Statement for Presentation in the

House of Commons

Bill C-235

May 26^th, 1999

Paul Steckle, M.P.,

Huron-Bruce

Mr. Speaker:

I am pleased to rise today to address a matter that has again been brought to the attention of the Members of this place. As the Victoria Day long weekend has only recently ended, I find it fitting that we are again examining the price policies of Canada’s major oil companies.

Mr. Speaker, exactly one year ago tomorrow I spoke in this House, on this same matter. At that time, my colleagues and I engaged in an energetic and productive debate. We explored what we believed to represent every legal facet and regulatory implication conceivable but Mr. Speaker, the fact remains that today we are still faced with the same problem. Our “mom and pop” style gas vendors are closing and we may not have another year to stop it. We need to take action now.

This entire issue seems to have induced public anger, as only a few other issues have been able to do. I am certain that this translates into a simple matter of economics. Basic physics tell us that, for every action, there is an equal and opposite reaction. Essentially, if you hit the consumer in the pocket book without appropriate justification, you can be assured that there will be a very clear and potentially angry response. Canadian public opinion is clear. Gas consumers are demonstrating that they resent unfair predatory pricing policies.

It is for the reasons that I have just outlined, that I am pleased to lend my support to this Private Members Bill.

On a historical note, Bill C-235 was first introduced to the Thirty-fifth Parliament, in 1997, as Bill C-238. Unfortunately, the Bill had not yet been fully considered when the House dissolved for the 1997 election. As a continuation of that process, the Member for Pickering-Ajax-Uxbridge re-introduced the aforementioned measures with the hope that we would have the opportunity to fully debate them.

Mr. Speaker, at this point I would be remiss if I failed to acknowledge the tremendous initiative and leadership demonstrated, with respect to this matter, by the Member for Pickering-Ajax-Uxbridge. Not only did this Member commit to the establishment of the Caucus Committee on Gasoline Pricing, but he also agreed to act as our Chair.

As you know Mr. Speaker, all Parliamentarians have a demanding schedule. As Committee Chair, the Member was guaranteed long and irregular hours, a hectic travel schedule and an endless barrage of what was, at times, a hostile media assault. Despite the drawbacks, the Member for Pickering-Ajax-Uxbridge stood firm. Without his determination and guidance, I know that the so-called “Gas Caucus,” would never have come to fruition.

With respect to the matter at hand; Bill C-235 would establish a legislated basis for the enforcement of industry wide, fair pricing policies. I submit that the proposed measures would go a long way toward improving the industry’s rapidly emerging anti-competitive atmosphere however, these concrete and long-overdue alterations also promise to have a profound, trickle-down effect at the pumps.

In an effort to promote fair pricing rather that just cheap pricing, Bill C-235 clearly establishes regulations for a manufacturer who sells a product, at the retail level, and one that sells either directly or through an affiliate while at the same time supplying the product to a customer who competes with the supplier at the retail level. To simplify, this Bill will give the customer a fair opportunity to make a profit similar to that of the supplier hence ending the practice known throughout the industry as “predatory pricing.”

In addition, this Bill also establishes a policy of governance that labels any supplier who attempts to bully or coerce a customer, in the establishment of retail marketing policy, as one who has committed an anti-competitive act. That in a nutshell, is what this legislation aims to curtail.

The Liberal Caucus Committee on Gasoline Pricing has extensively toured this country to conduct a comprehensive series of public hearings. Further to that, when in Ottawa, we devoted a considerable portion of our efforts and time to direct consultations aimed at providing us with access to a wide cross-section of the opinions held by consumers, by retailers, by wholesalers and by specialized interest groups. I learned a great deal from those consultations. Needless to say, there is vast process that occurs between the well and the pump. Gas is big business and I must say that one of the most common sentiments expressed to us, was a sense of fear, resulting from, the rapidly depleting pool of competition within the industry.

