Copyright 2009, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Competition, Antitrust & Foreign Investment, March 2009
Under Canada's competition laws, a merger may proceed where the efficiencies resulting from the transaction are greater than and will offset its anticompetitive effects.
The Canadian Competition Bureau has just published the final version of its Bulletin on Efficiencies in Merger Review. A draft version of the Bulletin was published earlier this year and several interested parties – including the American Bar Association (Section of Antitrust Law and Section of International Law) and the Canadian Bar Association (National Competition Law Section) – provided comments. The Bulletin is intended to provide merging parties with practical guidance in understanding the Competition Bureau's enforcement approach in the area of efficiencies and merger reviews, and is a supplement to the Bureau's existing Merger Enforcement Guidelines.
The Bulletin confirms the Bureau's position that, in appropriate cases, the Bureau will not necessarily resort to litigation before the Competition Tribunal to resolve efficiency claims. In other words, the Bureau itself will first assess whether the gains in efficiency arising from a transaction are greater than and will offset any anti-competitive effects. In this respect, the Bulletin encourages parties who choose to submit efficiency claims to do so at the earliest possible stage, as this may assist the Bureau in providing a timely response as to whether or not a remedy may be sought in respect of a merger. Detailed information about efficiency claims at an early stage would also allow the Bureau to prepare follow-up information requests and test the claims during its market contacts – subject to confidentiality restrictions.
According to the Bulletin, the Bureau will generally follow the direction and standards given by the Competition Tribunal and the Federal Court of Appeal in Superior Propane. The Bulletin also notes that the Bureau will consider dynamic efficiencies in its analysis, and may place more emphasis on such efficiencies in concentrated industries characterized by rapid technological change and innovation. Where possible, dynamic efficiencies would be assessed on a quantitative basis (e.g., decrease in production costs as a result of innovation) but, in the absence of quantitative information, a qualitative assessment would be conducted.
Finally, the Bulletin attempts to clarify the Bureau's position with respect to gains in efficiency from non-Canadian sources, noting that in most cases the trade-off analysis will weigh the gains in efficiency that benefit the Canadian economy with the anticompetitive effects of a transaction in Canada.
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