Statement by Konrad von Finckenstein, Q.C., Director of Investigation and Research, Competition Bureau

To the Standing Committee on Industry

April 2, 1998

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• Madam Chairman, I am pleased to appear before the Committee in its consideration of Bill C-20 - a Bill to amend the Competition Act. I listened with interest to the questions raised on Tuesday and would like to take this opportunity to address your concerns on mergers, misleading advertising and wiretapping more fully.

• Before dealing with these specifics I would like to reiterate what the Minister said on Tuesday: The Competition Act has served Canadians well. There are probably few countries in the world where consumers enjoy more freedom of choice over the products they buy and the prices they pay. Or where Canadian and foreign businesses can count on a more stable and equitable marketplace.

• However, the face of the Canadian economy has changed and the Act needs to be updated to deal with the new realities including deceptive telemarketing, the exponential use of advertising and the mega merger wave. These amendments will continue to allow us to have one of the most effective competition law regimes into the twenty-first century.

• Our system combines criminal and civil law provisions in what is called a "framework" Act. In other words it can be fairly applied to all sectors of the economy - except where industry-specific legislation and regulations apply.

• As I mentioned, we are now in a merger wave which has catapulted the issue of mergers onto the front pages of the country. We feel that the proposed amendments to the Act will strengthen the Director's ability to assess whether or not proposed mergers are anti-competitive and to protect Canadians.

• Currently, we have to rely largely on the goodwill of those wishing to merge to work with us, to provide us with relevant information and to wait until our examination is finished before merging.

• The proposed amendments and subsequent regulations will ensure that information provided to the Bureau is more relevant and the waiting periods more realistic.

• The amendments will make it easier for the Director to obtain interim orders from the Competition Tribunal to delay proposed mergers. This will enable the Bureau to continue its examination when companies refuse to cooperate.

• While the proposals strengthen the merger review process, they also reduce the number of transactions which we will become involved with, by about 15 percent. We are also convinced that Bill C-20 will reduce the paper burden on the business community especially for straightforward cases.

• The second concern raised on Tuesday, which I would like to address, is the proposed changes to the provisions dealing with misleading advertising. The creation of two tracks, civil and criminal, will give the Bureau flexibility to deal with cases in the most expeditious manner. Under the civil regime we will be able to stop misleading advertising quickly without embarking on lengthy criminal court proceedings. However, we will not hesitate to use the criminal track for the most serious cases.

• The reasons for these changes are that the civil remedy does not have the high criminal standard of proof and is cheaper as well as faster. It will also make it easier for the Bureau to obtain temporary Court Orders to stop particularly harmful advertising.

• These amendments will not weaken our ability to deal with misleading advertising . Rather, they will continue to ensure the distribution of more accurate information in the marketplace. They will give us the necessary tools to react immediately and make us more effective by giving the court a wider range of remedial orders. Administrative monetary penalties may be imposed under Bill C-20 with escalating amounts for repeat offenders.

• Criminal penalties in the Act are retained and potential violations will be fully investigated. We will not hesitate to refer cases to the Attorney General should the facts warrant criminal prosecution.

• On Tuesday the Minister spoke about the proposed changes which will help us deal with telemarketing scam artists. We need to improve our tools used to gather evidence of this activity, which has robbed some of the most vulnerable members of our society of their savings to the tune of some $4 Billion annually. There are simply some situations where the existing provisions of the Act just does not work.

• Bill C-20 would give the Bureau the ability to use wiretapping to gather critical information in cases of deceptive telemarketing, and other serious criminal offences of conspiracy and bid-rigging . In order to use this method of evidence-gathering we will have to convince a judge that it is absolutely necessary and that the other powers under the Act are insufficient to obtain such evidence. We will not be able to wiretap without judicial consent. Rest assured, Bill C-20 will not allow us to wiretap on a whim. More detail on the strict limitations of use of wiretapping is contained in the draft guideline on wiretapping which I will distribute to Committee members.

• In summary, the amendments contained in Bill C-20 will ensure that we enter the 21st century with sound competition legislation. With laws that encourage compliance, open the way for negotiation, and yet still allow for justice to be served on those who flaunt the Act.

• The changes the Minister and I have described above are the result of extensive consultations.

• Recommendations came from managers of large corporations, small business owners, purchasing agents, consumer groups and interested individuals across the country. If they were here today, they would also tell you that modernization of the Competition Act is long overdue.

• In closing, I would like to thank the Committee for this opportunity to elaborate on key elements of Bill C-20. I would be happy to answer any of your questions.