The rapid growth of digital media in recent years and the
simultaneous pressures on traditional media have led to a number of
fascinating media transactions in which the Competition Bureau has
had to confront the difficult question of product market definition
in industries characterized by disruptive technological change.
In March 2015, the Bureau cleared a magazine publishing transaction (TVA
Group's acquisition of Transcontinental's magazine
business) due, in its words, to the "presence of effective
remaining competitors in all overlapping genres of magazines and
the ability of advertisers to reach the same demographics through
other magazines and media" (emphasis added). The
Bureau also stated that it considered the "general decline in
readership of magazines, in part attributable to the increasing
importance of the Internet as an alternative for readers"
The precedential significance of these references to other media
and the Internet is not entirely clear. That said, these references
cannot be accidental, and it is therefore possible that something
of a shift in the Bureau's analytical framework for media
mergers may be underway.
By way of context, historically, and consistent with competition
authorities in other leading jurisdictions, the Canadian
Competition Bureau has approached product market definition in the
advertising and media industries on the basis that each different
type of media (e.g., radio, television, newspapers, flyers,
out-of-home, etc.) constitutes a separate market. Divestitures of
radio stations, television channels and newspapers have been required precisely on
For its part, and although contested merger jurisprudence in
Canada is extremely rare, the Competition Tribunal, in 1992,
supported an even narrower product market definition than had been
proposed by the Bureau in the only fully litigated media merger in
Canada, the Southam case, finding that daily newspapers
and community newspapers were not in the same product market. In
relation to nascent electronic media, the Tribunal wrote:
"The evidence with respect
to the electronic media is that they are too weak substitutes to be
considered part of the same retail advertising market as
Some 22 years later, in June 2014, the Bureau reached a
remarkably similar conclusion in its analysis of
Transcontinental's acquisition of Quebecor Media's
community newspapers in Quebec:
"... for the purposes of the
present merger review, the Bureau determined that the relevant
market was comprised solely of advertising in community newspapers.
However, the Bureau recognizes that the degree of substitutability
between advertising in community newspapers and online advertising
A few months later, however, the Bureau approved the divestiture of numerous of these
community newspapers to a buyer who only offers online advertising
services and would not continue to publish printed editions of the
newspapers, on the basis that no other interested buyer existed for
the newspapers in question. While it is debatable whether this
divestiture amounted to a true competition law remedy within the
traditional meaning of that phrase (because how could a purchaser
who does not compete in the relevant market remedy a substantial
lessening of competition in that relevant market), the obvious
interest of this buyer, and its approval by the Bureau, puts into
doubt, at the very least to some degree, the strength of the
original conclusion regarding market definition.
The outcome of the Transcontinental / QMI newspaper transaction,
together with the conclusions reached during the TVA /
Transcontinental magazine transaction, may turn out to represent an
important chapter in the Bureau's evolving review of media
mergers. The next media transaction on the Bureau's docket is Postmedia's proposed acquisition
of Sun Media's English-language daily newspaper business. The
Bureau's pronouncements on market definition and the role of
the Internet in that transaction will be eagerly anticipated.
Stikeman Elliott LLP was counsel to Transcontinental on both
transactions referred to herein.
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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