I cannot give it to you for Japan, but I can give it to you for Russia. Prior to the war, and in fact up until 1954, Canada was Britain's leading supplier of softwood products-lumber, shingles and material of that kind. That is, as late as 1954 it was the leading supplier. By 1957, Canada's share of the United Kingdom imports had dropped to 14.7 per cent and Canada's position was that of fourth place supplier of products to the building industry in Britain. We had been replaced successfully by Sweden, Finland and Russia. During this period when Canadian sales were dropping off the Soviet of Russia had increased her sales from one tenth to one fifth of the total of United Kingdom's softwood importation. In the case of the Swedish and Finnish importers they were trading at a profit.
Notice the distinction there, and it is developed later on, that the Swedish and Finnish exporters were operating at a profit. The implication is that the Russian exporters were not operating at a profit, and this is developed later on. I continue the quotation:
Their objective was to make a profit, but their operating costs were lower because wages were lower. That was not so in the case of Russia, when they came in and took that market. I am reliably informed by an official of the Department of Trade and Commerce-this can be checked by reference to the minister or other officials of that department-that the Russian technique in invading the British market is that they will come in with a particular type of lumber which is in demand, and even though the lumber may be needed at home in Russia, they will quote to supply the whole demand at a price that is better than the Canadian price for a particular kind of lumber.
I imagine when he uses the word "better" he means lower.
It is even better than the Swedish and Finnish prices in some cases. Then if you repeat the order they will give you a further reduction. That is not done by any cartel. That is done by a government trade agency. Does that answer your question?
He went on then to deal with another matter. I should like to point out that our problems and difficulties in the export markets could not be even partially solved by the amendment before us now to exempt export activities from prosecution under the Combines Investigation Act. 1 refer particularly to our difficulties in so far as the Soviet union is concerned. Mr. Nicholson has pointed out here the manner in which the Soviet undertook to export lumber to Great Britain,
thus cutting into the amount of lumber that had been exported from Canada prior to 1954. I have not been in Russian nor have I worked in industry there, so I have no personal knowledge of these facts, but it is generally understood that Russian exports are controlled by a state organization. They have no worry about profits; they have no worry about costs of production; they have no balance sheets which have to be totalled up. The cost of production can be absorbed by society as a whole. The selling price in the world market means, in fact, relatively little.
Canada cannot possibly compete with the Soviet union in world markets because of the system under which the Soviet operates. When it comes to Sweden and Finland undercutting us because of wages, that is another matter. The natural implication of Mr. Nicholson's remarks is that if wages are the only factor, then one solution perhaps would be to reduce wages here to a point where they were comparable with wages in other countries so that we would be able to compete on price. Alternatively we could increase our productivity to the point where we were producing units of wood or whatever it was, say 1,000 board feet of lumber or squares of shingles, at lower per unit costs and then we would be in the position where we could compete. None of these things can be accomplished by an amendment to the Combines Investigation Act.
If it is desired to tackle this question through the Combines Investigation Act, then this amendment fails to meet the problem because it refers only to those exemptions connected with price conspiracy under section 32, which covers agreements between so-called competing corporations. There is no reference whatever in the minister's amendment to the activities of monopolies in the export market. It is true that a monopoly, because there is only one corporation, would have difficulty in conspiring with itself to set prices. It is an automatic action that a monopoly takes to meet these conditions. However, a monopoly does operate in the export markets, and that fact is not dealt with in this amendment.
Then we have to consider the problem of the merger of two companies in the export field. Suppose there were two competing firms, Anglo Canadian Fish Company and B. C. Packers or any other two fish companies or two lumber companies, which entered into a conspiracy in relation to the export of articles, and that conspiracy had no deleterious effects on the domestic market. For the sake of argument let us say that the conspiracy with regard to the export market was protected by the proposed amendment
Combines Investigation Act to add subsections 4 and 5. These two companies merge, and they are still engaged in export trade. There is then no conspiracy, because the companies have merged and there is now a monopoly or price leadership situation. What is the position of these companies in so far as the Combines Investigation Act is concerned?
As I understood the amendment originally proposed by the hon. member for Bonavista-Twillingate in the banking and commerce committee, it dealt with mergers and monopolies as well as price conspiracies. It appeared to cover the whole range of illicit corporate activities with which this Combines Investigation Act seeks to deal, apart from the resale price maintenance and price discrimination provisions. These are matters which I think should be dealt with and answered.
There was one other matter which I raised and upon which I was not satisfied with the answer given to me by the minister last evening. I think perhaps the point I made is still valid and I should like to reiterate it. In paragraph (c) of the proposed subsection 5 which is before us it is stated:
(e) has restricted or is likely to restrict any person from entering into the business of exporting articles from Canada;
My contention was that there could be some conflict between that provision and the provision in subsection 3 of section 32, which reads in part as follows:
-has restricted or is likely to restrict any person from entering into or expanding a business in a trade or industry.
It was my thought that the minister should have included these words "or expanding a" also in (c). The minister maintains that these things are dealt with in other paragraphs. He mentioned that paragraph (a) contains protection in this regard when it talks of reduction or limitation of the volume of exports of an article. I believe he also made reference to paragraph (b) in which the language used is:
-has restrained or injured or is likely to restrain or injure the export business-
It could be interpreted to mean that if it prevented the expansion of business, therefore it meant to restrain or injure the export business of any domestic competitor who is not a party to the conspiracy, but I think for soundness and for sense my suggestion should be followed. There is a connection between the activities of corporations which conspire to set prices, to limit production, to limit supply or to do any of the other things prohibited in subsection 1. There is a connection as to whether these activities are in the export field or whether they are solely in the domestic field or whether they are
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Combines Investigation Act all one or a bit of each. There is a close connection. It is very easy for the activities in the export field to spill over into the domestic field and to injure trade or commerce in Canada internally as a result of their extraterritorial designs and activities.
I think it would be best to place these words "or expanding a" in the subsection so that it reads substantially the same as subsection 3. It is dealing with the same thing. The minister started off in subsection 4 by relating it to a paragraph in subsection 1 and saying that in any prosecution under the subsection a corporation may be convicted if certain things take place. This is the same argument or the same thought that is expressed in subsection 2 where it refers to a prosecution under subsection 1. They are relating to subsection 1 in each case. Subsection 3 indirectly relates to subsection 1 because it talks about entering into or expanding a business. I think these things all have a connection with the basic prohibition against conspiracy to injure trade, fix prices and so on.
Accordingly in this regard, Mr. Chairman, I think I should formally place this matter before the committee by moving:
That the amendment be amended by deleting in line 2 of paragraph (c) the word "the" between the words "into" and "business" and substituting therefor the words "or expanding a".
In my view this amendment would bring the provisions or the words in line with those in subsection 3. I do not think it would have as great a tendency to leave the court in the position of wondering whether we meant something different, as to the activities of a conspiracy and their effect on the export market, from what we meant when we were talking about a conspiracy to exchange statistics internally and its effect upon the domestic market.
If it is the intention of the minister that he means something different, then that is another case entirely, but it appears to me that we are getting at the same thing. It seems to me that the minister wants to ensure that if there is a conspiracy on the export market, this should not have any detrimental effect internally, within the nation. Such being the case I think this suggestion should be adopted, for the sake of consistency and in order to make it easier for the courts, if a case such as this gets into the courts, to determine just what parliament was getting at when it drafted these particular words.
Topic: COMBINES INVESTIGATION ACT-CRIMINAL CODE AMENDMENTS RESPECTING MERGERS, MONOPOLIES, ETC.