On October 5, 2011, the Competition Bureau released a "Position
Statement" summarizing its approach in
reviewing Canadian Tire's recent acquisition of the Forzani
Group. The transaction, which took the form of a takeover bid, was
announced on May 9, 2011, and the Bureau cleared the transaction on
August 3, 2011. The transaction provided the Bureau with the
relatively rare opportunity to review a retail merger between
retailers carrying on business using different business models:
Forzani is a national sporting goods retailer (including sports
apparel and equipment), and Canadian Tire is a mass merchandiser
selling products, through a network of independent dealers, across
a range of categories, including sporting goods as well as
automotive parts, tools, house wares and electronics.
In reviewing the transaction, the Position Statement notes that
the Bureau analysed its potential competitive effects in a number
of possible product markets (retail sale of sporting equipment;
retail sale of certain sporting equipment categories, such as
hockey equipment; and the retail sale of specific sporting
equipment products, such as hockey skates), but ultimately
concluded that it was not necessary to conclusively define the
relevant product market(s) in light of econometric evidence showing
that neither party responded competitively to the presence of the
other in local markets, and to evidence that this was unlikely to
change post-merger. To our knowledge, this is the first time the
Bureau has expressly relied on such a competitive effects analysis
in its assessment of a merger, although the potential for such an
approach was signalled in its draft revisions to the Merger Enforcement
Guidelines, published earlier in 2011.
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