Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

The Act does not set out deadlines for filing. When to submit a notification is a decision of the parties. However, a transaction that is notifiable may not be consummated until the applicable statutory waiting period has expired (see question 11).

Failure to comply with the pre-merger notification requirements in the Act constitutes a criminal offence with possible fines of up to C$50,000 as well as the possibility of civil penalties of up to C$10,000 per day. The Bureau monitors financial press accounts of transactions and may also be made aware of transactions through competitor, customer or supplier complaints. While to date there have been no convictions or penalties imposed for failure to notify (other than agreements to implement compliance programmes), parties should expect this provision of the Act to be enforced vigorously unless the failure to notify was inadvertent, in which case a decision not to prosecute or other resolution might be negotiable with the Commissioner and the Director of Public Prosecutions.

Which parties are responsible for filing and are filing fees required?

Generally, both parties to the transaction have the obligation to file. For share acquisitions and acquisitions of an interest in a combination, as noted in question 5, the Act deems the target entity, not the vendor, to be a party to the transactions. In hostile or unsolicited takeover bids, the bidder makes an initial filing (which commences the waiting period) and the Commissioner then requisitions the counterpart filing from the target (which must be filed within 10 days).

As of 1 April 2019, the filing fee for a notification was raised to C$73,584. This fee amount will be in effect until April 2020, when it once again will be adjusted for inflation. (Prior to 2018, a C$50,000 filing fee had been in place since 2003, which was raised to C$72,000 in 2018.) The same filing fee applies to a voluntary notification by way of an application for an advance ruling certificate. The filing fee is often paid by the acquirer, but this is a matter of negotiation between the parties. Where filings have been submitted by both parties, the Bureau considers both notifying parties to be jointly and severally liable for the filing fee. If only a request for an advance ruling certificate is submitted for a proposed transaction, the requesting party is solely responsible for the fee.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

There is a 30-day no-close waiting period from the day the filing is certified complete (usually the same day as the filing by the last of the parties occurs).

The Commissioner may, within the initial 30-day waiting period, issue a supplementary information request (SIR) (similar to a US ‘second request’) requiring the parties to submit additional information that is relevant to the Commissioner’s assessment of the proposed transaction. If the Commissioner issues a SIR, a second no-close waiting period continues until 30 days after the day that the required information has been received by the Commissioner and certified complete by the parties. While the issuance of a SIR is a formal process established by the Act, requests by the Commissioner during the initial waiting period for the voluntary disclosure of additional information are common and do not affect the statutory waiting period.

The Act provides for early termination of the waiting periods by the Commissioner. This can be expected to occur if the review has been completed but not when the review is ongoing.

Consummation of the transaction is not permitted during the waiting periods. If the parties proceed by way of an application for an advance ruling certificate instead of filings, the no-close period effectively runs until the Commissioner has either issued such a certificate or provided a letter confirming that the Commissioner does not, at that time, intend to make an application under section 92 of the Act in respect of the proposed transaction together with a waiver of the filing requirements.

In complex cases, reviews may extend beyond the waiting periods. In such cases, the Commissioner sometimes simply requests that the parties refrain from closing their transaction until the review is complete. There is no obligation to accommodate such a request, but merging parties often do so. Formal timing agreements between the parties and the Bureau may also be used to confirm that a transaction will not be closed for a period of time after the expiry of the statutory waiting period. Alternatively, the Commissioner can seek a temporary injunction to prevent the transaction from closing for a further 30 (extendable to 60) days to allow the Bureau to complete its review.

If the Commissioner decides to challenge a transaction, another provision of the Act allows the Commissioner to seek an interlocutory injunction to prevent the transaction from closing in whole or in part, pending the resolution of the Commissioner’s challenge on the merits. To obtain an interlocutory injunction, the Commissioner must prove that there will be ‘irreparable harm’ if the injunction is refused and that the ‘balance of convenience’ favours delaying the closing of the transaction. The 2016 Parkland case clarified that ‘irreparable harm’ includes harm to consumers and harm to the broader economy resulting from the transaction, where such harms cannot be undone by an order of the Tribunal under the merger provisions of the Act. The Commissioner must provide ‘sufficiently clear and non-speculative’ evidence of market definition and concentration and likely harm to competition to meet this test.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

Closing prior to expiry of the applicable waiting period is a criminal offence that can be subject to a fine of C$50,000 and also a civil penalty of up to C$10,000 for each day of non-compliance. While there have been no reported cases of prosecutions, and while some leniency has been shown in cases of inadvertence, the Commissioner is likely to enforce this provision vigorously if it appears that the non-compliance was intentional.

Regardless of whether the waiting period has expired, closing before clearance carries the risk that the Commissioner will challenge the merger after completion of the review if he or she concludes that it is likely to lessen or prevent competition substantially. He or she may seek a divestiture or dissolution order up to one year after the date of closing. There is also the possibility that coordination undertaken prior to closing that amounts to ‘gun jumping’ could be subject to a prosecution for conspiracy or bid rigging (given that the parties would not (yet) benefit from the affiliates exception from these criminal offences).

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Subject to crafting a local hold-separate resolution as noted in the answer to question 14 (which is extremely rare), if the transaction is notifiable in Canada, the penalties for early closing discussed in questions 9 and 12 would apply to foreign-to-foreign transactions.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

As noted in the response to question 11, the parties may proceed with closing if the no-close waiting periods have expired but the review process is ongoing, and the Commissioner has not obtained an injunction or entered into a timing agreement with the parties.

