Competition review panel calls on government to remove ban on cross-pillar mergers

The Competition Policy Review Panel is calling on the federal minister of finance to “remove the de facto prohibition on bank, insurance and cross-pillar mergers of large financial institutions, subject to regulatory safeguards, enforced and administered by the Office of the
Superintendent of Financial Institutions [OSFI] and the Competition Bureau.”
Canada’s ministers of industry and finance announced the creation of the panel on July 12, 2007. The panel was asked to review Canada’s competition and foreign investment policies and to make recommendations to the Minister of Industry “for making Canada more competitive in an increasingly global marketplace.”
The panel presented its 140-page final report to the minister, and its recommendations include the possibility of allowing cross-pillar mergers between banks and insurance companies. [The report does not speak to the issue of banks selling insurance from their retail branches.]
“Much has changed since 1998, when a de facto prohibition on mergers between large financial institutions was announced by the Minister of Finance,” the policy review panel’s report reads. “Canadian financial institutions have become more international, have pursued divergent strategies and have succeeded or fallen back according to their respective strategies
“Financial institutions the world over have merged, creating larger, more powerful competitors. Yet the de facto ban on mergers between large Canadian financial institutions has been in place for decades.
“The panel is of the view that appropriate prudential, competition and public interest standards and processes are in place in Canada to allow for an objective analysis of merger proposals involving financial institutions.”
To date, the federal government has reportedly said only that it will be giving the recommendations serious consideration.