Friday, November 13, 1998
REPORT IDENTIFIES PROBLEMS WITH COMPETITION
BUREAU'S BANK MERGER REVIEW
OTTAWA - Today, the Canadian Community Reinvestment Coalition (CCRC)
released its report on the Competition Bureau's review of the proposed
bank mergers. The 10-page report, entitled Bank Rhetoric or Customer
Reality: Key Questions About the Competition Bureau's Analysis of the Proposed
Bank Mergers, identifies key problem areas of the Competition Bureau's
ongoing analysis of the proposed mergers. The Competition Bureau is expected
to report by mid-December on the anti-competitive impacts of the mergers.
In its report, the CCRC calls on the Competition Bureau to ensure that
its review of the mergers is open, fair, and addresses the marketplace
reality for bank customers, especially individuals and small businesses
(For a copy of the report, contact the CCRC). Specifically, the CCRC recommends
that the Bureau:
- Disclose details of the Bureau's analytical approach to the mergers
(such as product and geographic market definitions) so that all Canadians,
not just the merger-seeking banks, have an opportunity to respond to and
influence the Bureau's decisions about details of its analysis.
- Take into account the record profits of the merger-seeking banks since
1993 as evidence that the banks already have anti-competitive levels of
- Use product market definitions that reflect reality for customers,
and split products into separate markets if there is any reasonable doubt
as to whether the products are substitutes for each other.
- Define geographic markets in a much more realistic way than simply
using, as the Bureau is, the banks' database based upon Canada Post's 1,500
Forward Sorting Areas (FSAs - 173 rural FSAs are more than 1,000 square
kilometers, much larger areas than anyone would travel to shop for financial
- Not consider Internet or telephone banking as a significant means of
providing products or services, or for new companies to enter the market,
given that only a very small percentage of Canadians (7.4%) have access
to the Internet, or are using Internet (1%) or telephone (10%) banking
- Take into account all possible alternative arrangements to mergers
such as joint ventures and licensing agreements that could increase the
efficiency and competitiveness of Canada's banks.
- Not consider foreign banks or new domestic financial institutions as
significant competitors in the Canadian banking market, given the many
barriers to entry faced by these competitors.
"The Competition Bureau must close the gap between the big bankers'
rhetoric and the reality for bank customers, especially individuals and
small businesses," said Duff Conacher, Chairperson of the CCRC, "Financial
products and services are not as accessible through Internet and telephone
banking, or from competitors of the banks, as the banks would like everyone
to believe. And the banks' record profits provide evidence that the market
is already anti-competitive."
Canadian Community Reinvestment Coalition
P.O. Box 1040, Station B, Ottawa, Canada K1P 5R1
Tel: (613) 789-5753
Fax: (613) 241-4758
Copyright 1998 Canadian Community Reinvestment Coalition