EFFICIENCY ANALYSIS IN CANADIAN MERGER CASES

Remarks Prepared for the Federal Trade Commission Hearings on Global and Innovation-Based Competition

by

Margaret Sanderson
Bureau of Competition Policy, Canada

Washington, D.C. November 2, 1995

Canada occupies a unique position among antitrust authorities in the area of merger enforcement in that our legislation provides for an explicit efficiency exception to otherwise anticompetitive mergers.{1} As a result, when a merger is expected to be both anticompetitive and efficiency enhancing, section 96(1) resolves the conflict between competition and efficiency goals in favour of efficiency. This has forced the Bureau of Competition Policy to devise and articulate standards which it will apply in dealing with merging parties' efficiency claims.{2}

The need for an emphasis on efficiency is all the more important in a small economy, such as Canada.{3} Concentration levels are high in many Canadian industries, yet firms may not be operating at minimum efficient scale. As a result, efficiency gains are realizable, in certain industries, through greater specialization and potential economies in production, distribution and marketing. The need to rationalize is all the more significant as the Canadian economy has become increasingly exposed to international competition.

Of course, one does not need to have an explicit efficiency exception to mergers in order to entertain efficiency arguments. Indeed, the vast majority of mergers considered by antitrust authorities are efficiency-driven. As we all know, firms will engage in mergers when they increase profits. Profits may be increased either through the acquisition of market power, or through the achievement of cost savings, or some combination of market power and cost savings. The very fact that so few mergers are contested by antitrust authorities illustrates the prevalence of efficiencies in motivating transactions.{4} In this context it is natural for enforcement authorities to consider efficiencies when seeking to determine the profit rationale behind a particular transaction. As a consequence, efficiencies have been noted to be a "plus" factor used by enforcement authorities in exercising their prosecutorial discretion to resolve competitively close cases.{5} It is understandable then that parties frequently advance efficiency claims even prior to the antitrust authority identifying competition issues.

The focus of this paper is somewhat narrower, and is confined to a description of how efficiencies are considered once competition issues have been identified. In Canada, this means establishing that the merger has, or is likely to, substantially lessen or prevent competition as outlined in section 92.{6} An efficiency trade-off is considered after this step. Specifically, section 96 requires that the Competition Tribunal -- the Tribunal before whom the Director of Investigation and Research challenges mergers -- shall not issue an order against a merger under section 92 where the merger is likely to result in gains in efficiency that are greater than, and will offset, the likely anticompetitive effects of the merger, and these efficiency gains would not likely be attained if an order of the Tribunal were made.

The efficiency exception is broadly framed, and so, it may be argued, supports various interpretations. As outlined in the Merger Enforcement Guidelines, the Bureau has adopted a "total welfare" approach to the section, as opposed to a more "consumer-oriented" approach.{7} Hence, anticompetitive effects refer to the part of the total loss incurred by buyers and sellers in Canada that is not merely a transfer from one party to another, but represents a loss to the economy as a whole, attributable to the diversion of resources to lower valued uses. This standard is no different from the traditional benefit-cost analysis applied to other public policies. The use of a total welfare standard when evaluating efficiencies is the essential difference in Canada's approach to merger enforcement from that which is undertaken by U.S. federal antitrust authorities.

Interestingly, this essential difference has not led to a flood of anticompetitive mergers being approved on the basis of efficiencies. Some commentators have expressed concern that the fact that efficiencies have not been determinative in more cases indicates that the touted efficiency orientation of the Canadian merger provisions has failed to materialize.{8} Yet the Bureau has devoted considerable attention to analysing efficiency claims when these are presented and serious competition issues are identified. Rather than indicating a reluctance to accept efficiencies, the infrequency of efficiency trade-off cases should not be surprising when one considers the infrequency with which mergers are found to give rise to a substantial lessening or prevention of competition under the Canadian statute.{9}

Rationale for a Total Welfare Approach

So what exactly is meant by a "total welfare" approach. In economic terms this means that a merger will not be challenged where it has the effect, or is likely to have the effect, of increasing the sum of producer and consumer surplus. When a merger is anticompetitive, it results in a price increase thereby giving rise to a redistribution effect from consumers to producers and a negative resource allocation effect. Unlike a "consumer welfare" approach, a total welfare standard dictates that no weight be accorded to the transfer from consumers to producers, instead viewing this redistribution as neutral.{10} In contrast, a "price standard" whereby the prices charged by the firm post-merger must not rise views consumers as more deserving of a dollar than producers.{11}

The rationale for a total welfare approach is firmly grounded in economics and, in the Director's view, also in legislative intent. Economists have long advocated treating the wealth transfer effects of mergers neutrally owing to the difficulty of assigning weights a priori on who is more deserving of a dollar. For example, it is unclear that the pension-fund investors in, say a diamond-mining, firm would be more or less deserving than diamond consumers.{12} When viewed in a general equilibrium context, this money is recirculated within the economy in any event, no matter who initially, or last, held it. Hence, it doesn't matter whose pocket the money flows through. Of course, this conclusion is based on the assumption that the merger is small relative to the size of the total economy and hence prices in other markets can be taken as given.

