On January 11, 2012, Canada's Competition Bureau published revised Merger Review Process Guidelines, updating the Bureau's approach to the administration of the merger review process under the Competition Act in light of experience gained since the implementation of the two-stage U.S.-style notification process in 2009.
In particular, the Guidelines discuss: (i) the statutory waiting periods which apply to mergers that exceed certain thresholds set out in the Act; (ii) the two-stage notification process including the use of Supplementary Information Requests (SIRs), similar to the "second request" process in the United States; (iii) the use of timing agreements as an alternative means of obtaining information about a transaction and (iv) provide the Bureau's view of how parties should conduct their searches for documents and information when responding to a SIR, in the form of sample search instructions.
All transactions involving an operating business in Canada which exceed certain thresholds are subject to mandatory pre-merger notification under the Act, and the parties are not permitted to close the transaction until the expiry or early termination of a 30-day waiting period following pre-notification. That waiting period can be extended, however, if the Commissioner of Competition requires additional information to complete her review of the likely competitive impact of the transaction and issues a SIR. Where a SIR is issued within the first 30 days following notification, the waiting period does not expire until 30 days following compliance with the SIR.
The most significant changes in the revised Guidelines include:
- Hostile Transactions: A new section of the
Guidelines deals with the merger review process in the context of
hostile transactions. This new section is largely repetitive of the
Bureau's second enforcement guideline
regarding hostile transactions and notes that, in the context of a
hostile transaction, a target is not able to affect (e.g., delay)
the commencement of the relevant waiting periods by delaying its
pre-notification filing or its response to a SIR. The section also
notes that, to ensure that it receives SIR responses from targets
on a timely basis, the Bureau will typically issue a SIR in
combination with a timing agreement (to certify compliance on or
before a specified date) and/or a court order obtained pursuant to
section 11 of the Act, which compels the target to provide
information to the Bureau.
- Pre- and Post- Issuance Dialogue: The revised
Guidelines provide more detail about the dialogue between the
Bureau and the parties before and after the issuance of a SIR. In
particular, pre-issuance dialogue can serve to narrow the scope of
a SIR and identify technological barriers to production, while
post-issuance dialogue can help to prioritize information to be
supplied and specify the custodians and search terms to be used in
collecting data. The Bureau typically expects parties to use best
efforts to respond to a SIR in a timely manner and on a rolling
basis.
- Updated Search Periods: The revised Guidelines
provide that, when a SIR is issued, the default search period for
hard copy and electronic records will generally be the year-to-date
period immediately preceding the date of issuance of the SIR and
the previous two full calendar years. For data requests, the time
period will generally be limited to the year-to-date immediately
preceding the SIR issuance and the previous three full calendar
years. However, these default search periods may vary depending on
the facts of a particular case.
- Requirement to Refresh: The revised Guidelines
note that the Bureau will require parties to produce
"refreshed" information where the period between the date
of issuance of a SIR and the date of certification of a complete
response exceeds (typically) 90 days. In such cases, the Bureau
will require responsive records to be current to within 30 days of
the certification of a party's response.
- Timing Agreements: A revised section on
"timing agreements" provides more detail about the
situations in which the Bureau will consider using a timing
agreement as an alternative means of obtaining additional
information about a proposed transaction, as opposed to issuing a
SIR. The revised section also notes that, in the context of a
hostile transaction, the Bureau may request that a bidder provide a
timing commitment (not to certify compliance before a specified
date) to ensure that the Bureau has sufficient time to obtain and
analyze information from all parties.
- Sample SIR Instructions: The revised Guidelines contain sample SIR instructions, which set out the logistical procedures that parties must follow in complying with the SIR. The instructions include the relevant search periods, the means by which documents must be provided, and an acceptable manner in which to certify that a party has fully complied with a SIR.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.