On February 24, 2011, the Commissioner of Competition announced that the Competition Bureau will undertake “moderate revisions” to the Canadian Merger Enforcement Guidelines (MEGs). This announcement follows a series of roundtable consultations with competition law practitioners across Canada, consultations with foreign agencies and an internal Bureau review. A wide variety of opinions were expressed during these roundtable consultations, including opinions as to whether revisions were necessary, particularly given that the MEGs were last revised in 2004 following a thorough review and consultation process. In this regard, an important factor driving the revisions is generally believed to be the 2010 revisions to the U.S. Horizontal Merger Guidelines (although these had last been revised in 1992).
The Bureau’s press release indicates that the MEGs will not undergo a “full rewrite” but rather will address specific areas where the current MEGs do not fully reflect Bureau practice and current economic and legal thinking. The Bureau’s announcement identifies a non-exhaustive list of seven areas in which the Bureau is considering revisions. These are: 1) providing additional guidance on monopsony issues; 2) explaining the Bureau’s approach to minority interests and interlocking directorships; 3) providing additional guidance on the Bureau’s approach to unilateral effects, in light of current economic thinking; 4) clarifying the framework for assessing coordinated effects; 5) providing more accurate guidance on vertical issues, focussing on foreclosure effects; 6) incorporating the Efficiencies Bulletin into the MEGs; and 7) clarifying that merger review is not a “linear process” that must start with market definition but is rather an iterative process where market concentration is considered together with other evidence of competitive effects. This last area is understood to refer to economic tools such as the “upward pricing pressure test” articulated by the economists Joseph Farrell and Carl Shapiro in 2008. The degree to which such tools find their way into the new MEGs is sure to be a matter of considerable interest and debate.
The Bureau intends to publish revised draft MEGs in the second quarter of 2011 and will be seeking public feedback prior to finalizing the revised MEGs in the fall of 2011.