Even considering that some system of weighting could be articulated, the practical implications of this are likely insurmountable. It is often difficult to determine who is losing and who is receiving the transfer, particularly in widely-held companies. In cases of intermediate products, is one looking to the shareholders of the consuming companies or to their ultimate customers? These problems are further complicated if one wishes to also distinguish between foreign and Canadian consumers and shareholders. Moreover, such distinctions run the risk of violating the national treatment obligations found in the investment provisions of various trade deals Canada has entered into, most notably NAFTA.

Turning to legislative intent, considerable debate was generated in Canada over this very issue following the Competition Tribunal's decision in the Hillsdown case.{13} Hillsdown is the only contested merger case before the Competition Tribunal which discusses efficiencies.{14} The discussion of efficiencies in this case was obiter dictum since the Tribunal did not find that a substantial lessening or prevention of competition was likely to result from the merger. Interestingly, both the Director and the Respondents were in agreement with the legal approach to be taken, namely that outlined in the Merger Enforcement Guidelines. Nevertheless, the legal member of the panel, Madame Justice Barbara Reed, who has since left the Competition Tribunal, questioned the approach taken. In her discussion, Madame Justice Reed did not offer an alternative legal test, but instead offered a series of questions, which in her view, should be considered in balancing efficiency gains against expected competition effects.

While Madame Justice Reed clearly understood the economic reasoning behind the Director's and the Respondents' approach, she expressed the view that perhaps this was not the original intent of Parliament in drafting the section. Her concern was that by adopting a total welfare approach to the section, one was narrowing the interpretation to be accorded to "anticompetitive effects" of a merger. An alternative interpretation she offered was that efficiencies might be given more weight where detrimental effects of the merger, defined to be both the allocative inefficiency plus the transfer from consumers to producers (or perhaps some portion thereof), are "not positively certain to follow" from the merger. Madame Justice Reed went on to note that where the efficiency gains are found to likely lead to lower prices to consumers -- a U.S. styled approach -- this would generally be determinative in the merger's favour.

Given the efficiencies discussion was obiter, the Director did not elect to appeal this aspect of the decision. The Director's response at the time was that if Parliament's desire had been to deny the possibility of any price impact on customers by giving consideration to the wealth transfer effects of a merger, then this presumably would have been specified in the language of the section.{15} Logically, one is left in the position that if one believes that prices are not likely to rise post-merger given the market configuration and the changed cost structure of the firm, then no substantial lessening of competition is likely to arise, and hence there is no need to have an efficiency exception.{16} To require a U.S. type "price test" for efficiencies would effectively read the efficiency exception provision out of the Canadian legislation.{17}

Anticompetitive Effects

The difficulty which some antitrust observers have with adopting a "total welfare" approach to efficiency analysis is the belief that small cost savings can dwarf large price effects of mergers. This understanding is often driven by the original modelling of the efficiency trade-off problem undertaken by Oliver Williamson.{18} Yet, the basic message behind the Williamson model is to recognize the potential benefits (i.e. cost savings) of mergers in addition to the costs (i.e. anticompetitive effects). Given the simplicity of Williamson's model, however, any application of the theory requires a more complex analysis. Thus, one must extend the original work of Williamson to account for various other factors, including pre-existing market power, efficiencies confined to the merged entity, differing demand assumptions, and differing assumptions about firms' competitive responses to each other.{19}

Essentially, one must turn to a fuller modelling of the cost conditions and competitive interactions of firms pre- and post-merger. While this is more complicated, antitrust authorities are fully capable of conducting this type of economic analysis. One can use various assumptions relating to demand elasticities, cost conditions and competitive responses of rivals in order to arrive at possible price and output levels post-merger. While this is far from an exact science, it will give some order of magnitude to the expected losses from an increase in price post-merger. More difficult predictions related to measuring losses from a reduction in service, quality, variety, innovation and other non-price dimensions of competition may also have to made. In these cases, a qualitative assessment is made since no quantifiable figure is practically attainable.

