As of November 1, 2010, new internal processing deadlines apply to Canadian merger review by the Competition Bureau, pursuant to the release of the Fees and Service Standards Handbook for Mergers and Merger-Related Matters. The Handbook’s release followed the release of a draft handbook in May, 2010 and extensive public consultations. A key purpose of the new Handbook is to better align the Bureau’s own (non-binding) internal timelines for processing merger files (so-called “service standards”) with the statutory waiting periods.
At the same time, in a related Procedures Guide for Notifiable Transactions and Advance Ruling Certificates, the Bureau has clarified that electronic merger notifications will now only be accepted between 9 am and 5 pm Eastern Time on business days for same-day receipt (the Bureau had previously accepted paper filings until 5:00 pm, but electronic filings until midnight for same-day receipt), and waiting periods that end on a weekend or other statutory holiday in the province of Quebec will be extended to expire on the next business day.
Since the publication of the original Fee and Service Standard Handbook in 2003, the Bureau has classified incoming merger files (once it had sufficient information upon which to make an assessment) as “non-complex”, “complex” or “very complex”. The vast majority of filings have been “non-complex” and the internal service standard within which the Bureau undertook to complete its review of such files was 14 days. “Complex” transactions (essentially, those which require a closer look or are factually complicated but which do not look likely to require a remedy) were to be processed within a maximum of 10 weeks (but in practice were almost always to the point of preliminary conclusions within much less time). “Very complex” transactions (those likely to require a remedy or otherwise factually extremely complicated) were to be processed within a maximum of 5 months.
The classification exercise has been simplified. Starting November 1, 2010, transactions will be classified as either “complex” or “non-complex”, generally within 5 business days of receipt of sufficient information upon which to base the analysis. The service standard for non-complex transactions remains 14 days from receipt of the required information (for details, see the Handbook). The service standard for a complex transaction is now a much-reduced 45 days (which better reflects the reality in cases where a Supplementary Information Request (“SIR”), or “second-request”, is not issued). That said, the waiting period for a complex transaction for which a SIR is issued is now the same as the statutory waiting period (30 days following submission of the requested information and documents). In practice, therefore, merger files will still be processed by the Bureau on one of three time-lines: those applicable to non-complex, complex and SIR transactions. The difference is that the Bureau typically tries to classify an incoming file within a week or so of receiving substantive submissions – whereas it has up to 30 days after receiving a notification to issue a SIR, and thus can take more time to decide whether a complex file should also receive a SIR. As before, the Bureau’s review of a complex transaction may continue past the expiry of the waiting period, where a SIR is not issued. All service standards are non-binding, and are tolled if the parties do not provide a timely response to requests for additional information.
The Handbook also contains lists of information to be provided to commence the service standards. These vary for non-complex mergers with no or minimal overlap, non-complex mergers with moderate overlap, and complex mergers. Of note, all information required in a notification (including customer contacts) is now requested for all transactions other than non-complex transactions with minimal overlap (i.e., below 10% post-merger).
No change to filing fees:
Also of note, there is no change to the fees required for merger filings in Canada. They remain at Cdn.$50,000 per transaction, whether the parties file statutory notifications (thus starting the formal waiting period) and/or a request for an Advance Ruling Certificate or “ARC” (which when granted will exempt the transaction from the requirement to notify, but for which a formal waiting period does not run unless also accompanied by a notification). As clarified by the Competition Bureau earlier this year, no taxes are charged in respect of the filing fee for either a notification or an ARC request.
Policy on “pull and re-file”:
Given the adoption of the U.S.-style merger review procedure, and the consequences to merging parties of receiving rather onerous “second requests” or “SIRs” if the Bureau does not wish the waiting period to expire, it is not surprising that the Competition Bureau reports that some parties have also adopted the U.S. tactic of “pulling” (revoking) a notification if it looks like, with more time, the parties might be able to avoid the issuance by the Bureau of a SIR. Known as “pull and re-file”, it re-starts the initial 30-day waiting period, thereby extending the time within which the Bureau must decide whether to issue a SIR. The Handbook clarifies the circumstances under which a notification can be pulled and re-filed without triggering a second $50,000 filing fee. Essentially, the new notification must be current as of the date submitted (i.e., certain documents dealing with the impact of the transaction (called “4(c)” documents in the U.S.) must be updated, as well as the required financial statements), it must be accompanied by a new affidavit, and it must be received within 5 business days of the initial notification having been withdrawn. Parties are, of course, free to pull and re-file at any time, but will be required to pay a second filing fee if they wait longer than 5 business days to re-file.