On August 19, 2014, the Competition Bureau (the
"Bureau") released a Position Statement which concluded
that Eastlink's proposed acquisition of Bruce Telecom would
substantially lessen or prevent competition for telecommunications
services in the communities of Port Elgin and Paisley and advised
the parties that it was willing to challenge the proposed
transaction. As a result, the parties announced that they would
abandon the transaction.
On January 22, 2014, the Municipality of Kincardine (which owns
Bruce Telecom) agreed to sell Bruce Telecom to Eastlink.
Bruce Telecom, the incumbent telecommunications company within
Bruce County, Ontario, offers home telephone, television, wireline
broadband internet, and wireless services to consumers in the towns
of Kincardine, Tiverton, Port Elgin and Paisley (and surrounding
Eastlink, a privately-held Halifax-based company, owns and
operates cable systems across Canada. Within Bruce Telecom's
service area, and in particular in respect of Port Elgin and
Paisley, Eastlink competes directly with Bruce for the sale of
telecommunications services (i.e., home telephone, television,
wireline broadband internet and wireless services).
According the the Position Statement, the merged entity would
have been the only telecommunications services provider for many
consumers in Port Elgin and Paisley. The Bureau believed that the
proposed transaction would have substantially lessened competition
for the supply of both (i) wireline broadband internet services and
(ii) bundles of home telephone, television and/or wireline
broadband internet services, with the result that consumers would
likely have faced materially higher prices, less choice, and
received materially lower service quality for telecommunications
In arriving at its position, the Bureau concluded that mobile
wireless and fixed wireless telecommunications services are not
close substitutes for wireline broadband services. This is based on
the Bureau's view that there are significant differences in
terms of both performance and pricing between wireless and wireline
services. In particular, the Bureau concluded that consumers viewed
wireless broadband internet services as a less attractive and
uneconomical alternative to equivalent wireline serives given the
heavy and increasing data usage of many households and
A further factor considered by the Bureau is that it was
unlikely the merged firm would face competition from new entrants
given the high barriers to entry for the provision of wireline
telecommunications (i.e., the costs associated with building out a
network and establishing a market presence, the importance of
economies of scale in achieving viability, and the challenge of
overcoming historically strong position of well-entrenched
The outcome in this case is also interesting for two additional
reasons: (i) the proposed transaction was not subject to pre-merger
notification, as it did not meet the relevant financial thresholds
and was only brought to Bureau's attention due to complaints
from consumers and (ii) Port Elgin and Paisley are relatively small
communities (with populations of approximately 8,000 and 1,000
The takeaway from this is that (i) the Bureau is prepared
to challenge transactions that fall below the pre-merger
notification thresholds and (ii) the Bureau will actively protect
the interests of small communities, in particular with respect to
For a copy of the Bureau's Press Release, please click here.
For a copy of the Bureau's Position Statement, please click here.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).