On November 1, 2004, the Competition Bureau (the "Bureau")
reached a Consent Agreement (the "Agreement") from La Coop
fédérée ("LCF") and Groupe BMR
("BMR") in connection with LCF's acquisition of a
minority interest in BMR. The Agreement requires that (i) certain
franchisees in four local markets in the province of Quebec find
new banner under which to operate; and (ii) that LCF and BMR
continue supplying the stores on competitive terms until either a
new franchisor is found or the end of 2014.
Based on its review of the transaction, the Bureau concluded
that the merger would likely result in a substantial lessening or
prevention of competition in the retail sale of hardware products
and building materials in four cities in the province of
While the Bureau has not issued a position statement, the
Commissioner likely viewed the transaction as the acquisition by
LCF of a "significant interest" in BMR. The Merger Enforcement Guidelines (the
"MEGs") define a "significant interest" as the
"ability to materially influence the economic behaviour of the
target business, including but not limited to decisions relating to
pricing, purchasing, distribution, marketing, investment, financing
and the licensing of intellectual property rights".
What makes this case interesting is that the Commissioner
required remedies in connection with the acquisition of a minority
interest, as opposed to an acquisition of control. This is
consistent with a trend towards increased merger enforcement and
sends a clear message to merging firms that the Bureau will seek
remedies or challenge transactions below the pre-merger
notification thresholds, as well as minority interest transactions
where it believes they raise substantive
concerns. Accordingly, firms contemplating transactions that
fall into either of these categories should engage in some
preliminary competitive effects analysis, as it can no longer be
assumed that these types of transactions are below the Bureau's
LCF is the largest agri-food company in Quebec and is owned by
over 100,000 members grouped in 102 cooperatives located in several
Canadian provinces. Most relevant to this transaction, LCF runs the
network of 175 hardware stores that operate throughout Quebec, New
Brunswick, and Eastern Ontario. BMR is a group of independent
dealers that operate 187 hardware centres in Quebec, Ontario and
the Atlantic Provinces as well as on the French islands of Saint
Pierre & Miquelon.
For a copy of the Bureau's press release, please click here.
For a copy of the Consent Agreement registered with the
Competition Tribunal (French only), please click
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The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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