Minister releases report from the Special Panel on Corporate
Concentration in the Fishing Industry

Gerry Reid, Minister of Fisheries and Aquaculture, today announced that the Special Panel on Corporate Concentration in the Fishing Industry, has completed its deliberations and submitted its final report to government. Reid tabled the report in the House of Assembly today.

"I would like to commend the panel, including Mr. Les Dean, the panel chair, and Mr. Sam Walters and Mr. Harold Wareham," said Reid. "These individuals were asked to undertake an enormous and complex task, in a very short period of time. They have come back with a clear, concise and in-depth report, which will serve to assist in government�s overall approach to fostering sound fisheries policy. This was an important piece of work which will benefit all Newfoundlanders and Labradorians."

The fishing industry in this province has undergone a dramatic transformation in the past number of decades, and one of the major issues spoken of throughout the industry is that of corporate concentration. Reid committed to addressing this issue earlier this year and, on September 6, 2001, established the panel with a mandate to examine corporate concentration in the fishing industry in the province. Specifically, the panel was asked to make recommendations to the minister, which would be consistent with the government�s objective of mitigating any negative social and community consequences which may arise from corporate concentration, while ensuring the continuation of a sound business and investment climate.

"The report provides an in-depth overview of the evolution of the fishing industry in recent years, including the impact of issues such as resource availability, management of the processing sector, regional balance considerations and the investment climate in the industry," added Reid. "Furthermore, the report also gives a clear definition and explanation of corporate concentration and discusses effective fisheries policy coordination. Finally, the report outlines several informed and useful recommendations to government."

Some of the recommendations put forth by the panel include a legislative review and revision of the Fish Inspection Act, the creation of an arm�s length Fish Processing Licensing Board, and increased efforts into fisheries policy integration with the establishment of a Canada/Newfoundland and Labrador Fisheries Policy Co-ordination Council.

"In general, the panel noted that there have been dramatic changes in the industry over the past 10 years that have resulted in a change in the corporate structure of the industry," said Reid. "Firms have grown both internally and through acquisitions. Many of the large offshore groundfish companies now have smaller operations as compared to the pre-moratorium period, while those companies with shellfish have grown in size. Overall, the panel concluded that there are a sufficient number of companies in the industry to ensure that there is competition for raw material."

In addition, the panel also recognized some initiatives undertaken in the industry in recent years which have had a positive impact on the fishery overall. The panel specifically commented on the efforts of the Department of Fisheries and Aquaculture for the implementation of the Quality and Inspection Program which has been very successful in gaining international recognition for the province as a world leader in the production of premium quality seafood products. The panel also strongly endorsed the Final Offer Selection process, which serves as the price negotiation mechanism for the industry.

"I will be tabling this report in the House of Assembly this afternoon, as I believe it is an important piece of work, which will be of interest to all Newfoundlanders and Labradorians," said Reid. "I am also looking forward to hearing from all stakeholders in the fishing industry when they have an opportunity to review this report. As we move forward, we will rely on the cooperation and participation of stakeholders, along with the federal government, to achieve a viable and sustainable industry for the long-term benefit of the people of this province. "

In their deliberations, the panel relied on extensive consultations with approximately 50 organizations, individuals and companies, both inside and outside the fishing industry, including the Fisheries Association of Newfoundland and Labrador (FANL), the Fish, Food and Allied Workers (FFAW/CAW), United Fishermen and Commercial Workers (UFCW), the Newfoundland and Labrador Federation of Municipalities and the Chair in Resource Conservation at Memorial University.

Government is now in the process of a thorough review of the panel�s report and evaluating the implications and feasibility of implementing the individual recommendations. The report is now available on the government�s Web site at www.gov.nl.ca/fishaq/.

Media contact: Elizabeth Matthews, Communications, (709) 729-3733, or (709) 727-3438.

1. The following policy objectives should guide the management of the processing sector:

• To develop a stable, self-sustaining, internationally competitive sector;
• To optimize (not maximize) employment generating opportunities;
• To ensure healthy competition amongst firms;
• To achieve quality enhancement objectives and the optimum resource utilization;
• To ensure a balance between resource availability and processing capacity.

2. The Fish Inspection Act should be renamed the Fish Processing Licensing and Inspection Act and amended to give greater clarity to the objectives of the act with respect to the management of the fish processing sector in an economic development and policy context. The Fish Inspection Act should be amended as follows:

• to state that the minister, before a licence is issued or renewed, may require the applicant to demonstrate a commitment to specific policy objectives inherent in the act (e.g. quality enhancement).
  
  
• to clearly state that a primary objective of the act is to promote a competitive industry environment consistent with the spirit of the Fishing Industry Collective Bargaining Act and the Federal Competition Act.
  
  
• to make a specific linkage in the act between the revoking or suspension of a fish buyers�/processor licence and any anti-competitive practices determined to be inconsistent with the Competition Act.

3. The Department of Fisheries and Aquaculture should implement a more rigorous review and assessment process and notice period for mergers, acquisitions and share capital changes.

4. The core/non-core licensing policy framework should remain in place, but in full consultation with industry stakeholders; consideration be given to including non-core license holders in any call for proposals for new product development initiatives.

5. The processing license transfer policy should remain in effect to promote plant capacity consolidation on a regional basis, and safeguards should be in place to ensure regional participation is not compromised.

6. An arms length Fish Processing Licensing Board should be established to give consistency, transparency and predictability to the implementation and management of the fish processing licensing framework.

7. The Department of Fisheries and Aquaculture should establish a clear and concise evaluation framework related to the reactivation of fish processing licenses.

8. Government should increase coordination of its fisheries development policy with its strategic economic development policy to advance the role which "strategic" processing plants can play in regional economic development.

9. The province should seek an assurance from the Government of Canada that its resource allocation and access policies safeguard the historical linkages with fish stocks and that the same assurance be sought for emerging fisheries.

10. Inshore harvesters and processors should reaffirm their commitment to the interest based/final offer selection price bargaining system. Government should work closely with harvesters and processors to further strengthen the price settlement model.

11. Government should continue to provide an effective financing program in support of the inshore harvesting sector. The Bank Loan Guarantee Program now in place be continued, but that the effectiveness and efficiency of the program to meet the needs of the small vessel sector should be evaluated.

12. A Canada/Newfoundland and Labrador Fisheries Policy Coordination Council should be established to make recommendations to governments on major public policies relative to the harvesting sector, the processing sector, marketing, quality enhancement and fisheries development opportunities and strategies.

2001 11 29                           3:00 p.m.