CCA Bulletin 07/08

March 3 , 2008

The cultural sector presents its views to the Federal Competition Review Panel

Just the facts

Last week, the CCA joined 13 representatives of cultural industry organizations from Montréal and Toronto in a three-and-a-half-hour in camera consultation session with members of the Competition Policy Review Panel.The Panel was appointed in July 2007 by the federal Ministers of Industry and Finance to examine, amongst others, the existing legislations and restrictions affecting foreign investment and ownership in Canadian cultural industries: books, magazines, film, broadcasting, new media, etc.

Represented in the room were the audiovisual, book and magazine industries. A separate session for broadcasting was scheduled later on in the day, at which the CCA would have asked to attend as well if it had been aware of its existence. Each participant had five minutes to make a statement, and then the discussion was open to all, with Panel members asking questions. A high ranking official from the Department of Canadian Heritage sat as an observer. For the CCA, this was an occasion to reiterate the key points included in the brief presented to the Panel on January 11, 2008.

The point was made several times that cultural products are not like others: they play a defining role in establishing who we are as a nation and they are meant first and foremost for local consumption (it was noted that export markets are difficult to find in the case of Quebec industries and present a special challenge for English Canada because of the dominance of the US giant, that tends to import Canadian creative talent rather than Canadian productions). From the national hotbed of talents, an impressive number of our artists and productions have achieved international recognition, and the internationalization of our cultural excellence should receive governmental support for a variety of reasons. But Canada’s aim is not to export more artists as it would CANDU reactors or telecommunications technologies.

Given the demographic, geographic and economic realities of Quebec and of English Canada, cultural industries and the Canadian arts and culture sector as a whole require public financial support and regulations. They will exist and thrive only as the result of a common will to ensure we have a distinct culture as a nation, whatever that may be in Canadian terms.

The message sent by all, and summarized at the end by the Chair of the Panel, was quite clear: cultural industries are not like other sectors under the Panel’s review, banking and telecommunications (although convergence is bringing the latter closer to the group) and “If it ain’t broken, don’t fix it”. This being said, participants made clear that they were not simply advocating for status quo. We insisted on the necessity to review and complement existing mechanisms already in place with regards to foreign investment and ownership. Qualms were expressed about the “net benefit test” applied under the Investment Act to authorize take-overs. It was pointed out, for example, that the obligation put on foreign owners to sign up Canadian talent (e.g. in music or editing), while great for individual artists, has had a perverse effect on the sector as a whole as Canadian publishers and recording companies cannot reap the benefits of the talents they have contributed to develop, while foreign-controlled companies have neither obligation nor interest to reinvest in the next generation of Canadian artists and creators.

Panel members were particularly interested in the impact of Internet on cultural industries. There was a consensus that this new distribution platform, with the interactivity and the multiplicity of choices it offers, is having a definite impact and that different sub-sectors were grappling with ways to face this new reality. Many said it is high time to integrate the so-called new media into the Canadian cultural ecology through appropriate forms of regulation, an idea that the CCA has been pushing for quite some time.

Tell me more

It was pointed out that since 1985, of 125 acquisitions by foreign interests of Canadian companies, only 4 had been rejected, begging the question: is a further loosening of the rules really necessary? And where is the evidence that the current regime of restrictions on foreign ownership is detrimental to Canadian cultural industries (the Harlequin example excepted)?

The problems for Canadian cultural industries are insufficient financing and ineffective application of existing regulations. With the appearance of new digital production and distribution platforms, and in accordance with Canada’s support of cultural diversity at home and abroad, it is time to develop a new regulatory and funding framework to ensure that Canadians have access to Canadian books, magazines, music, audio-visual production and any other form of cultural expression resulting from a fast evolving technology. In this context, maintaining effective control in the hands of Canadians is a prerequisite for all other required measures to be effective in ensuring the creation and distribution of cultural content created by and for Canadians first and foremost.

The CCA is pleased that the Minister and the Panel responded to our concerns about the review of cultural industry policies without the involvement of cultural policy experts. The CCA suggested, in a letter to the Minister, that he either adds a cultural policy expert to the Panel or convenes a sub-group. Last week’s consultation satisfied this request.  A series of seven sectoral and of as many regional consultations is scheduled over the coming weeks.

The Panel is mandated to review key elements of Canada’s competition and investment policies to ensure that they are working effectively. The Panel is examining a range of issues, with an eye to ensuring Canada’s policies are modern and effective, and reflect a competitive environment that is global in scope, and typified by fierce competition between national jurisdictions seeking to attract investment, people and economic opportunities. The Panel is targeting to report back to the Minister of Industry on behalf of the Government by June 30, 2008.