The revised MEGs were released after a first round of
consultation on whether the previous MEGs required amendment (which
consultation was announced in September 2010) and a second round of
consultations that followed the June 27, 2011, issuance of draft
revisions for comment.
The revised MEGs do not significantly change the Bureau's
substantive approach to merger review, but do make several changes
that are important to note, including:
Placing less emphasis on market definition
The revised MEGs adopt a more flexible approach to defining
markets, clarifying that, while market definition is generally
undertaken by the Bureau, it is not a mandatory step in the
Bureau's merger review. The revised MEGs explain that the
Bureau may use tools other than market definition for determining
the competitive effects of a merger, including looking to
ordinary-course documents created by the merging parties, or
first-hand observations of the industry by market participants.
Putting greater focus on vertical and conglomerate mergers
With respect to non-horizontal mergers, the revised MEGS provide
greater guidance on how the Bureau views market power both in terms
of monopsony power and countervailing purchasing power. The MEGs
explain that the Bureau will focus on whether the merger is likely
to lead to foreclosure of inputs or customers. The revised MEGs do
also, however, note that non-horizontal mergers are less likely to
Addressing the issue of interlocking directorates and minority
The Competition Act defines merger broadly to include
the acquisition of a "significant interest". The revised
MEGs set out a broader set of factors that the Bureau will look at
when determining whether the acquisition of a minority interest (or
other arrangement including interlocking directorates) will result
in the acquisition of a significant interest.
Reflecting the approach to competitive effects that is seen in
the US Horizontal Merger Guidelines
The revised MEGs have adopted an approach to assessing
differentiated product markets that is similar to the US approach.
The revised MEGs also provide further guidance on the assessment of
competitive effects in situations where there are many bidders or
potential suppliers that are similarly situated to the merging
Providing a revised interpretation of the efficiencies
The revised MEGs update the discussion of the "efficiencies
defence" that was set out in the Bureau's 2009 Bulletin on
Efficiencies in Merger Review (now superseded by these MEGs). The
revisions emphasize the onus on the merger parties to provide
evidence of efficiencies in a detailed and timely manner. This will
compel parties to conduct an analysis of efficiencies early on in
the process if they believe that an efficiencies argument is
The revised MEGs do maintain, however, many integral aspects of
the previous MEGs, including the hypothetical monopolist test to
define product markets, as well as the 35-percent market share safe
harbour threshold, below which transactions generally will not be
The MEGs are an important guide for competition practitioners
and their clients when attempting to determine how the
Competition Act's merger review provisions will be
applied to a particular merger. These revised MEGs provide
therefore an important update on the Bureau's current approach
to merger review and will therefore be valuable to dealmakers and
their competition counsel.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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