Copyright 2009, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on Competition, Antitrust & Foreign Investment, March 2009
On March 24, 2009, the Canadian Competition Bureau released draft Revised Merger Review Process Enforcement Guidelines which, among other things, describe how the Commissioner of Competition intends to use her new powers to issue U.S.-style requests for additional information during the merger review process. A copy of the draft guidelines is available at: http://www.cb-bc.gc.ca/eic/site/cb-bc.nsf/eng/02986.html. The Bureau has invited interested parties to submit comments by May 29, 2009.
BACKGROUND: AMENDMENTS TO CANADA'S COMPETITION ACT
On March 12, 2009, the Budget Implementation Act came into force, enacting several significant amendments to the Competition Act, including a revised merger review process.
The previous merger review regime provided a maximum waiting period prior to closing of 42 days from the date of filing. Unless volunteered by the parties, the Commissioner had to apply for a court order (i.e., subpoena) to obtain information over and above the pre-merger filing.
The new merger review regime, under the amended Competition Act, mandates an initial waiting period of 30 days during which a transaction cannot close (unless it is waived).
During the initial waiting period, the Commissioner may issue a request for additional information (the guidelines use the term "supplementary information request") for use in cases that raise substantive competition issues. This request is limited only by the requirement that the additional information be "relevant" to a competitive assessment of the proposed merger. If a supplementary information request is issued, the parties are not permitted to close the transaction until 30 days after compliance with the supplementary information request.
THE DRAFT GUIDELINES
The draft guidelines set out the practices and procedures the Bureau plans to follow with respect to issuing supplementary information requests. Notable points from the draft guidelines include:
- Restrictions on Scope – In all but exceptional cases, the Bureau will adhere to the following restrictions in delineating the scope of the request:
- Custodians - The number of custodians that need to be searched will be limited to a maximum of 30 individuals.
- Time Period - The production of hard copy and electronic records created or received will be limited to two years from the date of the supplementary information request. In the case of data requests, the limit is three years from the date of filing.
- Internal Review, Appeals, and Compliance Procedures – The guidelines provide for an internal review process prior to a supplementary information request being issued and for an appeals process related to the scope of, and compliance with, a supplementary information request once one has been issued:
- Prior to Issuance – A supplementary information request will be reviewed prior to issuance by four senior members of the Bureau and the Department of Justice.
- Review of the Scope of a Request – Upon issuance of the supplementary information request, a party can challenge the scope of the request by first engaging in discussions with the responsible Bureau officer. If these discussions do not resolve the issue, the party can further request that a senior Bureau officer review the supplementary information request through the Bureau's internal appeal process.
- Compliance – Where there is a dispute over whether there has been full compliance with a supplementary information request, a senior Bureau officer may be brought in to review. The Commissioner may also apply to a court to determine the issue.
- Hostile Bid Transactions – In hostile take-over transactions, if a supplementary information request is issued, the second 30-day review period begins on the date that the bidder (not the target) complies with the supplementary information request. This is designed to ensure that target companies do not delay the closing of a transaction by not complying with the supplementary information request.
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