The Competition Bureau has released an updated Merger Review Performance Report (Report) tracking the activities of its Mergers Branch since the last report published in May, 2010 and discussed in our previous post.
Since 2010, the Bureau has published a series of revised guidelines as part of its ongoing efforts to realign its merger review procedures following the 2009 amendments to the Competition Act and the Notifiable Transactions Regulations. The updated guidelines include:
New Service Standards for Merger Review
- Competition Bureau Fees and Services Standards Policy for Mergers and Merger-Related Matters published in October, 2010
- Procedures Guide for Notifiable Transactions and Advance Ruling Certificates under the Competition Act published in November, 2010
- Competition Bureau Fees and Service Standards Handbook for Mergers and Merger-Related Matters published in April, 2012
- Hostile Transactions Interpretation Guideline Number 1: Bureau Policy on Disclosure of Informationreleased in July, 2011
- Hostile Transactions Interpretation Guideline Number 2: Bureau Policy on Running of Subsection 123(1) Waiting Periods released in July, 2011
- Pre-Merger Notification Interpretation Guideline Number 13: Satisfying the Information Requirements set out in Section 16 of the Notifiable Transactions Regulations and Completeness of Notification released in June, 2011
- Revised standard language for "no action" letters issued by the Bureau, announced in August, 2011
In addition to these customized service standards and interpretation instruments, the Bureau has released more general guidelines outlining its merger review process including the Merger Enforcement Guidelines, a Mergers Remedy Study, and Merger Review Process Guidelines.
Finally, as part of its effort to enhance communication and transparency in the process of merger review, the Bureau has committed, where possible, to publicly communicate the results of certain merger reviews through the issuance of Position Statements that briefly describe the Bureau's analysis of a particular transaction. The following position statements have been published by the Bureau since the release of the 2010 Report:
- BCE Inc. and Rogers Communications Inc./ Maple Leaf Sports & Entertainment Ltd. (2012)
- Cardinal Health Canada Inc. / Futuremed Healthcare Products Corporation (2012)
- Chartwell Seniors Housing REIT / Health Care REIT Inc.(2012)
- Transcontinental Inc./ Quad Graphics Canada Inc. (2012)
- Canadian Tire Corp, Ltd. / The Forzani Group Ltd. (2011)
- XM Canada / Sirius Canada (2011)
- BCE Inc. / CTVglobemedia Inc. (2011)
The Bureau's transparency initiative also includes the publication of a Merger Register used to disclose completed mergers on a monthly basis—including those that have not been made public. The Bureau's Merger Register is the most controversial of its transparency initiatives, as some critics have argued that it will lead to the disclosure of confidential commercial information which has traditionally been afforded protection under section 29 of the Competition Act.
Bureau Workload and Resources
The Bureau's caseload in the FY 2010-11 increased slightly since FY 2009-10 from 216 matters to 236. Complete statistics for FY 2011-12 were not available at the time of the Report's publication.
As noted in its 2010 Report, the Bureau's workload and resources have continued to be strained by an influx of highly complex transactions that have raised competition concerns. Examples of highly complex reviews since the 2010 Report include:
- BHP's hostile bid to acquire Potash Corp. of Saskatchewan which was ultimately blocked by the Minister of Industry under the Investment Canada Act
- London Stock Exchange's proposed merger with the Toronto Stock Exchange ("TMX") which was unsuccessful due to a competing bid to acquire the TMX by Maple Group
- Google's acquisition of Motorola which involved the competitive effects of patents in the wireless industry
- BCE and Rogers' proposed acquisition of Maple Leaf Sports Entertainment which the Bureau is currently reviewing
Since the 2010 Report, the Bureau has issued 13 SIRs and four consent agreements have been registered with the Competition Tribunal.
In litigation before the Competition Tribunal, the Bureau has been very active on the front of unresolved merger matters. In January, 2011 it challenged CCS Corp's acquisition of Complete Environmental Inc. which was the owner of a proposed hazardous waste landfill in British Columbia. This application represented the Bureau's first challenge of a merger since 2005. In June, 2011 the Bureau filed an application with the Tribunal seeking to prohibit a proposed joint venture between Air Canada and United Continental Holdings Inc.
The 2009 amendments to the Competition Act raised the threshold for notifiable transactions from $ 50 million to $ 70 million. Pursuant to an annual indexing formula set out in the Act, the threshold has now increased to $ 77 million. The practical effect of these revisions is that fewer transactions are now subject to mandatory notification, which in the Bureau's view potentially increases the likelihood of non-notifiable mergers raising substantive competition issues.
Accordingly, the Bureau has embarked on a new initiative to actively monitor transactions in the Canadian marketplace. This monitoring involves scanning various media sources and mergers acquisition databases, as well as reviewing complaints from relevant stakeholders in the marketplace.
While year-to-year fluctuations exist within each notification subset (e.g. pre-merger notifications, ARCs, pre-merger notifications and ARCs, and other) the Bureau found that the proportional distribution of merger reviews by matter type has remained relatively consistent for an extended period of time.
The data compiled in the Report supports the Bureau's view that its mergers workload is becoming increasingly complex. The table below, reproduced from the Bureau's Report, indicates that over the three quarters of FY 2011-2012 the percentage of matters designated as 'complex' increased by approximately 7% over the previous fiscal year:
Since the 2010 Report, the Bureau has found that the average time required to review a non-complex matter increased by approximately 1.3 days, though the average time required to a review complex matter decreased by approximately 7 days which follows from the implementation of a considerably shorter service standard for complex reviews, introduced through the Merger Fee Policy and revised Merger Handbook in November, 2010. The Report concludes that the Bureau has been able to meet the service standard in more than 90% of its reviews, regardless of complexity.
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