C. General Regulation of Trade Affecting the Whole Dominion
| Author | Patrick J. Monahan - Byron Shaw |
| Pages | 298-310 |
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In Parsons, the Privy Council stated that in addition to the authority over interprovincial and international trade, Parliament might also have jurisdiction over the "general regulation of trade affecting the whole Dominion." In subsequent cases, the Privy Council declined to explain or apply this so-called second branch of the trade and commerce power. Indeed, the law lords analyzed federal and provincial trade jurisdiction almost exclusively in terms of the first branch of Parsons. In order for federal trade regulation to be upheld, it was necessary to demonstrate that the law was limited to persons, transactions, or activities crossing provincial borders. The Privy Council largely ignored the possibility that federal regulation directed at local trade might nevertheless be upheld on the basis that it involved the general regulation of trade affecting the whole dominion.
A possible exception was the 1937 Canada Standard case discussed above.39Although the Privy Council did not expressly refer to the general regulation of trade branch of Parsons, it did state that the statute was supportable on the basis of the trade and commerce power. Since the statute applied to goods traded locally as well as interprovincially, the Canada Standard case is usually regarded as having been implicitly decided under the second branch of the trade and commerce power.40
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The first indication of the Supreme Court’s revival of the second branch of Parsons came in Reference Re Anti-Inflation Act, 1975 (Canada),41which was discussed in detail in Chapter 8. In that case, federal legislation establishing a wage-and-price control program was upheld on the basis of the peace, order, and good government power. Given the previous jurisprudence on the federal trade and commerce power, the attorney general of Canada did not even argue that the legislation could be upheld under section 91(2). The legislation before the Court in the Anti-Inflation Reference was not restricted to interprovincial or international trade and applied directly to firms and persons engaged in local trade. Despite the previous jurisprudence and the lack of argument from the parties, Laskin C.J. suggested that the legislation might have been supportable on the basis of the trade and commerce power. Laskin C.J. pointed to the second branch of Parsons, noting that section 91(2) "provides the Parliament of Canada with a foothold in respect of ‘the general regulation of trade affecting the whole dominion.’"42He stated that the legislation was not directed to any particular trade but, rather, "is directed to suppliers of commodities and services in general and to the public services of governments, and to the relationship of those suppliers and of the public services to those employed by and in them, and to their overall relationship to the public."43Laskin C.J.’s unsolicited obiter comments were surprising in light of the moribund status of the second branch of the trade and commerce power at the time. Laskin C.J. seemed to be suggesting that the second branch would support federal legislation that directly regulated local trade, as long as it dealt with "trade in general" as opposed to particular trades or industries.44The following year, Laskin C.J. expanded on his comments in MacDonald v. Vapor Canada Ltd.45At issue in Vapor was a federal law providing a civil remedy for any act or business practice "contrary to honest industrial or commercial usage in Canada." The
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Supreme Court held that the legislation was unconstitutional since it created civil causes of action, which was a matter of property or civil rights in the province. However, Laskin C.J., who wrote the decision of the Court, suggested that the result may have been different if the law had been part of a regulatory scheme administered by a federally appointed agency. The legislation could not be supported on the basis of the trade and commerce power because enforcement was "left to the chance of private redress without public monitoring by the continued oversight of a regulatory agency."46Laskin C.J.’s dicta were subsequently adopted by Dickson C.J. in an important and comprehensive restatement of the jurisprudence on the second branch of the trade and commerce power. In the 1989 General Motors case,47Dickson C.J. set out a non-exhaustive five-part test for the general trade power under section 91(2). The first three indicia were derived from Laskin C.J.’s judgment in Vapor: (1) the impugned legislation must be part of a regulatory scheme; (2) the scheme must be administered by the continuing oversight of a regulatory agency; and
(3) the legislation must be concerned with trade as a whole rather than with a particular industry. To this list, Dickson C.J. added two further indicia: (4) the legislation should be of a nature that the provinces jointly or severally would be constitutionally incapable of enacting; and
(5) the failure to include one or more provinces or localities in a legislative scheme would jeopardize the successful operation of the scheme in other parts of the country. Dickson C.J. stated that these indicia would serve to ensure that federal legislation "does not upset the balance of power between federal and provincial governments."48
On its face, the five-part test in General Motors would seem to represent a high hurdle for the federal government to support legislation under the second branch of the trade and commerce power. However, Dickson C.J. held that it was not necessary for federal legislation to satisfy all five indicia. He described the five indicia as a "preliminary checklist, the presence of which in legislation is an indication of validity under the trade and commerce power." At the same time, he stated that "the presence or absence of any of these five criteria [need not be] necessarily determinative." The overriding consideration is whether
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"what is being addressed in a federal enactment is genuinely a national economic concern and not just a collection of local ones."49It is important to keep this "overriding consideration" in mind when applying the second branch of the trade and commerce power. In our view, the relevance of the first two indicia is unclear. Whether a particular legislative provision is part of a regulatory scheme (the first indicia) or whether the legislation provides for a regulatory agency (the second indicia), seem unrelated to the issue of whether the underlying economic problem being addressed is truly national in scope. The first two indicia seem more concerned with the form of federal legislation rather than with the substance of the economic problem being addressed. It may be that they reflect a previous era of an expanding public sector. Indeed, Laskin C.J. wrote his 1977 judgment in Vapor at the height of government expansion, and it is understandable that he might regard the establishment of a regulatory agency and the existence of a regulatory scheme as natural and desirable. In the contemporary environment, when governments are contracting and downsizing rather than expanding, it seems anachronistic to make the validity of federal legislation contingent on these formal criteria.
The relative significance of the five indicia in General Motors can be discerned from the manner in which they were applied by Dickson C.J. The statute at issue in General Motors was the Combines Investigation Act.50In the past, federal legislation regulating anti-competitive practices had been upheld under Parliament’s criminal law power. However, amendments enacted in 1986 had placed a greater emphasis on regulation as opposed to criminal sanctions, and it was therefore necessary to consider whether the legislation could be upheld on the basis of the trade and commerce power. Dickson C.J. concluded that the legislation satisfied all five indicia and was supportable under the second branch of Parsons: (1) the Act embodied a "complex scheme of economic regulation," since it contained three elements: an elucidation of prohibited conduct, the creation of an investigatory mechanism, and the establishment of a remedial mechanism; (2) the scheme "operate[d] under the watchful gaze of a regulatory agency ... the Director of Investigation and Research and ... the Restrictive Trade Practices Commission";51
(3) the Act was "quite clearly concerned with the regulation of trade in general, rather than with the regulation of a particular industry or
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commodity";52and (4)-(5) the deleterious effects of anti-competitive practices "transcend provincial boundaries" and ensure that a competitive economy is "not an issue of purely local concern but one of crucial importance for the national economy."53Dickson C.J.’s application of the fourth and fifth indicia is particularly noteworthy. There is an obvious parallel between the fourth and fifth criteria and the "provincial inability" test to determine whether a matter qualifies as a matter of national concern under the peace, order, and good government (pogg) power. As discussed in Chapter 8, the provincial inability test in the pogg jurisprudence considers "the effect on extra-provincial interests of a provincial failure to deal effectively with the control or regulation of the intra-provincial aspects of the matter."54However, in General Motors, Dickson C.J. concluded that the federal legislation could not operate effectively if it were restricted to interprovincial and international trade. In coming to this conclusion, he rejected the Quebec attorney general’s argument that the provinces were capable of regulating competition within their respective boundaries. Dickson C.J. agreed that the provinces had jurisdiction over...
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