Yesterday, the Competition Bureau (the “Bureau”) announced that had issued a No Action Letter (“NAL”) in connection with Cineplex Inc.’s acquisition of 22 movie theatres from Empire Theatres Ltd. The Bureau’s press release also indicated that, during the course of the review, the parties revised their transaction to address concerns raised by Bureau staff.
In June of this year, Empire Co. Ltd. (parent of Empire Theatres Ltd.) announced that it would sell 46 movies theatres across Canada. Initially, Cineplex agree to purchase 24 movie theatres in Atlantic Canada and Ontario from Empire for approximately $200 million. The remaining movie theatres were to be sold to Landmark Cinemas Inc. for $55 million.
However, during its three-month review, the Bureau advised Cineplex and Empire that it believed the acquisition of two movie theatres in the Ontario (located in Whitby and Kanata) would likely result in a substantial lessening of competition in those markets. To address the Bureau’s concerns, Cineplex and Empire revised their deal to exclude these theatres, which Empire will sell to an alternative buyer.
Under the terms of the revised deal, the theatres acquired by Cineplex are all located in Atlantic Canada (where the company does not currently operate). Accordingly, the Bureau concluded that the revised transaction would not result in a substantial lessening and/or prevention of competition and issued a NAL.
The fact that the Bureau’s press release discusses the fact that the parties modified their transaction in light of concerns raised by the Bureau during its review is noteworthy in that it comes on the heels of the Commissioner of Competition’s (the “Commissioner”) recent speech expressing his goal that having a clear and transparent dialog with transaction parties would allow them to pro-actively address potential substantive concerns. The Commissioner indicated that, in his view, “This type of co-operation can substantially expedite the review process and avoid the costs and delays of litigation or protracted settlement discussions.”
The approach taken by the Commissioner, as well as the disclosure of the fact that the parties modified their deal in light of the Bureau’s stated concerns is another signal that the Bureau is working to both increase the transparency of its merger review process, as well as work with parties to resolve substantive issues in a practical manner where possible.
For a copy of the Bureau’s press release regarding Cineplex, please click here.