A solo voice in an uncompetitive land

November 17 1980

A solo voice in an uncompetitive land

November 17 1980

A solo voice in an uncompetitive land


Robert Bertrand

As multimillion-dollar mergers and take-overs become commonplace front-page news in Canada and as an even larger share of the economy falls under the control of fewer and larger interests, the corporate giants of the nation's boardrooms find themselves facing an unlikely adversary.

He is a civil servant with a very special mandate. As assistant deputy minister in the Bureau of Competition Policy,

Robert J. Bertrand,

1+7, reports to his minister, André Ouellet. As director of investigation and research at Consumer and Corporate Affairs, he reports to Parliament.

In the past few years, Bertrand has been increasingly vocal in his criticism of the growing trend to corporate concentration in Canada and the legislation that permits that trend to grow. At the moment Bertrand is acting under the Combines Investigation Act to examine the Thomson and Southam newspaper chains in the wake of the recent closings of the Ottawa Journal and The Winnipeg Tribune. He was interviewed for Maclean’s in his Hull, Quebec, office by Elizabeth Gray.

Maclean’s: Given our national inclination towards public enterprise and government intervention, why do you think we have such weak competition legislation in Canada ?

Bertrand: I think they’re both related. In Canada we have always sat between two chairs where competition is concerned, exactly as if we are not convinced that competition is a good thing. Essentially our law and history have developed through good co-operation between corporations and the state. Our country was built on this: Canadian Pacific and the opening of the West; Hudson’s Bay and its land acquisitions. Whenever there has been a large undertaking the state has done it in co-operation with large corporations. Unlike the Americans, we don’t regard this relationship as bad. It’s an accepted fact of life here.

And those corporations who have this relationship with the state are by definition large corporations and relatively immune to competition.

Maclean’s: And our answer to problems in the private sector historically has been to take over that sector,

rather than encourage competition? Bertrand: Yes. Either take it over or regulate it. In Canada we have shown a great willingness to displace competition in favor of other policy goals, such as employment, or research, or industrial strategy. Marketing boards, for example, were a solution to agricultural problems. And seldom is there a public outcry.

Maclean’s: What's the most important failing of our competition legislation at the moment?

Bertrand: I think it is the criminal stigma attached to any prosecution in a matter of merger or monopoly. The law now says that when any large corporations merge, we have to prove they are criminal rather than civil transgressors. And that’s difficult to prove in court because, as I’ve said, we’ve never been all that keen on competition in Canada. Why should the courts reason any differently than the public? So the courts are very demanding about the burden of proof.Essentially we shouldn’t be looking at these activities as crimes,

or branding individuals as criminals. If you look at the development of merger law in the U.S., and they had about the same situation as we have in Canada, their development was really the result of civil litigation. You have only to look at a few decisions of our Supreme Court to see how difficult it is to win in court on merger law, for instance. Our courts have been very conservative, and in a sense they are reflecting Canadian society. American courts have not been afraid to develop the law. Civil rights decisions, or busing, for instance, are really judge-made law. And they do it conscientiously. Maclean’s: What

about the argument that big chains are stronger than their weakest links, that, their size enables them to prop up those weak links? Bertrand: Yes, I

have heard that argument.

Maclean’s: I'll bet

you have!

Bertrand: I’ve also seen newspapers being closed.

Maclean’s: So is the argument a lot of hot air?

Bertrand: Well, it may be that the chains are willing to support a weak member when it’s to their own particular advantage or else just for the short term. But when it becomes a matter of dollars and cents in several millions, the principle might be set aside a bit. Maclean’s: What is your relationship to the Restrictive Trade Practices Commission [a quasi-judicial body concerned with goods supply] ? I know it is independent both of you and of government, but it is also something of a sounding board for you, isn't it? I'm thinking of your recent attack on Bell Canada’s relat ionship with its 60-per-cent-owned subsidiary, Northern Telecom Ltd. Bertrand: Yes. A sounding board perhaps, but it also acts as a watchdog on my powers. I cannot search premises for evidence or subpoena witnesses without the approval of the commission. In the case of Bell-Northern, the CRTC is func-

tioning as a tribunal and its decisions are subject to appeals to cabinet. We’ve been calling witnesses to those hearings over the past four years to make our case that the Bell-Northern relationship should be severed and that Bell should adopt a more liberal attachment policy.

Maclean’s: Is Bell a special case given what you've described as the Canadian government 's historical fondness for big corporations?

Bertrand: The size of Bell ... its relationship with its subsidiary . . . and the position of that market in Canada all make it something very special. Bell is

‘We’ve never been keen on competition in Canada ’

making it difficult for any Canadian manufacturer to put a product on the market because it buys almost everything from Northern. There are lots of examples of producers who have better products, but Bell won’t attach them to its lines. Mittel, for example, has good switchboards which sell well everywhere except in Canada. We argue it is not in the best interests of the country to have such a purchasing power dictate what the structure of industry should be. And if it were to have to compete, I’m not afraid that Northern will disappear! Everyone in Canada looks up to Northern. And it is expanding very well against competition in the U.S. So why not here? Our present law does not take into account the need for an industrial strategy that will ensure resources in Canada are used in the best interests of the nation.

Maclean’s: Your minister, André Ouellet, has promised we will soon have legislation with teeth. But successive governments have promised that and still caved in to the business lobby. Why

should we believe him now? Is the climate changing?

Bertrand: Yes, perhaps. For one thing, large corporations are no longer as immune to mergers as they were. In the past five years we’ve seen take-overs involving hundreds of millions—some of the companies we thought were too big to be acquired, our sacrosanct institutions. We’ve seen the emergence of the private wealth of a single individual like Ken Thomson. The Bay goes one year; newspapers the following year. We might well ask what’s next year? Not even the largest corporations, like Canadian Pacific, are immune to takeover attack by private fortune. Maclean’s: Do you perceive a split developing in the business lobby, between large and small sectors?

Bertrand: Yes, in some respects. Because the economy is not expanding as-it once was, the larger corporations can no longer afford to be benevolent towards their small competitors, a kind of liveand-let-live approach. Under pressure from their shareholders they are now looking to the small and medium-sized firms as targets for expansion. Our legislation should not endorse the law of the jungle. It should protect small enterprises from being absorbed by bigger ones as soon as they become innovative. Maclean’s: Is public opinion with you, do you think?

Bertrand: We used to think the public was only concerned for as long as a merger was front-page news. But now mergers are so frequent that I think the public is staying concerned for longer and old attitudes are beginning to change. For example, competition policy was on the federal-provincial agenda at the last conference; it has never been part of those negotiations before. Competition is an essential element in Confederation. You can call it a common market or a federal state or whatever you like—but you can’t have it without a strong competition principle, and there is greater awareness of that now.

Maclean’s: What about the parliamentary agenda? Are you optimistic about new, tough legislation there soon? Bertrand: I have known André Ouellet for many years and his skill and knowledge of the parliamentary process would lead me to believe that if he says he will, he will. For me, there’s something to be done to stimulate public discussion. I believe competition policy is an essential element in the political process, and also an essential element in our economic life in Canada. We’ve reached a stage where we are maturing and we don’t need to remove competition as before. I think that, having become an adult nation, we have to be able in this country to face the world and stop being protected.