The Canadian Parvasi - Issue 21

The International News Weekly MONEY/REAL ESTATE
November 24, 2017 | Toronto 18
Civil probe against Loblaw for alleged abuse of dominance dropped
Agencies
TORONTO: Canada's competition
watchdog has closed
a 3 1/2-year civil investigation
into Loblaw Companies
Ltd. related to allegations
the grocery giant abused its
dominant position in dealing
with suppliers.
The Competition Bureau
said Tuesday that after
analyzing the impact of
Loblaw's (TSX:L) supplier
policies on competition, it
concluded there wasn't sufficient
evidence to support
allegations that the company
abused its dominant
position. Loblaw said the
bureau's announcement on
Tuesday was welcome news.
"We have been an open
book and made significant
contributions to the bureau's
review. We have used
the process to better understand
the bureau's concerns
and observations, and
have simplified the way we
conduct our business with
suppliers," said spokesman
Kevin Groh.
"We are continuing to
introduce industry-leading
compliance measures."
The civil investigation
— which the bureau said is
separate from its criminal
investigation into the grocery
industry — centred on
whether Loblaw had influenced
its suppliers' dealings
with other retailers by seeking
compensation when other
retailers sold their products
at lower prices.
The bureau said it identified
several Loblaw policies
that raised concerns but
found no clear evidence that
they had actually reduced
competition with its rivals,
resulting in its decision to
end the civil probe.
But it wouldn't reveal
much about how the closed
investigation compared
with its open criminal investigation
into allegations
of anti-competitive pricefixing.
"By law, the Bureau's
investigations and inquiries
are conducted confidentially.
Therefore, I cannot
comment further," bureau
spokeswoman Marie-France
Faucher said in an email.
Media reports have
said the bureau's criminal
price-fixing investigation is
focused on the price of packaged
bread.
However, food industry
expert Sylvain Charlebois
said he doesn't think the bureau
will find any evidence
to support the bread conspiracy
theory.
"And if there is such a
cartel, consumers are actually
benefiting from it because
prices are very soft
and there's more variety at
cheaper price," Charlebois
said from Halifax, where
he's dean of Dalhousie University's
business school.
He said the criminal investigation
of alleged price
fixing was sparked by small,
independent grocers that
don't have the same clout as
big competitors such as Loblaw,
Metro Inc. (TSX:MRU)
and the Sobeys chain owned
by Empire Company Ltd.
(TSX:EMP.A) — which have
all said they're co-operating
with the Competition Bureau.
Feds could net $6B from
new business tax rules
Agencies
OTTAWA: The federal government
could eventually
rake in up to $6 billion annually
in new revenue as a
result of a proposed change
in the tax rules for incorporated
small businesses, Parliament's
budget watchdog
estimated Thursday.
A parliamentary budget
office report concluded
changes to passive investment
rules would add up to
$1 billion to federal coffers in
the first couple of years, rising
to as much as $4 billion
in 10 years and as much as $6
billion in 20 years.
The report comes amid
continuing opposition to
the proposed changes in tax
rules for incorporated businesses
— even after Finance
Minister Bill Morneau last
month scaled back the plan
in a bid to quell an outcry
by doctors, lawyers, accountants,
shop owners, farmers,
premiers and even some Liberal
backbenchers who contended
the changes would
hurt the very middle class
the Trudeau government
claimed to be trying to help.
But the PBO's report
backs up Morneau's contention
that the plan would
impact only a tiny percentage
of wealthy businesses
— at least when it comes to
the passive investment proposal.
"In terms of distribution,
the impact of these changes
is likely to be highly concentrated
on a relatively small
share of CCPCs, which hold
the vast majority of passive
investment assets," the report
says.
The tax rule changes are
aimed at ending the ability
of wealthy individuals to use
incorporation to gain what
the government maintains
is an unfair tax advantage.
The most contentious proposal
would limit the ability
of a corporation to make socalled
passive investments
in things unrelated to the
business, like real estate.
In response to criticism,
Morneau revised the proposal
last month, adding a proviso
that the change would
apply only to passive investments
exceeding an annual
income threshold of $50,000
— a change the government
maintains will ensure
the measure applies only to
three per cent of the wealthiest
private corporations.
Nevertheless, a coalition
of some 80 business groups
is continuing to pressure
Morneau to drop the proposed
restriction on passive
investments altogether. In a
letter to the minister earlier
this week, the Coalition for
Small Business Tax Fairness
says the $50,000 threshold
is too low and would prevent
small businesses from
making investments that
will help them grow.
However, the PBO report
backs up the government
that only a very small
number of businesses, some
47,000, would be impacted by
the change.
In 2014, it says just 2.5
per cent of Canadian controlled,
private corporations
(CCPCs) earned 88 per cent
of all taxable passive income.
Moreover, the report
says 60 per cent of all passive
income is earned by CCPCs
with "no active business income,
suggesting they were
set up solely for the purpose
of generating passive income."
Morneau is also proposing
to limit the ability of
incorporated business owners
to sprinkle their income
to other family members,
creating a "reasonableness
test" to determine whether a
spouse or children actually
do any work for the business.
India not banning
cheque book facility
Agencies
NEW DELHI: In its
push for digital economy,
the Indian government
says it has
no plans to withdraw
cheque book facility.
The clarification
from the ministry of finance
came after Confederation
of All India
Traders (CAIT) Secretary
General Praveen
Khandelwal said last
week that ``in all probability,
the Centre may
withdraw the cheque
book facility in the near
future to encourage digital
transactions."
But the ministry
of finance denied that
there was any such
move.
``It had appeared in
a certain section of media
that there is a possibility
that the Central
Govt may withdraw
bank cheque book facility
in the near future,
with an intent to encourage
digital transactions.This
has been
denied by the Govt &
reaffirmed that there's
no such proposal,’’ the
ministry tweeted.
The finance ministry
also said ``while the
government is committed
to transform India
into a less-cash economy
and promote digital
and electronic transactions
through multipronged
initiatives,
cheques are an integral
part of the payments
landscape, and form the
backbone of trade and
commerce.’’
India has witnessed
a huge jump in e-transactions
after last year’s
note ban.
The Payments
Council of India says
the growth rate of India’s
digital payments
industry which before
demonetization varied
in the range of 20-50
per cent, is now in the
range of 40-70 per cent.
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Sears alleged price hike before liquidation under investigation
Agencies
TORONTO: The Competition
Bureau is investigating
allegations that prices
on some merchandise were
marked up ahead of the liquidation
sales at Sears Canada
that began last month,
the court-appointed monitor
overseeing the retailer
says.
The monitor's seventh
report to Ontario Superior
Court says the federal
competition watchdog sent
letters on Nov. 8 to the liquidators
inquiring about
the allegations that certain
merchandise was marked
up.
The Competition Bureau,
Sears Canada and
one of the liquidators were
asked Thursday for comment
about the monitor's
report and allegations, but
none had replied by midday.
The bureau typically
cannot confirm or comment
about ongoing investigations.
However, it has said
that sale prices should accurately
reflect the true presale
price.
Sears began the process
of liquidating its remaining
stores in October after failing
to find a buyer.
After the sales began,
several customers posted
pictures to social media
suggesting prices had been
raised.
The joint-venture group
running the liquidation
includes Hilco Global, Gordon
Brothers, Tiger Capital
Group and Great American
Group.