- Policies on Merger Review Timing
- Providing Additional Transparency in Hostile Transactions
- Clarifying Roles and Responsibilities in Criminal Matters
The Competition Bureau recently released a number of policy documents designed to increase transparency in its review processes and provide greater clarity to stakeholders. The Fee and Service Standards Handbook for Merger-Related Matters was issued in draft form for public consultation: its key element is a proposal to reduce the maximum review time for transactions classified by the bureau as 'complex' or 'very complex'. The bureau also issued a policy on the disclosure of information in hostile transactions, as well as a memorandum of understanding with the Department of Public Prosecutions. These documents explain the types of information that may be communicated to the target of a hostile bid during a merger review and the interaction between the bureau and prosecutors in criminal cases, respectively.
Fee and Service Standards Handbook for Merger-Related Matters
Although the Competition Act was amended in 2009 to create a single 30-day waiting period for transactions subject to pre-merger notification, the bureau does not always complete its reviews within that period. In 1997 the bureau developed non-binding 'service standards' to provide guidance to merging parties as to the maximum time period within which it would complete a review. These periods depend on the complexity of the transaction, as determined by the bureau: non-complex transactions are to be reviewed within 14 days, complex transactions within 10 weeks, and very complex transactions within five months. The draft handbook proposes a 60-day period for complex transactions and a 120-day period for very complex transactions (non-complex reviews will still be completed within 14 days). A new category has also been proposed; for transactions where the bureau has issued a 'supplementary information request' (akin to a 'second request' in the United States), the service standard will correspond to the expiry of the statutory waiting period, which is 30 days after compliance with the supplementary information request. The draft handbook also outlines the factors that the bureau considers when classifying a transaction, as well as the types of information that it considers sufficient to make its classification. In a number of areas, the bureau has increased the amount of information being sought from merging parties, and it is expected that concerns over information burdens will be raised with the bureau during the public consultation phase of this policy review.
When a bidder in a hostile transaction submits a premerger notification, the bureau is required to notify the target company immediately, which must then file a notification within 10 days. In practice, that is often the only information that the bureau will provide to the target during the course of the review, as the bureau is limited by the confi dentiality obligations of the act from disclosing much information. The bureau's new approach will be handled on a caseby-case basis due to the complexities of hostile bids, particularly those involving competing bidders. Where certain information has been shared with one party, the bureau will strive to disclose such information equitably to the other party.
The information that may be shared includes:
- the complexity classification;
- the anticipated timing of the review;
- the date on which the other party has certified completion of any supplementary information request response;
- the bureau's preliminary and final views on matters such as market definition and barriers to entry; and
- the bureau's preliminary and final conclusions regarding a potential prevention or lessening of competition.
The bureau will continue its policy of not disclosing confidential information such as customer and supplier information and other internal company documents that are contained in pre-merger notifications.
Memorandum of understanding
Seeking to enhance transparency and predictability in the relationship between the bureau and the Public Prosecution Service of Canada, the competition commissioner and the director of the prosecution service entered into a memorandum of understanding. The memorandum clarifies the roles and responsibilities at the investigation and prosecution stages of cases under the Competition Act. The bureau is responsible for investigating alleged contraventions of the act and, where warranted, it refers potential criminal violations to the prosecution service. It is up to the prosecution service to decide whether to prosecute such cases and, where warranted, to prosecute the cases.
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