Bank Merging

This letter would be sent prior to the Bureau engaging in any discussions on possible remedies.
             Lessening Competition.
             A merger among banks can lessen competition if it enables the merged unit to raise prices, or if it is likely to bring about a price increase as a result of increased range for interdependent behaviour in the market. Interdependent behaviour includes an understanding among firms in the market to profitably increase price or to compete less forceful. Competition can also be lessened if the merger allows firms to profitably lower quality or service, or to reduce product variety.
             Preventing Competition.
             One of the main reasons for a bank to merge is because of competition with other banks. Competition can be prevented by conduct that is one-sided. Competition can also be prevented as a result of independent behaviour where a merger enables a single firm to maintain higher prices than what would exist in absence of the merger. Competition can also be prevented where a merger will inhibit the development of greater rivalry in a market already characterized by interdependent behaviour. .
             The Competition Bureau.
             The mandate of the Competition Bureau is to ensure that Canada has a competitive marketplace and that all Canadians enjoy the benefits of low prices, product choice and quality service. This requires that proposed mergers be examined to determine whether the merged company will substantially lessen competition by raising prices, limiting choice and decreasing service. Should the Bureau reach a conclusion to this effect, and after taking into account any claimed efficiencies, it will generally require that the proposal be restructured or abandoned.
             Review Procedures.
             In order to continue the Bureau's practice of ensuring predictability, the Director, after consultations with the Minister of Finance, has decided to adopt the following procedure for all Schedule 1 bank mergers:.