I suggest that the
house consider the possibility of giving to the commissioner who handles this work a more direct method of action, or that we put into effect a form of action which will bring more direct results. We had presented under date of March 14, 1939, a report on the investigation of a combine in paperboard shipping containers, and if ever there was a combine
which was a combine this is one, according to the report of the commissioner. The report 6ays:
This system of control has been rigidly enforced. Deposits varying in amount from $500 to $10,000 were placed by the members with the management of the association as guarantees that prices would be maintained and that its other regulations would be observed. These deposits, in the ease of quota members, have been added to through a levy of one per cent on sales, until in 1938 the total accumulation amounted to over a quarter of a million dollars.
This is an accumulated fund, the financial backing for a combine. Further on the report says:
When these facts are considered, and when it is realized that the industry has operated until recently under a tariff protection which worked out to between forty and fifty per cent, it is apparent that price competition as a public safeguard in this industry has been all but completely suppressed by the operations of this association. Indeed it would be difficult to devise a more complete elimination of price competition in any industry than has been achieved through the operations of Container Materials, Limited, in connection with the manufacture and sale of shipping containers. Certainly nothing more complete in this respect has been the subject of investigation _ under the Combines Investigation Act since it was passed in 1923.
Then on page 86 I find this statement:
In the past five years four new corrugated box plants have been established in Ontario. The experience of one of these, O. and S. Corrugated Products Company, of Toronto, is related in section vi of this report.
Within a month of the establishment of the
O. and S. Company the members of the combination induced its owners to agree to maintain the fixed prices, and secured this agreement by offering the company a sales allotment and a guarantee that even if the company produced nothing it would be compensated to the extent of $30,000 for its first nine months with the group. The sales of the O. and S. Company dropped sharply within a month of joining. Its sales for the entire nine months totalled only $19,355. Its receipts from the members of the combination for the same period amounted to $26,128.
In other words, this company was paid for its abstention from competition.
Arrangements on a similar basis continued, with the result that in the twenty-five months period ending April 30, 1938, payments received by this company from the group amounted to 84-5 per cent of its sales. In other words, under this arrangement, for every dollar of sales made by this company it received an addition of 84-5 cents from the other members of the combination. In this twenty-five months the O. and S. Company was paid a subsidy of $69,690, largely, if not altogether, as a return for its undertaking to refrain from any competition in price with the members of the combination. This amount was paid to this Ontario company in several instalments by all the members of Container Materials, Limited, including those whose plants are located in the maritime provinces, Manitoba and British Columbia.
Further with reference to this company, we have an illustration, from the evidence of how thoroughly it took advantage of the protection which had been given to it to exact the highest possible price which could be charged. In the evidence we find a statement from the Consumers' Glass Company, dated March 23, 1936, part of which reads as follows:
Despite the fact that we have approached the carton manufacturers in a friendly way in an endeavour to work out a cheaper carton to compete with American competition, it is now quite obvious to us that the carton companies are just toying -with our problems and intend to continue to take full advantage of the 50 per cent duty their industry enjoys. The exorbitant prices paid for cartons in Canada at this time is a very serious handicap to this industry and if satisfactory price arrangements cannot be arrived at between the two industries in a friendly way, we will have no other alternative but to take more drastic measures in the future.
One might go on and quote indefinitely from this document, but it all tends in the same direction. This was an admirable investigation; certainly the matter was thoroughly investigated. The report is, I think, a very able one and is a tribute to the able and conscientious administration of the Combines Investigation Act. But the difficulty lies in the fact that although this report is dated March 14, 1939, it seems impossible to do anything with .it so far, because of course in these matters we must go before the attorneys general of the different provinces. I am going to suggest later that there be a different method of approach.
A few days ago, on May 27, Mr. Shipman, a manufacturer of paper boxes who was outside the combine, wrote a letter to the commissioner of customs and sent me a copy. I desire to quote from his letter:
On October 1, 1938, the price of liner board, for instance, was $1.56 per thousand square feet, to-day it is $1.30 per M square feet, a reduction of 16| per cent. During this same period, the combine members who, as you know', also manufacture and control the price of paper board have reduced their prices of boxes as follows: October 1, 1938, 20 per cent; January, 1939, 3 per cent; February, 1939, 5 per cent; March, 1939, 10 per cent; making a total of 38 per cent. In addition to cutting the price of boxes 38 per cent the O. & 8. Corrugated Products Company openly offer all our customers to beat the above prices by 5 per cent and in some cases more than that, bearing the cost of same, we believe, from monies received from the combine members.
I do not know whether this gentleman is right or not, but it is a suggestion that the combine continues to exist, but that, in changed circumstances, desiring now to get rid of the only competitor that remains-one of the original disturbers of their combine- they propose to put him out of business, right
under the shadow of their combine, by means of continuing reductions in prices far below a level which might normally be expected.
Surely under these circumstances, where a combine still continues in sharp defiance of the report of the commissioner, or the report is deliberately ignored, it might be well for the House of Commons to consider another remedy and, I suggest, a potent one. It lies in section 15 of the Customs Tariff, which provides:
1. Whenever the governor in council deems it to be in the public interest to inquire into any conspiracy, combination, agreement or arrangement alleged to exist among manufacturers or dealers in any article of commerce to unduly promote the advantage of the manufacturers or dealers in such article at the expense of the consumers, the governor in council may commission or empower any judge of the supreme court, or of the Exchequer Court of Canada, or of any superior court or county court in Canada, to hold an inquiry in a summary way and report to the governor in council whether such conspiracy, combination, agreement or arrangement exists.
In regard to this section of the Customs Tariff I should like to ask the minister if now, with a report such as this, we have not the definite suggestion that a combine does exist. We then come to the remedy:
2.. The judge may compel the attendance of witnesses and examine them under oath and require the production of books and papers, and shall have such other necessary powers as are conferred upon him by the governor in council for the purpose of such inquiry.
The information referred to has been already submitted.
3. If the judge reports that such conspiracy, combination, agreement or arrangement exists in respect of such article, the governor in council may admit the article free of duty, or so reduce the duty thereon as to give to the public the benefit of reasonable competition in the article, if it appears to the governor in council that such disadvantage to the consumer is facilitated by the duties of customs imposed on a like article.
I submit that the case is now proven, that a remedy exists within the Customs Tariff, and that, in order to make effective the work of the combines investigation officer, where a case has been proven against the combine, action may be taken under the clause of the Customs Act which I have cited. It is a far more powerful and forceful remedy than any other that can be had under the Combines Investigation Act. Before the Combines Investigation Act can be made really effective there must be some coordination between the administration of the Customs Tariff and the operation of the combines act so that when it is shown that this state of affairs exists and that these companies, coldbloodedly and remorselessly, have been
exploiting the people months after the investigation has taken place, the government can step in. The hand which can stop them, which has power to take away the monopoly which the same hand gave, should be reached out so strongly and forcefully that the first time action is taken it will be a lesson to other corporations that there are limits to human greed. Let it be a lesson to all such corporations that within the Customs Tariff we have the power to impose a further restraint upon their activities.
Topic: DEPARTMENT OF LABOUR