Canada's Competition Bureau is currently reviewing the pre-merger notification filed by Oracle Corp. in its bid to snag rival PeopleSoft Inc., to determine whether the merger will hinder competition.
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.
"The legal test we concern ourselves with is whether or not the proposed merger will substantially lessen or prevent competition. Our whole analysis is geared at answering that question," Annan said.
The bureau uses numerous guidelines in the Canadian Competition Act to examine, and ultimately determine, if the merger is a go or a bust. For example, it will look at the company's pre and post market share, the level of difficulty for other competing companies to enter the space as a result of the merger, the affects on the remaining competition and how consumers will be affected, he explained.
Aside from contacting the involved companies, Annan said in some cases the Bureau will speak with competitors in the industry, customers and suppliers and even hire an industry expert or external economist in a consulting role to assist during the review period.
Canada's Competition Bureau is closely following the U.S. Department of Justice, which has made a second request under the Hart Scott Rodino Act requesting Oracle provide additional information concerning the merger and the likely impact of the merger on the competition. The European Commission has also engaged in early talks with Oracle concerning its hostile PeopleSoft merger.
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 the review process of the Oracle case still undetermined in Canada, Corley added that the final decision could be more difficult to address than most for the bureau.
"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.