As each of us is aware, the Department of Industry holds the primary responsibility for ensuring that the provisions of the Competition Act are enforced. Eventhough the Department has conducted numerous investigations into specific case violations of the Competition Act, I fear that this would be similar to arming our current, active-duty military personnel, with only black powder muskets. In essence, the musket was at one time the most effective tool available to the police and to the military however, that is no longer the case. It’s not that the musket operates any differently today then it did a hundred years ago but, because the situation around us had changed so dramatically, we needed to develop new ways to deal with the new problems that we were faced with.

This analogy applies to the Competition Act more that most of us would admit. The Canadian oil industry looks very different today, then it did only a few short years ago. This has occurred, in part, as a result of the aggressive tactics and the predatory pricing policies of the industry majors. The resulting instability has placed the smaller, independently owned dealers, in serious jeopardy of going the way of the Dodo. One might wonder why Parliament should concern itself with the loss of a private, small and independently owned business. The fact is that the loss of one outlet does not impact tremendously when viewed in the context of the grand scheme of things however, when we start experiencing the loss of hundreds, alarm bells should start ringing.

What we are talking about is a matter of an emerging monopoly. The industry majors will freely admit that the little guy is their best single source of competition. It could be said that the little guy is the most effective method of keeping the bigger guys honest. Considering this, would it not stand to reason that each time the market loses an independent, the safeguard is weakened?

Mr. Speaker, I regret to inform you that, over the course of the last twenty years, a disturbing trend has emerged within the industry. We are rapidly losing our independently owned establishments.

Some would argue that this is a result of the reduced access to capital or any number of other factors that small businesses routinely face. I would suggest that the banks won’t lend money because of the increasing risks involved. Risks that are present, in part, because of unfair competition within the market. The point being that, if we do not act immediately to rectify the problem, we run the risk of missing the boat on this issue. When the independents are gone, they are gone forever.

My point is very basic; the Competition Act, as it exists today, is not properly equipped to deal with the complicated issues being generated by this sector of our economy. The oil industry is unlike any other area of commerce. As such, it requires highly specialized rules of governance, rules such as those contained in Bill C-235. Bill C-235 is not a blanket solution for all of the regulatory problems that face us. It is an important first step. We need to take the initiative and move forward with this step now.

I recall the gas prices of last summer and how my constituency office was flooded with angry calls demanding that I do something to combat the exorbitant and rapidly fluctuating pump price of gasoline. Unfortunately, I could do little to ease the concerns of my constituents as the Competition Act only applies in instances of collusion. An act which represents only a very small part of a much larger problem.

I have said it before, and I will say it again, if we opt for inaction then we opt for a continuation of the unfair, anti-competitive and highly unjustifiable pricing policies of this country’s major oil companies. That is unacceptable to me and it is unacceptable to the constituents that I represent.

I do want to clarify that I am not attempting to paint the majors as villains. What I want to do is to ensure that adequate statutes are in place to ensure that they are accountable to individuals who rely on them and their product. In rural Canada, as in many other sectors of this nation, public transportation is simply not available. Services are miles apart and therefore personal transportation is a necessity rather than a luxury. We would not stand for unwarranted and unexplained vacillation in the price of food, home rental costs, medicine or other basic essentials; so why have we accepted it with respect to gasoline?

I would urge each and every one of my colleagues to support Bill C-235. It’s a good Bill and it’s deserving of our support. This Bill is not demanding bargain basement prices, it’s calling for fair prices, high or low is not necessarily the issue. Often, as a result of predatory pricing, extremely low prices cause the most difficulty for the independents. Selling at less than the rack price allows the majors to undercut their competition hence eliminating any profit margin and, we are all aware of what sustained profit loss means to a business.

In conclusion Mr. Speaker, a continuation of predatory prices is a prime example of short-term gain for long-term pain. We have the ability to prevent a looming disaster from occurring. If we wait for all of the competition to be eliminated from the market, then what we have remaining is an uncontrollable monopoly that has the ability to unilaterally dictate the price, and availability, of one of this country’s most essential commodities. I sincerely hope that we can all exercise the leadership required to finally deal with this important issue.