Some commentators have also advocated using the wealth transfer which accrues to the merging parties as a sort of "signal" of the credibility to be given to efficiency claims.{20} Economic theory suggests that, in general, mergers should tend to be marginally profitable -- neither significantly profitable nor unprofitable on average. Knowing this and the fact that mergers can increase profitability either through lower costs or improved prices may allow one to gain some insight into the predominant reason for the transaction's profitability -- i.e. does it stem primarily from increased efficiency or from the exercise of market power? Thus, where one finds that the wealth transfer to the merging parties is very large, one might wish to question the extent to which the parties could also realize significant cost savings since both a large efficiency gain and a large wealth transfer imply a dramatic increase in profitability -- something which is questioned by empirical studies of merger activity.{21} This does not mean discarding, or discrediting, efficiency claims in cases where one anticipates significant price increases, but it may mean critically scrutinizing claimed cost savings whenever the wealth transfer to the merging parties is demonstrably significant.

Relevant Cost Savings

The burden of proof in establishing efficiencies rests with the merging parties, and is to be established on the balance of probabilities in the usual way dictated by civil law. This was clearly established in Hillsdown, and is the appropriate standard given the asymmetric information problems which make verification of the parties' claims difficult for the enforcement agency.{22} To be considered as relevant savings for the trade-off analysis, the claimed efficiencies must represent a savings of real resources, rather than a redistribution of income.{23} Furthermore, it must be the case that these claimed efficiencies would not likely be realized if an order against the merger were made. Efficiencies do not have to be of a certain magnitude in order to be relevant.

Cost savings may fall into two broad categories: production efficiencies and dynamic efficiencies. Production efficiencies include product-level, plant-level and multi-plant level operating and fixed cost efficiencies; savings associated with integrating new activities within the firm; and, savings attributable to the transfer of superior production techniques and know-how from one of the merging parties to the other. Plant- level savings refer to those which flow from specialization, elimination of duplication, reduced downtime, smaller inventory requirements or the avoidance of capital expenditures that would otherwise be required. Multi-plant level savings include those associated with plant specialization, rationalization of administrative and management functions and the rationalization of research and development activities. Efficiencies may also be brought about in respect of distribution, advertising and capital raising. A reduction in transaction costs associated with integrating activities which were previously performed by third parties, such as contracting for inputs, distribution and services, may also constitute production efficiencies.

In the case of Hillsdown, for example, the parties claimed three areas of cost savings: administrative cost savings, transportation cost savings and manufacturing cost savings. The administrative cost savings stemmed from reducing the number of administrative positions post-merger. Thus, a marketing manager, an accountant, a route service manager and three sales personnel would no longer be required. The savings associated with this staff reduction included salaries and associated benefits and expenses after having subtracted severance costs. The transportation cost savings would be achieved through the rationalization of various truck routes, allowing for a reduction in the trucking fleet, drivers and fuel costs post-merger. The manufacturing cost savings would arise from one party reducing its input purchases, relying instead on the existing production of its merger partner. As this case indicates, often efficiencies are achieved from reductions in the numbers of employees.{24}

The second class of efficiencies, dynamic efficiencies, include gains attained through the optimal introduction of new products, the development of more efficient productive processes and the improvement of product quality and service. Ordinarily, it is extremely difficult to forecast such savings, for both the parties and the antitrust agency.

Some commentators have argued that certain types of cost savings should be accorded greater weight than others, owing to the problems of proof.{25} Specifically, savings arising from economies of scale are thought to be of higher value than those which might arise from consolidating management or administrative functions. In the Bureau's experience, administrative and corporate overhead savings are just as likely to be measurable as plant-level production savings. However, certain production efficiencies are generally more easily verifiable than others and are certainly easier to verify than dynamic efficiencies. Yet this has not resulted in according a differing status to a class of efficiencies in the trade-off analysis; rather, a probability weighting (or range of weightings) is assigned to the various cost claims. In this way the less likely cost savings are accorded less weight without discarding a class or type of efficiency claim. The Tribunal would appear to be in agreement with such an approach, as it did not take the occasion in Hillsdown to treat administrative cost savings differently than manufacturing cost savings.{26}

