Thank you, Madam Chair, and good afternoon.
As you have mentioned, my name is Julien Brazeau. I am associate deputy commissioner at the Competition Bureau, and I'm joined by my colleague, Anthony Durocher, who is deputy commissioner of the mergers and monopolistic practices branch at the Competition Bureau.
My understanding is that the committee does have some outstanding issues or questions regarding the Postmedia-Sun transaction, as well as the “no action” letter the bureau released upon concluding its review.
During our previous two appearances before the committee, my colleagues and I outlined the manner in which the bureau conducts merger reviews, as well as the factors that are taken into consideration.
It is important to reiterate that in the context of merger reviews we take a look at a number of factors, including the level of economic concentration in a given market and the market shares of the merging parties, the degree to which the merging parties compete with one another, as well as the presence or absence of legitimate and effective competitors that can curtail the exercise of market power by the merging entity.
In examining a merger, the bureau obtains information from a wide variety of market participants, including suppliers, customers, regulators, and competitors.
I would stress that when reviewing mergers, the bureau's focus is on economic competition and efficiencies related issues such as the impact of the merger on prices or, in the case of media mergers, advertising rates and readership. As you well know, in conducting our analysis, we are bound by the four corners of the Competition Act. The factors that are to be considered in a competition analysis are set out in section 93 of the act, as we stated during our last appearance. It is important to note that it is the combination of factors—not the presence or absence of a single factor—that is determinative in the bureau's assessment.
While the bureau's focus is primarily on price and output, we also consider the proposed merger's likely effects on non-price dimensions of competition such as quality, choice, service, and innovation. These factors are approached from an economic lens and considered especially in markets in which there is significant non-price competition.
Let me now turn to what occurs when the commissioner decides not to challenge a transaction. This is done when, after a thorough review of the evidence, the commissioner is satisfied there will be no substantial lessening or prevention of competition, or that there are efficiencies which are greater than and offset any anti-competitive effects. In such a situation, the commissioner may issue a no action letter, indicating that he has decided not to challenge the transaction at that time but reserving the right to do so within one year following closing of the transaction. That is the statutory limit in this regard.
As a practical matter, given the extensive collection and analysis of information in a complex investigation such as Sun/Postmedia, a no action letter is regarded as an effective form of clearance on which parties can rely to close their transactions. To reopen a merger investigation in a case where the bureau has already provided the parties a no action letter, the bureau would likely require some new evidence, within the first year post-closing of the transaction, which materially affects the bureau's competitive assessment in the first instance.
I know that the committee is well aware of the March 25, 2015, statement regarding the commissioner's decision to issue a “no action” letter in his review of the Postmedia-Sun transaction. That statement contained the information that the bureau was able to publicly disclose at the time of the merger review.
It's worth repeating that the bureau conducts its investigations in a confidential manner and that all information that's gathered, whether it be through voluntary disclosure or through formal powers, is kept confidential. The law requires that we do not comment publicly until certain steps have been taken, such as the issuance of a “no action” letter. Even in those instances, we are required to keep confidential any information that is not public. This is to ensure the integrity of our investigations and to ensure that information provided to us by the parties or third parties, information that can be sensitive at times, is kept confidential.
Finally, I'm aware that this committee has expressed concerns over job losses that have occurred, especially follow the Postmedia-Sun transaction. While we recognize that mergers can unfortunately have a negative impact on jobs, the purpose of the bureau's review of a merger is to determine whether it's likely to result in a substantial lessening of competition or prevention of competition in a given market. That is, it's a market-power based analysis focused on price, output, and non-price dimensions of competition.
In the Postmedia matter, the bureau found that the print newspapers and the markets in question were facing a steady and continuing decline in readership and that the parties' ability to exercise market power was constrained by existing market conditions. Under such conditions, job losses, while painful to those who are impacted, are often the result of a competitive process as firms work to align costs with demand or realize efficiency gains.
I would also note that the bureau's release made reference to the parties maintaining separate editorial boards. However, this was not a factor in the commissioner's decision to issue the “no action” letter. Rather, these facts were included as information in our position statement on the review.
The focus of the bureau's review was not on what the parties said they would do, but rather on whether they would have enhanced market power. Based on a review, the evidence and economic analysis did not establish that the merged entity would have enhanced market power, and no subsequent information or evidence has caused us to re-examine that conclusion.
Following the conclusion of a merger review, companies involved are not required to consult the bureau on their future business decisions unless they've entered into an agreement to remedy an anti-competitive harm found during the review. In the case of the Postmedia-Sun transaction, we did not find a need for a remedy, and they are therefore not obligated to consult with the bureau on business decisions, including those related to staffing.
Of course, the commissioner of competition is able to address abuses of market power and other anti-competitive conduct or information or evidence that raise competition issues and come to light, including after the completion of a merger.
I know there are many other issues of concern, as you've raised already, Madam Chair. I'll conclude my remarks here, and my colleague Anthony and I will do our best to answer your questions at this time.