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Merger Enforcement Guidelines

September 2004

(PDF: 580KB)

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Table of Contents

Foreword

PART 1 - DEFINITION OF MERGER
Control
Significant Interest

• Notifiable Transactions
• Acquisition of Voting Equity Interests
• Non-voting & Convertible Securities
• Asset Acquisitions
• Increasing an "Interest" in a Business
• Other Considerations

 

PART 2 - THE ANTI-COMPETITIVE THRESHOLD
Overview
Lessening of Competition
Prevention of Competition
Substantiality

 

PART 3 - MARKET DEFINITION
Overview
Product Market Definition
Geographic Market Definition

• Foreign Competition
• Delineating Geographic Boundaries

 

PART 4 - MARKET SHARE AND CONCENTRATION
Participating in the Market Through a Supply Response
Calculating Market Shares
Market Share and Concentration Thresholds

 

PART 5 - ANTI-COMPETITIVE EFFECTS
Unilateral Effects

• Firms Distinguished Primarily by their Products
• Firms Distinguished Primarily by their Capacities

Coordinated Effects

 

PART 6 - ENTRY
Conditions of Entry

• Timeliness
• Likelihood
• Sufficiency

Types of Barriers to Entry

• Regulatory Barriers
• Sunk Costs
• Other Entry-Deterring Factors

 

PART 7 - COUNTERVAILING POWER

PART 8 - THE EFFICIENCY EXCEPTION
Overview
Gains in Efficiencies

• Types of Efficiencies Generally Included in the Trade-off
  • Gains in Productive Efficiency
  • Gains in Dynamic Efficiency
  • Deductions to Gains
• Types of Efficiencies Generally Excluded from the Trade-off

Anti-Competitive Effects

• Price Effects
  • Loss of allocative efficiency (Deadweight Loss)
  • Redistributive Effects
• Non-price effects
  • Reduction in Service, Quality, Choice
  • Loss of Productive Efficiency
  • Loss of Dynamic Efficiency

The Trade-Off

 

PART 9 - FAILING FIRM
Business Failure and Exiting Assets
Alternatives to the Merger

• Acquisition by a Competitively Preferable Purchaser
• Retrenchment/Restructuring
• Liquidation

 

PART 10 - VERTICAL MERGERS
Increased Barriers to Entry
Coordinated Effects Facilitated by Vertical Integration

PART 11 - CONGLOMERATE MERGERS

APPENDIX I: ADDITIONAL INFORMATION ON SUNK COSTS
Market Specific Assets and Learning
Product Differentiation
Strategic Behaviour