Two of Canada’s largest newspapers just had their offices searched by competition agents

Two of Canada’s largest newspaper companies are under investigation for “anti-competitive conduct” by a federal agency that executed search warrants at the offices of Postmedia and Torstar on Monday in the aftermath of a deal to close three dozen small newspapers.

The Competition Bureau of Canada is probing an agreement between the two media firms to swap about 40 small-town newspapers last November and then shut most of them down, the CBC reported, although the government agency remains tight-lipped.

“Investigators with the Bureau are currently gathering evidence to determine the facts relating to the alleged conspiracy,” John Pecman, Commissioner of Competition, said in a statement. No wrongdoing has been proven and no charges have been laid, the statement added.

The media companies denied breaching competition rules over the deal to shutter the small-town newspapers.

"Postmedia is strongly of the view that there has been no contravention of the Competition Act with respect to this matter and Postmedia is co-operating with the Competition Bureau in connection with their investigation," the company which owns the Vancouver Sun, National Post, Montreal Gazette, Ottawa Citizen and other major dailies said in a statement.

Torstar, the company which publishes the Toronto Star and other papers, said in a statement it “does not believe it has contravened the Competition Act and is cooperating fully with the Competition Bureau in connection with its review.”

Torstar said officials from the Competition Bureau conducted searches of its corporate offices as part of its ongoing review of the company’s transaction with Postmedia Network Inc. completed on November 27, 2017.

That swap resulted in 41 newspapers changing hands, the closure of 36 papers and nearly 300 job losses, CBC reported.