On May 28, 2014, the Competition Bureau (the "Bureau")
announced that it had entered into a Consent Agreement (the
"Agreement") with Transcontinental Inc.
("Transcontinental") in connection with its acquisition
of Quebecor Media's ("Quebecor") portfolio of 74
community newspapers throughout the Province of Québec. The
Agreement requires the divestiture of 34 local community
newspapers. The Agreement states that there is no minimum sale
price for the papers to be divested and that Transcontinental may
be allowed to retain ownership of papers that cannot be sold.
On December 5, 2013, Transcontinental agreed to acquire
Quebecor's entire community newspaper portfolio, including web,
mobile and printed formats, as well as regional offices and
pre-press hubs located in Rimouski, Saint-Georges and Val D'Or
(the "Proposed Transaction").
The Bureau's review focused on the potential enhancement of
market power by Transcontinental in the (i) door-to-door
distribution of community newspapers and third-party flyers; and
(ii) the sale of advertising in community newspapers, which could
lead to higher prices for advertisers.
The Bureau's analysis indicated that Transcontinental and
Quebecor were vigorous competitors and that they had launched or
acquired newspapers in certain local markets in the Province of
Québec where the other party was the historical
incumbent. Another relevant factor also considered by the
Bureau was that many of the community newspapers were facing
serious financial difficulties – consistent with the general
decline in the print newspaper industry in Canada and other
The Bureau concluded that Transcontinental and Quebecor were
each other's closest competitors in the areas where they both
owned a community newspaper. For this reason the Bureau took the
position that the Proposed Transaction would result in
Transcontinental owning the only community newspaper(s) in those
markets, leading to a substantial lessening or prevention of
competition in those markets.
Under the terms of the Agreement, Transcontinental is obligated
to sell 34 community newspapers through a specified sale process.
The Agreement states that there is no minimum price below which
Transcontinental is not obliged to complete a sale.
Additionally, the Agreement requires that Transcontinental supply
distribution and printing services to any potential buyer for at
least an initial period – at trade terms equivalent to those
provided to the newspapers prior to the announcement of the
Proposed Transaction. Transcontinental will be permitted to retain
ownership of the newspaper if a sale cannot be completed for a
The Agreement appears to have been designed to ensure maximum
flexibility for the sale process (e.g., sale process is to occur at
no minimum purchase price and Transcontinental be permitted to
retain ownership if a sale cannot be completed for a given
newspaper). The Commissioner of Competition's stated goal for
the sale process is to "maintain competition in local markets
through a sale process in regions where [Transcontinental and
Quebecor] strongly compete against one another."
Whether a sale of some or all of the newspapers in question will
be effected remains to be seen. Given the poor economics of
the print news media, the fact that papers service small,
French-speaking communities and the foreign ownership restrictions
applicable to the print media industry, there are likely to be very
few interested buyers. Further, even if a buyer can be found,
if they are not well-resourced with industry experience, it is
questionable how effectively they will be as competitors and for
For a copy of the Bureau press release, please click here.
For a copy of the Bureau's Position Statement, please click here.
For a copy of the Consent Agreement, please click here.
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guide to the subject matter. Specialist advice should be sought
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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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