In order to assign probability weights, one must verify the parties' cost savings claims. To do this the Bureau will often employ the services of industry, accounting or economic experts. For example, an engineer may be contracted to verify that: one, a production line can physically be run three times in a day rather than two times; two, determine if the cost savings forecasted from the increased intensity of production are accurate; three, identify any added costs which are likely to result from increasing the number of production runs, such as additional maintenance costs, increased downtime, or higher labour costs from overtime pay. Original corporate documents are relied upon, in addition to any independent work undertaken by the outside expert.{27}

The standard used to verify cost claims is a balance of probabilities, rather than a stricter "clear and convincing" evidence standard. While it is true that forecasting synergies from a merger is an uncertain and difficult exercise, it has been the Bureau's experience that this is often no more speculative than forecasting the competitive response of rivals or poised entrants to possible price increases by the merged entity.{28} A stricter evidentiary burden might also negate the availability of the efficiency exception.{29}

While there have been some merger cases where the Director monitored the implementation of efficiencies post-closing, the Bureau has not undertaken a comprehensive analysis to determine what proportion of pre-merger efficiency claims are fully realized post-acquisition. Anecdotal evidence on this is mixed. There are cases where the parties exceeded their original cost savings estimates and other cases where the parties failed to realize the significant savings anticipated. In some cases, unanticipated exogenous shocks (e.g. recession, labour difficulties) made the realization of efficiencies difficult. No clear trends have appeared, and as a result, parties' cost claims are approached in a similar and consistent fashion, whatever the industry or market characteristics.

Of particular note to a U.S. audience is the fact that, in Canada, savings in fixed costs are as important as those to variable cost, owing to the total welfare approach. The American use of a price standard in the efficiency/anticompetitive effects trade-off may effectively discard savings in fixed costs -- in order for firms to price at lower levels, the intersection of marginal cost and marginal revenue must be at a higher output level implying that only savings in variable costs are important. While a lowering of average costs will not alter the merged entity's pricing decision (since the intersection of marginal revenue and marginal cost is unchanged) there is still a real resource savings to the merged firm. Ultimately there is also a resource savings to the economy as well, since the merged entity may redirect the previously expended resources to another function.

Following a similar line of argument, the total welfare approach also means that the claimed cost savings do not have to be in the same market as the anticompetitive effects in order for the efficiencies to be part of the trade-off analysis, with one caveat. The legislation specifies that for the efficiencies to be relevant, it must be the case that they would not be realized if the order against the merger were made. Hence, where the order sought against a merger is a partial divestiture order, involving only certain product or geographic markets, then only the efficiencies related to these markets, or only the efficiencies which would not be achieved with this order, are relevant. For example, if the partial divestiture order is related only to products A and B, then cost savings to product C are not relevant for the trade-off. The exception to this would be if cost savings related to product C are inextricably linked to those related to products A or B such that they would not be achieved if the order against products A and B were made, then the cost savings attributed to product C would be included in the trade-off.{30}

As the above discussion illustrates, for the efficiencies to be part of the trade-off, the Bureau tests alternatives which may yield similar cost savings. Unlike the more strict U.S. standard where efficiencies must be "unique" to the transaction, in Canada, a lesser standard is applied. Canada's Merger Enforcement Guidelines indicate that efficiencies will not be discarded from the trade-off in the event that they could theoretically be achieved through some other means, but only if they would likely be achieved through alternative, less anticompetitive means. Hence, efficiencies generally will not be excluded from the balancing process on the speculative basis that they could be attained through a merger with an unidentified third party. Rather, to determine likeliness, the market realities of the industry in question are considered. In Hillsdown, the Tribunal gave the greatest weight to the documentary evidence on the alternatives actually considered by the merging parties. As a result, where internal corporate documents indicate that, for example, a particular production line would be refitted with or without the merger, then a claim by the parties of cost savings related to this refitting of the production line would not be counted in the trade-off analysis. On the other hand, if it is clear that industry practice does not support contracting out of certain corporate services, then a claim of cost savings related to these corporate services would not be discredited on the basis that the services could theoretically be contracted out to achieve similar savings.

The Trade-off Analysis

In order to meet the requirements of section 96, the efficiency gains must be found to be "greater than and offset" the anticompetitive effects likely to result from the merger. As indicated above, both efficiency gains and anticompetitive effects have had a probability weighting assigned, and each will be expressed in present value form. Present values are particularly important for efficiencies which typically have various cost savings occurring at differing points in time. Usually, efficiencies take effect some time after the merger is consummated after the parties incur certain upfront investment costs. Where quantitative estimates are available for efficiencies and anticompetitive effects these are comparable. Efficiency gains and anticompetitive effects that cannot be weighed in similar terms will be evaluated to determine if the gains offset the expected losses. Given the subjective nature of this assessment, it will ordinarily require the exercise of the Director's discretion.

