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Process and timing
Is the notification process voluntary or mandatory?
If the type of transaction requires advance notification and if the size of parties and size of transaction thresholds are exceeded, then notification is mandatory. Failure to notify is a criminal offence. However, inadvertent failure to notify has not, at least thus far, been the subject of significant enforcement action. By way of example, a firm which recently failed to notify two mergers agreed to an alternate case resolution by adopting a compliance policy, without additional penalty.
What timing requirements apply when filing a notification?
There is no time limit within which notification must be filed. However, if the transaction is notifiable, it cannot close until the relevant materials have been filed and 30 days have elapsed without receipt of a supplementary information request – unless the commissioner of competition waives the remaining period.
If a supplementary information request is issued by the commissioner within the initial 30 days after filing, the time periods before which closing cannot occur are extended to 30 days after the parties complete their response.
What form should the notification take? What content is required?
Notifications may take two broad forms. One is a request for an advance ruling certificate or a no action letter. Pursuant to Sections 102 to 103 of the Competition Act, an advance ruling certificate, if issued by the commissioner of competition, confirms that the commissioner may not subsequently challenge the transaction based on the information which was provided to him or her in respect of the request for the advance ruling certificate. By contrast, a no action letter is a statement by the commissioner of competition that as presently advised, he or she does not intend to challenge the transaction. It is generally provided by the commissioner in conjunction with a waiver of the formal notification requirements.
Requests for an advance ruling certificate and no action letter are typically made in the form of a letter to the Competition Bureau outlining the transaction and the reasons why it is not likely to give rise to a substantial lessening or prevention of competition. These letters vary considerably in complexity. In transactions where there is virtually no overlap between the parties, the letter can be extremely short. In other cases where the transaction is complex and there is significant overlap, such requests can be extensive, detailed and involve considerable factual and economic evidence – typically similar to white paper submissions in the United States.
When an advance ruling certificate or no-action letter is requested without the filing of a formal notification, the Competition Bureau strives to respond promptly, but there is no formal time limit and the parties may not close the transaction until the bureau issues the advance ruling certificate or provides a no-action letter and waives the formal filing requirement.
The other approach is to file formal notification. This requires a considerable amount of detailed information, including:
- an overview of the transaction structure;
- an executed or draft copy of the legal documents used to implement the proposed transaction;
- a description of the transaction’s business objectives;
- a list of the foreign antitrust authorities that have been notified;
- a summary description of the principal business carried out by each party and their principal product categories, including contact information for the top 20 customers and suppliers for each product category;
- basic financial information;
- an indication of the geographic scope of sales of each of the party’s principal businesses; and
- all studies, surveys, analyses and reports prepared or received by an officer or director for the purpose of evaluating or analysing the proposed transaction – similar to the Section 4(c) documents under the US Hart-Scott-Rodino process.
Filing of this information, under oath or affirmation, starts a 30-day clock after which, if no supplementary information request is issued, the transaction may close. In transactions where timing is important, it is common to file formal notification to start the clock running. Where formal notification is filed, the parties almost always file a request for an advance ruling certificate or no action letter.
Is there a pre-notification process before formal notification, and if so, what does this involve?
There is no pre-notification process before formal notification (ie, there is no legal or practical requirement to contact the Competition Bureau before filing a notification). However, the Competition Bureau is open to pre-filing discussions to prepare to review the file expeditiously and provide initial guidance where it can regarding areas of potential concern. That said, it is not necessary or expected that there be any pre-filing discussion, as is the case in some jurisdictions. Where timing is important, it is often advisable to provide advance information to the Competition Bureau, so that it may move expeditiously to review transactions once a formal filing occurs.
Can a merger be implemented before clearance is obtained?
Parties may not complete a merger prior to the expiry of the waiting periods, unless the commissioner of competition waives the running of any remaining time period.
Guidance from authorities
What guidance is available from the authorities?
Guidance is generally available from the Competition Bureau regarding the operation of the notice and waiting periods. However, as the rules in this regard are relatively straightforward, guidance in this respect is seldom required.
What fees are payable to the authority for filing a notification?
If a transaction is notifiable, a fee of C$50,000 is payable with respect to notifications. That fee is payable for a formal notification or for a request for an advance ruling certification or for both in respect of the same transaction (ie, one C$50,000 fee for both).
Publicity and confidentiality
What provisions apply regarding publicity and confidentiality?
Section 9(3) of the Competition Act provides that “all inquiries [under the Competition Act] shall be conducted in private”. Section 29 of the act provides that the commissioner of competition and his or her officials may not communicate information received in respect of a matter under investigation, except with the Canadian law enforcement agency or for the purposes of administration or enforcement of the act.
The Competition Bureau is of the view that the latter exemption allows it a wide ambit to communicate otherwise confidential information. The bureau’s position and standard approach is that once a filing has been made, it can and will make whatever contacts with marketplace participants that it deems necessary and appropriate to assess the implications of a transaction. Further, the bureau is of the view that this provision allows it to exchange any information in its possession with foreign antitrust authorities, insofar as that exchange may assist it in its own investigation of a merger transaction. Thus, while many foreign agencies require a waiver from the parties to share information with the Competition Bureau, the Canadian bureau takes the position that no waiver is required to share information with foreign antitrust authorities.
In 2013 the bureau commenced publication of a regular merger registry. A month after it completes a review of a transaction, the transaction will be publicly listed on the register. The register lists transactions which were reviewed in the previous month, by way of names of parties and industry in which they operate. Typically this does not cause problems regarding confidentiality, but on some rare occasions when a merger is not publicly known there can be issues. As a result, parties need to understand the bureau’s approach for maintaining confidentiality in respect of transactions and work with it to minimise any negative impact.
Are there any penalties for failing to notify a merger?
There are penalties regarding failing to provide notification of a merger. Under the Competition Act there is a criminal fine of C$50,000 for failure to provide advance notice of a merger where it is required, as well as the possibility of a civil penalty of up to C$10,000 per day. However, in more than 30 years of the merger notification provisions being in force there have been no prosecutions for failure to notify. Recently a firm which had failed on two occasions to file a mandatory notification agreed to resolve the commissioner of competition’s concerns by agreeing to adopt a competition law compliance policy.
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