Canada's competition watchdog says it will review a deal between Torstar Corp. and Postmedia Network Inc. announced Monday to sell newspapers to each other and close most of them down.
Torstar Corp. and Postmedia Network Inc. announced Monday they will cut nearly 300 jobs when they shutter more than 30 newspapers, most of them in Ontario.
Postmedia said in a news release that the transaction was not subject to merger notification provisions of the Competition Act but Competition Bureau spokesman Jayme Albert said in an email that a review is planned.
"Under the Competition Act, transactions of all sizes and in all sectors of the economy are subject to review by the commissioner of competition to determine whether they will likely result in a substantial lessening or prevention of competition in any market in Canada," he said, adding the transaction can be challenged before the Competition Tribunal for up to a year.
The deal announced Monday was roundly criticized by observers and unions who said it will lessen competition and hurt local news coverage in the affected communities, but defended by the companies as necessary to reduce costs as advertising revenues shrink.
Fresh pressure on the feds
Canadian union leader Jerry Dias called the closures "devastating" and urged federal Heritage Minister Melanie Joly to take action to protect print journalism.
Joly unveiled a cultural strategy in September that was criticized by industry experts for lacking expected measures that could have given a boost to Canada's struggling newspapers.
At the time, she said the federal government had no interest in bailing out industry models that are no longer viable, and would instead focus on supporting innovation, experimentation and the transition to digital platforms.
Dias, the national president of Unifor, Canada's largest private-sector union, argued Monday that helping print media out of a crisis does not have to be about propping up a failed business model.
"The federal government has to step up," he said. "If the government wants to have a thriving industry, if they want to have freedom of expression, if they want to have journalistic integrity, then we're going to have to find a mechanism to deal with it ... You put money into journalism. That's what the issue is."
When asked Monday if news of the closures had encouraged her to rethink her approach, Joly reiterated that the government will provide support in the coming months for local media as they continue to shift to web-based models.
"Of course, I'm sad to hear about these local closures and my thoughts are with the families affected," she said. "We value the importance of journalism and that's why we invest up to $75 million per year in local media."
Ottawa-area Liberal MP Anita Vandenbeld called the closures – several of which will impact papers in the national capital – an unfortunate development that will impact democracy and make it more difficult for politicians and community groups to connect with locals.
Vandenbeld said that if there are solutions available to help the industry, the government should pursue them. But she believes the industry's challenges are a much larger issue that are part of a global trend.
"I think it's part of a much larger and much more worrying trend in the world today, which is the closure of a number of media outlets, investigative journalism, print media, that is frankly not good for our democracy," she said.
"If there are solutions, then absolutely I think we should be doing what we can. But I think this is a much bigger, societal issue than individual papers."
Conservative MP Peter Van Loan, who is the heritage critic for his party, said he thinks the newspaper chains are making a mistake by shutting down the local papers, but said the federal government should not intervene.
"It's not appropriate for government to run the media and government shouldn't be running the media," said Van Loan, whose own Ontario riding of York, Simcoe is also losing a local paper, the Bradford Times.
"When you have dynamic change, the answer is not to have government fund money to turn back the clock and try to keep an old model alive that doesn't work anymore."
New Democrat heritage critic Pierre Nantel, meanwhile, said he thinks the government should reconsider.
"They should be revisiting their decision," said Nantel. "We all know she said specifically she wouldn't help what she called a flawed business model. Obviously she didn't do (anything), and now what do we have?
"Wake up. The barn is burning."