modernized, but these businesses, having failed to innovate on everything else in many ways, innovated when it comes to their anti-competitive practices. Which is why this change was made. The Bloc Québécois had long been asking for that change and we commend the efforts of the Minister of Innovation, Science and Industry.
Bloomberg recently said that Canada was a good place to invest. The government brags about it almost every question period. Despite that and despite the fact that profit margins at grocery stores are higher in Canada than they are in the United States, we were surprised to learn that the U.S. companies, foreign entrants, did not want to set up shop here and create competition. This raises a lot of questions, which, I think, should be studied in committee.
Are there regulatory barriers that prevent these companies from investing here? Are there barriers to investment that prevent these companies from investing here? What are the institutional data that explain the fact that Canada, despite its high profit margins, is unattractive to U.S. companies south of the border, whose profit margins are two to three percentage points lower? I think that we need to answer those questions.
I know that we are debating a committee report on a special tax, but we could debate at length the effect that a special tax would have on grocery stores' excess profits and whether it will be passed on to consumers. We could debate that at length, but one thing is certain: It will not resolve the competition issue. If we impose a special tax on these companies' excess profits tomorrow morning, it will not bring in new companies, it will not open new grocery stores and it will not increase competition. We will also still be obligated to implement the same temporary measure next year, in five years, 10 years or even 15 years. The diagnosis is clear. The state of competition has been in decline for the past 30 years, and it will continue to decline. We cannot just come up with a band-aid solution. We need to get to the root of the problem.
I think the Minister of Innovation, Science and Industry needs to be asking himself these questions. He has been running all over the United States, meeting with grocers and asking them to come open stores here. That is not how investment is supposed to work. Investment is supposed to be attractive. We have yet to announce how we will be voting on this committee report. There are several hours of debate left. We will be listening. The Bloc Québécois still has a lot of thinking to do.
However, it should be noted that the Conservatives have tabled an amendment calling for this report to be referred back to committee, so that the committee can study alternative solutions to the food inflation problem, including axing the carbon tax. My grandfather had an expression that I liked a lot. He used to say that if the only tool you have is a hammer, you think everything is a nail. That is the problem with the Conservatives. The carbon tax is the only thing they have to talk about. It could be the solution to menopause, it could be the solution if your car breaks down. Axing the carbon tax is the solution to everything.
I encourage the Conservatives to think about their amendment. We cannot send a report back to committee and ask it to take more time, do more analyses and push for solutions because food is a major and vital expense for Quebeckers and Canadians. We cannot say that we need that done in a non-partisan, constructive way and then turn around and include the most partisan nonsense on earth in the motion, while telling the committee that instead of reflecting in earnest, it should take this trivial partisan line and make that the focus of its reflection.
This is actually a great initiative by the NDP. It still needs some fine tuning, but eventually, we will have to turn our attention to the state of competition. Guess what? Axing the carbon tax for three or four months will not reopen a single grocery store in Quebec.
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- Jun/3/24 7:27:40 p.m.
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Madam Speaker, I am pleased to be debating with the NDP today because they are once again proving my point.
The member says that in France, the finance minister gathered 75 people in a room to negotiate. There is so little competition here that there were five people in the room. They could have fit in a cubicle here in the back of the lobby. We clearly do not have the same market structure at all.
The profit margins are higher here. The land area is bigger and it is less densely populated. We have a fundamental issue with competition. What I was saying to the member earlier is that I think that it is a good idea to think about this, but until we find a way to ensure more competition, more innovation and more supply for consumers, we will go from one temporary measure to the next. There are other anti-competitive behaviours. The grocery stores here are all the same. The service offering is identical almost everywhere, and the supply of products is identical everywhere.
I think we need to think outside the box and spend a lot of time on this. The member can count on me to be part of that.
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- Jun/3/24 7:38:15 p.m.
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Mr. Speaker, in his speech, my colleague mentioned that consumers will not be able to enjoy lower prices unless new competitors enter the market. I would like to know why he thinks new entrants are reluctant to invest in Canada.
Why is our industry minister always travelling, chasing grocers south of the border? Is that not proof, in and of itself, that there are significant barriers, primarily regulatory ones, that discourage people from investing in Canada?
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- Jun/3/24 8:05:32 p.m.
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Mr. Speaker, that is exactly the point. We do have a massive concentration of grocery chains in this country, and the response from the Liberal government has been to just ask them politely to stop gouging Canadian consumers. That is absolutely unacceptable and one of the reasons why I am so critical of the Liberal government in this regard. The minister of industry asked them politely, and it did not change anything at all.
What it takes is action. Other countries have taken action by having an excess profits tax and by having an enhancement for competition, just as the member for Burnaby South, the leader of the NDP, has brought forward for the Competition Act, so that the Competition Bureau can actually take action against the rise in prices that are simultaneous and, obviously, in a very real sense, price-fixing. We saw this when it came to the great bread price-fixing saga. This happened under the Conservatives, and they did not take any action at all. The Liberals finally did. I will give them some credit for that, but the reality is that the cost of what was gouged, or stolen, was an average of $400 from every Canadian family. My colleague from the Bloc said we cannot say “steal”, but the price-fixing majors, the grocery giants, stole an average of $400 from every Canadian family. That was price-fixing. They raised the price of bread and they stole $400 from every Canadian family over the course of a number of years. That is theft.
What it takes is a government that is willing to stand up to the grocery chains, willing to legislate against them and willing to implement those tools, including an excess profits tax and enhanced consumer protection legislation, and then basically telling the CEOs that unless they stop gouging people, the government will take action, as it has all these tools in place. We know that did not happen under the Conservatives. It has happened very rarely under the Liberals.
What it will take is an NDP government that actually stands up for working people. We are prepared to do just that.
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- Jun/3/24 8:51:42 p.m.
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Mr. Speaker, I did answer my colleague's question. The reality is that if companies try to gouge again and pass those costs on to consumers, the excess profit tax kicks in. That is why, during the Second World War, the excess profit tax that was put into place as a tool at that time did not ignite or engender any passing on of those costs to consumers. It is the same principle, so I did answer his question.
My question for the member is this. Given Conservatives are refusing even to participate, as they are not in the House, and are refusing to talk about the issue of school lunches—
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