Competition Policy Review Panel Research Paper Summary (Page 2 of 3) in pdf

This document is a summary of research commissioned for use by the Competition Policy Review

Panel. The reports remain the responsibility of the individual researcher(s). The views expressed

do not necessarily reflect those of the Panel or the Secretariat.

such as telecommunications and broadcasting; it is also remarked that this fact is

controversial in Canadian public policy debates.

International Policy Standardization:

The research paper argues that procedural differences in merger reviews can

make it more difficult to co-ordinate international responses to proposed mergers

and acquisitions, specifically by delaying exchanges of information and making

them asymmetric. That being said the researchers also note that Canada has

been proactive in integrating its competition policy internationally. For instance,

Canada is a signatory to information sharing protocols with the US, UK and

Australia; and multilateral partner of several jurisdictions under the Mutual Legal

Assistance in Criminal Matters Act to foster cooperation and conflict mitigation in

competition law enforcement. The research paper comments that there may be

risks to a relatively small and open economy like Canada’s of blindly adopting the

higher standards of the US or EU.

The Treatment of Efficiencies:

The researchers have found that Canada has been among the first few

jurisdictions to demonstrate a willingness to consider efficiencies during a merger

review. In fact, Canadian Competition officials pursue a formal efficiencies

defense under section 96 of the Competition Act enacted in 1986. On the

contrary, the US and EU jurisdictions consider efficiencies as one of many

factors pertinent to a merger review. While the US treats efficiencies as part of a

“strong lessening of competition” assessment, the EU foremost requires that

efficiencies benefit consumers. In Canada, the efficiency defense legislation

allows a merger with substantial anti-competitive effects to take place if the

merging firms prove the countervailing gains in efficiencies. Thus while Canadian

officials may approve a merger leading to monopoly or near-monopoly on the

basis of efficiency gains, their US and EU counterparts are very unlikely to permit

such a merger for efficiency reasons alone.

The Balancing-Weight Standard:

The research paper finds that whereas most comparable jurisdictions use a

consumer-surplus standard for measuring efficiencies resulting from a merger,

the Canada’s Competition Tribunal has reluctantly introduced a balancing

weights standard during the 2002 Superior Propane case. Under this standard,

firms may operate efficiently and pass part of their benefits of greater efficiency

on to consumers. While this approach may be suitable for Canada’s small and

open economy, its application has been criticized as subject to judgment and

uncertainty.

Conclusion:

Global changes such as the shift towards services-dominated economies and

the increasing presence of foreign ownership pose several challenges to

Competition officials. Firstly, international co-operation has become more

important and this has given impetus to harmonize standards and procedures

Competition Policy Review Panel Research Paper Summary Page 2

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