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
BACKGROUND: AMENDMENTS TO CANADA'S COMPETITION
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
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
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
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.
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.
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