Canadian competition watchdog eyes Oracle bid

Canada’s Competition Bureau is currently reviewing the pre-merger notification filed by Oracle Corp. in its hostile bid to buy rival PeopleSoft Inc., to determine whether the merger will hinder competition.

But, if the bureau’s history holds true, it is unlikely to rule against Oracle, says one lawyer.

Francois Rioux served as legal counsel for the Canadian Department of Justice and acted as the Competition Bureau’s lawyer for eight years. Typically, if the Bureau has expressed concern over a merger, it will first try to negotiate with the parties over issues it feels need to be re-examined, such as geographic or product-related concerns, he said.

If those discussions fail, the Bureau’s commissioner will then decide if it will present its case before the Competition Tribunal.

Since 1986, out of thousands of cases contested by the commissioner annually in Canada, only five mergers have been contested. Of those cases, “the commissioner has lost most of them,” said Rioux, currently the leader of the commercial litigation group and competition group practice at Borden Ladner Gervais LLP in Montreal.

If a case is contested, he noted that it could take years before it is resolved and in most instances the bureau will opt to negotiate before litigation proceedings.

Richard Corley, co-leader of the technology practice and partner in the competition practice at Blake, Cassels & Graydon LLP in Toronto, says that Oracle’s result at the end of the review process will “depend upon whether the regulators have been persuaded that the merger is not likely to cause a substantial lessening of competition.”

He added that in Canada, the Bureau will ultimately have to decide whether the merger will have an adverse affect on competition in Canada.

With the length of Oracle’s review process still undetermined, Corley said the final decision could be more difficult to address than most.

“Software is always a difficult one to address because of its flexibility and [because] software packages evolve over time and can add or migrate functionality,” he said.

Still, at the end of the day, when asked by ComputerWorld Canada if the Competition Bureau could block or prevent the merger from taking place in Canada, neither the Bureau nor legal experts offered a definitive response.

Richard Annan, assistant deputy commissioner in the mergers branch at the Canadian Competition Bureau in Gatineau, Que., said it has investigated Oracle’s US$7.25 billion bid since the deal was first announced in June. In Canada, mergers are automatically reviewed if the target company has more than $50 million in sales or assets in Canada, and if the two companies combined have assets or sales that exceed $400 million.

He said the organization has one specific goal in mind when reviewing all mergers in Canada – how they affect the competitive landscape.

The Bureau uses numerous guidelines outlined in the Canadian Competition Act to examine, and ultimately determine, if the merger is a go.

Canada’s Competition Bureau is closely following the U.S. Department of Justice. The European Commission has also engaged in early talks with Oracle concerning its hostile PeopleSoft merger.