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On April 11, 2012, the Competition Bureau released a statement summarizing its review of the
acquisition of retirement residences by Chartwell Seniors Housing
REIT (Chartwell) and Health Care REIT Inc. (HC) of the Maestro
Retirement Residences Portfolio (Maestro). The Bureau issued a No
Action Letter in respect of the acquisition.
Both Chartwell and Maestro operate retirement residences in
Canada, while Ohio-based HC operates retirement residences in the
United States. The Bureau's review focused on the different
types of retirement residences and the local nature of competition
among retirement residences. The relevant product markets were
defined as Independent Supportive Living programs (ISL) and
Assisted Living programs (AL), due to differences in the services
offered and demand considerations for each.
The Bureau examined the level of care provided by each type of
program. ISL programs can range from providing minor additional
services to higher end services such as assistance with meals and
personal care. AL programs, on the other hand, provide residents
with services such as administering medication, rehabilitation and
memory care services. However, many retirement residences offer a
mix of both ISL and AL services. As a result, the Bureau concluded
that there was likely a degree of supply side substitutability
between the programs which could counter an exercise of market
power post-merger.
The relevant geographic market was defined as local, with each
retirement residence having a catchment area of 5 to 20 km. In
total, the review consisted of 21 local markets in cities
throughout Alberta, British Columbia, Ontario and Quebec. The
Bureau examined market shares based on retirement residences
generally, and then used the information regarding individual
residences to determine the likely degree of supply side
substitutability within each geographic market.
The Bureau issued a No Action Letter given the level of
effective remaining competition, low barriers to entry by new
players and expansion by existing ones, and high vacancy rates in
many overlap markets, in addition to the ability of retirement
residences to substitute ISL and AL services.
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