Study: Tim Hortons-Burger King Deal Could Cost Canadians

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OTTAWA — The Tim Hortons and Burger King merger (which involves 3G Capital as the burger chain’s largest stakeholder) is close to completion, but a report has emerged that predicts lost jobs and more risk for business owners. It calls the partnership “a bad deal for Canadians.”

Ottawa’s Canadian Centre for Policy Alternatives (CCPA), a left-leaning think tank, analyzed 3G Capital’s previous takeovers to examine the impact on the Canadian economy. “3G Capital has a well-established post-takeover playbook of cost-cutting and mass layoffs, and the billions in new debt to finance the acquisition will create enormous pressure for changes at Tim Hortons,” said David Macdonald, senior economist, CCPA . The study predicts hundreds of layoffs, millions in lost tax revenue, more risk for small-business franchise owners, lower-quality products and higher prices for consumers.

Meanwhile, Canada’s competition tribunal issued a ‘no-action’ letter Tuesday, confirming that it won’t challenge the proposed transaction, but, the deal still needs to be approved under the Investment Canada Act, which reviews significant investments in Canada by non-Canadians to ensure a benefit to Canada. “Burger King’s acquisition of Tim Hortons must create a ‘net benefit’ for Canada in order to win approval under the Investment Canada Act. Tim Hortons is already a successful business that does not need to be rescued, and Burger King’s owners have disclosed few benefits to Canada,” said Macdonald. “The federal government must demand a better deal for Canada if it is to consider approval.”

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