Speaking notes for Sheridan Scott Commissioner of Competition

Study of the pricing of Beef at the Slaughter, Wholesale, and Retail Levels, in the context of the BSE crisis in Canada

Remarks to the
Standing Committee on Agriculture and Agri-Food

Ottawa, Ontario
Feburary 16, 2004

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Thank you Mr. Chair and members of the Committee for inviting me here today. I welcome this opportunity to discuss the Competition Bureau's role with respect to the important issues facing the Canadian beef industry. Joining me today are Richard Taylor, Assistant Deputy Commissioner of Competition, Criminal Matters Branch and Suzanne Legault, Assistant Deputy Commissioner of Competition, Legislative Affairs Division.

I understand we have been invited here today to discuss your request that the Bureau "conduct an investigation into the pricing of beef at the processing and retail levels," as specified in Recommendation 7 of the November 2003 Committee Report.

Having read the transcripts of your Committee hearings as well as those of the recent special debate in the House of Commons, I can certainly understand your frustration about the difficult situation that is confronting our country. Canadian producers are suffering from the catastrophic results of the two BSE cases and the closing of the border. Canadian consumers are concerned about beef prices at the retail level. And many other sectors of the economy have been dramatically affected by the discovery of BSE in North America and the subsequent changes in the market.

Before I address the particular relevance of the Competition Act to these issues, allow me to say a few words about the legislation in general and the framework within which I operate. The Act's purpose is to maintain and encourage competition in Canada. The Competition Bureau's objective is to ensure a competitive marketplace which provides consumers with competitive prices and product choices. Our work promotes the efficiency and adaptability of the Canadian economy and allows small and medium sized enterprises an equitable opportunity to participate in the economy.

This is a sizeable mandate, but the Act does not give the Commissioner unlimited powers. As Commissioner, I work within a very specific legal framework which includes reviewing mergers and other agreements, acting to prevent abuse of dominance by firms which have significant market power and preventing false and misleading advertising. Perhaps of greatest relevance to the questions raised by this Committee, I have specific authority to pursue incidences of cartels and collusion.

However, I should note that the Act no longer authorizes the Commissioner to conduct general inquiries into issues of competition in industries. Such a power has been proposed by the Industry Committee of this House, and the Government has undertaken consultations with stakeholders on the proposal.

I would now like to say a few words about the application of this legislation to the issues you have been discussing. I should emphasize that the Competition Act is a law of general application and as such it applies to the Canadian beef industry. Any complaint of a potential contravention to the legislation is considered. Such consideration involves a review of the facts identified by the complainant and may involve further investigation by the staff of the Competition Bureau such as the examination of public data or consultations with other industry sources. In some circumstances, I can take the further step of proceeding to a formal inquiry under Section 10 of the Act. Once I proceed to this stage, the legislation provides for additional, more intrusive enforcement tools, such as search warrants.

Since my arrival as Commissioner of Competition five weeks ago today, I have been closely following developments in the beef market in light of my mandate and responsibilities under the legislation. My staff have been active on this file. We have carefully reviewed publicly available information such as: the extensive report prepared by the Quebec Government entitled "Rapport sur l'évolution des prix de la viande bovine durant la période du 20 mai au 30 août 2003; " the report of this Committee dated November 2003 as well as the transcripts from your hearings. We have consulted other sources such as Canfax and Statistics Canada data. In addition, we have reviewed information provided by complainants, experts and industry sources.

On the basis of the information available to date, I have no reason to believe that the Competition Act has or is about to be contravened. That being said, I would like to assure the Committee that I continue to examine this important issue that is so critical to this Committee, farmers and ranchers and Canadian consumers and I will not hesitate to take appropriate action if I uncover information which points to a potential breach of the Act.

Mr. Chair, we would be pleased to respond to any questions you may have.