June 1, 1939


The house in committee of supply, Mr. Sanderson in the chair.


DEPARTMENT OF LABOUR


99. Departmental administration, $117,276.


CCF

Abraham Albert Heaps

Co-operative Commonwealth Federation (C.C.F.)

Mr. HEAPS:

I presume that on this item, Mr. Chairman, we may discuss matters of fundamental importance affecting the Department of Labour, with particular reference to the activities of the minister. With other hon. members I realize the vast amount of

hard work which the Minister of Labour has done since taking charge of the department, but we are now in the fourth and possibly the last session of this parliament, and after prorogation we may face dissolution. In the minds of a great many people, particularly those who have been looking to the Minister of Labour to do something to relieve unemployment, it may be disillusion rather than dissolution.

Hon. NORMAN McL. ROGERS (Minister of Labour): If my hon. friend will permit me, there is an item in the special supplementaries dealing with unemployment and grants in aid to the provinces, and I hope he will not mind my suggesting to him that that would be a more appropriate time to discuss unemployment than on the departmental estimates.

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CCF

Abraham Albert Heaps

Co-operative Commonwealth Federation (C.C.F.)

Mr. HEAPS:

I have no objection to the course which the minister suggests, 'but I can assure him that if I make any comments now on the unemployment problem I shall not repeat them later. I have no desire to delay the proceedings, and intended to take only a few minutes to express my opinions with regard to the very serious unemployment situation. It was my purpose not to discuss the whole matter of unemployment on the departmental estimates, but rather to give a general summary of the unemployment situation.

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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

My only thought was to have the discussion in proper sequence. If we have an unemployment debate on the main departmental estimates it might very well interrupt consideration of the specific items which are really before the committee.

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CCF

Abraham Albert Heaps

Co-operative Commonwealth Federation (C.C.F.)

Mr. HEAPS:

When may we expect to reach that other item?

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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

I intend to go progressively down the list of items in the main estimates and then take the special supplementaries.

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CCF

Abraham Albert Heaps

Co-operative Commonwealth Federation (C.C.F.)

Mr. HEAPS:

I do not object to that procedure

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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

I think it would be preferable, if my hon. friend would agree.

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Item agreed to. 101. Combines Investigation Act, $48,060.


LIB

Robert John Deachman

Liberal

Mr. DEACHMAN:

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

Supply-Labour-Combines Act

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

Supply-Labour-Combines Act

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.

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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

The Combines Investigation Act itself provides three types of remedy. There is first of all the remedy of publicity, which in certain cases in the past has been effective, and has brought about a correction of the situation complained of within a given industry. In addition to that there are penalties, consisting of fines of $10,000 and $25,000 against individuals and corporations respectively, with a further provision for imprisonment. Finally the act provides for the alternative remedy to which the hon. member has referred, namely, the removal or reduction of the customs duty which apparently has permitted the combine to carry on its illegal operations. This provision is found not only in the Customs Tariff but in the combines act itself. It is actually incorporated in that statute. In the particular investigation under discussion, into the manufacture and sale of paperboard shipping containers and related products-

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CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

The second remedy to which the minister refers can be applied only after further action in the courts-

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LIB
CON

Henry Herbert Stevens

Conservative (1867-1942)

Mr. STEVENS:

*-by the attorney general, and after conviction has been obtained.

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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

Yes. I was going to explain that the report in this case was made by the commissioner on March 14 of this year. On March 31, after printing, it was transmitted to the attorneys general of the six provinces in which the combine was found to be carrying on its operations. This practice is laid down definitely in the terms of the Combines Investigation Act and it has been followed from the beginning, from the time the original legislation was adopted in 1923; and only once where the report and evidence have been transmitted to the attorney general of a province has prosecution failed to follow. The other remedy to which the hon. member refers is available to be exercised at discretion by the governor in council, but I submit that in order to carry out the purpose of the act it is certainly desirable in the first instance

Supply-Labour-Combines Act

to follow the normal procedure of transmitting the report and the evidence to the attorney general who has charge of the administration of justice in the province in which the combine has been found to exist.

During the past year another report was made, in connection with the distribution of tobacco products in Alberta and elsewhere in Canada. The same procedure was followed there, namely, the transmission of the report and the evidence to the attorney general of the province of Alberta. In pursuance of that, the attorney general of Alberta has commenced proceedings against this alleged tobacco combine and those proceedings are now in progress. Any other action such as that suggested by my hon. friend would certainly be collateral to the normal procedure and it would be for the governor in council in each case to determine whether upon the merits it was desirable to apply this further remedy, the reduction or removal of the tariff on the commodity in question.

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LIB

Robert John Deachman

Liberal

Mr. DEACHMAN:

Arising out of the minister's remarks are one or two questions which I should like him to answer. In the first place, does he regard publicity as an adequate punishment for a business record such as is revealed in the combine recently investigated, the paperboard shipping container matter? Secondly, how many times has the fine of $10,000 been imposed in Canada within recent years? And while the Combines Investigation Act contains a clause in regard to the reduction of duties, has that provision ever -been enforced? If so, who has enforced it? Have we ever had an application of the section of the Customs Tariff under which the duty was reduced in order to check the operations of a combine? I would suggest that the offence which these men have committed is not merely that of charging a higher price, because the tariff gives them permission, but it is the fact that they have brought about a combine which is effective in preventing competition and preventing others from lowering the price. Finally I submit that their offence, because it affects the national life of Canada, is a national matter and that action should properly be taken by the federal government. It is a crime against the consumers and the industry of the nation and therefore differs from other offences on which court action might be taken.

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LIB

Norman McLeod Rogers (Minister of Labour)

Liberal

Mr. ROGERS:

As to the fines which have been imposed and collected under the act since its inception, the total from 1923 to 1939 amounted to $316,400.

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LIB

June 1, 1939