After being overhauled and energized with sweeping new powers, the federal Competition Bureau has clearly adopted a more aggressive persona. Last year, in a very public fight, it took on the real estate industry's long-standing house-listing monopoly. And just as shoppers hit the malls before Christmas, the bureau announced a timely assault on credit card fees.
Away from the headlines, the watchdog agency has also started putting corporate mergers under more intense scrutiny, according to one of Canada's most prominent competition lawyers.
Brian Facey of Blake Cassels & Graydon LLP says the bureau - which was granted new U.S.-style powers to probe mergers in 2009 - has been imposing more conditions on merger deals meant to preserve a competitive marketplace, such as forcing newly combined companies to sell off assets.
According to his count, in the nearly two years since the bureau got its stronger powers, it has demanded conditions, known as "remedies," in 14 cases. In the two years before its overhaul, the bureau imposed, or forced companies to agree to, remedies in only seven mergers.
"Our results are coming into line with the U.S approach to antitrust law, which is [that in]pretty much any merger between major competitors, the Competition Bureau is going to put you through the wringer," said Mr. Facey, who acted for Labatt Brewing Co. Ltd. when the bureau launched a controversial and unsuccessful challenge of Labatt's 2007 takeover of discount brewer Lakeport Brewing Co.
Some of Mr. Facey's competitors at other law firms disagree that the numbers suggest the bureau is boosting its scrutiny of mergers. They say it's too early to draw conclusions. They also point out that many of the deals the bureau has examined since 2009 were already subject to competition remedies in the European Union or the United States.
"I don't see any evidence that the bureau is getting more aggressive in how they are analyzing mergers because of these changes at all," said Lawson Hunter, a former head of the Competition Bureau and now a lawyer with Stikeman Elliott LLP.
George Addy, another former bureau chief and now a lawyer with Davies Ward Phillips & Vineberg LLP, also disagrees with Mr. Facey's conclusions.
Any increase is likely "due to an increase in activity level as opposed to a change in attitude of the bureau," Mr. Addy said. "So as the economy rebounds, there's more transactions being undertaken."
When asked about the impact of the agency's new powers, a spokeswoman for the Competition Bureau pointed to remarks made by Melanie Aitken, the commissioner of competition, in a speech last September. Ms. Aitken said her officials were being instructed to use their new powers "judiciously" and had issued only 10 supplemental information requests since March of 2009, despite processing more than 300 mergers in total.
Under the current rules, before any merger with a combined worth of more than $400-million, or the acquisition of any company worth $70-million or more, the bureau must be notified. It then has 30 days to review the transaction. However, under new U.S.-style rules adopted in March 2009, the bureau can ask for what is known as a supplemental information request.
These requests for documents can take companies months to complete and can cost hundreds of thousands or even millions of dollars, Mr. Facey said. In most cases, the bureau is looking not only for data such as sales and price figures, but also any internal company documents that might shed light on the effects of the merger on future competition.
The remedies imposed in mergers are not limited to the selling off of assets. For example, in the acquisition by Coca-Cola Co. of the North American bottling business of Coca-Cola Enterprises Inc., the bureau announced in September that Coca-Cola Co. had agreed not to use sensitive commercial information it would obtain in the deal related to the bottling of Dr. Pepper.
While cracking down on mergers that threaten to create monopolies is meant to protect consumers from being gouged, too much scrutiny from a federal watchdog in a smaller country such as Canada could have broader negative consequences, Mr. Facey argued.
For example, domestic companies might choose foreign takeover bidders over Canadian ones to avoid a lengthy Competition Bureau review, resulting in fewer Canadian-owned players on the world stage, he said.
Donald Houston, a competition lawyer with McCarthy Tétrault LLP, said he couldn't say whether the bureau's new powers are the main reason for the increased number of remedies since 2009. But he agreed those new powers have strengthened the bureau's hand.
"There's no question that the bureau has more leverage under the current regime," Mr. Houston said, noting that under the new rules, the agency's requests for more information cannot be challenged in court.
Mr. Facey said the tally he has compiled is a sign of a more aggressive bureau in action: "When you do have a jump like that - it's basically a doubling - it suggests something trending in that direction."