The conditions around the Burger King takeover of Tim Hortons were driven by public expectations and not necessarily by government, according to Industry Minister James Moore.
On CBC Radio's The House, Moore said the desire of Canadians to know about how a business transaction will affect a local franchise and its commitment to the community influences the conditions negotiated in a deal and whether they are made public.
"People actually want to know these details. It's not that the government forces this kind of detail, but very often firms, recognizing the market in which they're entering … the consumers, the public in those markets. are looking for a certain degree of detail, and that's the circumstance here," he said.
On Thursday the federal government approved Burger King's takeover of Tim Hortons, but with conditions intended to protect jobs and the coffee chain's brand.
Conditions include Canadian headquarters and no job cuts
In a statement, Industry Minister James Moore said Burger King agreed to the following conditions:
- To keep 100 per cent of Tim Hortons employees at franchises across Canada and to preserve all of Tim Hortons' charitable work.
- To accelerate the opening of new Tim Hortons restaurants in the U.S. and globally.
- To establish the headquarters of the new company in Oakville, Ont., and to list the company on the Toronto Stock Exchange.
- To manage Tim Hortons as a distinct brand, without co-branding of any locations in Canada or in the U.S.
- To maintain the Canadian franchisee rent and royalty structure at current levels for five years.
- To ensure Canadians represent at least 50 per cent of the membership of the Tim Hortons brand board of directors.
The merged company becomes the third-largest fast food company in the world, with sales totalling $23 billion annually.
Enforcing conditions
Critics of the deal had argued that the merger might lead to layoffs at Tim Hortons and cause harm to Canada's interests.
How the government will enforce these conditions is unclear.
When asked about it on The House, Moore cited the case involving U.S. Steel in Hamilton. He said that when the company was not fulfilling the commitments it had agreed to, Ottawa took the company to court and won.
"Those conditions were then held, and those job commitments and the specificity that was outlined in that agreement was sustained and was enforced," he said.
The Canadian company Stelco was taken over by U.S. Steel in 2007. The federal government tried to fine U.S. Steel in 2009 for breaking job protection promises.
The government settled with the company after a two-year court battle in 2011, with the guarantee that it would operate both the Lake Erie and Hamilton plant until 2015. It also had to spend $250 million in capital investment.
Currently U.S. Steel is restructuring. It sought bankruptcy protection in September. Documents filed with the bankruptcy court state that U.S. Steel Canada plans to sell its Hamilton and Nanticoke plants by next October.
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