Friday, November 13, 1998


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:

  1. 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.
  2. Take into account the record profits of the merger-seeking banks since 1993 as evidence that the banks already have anti-competitive levels of market power.
  3. 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.
  4. 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 services).
  5. 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 services.
  6. 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.
  7. 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."

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Canadian Community Reinvestment Coalition
P.O. Box 1040, Station B, Ottawa, Canada K1P 5R1
Tel: (613) 789-5753
Fax: (613) 241-4758
Email: cancrc@web.net

Copyright 1998 Canadian Community Reinvestment Coalition