Competition Bureau Publishes Post-Merger Review Study

Ottawa, October 4, 2007 – The Competition Bureau today published a post-merger review study that it commissioned last year from CRA International, an economic and financial consulting firm.

Consistent with the Bureau’s priority to enhance performance management and transparency, the study evaluates whether the Bureau applied appropriate analytical approaches and took reasonable decisions in certain merger reviews by examining, in particular, whether any of the markets in question in those reviews are substantially less competitive today than they were pre-merger.

CRA found that, in general, the Bureau's analyses accurately assessed market conditions, and reasonably predicted outcomes (accounting for the information that was available at the time). In addition, the report does identify areas where the Bureau could make incremental improvements. These include a greater use of quantitative analysis, and more critical consideration before accepting claims of 'countervailing power' from buyers.

Three merger reviews were selected as part of this study: the 2000 acquisition by Corus Media of the assets of WIC Broadcasting; the 2003 merger of a number of coal companies based in Western Canada, collectively referred to at the time as the Fording Group; and a 1998 joint venture between 506062 New Brunswick Ltd. (Carmeuse) and Lafarge S.A., both suppliers of building materials.

The objective of the study was to consider mergers that had raised material competition concerns, but where the Bureau ultimately decided the merger did not merit a challenge before the Competition Tribunal. In addition, to be eligible for CRA to select the merger for this study, sufficient time had to have passed since the closing of the transaction to allow for the market to have adjusted to the merger, and the three-year period during which the Commissioner may challenge the merger before the Competition Tribunal had to have passed.

The key questions explored include:

• Have the competitive effects anticipated by the Bureau at the time of its conclusions come about, post-merger?
• Is the market more or less competitive and why?
• Were any relevant factors overlooked at the time of the original review?
• Did the original conclusions prove, over time, to be correct?
• Were the correct techniques used in applying the Bureau's analytical framework?

As detailed in its report, CRA consulted with a number of industry participants and reviewed other relevant sources of information as part of this study.

The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

Ex Post Merger Review: An Evaluation of Three Competition Bureau Merger Assessments

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