Lax merger laws in Canada underestimate the harm to competition caused by mergers and overestimate their benefits, a new report says.
Gaps in Canada's merger laws have failed to prevent the kind of acquisitions that allow big firms to "extinguish competitive threats and entrench their dominance," according to the Centre for International Governance Innovation.
The "permissiveness" of merger laws is especially concerning in the context of a growing digital economy, which is fraught with unique challenges, his report adds. The same proportion agreed that more competition between businesses could lead to more choice and lower prices for consumers. Under the Competition Act, parties to a proposed merger must notify the Competition Bureau if a transaction meets certain financial thresholds. But those thresholds do not include the value of the transaction itself, the report says.
That's because current laws take into consideration the increased efficiency that may come from a merger, he said. Harms from reduced competition are permitted if the proposed merger will lead to cost savings that are deemed to be greater.Instead, the laws favour negotiated agreements that include concessions or remedies that would address some of the competition concerns.
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