Indeed, it is important not to view the trade-off analysis as an exact science. Discretion has been exercised at various points in time, particularly when assigning probability weights to cost savings and in attempts to quantify anticompetitive effects. The aim of the exercise is to compare two orders of magnitude -- efficiencies versus anticompetitive effects -- and not to make a decision based on the fact that n+1>n. Furthermore, comparies orders of magnitude is generally feasible.{31}

As noted at the beginning of this paper, the number of cases where the Bureau has needed to undertake this extensive analysis is small. First, the number of mergers where significant competition issues arise is small, and second, not all of these transactions involve firms where significant efficiencies were anticipated. Given this, some might argue that it makes little sense to adhere to a total welfare standard. However, there may be important cases in the future for which this approach is ideally suited. In addition, a total welfare approach serves to remind antitrust enforcers that mergers are often efficiency-driven.{32}

To close, some interest has been expressed in the possibility of clearing anticompetitive mergers on a conditional basis when significant efficiencies are anticipated.{33} In Canada, the limitation period on challenging a merger is three years after the merger has been substantially completed.{34} Hence any attempt to conditionally clear a transaction would need to proceed within this time frame. In cases where efficiency gains are expected to arise quickly or where investments to yield significant cost savings are to be made shortly after closing, this may be a feasible means of ensuring efficiency gains come to pass.{35}

By adopting this approach, however, the enforcement agency may be left in the difficult position of regulator without access to the type of tools traditionally available to supervise firm conduct. There is also the added difficulty that detailed regulation may be contrary to the philosophy preached by most competition agencies. In addition, effective monitoring programs require resources, for they must not rely solely on information obtained from the parties. To bring optimal results, information from third parties is also required.

Finally, if one were to adopt a conditional clearance for mergers based on monitoring efficiencies, it will be important to credibly threaten to challenge the merger in the event that the efficiencies are not realized. This may be difficult when the parties have joined their operations extensively in order to achieve the disputed efficiencies. While seeking to hold separate certain aspects of the operation may improve the ability of the agency to threaten challenge or divestiture of "crown jewel" assets in the event that the efficiencies are not realized, this may also hamper the parties ability to realize the efficiencies.

Footnotes:

{1} See Competition Act, R.S.C., 1985, c. C-34, as am. R.S.C. 1985, c.27 (1st Supp.), ss.187, 198; R.S.C. 1985, c.19 (2nd Supp.), Part II; R.S.C. 1985, c.34 (3rd Supp.), s.8; R.S.C. 1985, c.1 (4th Supp.), s.11; R.S.C. 1985, c.10 (4th Supp.), s.18; S.C. 1990, c.37 ss.27-32, S.C. 1992, c.14, s.1. Section 92 provides the general prohibition on mergers which substantially lessen or prevent, or are likely to substantially lessen or prevent, competition. Section 96 provides the efficiency exception to section 92.

{2} See the Director of Investigation and Research's Merger Enforcement Guidelines, Information Bulletin No. 5, April 1991. Also, see George N. Addy, "Merger Review under Canadian Competition Law", Fordham Corporate Law Institute 21st Annual Conference 'International Antitrust Law & Policy', New York, October 27-28, 1994.

{3} See R.S. Khemani, "Merger Policy in Small vs. Large Economies", Canadian Competition Law and Policy at the Centenary, R.S. Khemani and W.T. Stanbury (eds.), Halifax: The Institute for Research on Public Policy, 1991.

{4} Even in the United States where antitrust enforcement is regarded as particularly rigorous, few mergers are challenged by the authorities. Deyak and Langenfeld note that about 96 percent of reported mergers in the U.S. in 1991 did not raise competitive concerns and were presumed to be efficient. (See Timothy Deyak and James Langenfeld, "Efficiencies in U.S. Merger Analysis", International Merger Law: Events and Commentary, no. 25, September, 1992). In Canada, about 98% of reported mergers do not raise competition issues under the Competition Act.

{5} See Joseph Kattan, "Efficiencies and Merger Analysis", Antitrust Law Journal, vol. 62, issue 2, Winter 1994. Also, see George N. Addy, supra note 2.

{6} See the Merger Enforcement Guidelines, supra note 2 for details of how the substantial lessening or prevention of competition assessment is made.

{7} Ibid., at Part 5, pp. 45-51.

{8} See Donald G. McFetridge, "The Prospects for the Efficiency Defence", Canadian Business Law Journal, forthcoming.

