On October 6, 2011, the Competition Bureau announced the publication of
the final version of its revised Merger Enforcement Guidelines
(MEGs), only thirteen months after announcing its intention to
review the guidelines in September 2010. The revised MEGs replace
both the 2004 version of the guidelines and the Bureau's 2009
Efficiencies in Merger
The revisions aim to better describe the Bureau's analytical
approach to merger review by addressing discrete areas where the
2004 MEGs no longer fully reflected Bureau practice or current
economic and legal thinking. It is generally understood that the
2010 revisions to the U.S. Horizontal Merger Guidelines
(U.S. Guidelines) also constituted an important factor driving the
need for review. Whereas the U.S. Guidelines are limited to
horizontal mergers, however, the revised MEGs also address vertical
merger analysis and go further than the U.S. Guidelines with
respect to horizontal merger analysis by incorporating more recent
thinking on Canada's own unique efficiencies defence.
As in the draft version of the revised
MEGS, released for consultation in June 2011, the final revised
MEGs are not intended to reflect any dramatic shifts in Bureau
merger enforcement policy or practice. Neither does the final
version introduce any major changes from the draft version,
although it does further clarify a number of definitions, fully
incorporate and replace the Bureau's 2009 Efficiencies
Bulletin, and eliminate an appendix providing additional
information on sunk costs that was contained in both the 2004 MEGs
and the draft revisions. While the title of Part 13 is changed from
"Failing Firm" to "Failing Firms and Exiting
Assets" in the final version, no changes were made to the
substance of this section.
adopt a more nuanced approach to market definition, making
clear that market definition is a means and not an end toward
assessing competitive effects and emphasizing the importance of
economic and other analytical tools;
provide greater detail regarding the Bureau's approach to
transactions involving minority interests and interlocking
directorates, reflecting the position taken in a prior submission
to the Organization for Economic Co-operation and Development
incorporate more detailed thinking on monopsony power, such
that it may apply not only to a merger of suppliers but also to a
merged firm with significant capacity as a buyer; and
provide enhanced guidance regarding the Bureau's framework
for analysis of "vertical" mergers, particularly with
respect to foreclosure and in relation to both unilateral and
In addition to the above developments, the revised MEGs make the
timeliness branch of the three-pronged entry test more flexible by
removing prior reference to a two-year period during which, as a
rule of thumb, entry would be considered timely in all industries.
They also reorganize the contents of the coordinated effects
framework to better reflect Bureau practice, provide additional
examples of countervailing power, and introduce a discussion of
bidding and bargaining markets in the assessment of unilateral
These changes, designed to better reflect current Bureau
practice, should not result in any fundamental changes in approach,
although they do introduce more nuanced thinking and a greater
range of economic and analytical tools than were previously
incorporated in the 2004 version of the guidelines. While the
changes could be considered consistent with a movement by the
Bureau toward a more activist approach to merger review, they will
also present opportunities for parties to incorporate more nuanced
thinking and a greater range of tools when presenting a case to the
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