Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Canada Competition Bureau approves sale of 14 Transcontinental community newspapers, (Sep 3, 2014)

By Linda O’Brien, J.D., LL.M.

The Canada Competition Bureau announced today that it has approved the sale of 14 Transcontinental community newspapers. Of these, three will continue to be operated as traditional weekly newspapers and 11 will be operated in online format. The transactions are being made under the May 2014 Consent Agreement between Transcontinental and the Bureau relating to Transcontinental’s proposed acquisition of 74 community newspapers from Québecor Media Inc. The aim of the Consent Agreement was to preserve competition in the sale of advertising in community newspapers in several areas in Quebec by requiring that 33 community newspapers be put up for sale.

The objective of the sale process was to test for the availability of possible alternatives to Transcontinental owning all the papers. However, even with incentives such as no minimum price and Transcontinental providing distribution and printing services to any potential purchaser for a specific period of time, no buyer was found for some of the papers. Transcontinental now retains full ownership of the 19 community newspapers that were not sold.

Le Journal de Saint-Hubert (Saint-Hubert) and Rive-Sud Express (Longueuil) are being acquired by Les MÉDIAS de la Rive-Sud. L’Écho du Nord (Saint-Jérôme) is being purchased by a company administered by Serge Langlois, Michel Langlois, Claude Langlois, Carole Côté, and Pierre-Marc Langlois, four experienced publishers who produce other community newspapers in the area via Les Éditions Blainville Deux-Montagnes.

Néomédia, a division of iClic Inc, is acquiring 11 newspapers. Néomédia, based in Saint-Georges de Beauce, has its own distribution platform and special expertise in local and regional news websites. The firm is buying the following community newspapers and intends to operate them in online format: Agri-Vallée (Valleyfield); Chambly Express (Chambly); Le Journal de Joliette (Joliette); Le Point du Lac-Saint-Jean (Saint-Félicien); Le Révei (Saguenay); L'Écho de la Rive-Nord (Sainte-Thérèse); L'Écho de Lava, (Laval); L'Écho de Trois-Rivières (Trois-Rivières); Pub Extra Magazine (Laval-Laurentides); Sorel-Tracy Express (Sorel-Tracy); and Vallée du Richelieu Express (Mont-Saint-Hilaire).

iClic operates embeauce.com, a local news source for the Beauce region, and has helped approximately 15 regional newspapers make the transition to an online format. In approving iClic as the purchaser, the Commissioner carefully considered a number of factors, including the criteria set out in the Consent Agreement and the Bureau's Merger Enforcement guidance. Ultimately, the Commissioner was satisfied that iClic would lessen Transcontinental's market power in these markets and, as such, was a competitively preferable purchaser, particularly in light of the fact that the likely alternative to iClic's purchase was the complete closure of these 11 newspapers

When conducting its review of Transcontinental’s acquisition of Quebecor Media, the Bureau assessed the potential enhancement of market power by Transcontinental in: (1) door-to-door distribution of third-party community newspapers and flyers and (2) the sale of advertising in community newspapers, which could lead to higher prices for advertisers, according to the Competition Bureau’s position statement.

"The Bureau is satisfied that 14 newspapers will be purchased,” said John Pecman, Commissioner of Competition. “However, I understand that some communities will be disappointed that no acceptable buyer was found for their community newspapers or that they are going to lose the paper edition of their newspaper. I remain convinced that the Bureau has done everything in its power to test the market to determine if there was a possible alternative to Transcontinental owning all the papers. Unfortunately, in some cases like this one, where many newspapers are in financial distress owing to the ongoing transformation of the community newspaper industry, the market dictates that there are limited alternatives."

Companies: Transcontinental Inc.; Quebecor Media Inc.

News: Antitrust