{9} See supra note 4. Also see R.S. Khemani and D.M. Shapiro, "The administration of Canadian merger policy, 1986-1989", Antitrust Bulletin, Fall 1994.

{10} For a fuller discussion of the economics, see Donald G. McFetridge, "The Efficiencies Defense in Merger Cases", Competition Policy Enforcement: The Economics of the Antitrust Process, Malcolm Coate and Andrew Kleit (eds.), Kluwer: forthcoming.

{11} Such a standard may be dictated by legislation, of course.

{12} Even assuming that some form of wealth redistribution is desired, there are clearly more efficient means open to the government of achieving this than the use of merger policy.

{13} See Canada (Director of Investigation and Research) v. Hillsdown Holdings (Canada) Ltd. (1992), 41 C.P.R. (3d) 289 (C.T.).

{14} Efficiencies were also briefly discussed in the Tribunal's decision in the consent order proceeding involving Imperial Oil and Texaco Canada, although the discussion was obiter to the decision. See Canada (Director of Investigation and Research) v. Imperial Oil Limited, CT-89/3.

{15} See Howard I. Wetston's remarks "Developments and Emerging Challenges in Canadian Competition Law" before the Fordham Corporate Law Institute, October 22, 1992, New York, New York.

{16} Pitofsky also makes this point with respect to the U.S. approach to efficiencies in mergers. See Robert Pitofsky, "Proposals for Revised United States Merger Enforcement in a Global Economy", Georgetown Law Journal, vol. 81, no. 2, December 1992.

{17} For further detail on this line of argument, see Paul S. Crampton, "The Efficiency Exception for Mergers: An Assessment of Early Signals from the Competition Tribunal", Canadian Business Law Journal, vol. 21, no. 3, March, 1993.

{18} See Oliver Williamson, "Economies as an Antitrust Defense: The Welfare Tradeoffs", American Economic Review, 1968, vol. 58.

{19} See Donald G. McFetridge, supra note 10.

{20} See David Besanko and Daniel F. Spulber, "Contested Mergers and Equilibrium Antitrust Policy", Journal of Law, Economics & Organization, vol. 9, no.1, 1993.

{21} See Paul A. Pautler and Robert P. O'Quinn, "Recent empirical evidence on mergers and acquisitions", Antitrust Bulletin, Winter, 1993.

{22} See Dennis A. Yao and Thomas N. Dahdouh, "Information Problems in Merger Decision Making and their Impact on Development of an Efficiencies Defense", Antitrust Law Journal, vol. 62, issue 1, Summer 1993 for a fuller discussion of the economic and legal reasoning behind having the merging parties bear the burden of proof.

{23} This requirement is explicitly laid out in the legislation within section 96(3).

{24} FTC Commissioner Varney comments on the limits which this may place on publicly disclosing expected efficiencies. See Christine A. Varney, "New Directions at the FTC: Efficiency Justifications in Hospital Mergers and Vertical Integration Concerns", prepared remarks before the Health Care Antitrust Forum, Chicago, Illinois, May 2, 1995.

{25} For example, see Kattan, supra note 5.

{26} See McFetridge, supra note 8.

{27} Given the need for detailed cost information, and the risks that the parties incur under the conspiracy provisions if the merger does not proceed, firms are advised not to exchange detailed cost information directly when providing the Bureau with efficiency information. Instead, detailed cost information may be provided by each firm to its individual counsel who provides the information to an independent third party for analysis, typically an economist or industry consultant.

{28} Deyak and Langenfeld believe this is equally true in the U.S. (see supra note 4).

{29} See Yao and Dahdouh, supra note 18.

{30} Deyak and Langenfeld indicate that a similar analysis would be undertaken in the U.S. (see supra note 4).

{31} For a concurring opinion, see Paul Crampton, "Alternative Approaches to Competition Law -- Consumers' Surplus, Total Surplus, Total Welfare and Non-Efficiency Goals", World Competition, vol. 17, no. 3, March 1994.

{32} See McFetridge, supra note 16.

{33} See Pitofsky, supra note 13. Also, see McFetridge, supra notes 8 and 16.

{34} Section 97 of the Competition Act, supra note 1.

{35} Where monitoring programs have been established in Canada to advise the Bureau of post-merger developments these have typically involved situations where there is a combination of high post-merger market shares, negatively weighted section 93 factors, and concerns on the Bureau's part that the proposed transactions are not likely to bring the efficiencies claimed by the parties.