The Commissioner will focus primarily on Canadian issues in all cases. In a foreign-to-foreign merger, the Bureau (and the Tribunal) will typically be receptive to local divestiture or possibly behavioural remedies as long as they are sufficient to address the domestic anticompetitive effects. Local hold-separate arrangements pending resolution of a Bureau review or Tribunal proceeding have occasionally been employed in the past. However, the Bureau’s Remedies Bulletin indicates that the circumstances in which the Bureau will consider agreeing to the use of such hold-separate agreements are narrow.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

As noted in question 10, rules exist to ensure that targets of hostile or unsolicited takeover bids supply their initial notification in a timely manner. In such a case, the waiting period commences upon the submission of the acquirer’s filing.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The information required for a pre-merger notification filing is set out in the Act and in regulations promulgated pursuant to the Act. The main requirements of the pre-merger notification filing are:

  • an overview of the transaction structure;
  • an executed copy of the legal documents to be used to implement the proposed transaction (or the latest draft thereof, if not yet finalised);
  • a description of the business objectives of the transaction;
  • a list of the foreign antitrust authorities that have been notified of the proposed transaction;
  • a summary description of the principal businesses carried on by each party and of the principal categories of products (or services) within such businesses, including contact information for the top 20 customers and suppliers for each such product category;
  • basic financial information for each party;
  • business, product, customer, supplier, financial and geographic scope of sales information of each of the party’s principal businesses;
  • all studies, surveys, analyses and reports prepared or received by an officer or director for the purpose of evaluating or analysing the proposed transaction that contain market-related or competition-related information (similar to the ‘4(c)’ documents under the US Hart-Scott-Rodino Antitrust Improvement Act of 1976 (the HSR Act)); and
  • similar information related to each affiliate of the notifying party with significant Canadian assets or sales.

If the Bureau concludes during the initial 30-day review period that a more detailed review is warranted, it may issue a SIR requiring the production of additional documents and data. The Bureau’s (non-binding) guidelines on the merger review process state that, in all but exceptional cases, the Bureau will limit the number of custodians to be searched in preparing a response to a SIR to a maximum of 30 individuals. The default search period for hard copy and electronic records in the possession, custody or control of a party will generally be the year-to-date period immediately preceding the date of issuance of the SIR and the previous two full calendar years. The Bureau will also generally limit the relevant time period for data requests to the year-to-date period immediately preceding the date of issuance of the SIR and the previous three full calendar years. Where parties operate on a North American basis, and where the transaction does not raise Canada-specific concerns, the Bureau may, in appropriate cases, work with the parties to try to limit the list of custodians (to the extent possible) to a list of custodians that the US authorities have agreed to in connection with a second request under the HSR Act.

An officer or other person who has been duly authorised by the board of directors of the notifying party is required to certify on oath or solemn affirmation that, to the best of that person’s knowledge and belief, all information provided in the pre-merger notification filing and in a response to a SIR (if applicable) is correct and complete in all material respects. Knowingly providing incorrect information could result in criminal prosecution for perjury in connection with swearing a false certificate.

The Competition Act also contains an obstruction offence that applies where any person impedes or prevents or attempts to impede or prevent any inquiry or examination under the Act. Knowingly withholding or providing misleading information could be seen as impeding or attempting to impede an examination by the Commissioner.

There has also been one reported case where the Bureau advised merging parties (identities not disclosed) that it would rescind the previously issued clearance because the information received in connection with the merger notification was materially misleading.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

After notifications have been filed, the Bureau will typically have follow-up questions as it conducts its investigation. Bureau staff will usually contact some or all of the customers set out in the parties’ filings to solicit information from them regarding the proposed transaction. Suppliers, competitors and additional customers may also be contacted. In addition, the Bureau may request that the parties to the merger provide additional information, documents or data such as estimates of market shares.

If the Commissioner plans to issue a SIR, the scope of this request will be discussed with the merging parties very shortly before the expiry of the initial 30-day waiting period and these discussions may continue after the request is issued. The SIR will typically involve compulsory production of large volumes of documents and data. Subpoenas may also be issued to third parties to produce relevant documents or data. The provision of compulsory testimony through depositions before a hearing officer is possible but rarely used in practice.

Most complex mergers will involve face-to-face meetings with Bureau staff and federal Department of Justice lawyers. Regardless of complexity, regular communication between the Bureau staff and the parties’ counsel is the norm.

What is the statutory timetable for clearance? Can it be speeded up?

As discussed in question 11, there is a 30-day no-close statutory waiting period from the day the filing is certified complete.

The Commissioner may, within the initial 30-day waiting period, issue a SIR requiring the parties to submit additional information that is relevant to the Commissioner’s assessment of the proposed transaction. If the Commissioner issues a SIR, a second no-close statutory waiting period continues until 30 days after the day that the required information has been received by the Commissioner and certified complete by each of the parties.

In most straightforward cases, the Commissioner’s review is typically concluded in less than two weeks. However, in more complex cases the Bureau’s review process may be substantially longer.

Although it is non-binding, the Bureau’s Fee and Service Standards Handbook sets out the following ‘service-standard’ periods to which the Bureau will attempt to adhere in its review process:

  • 14 days for non-complex mergers;
  • 45 days for complex mergers, except where a SIR is issued; and
  • 30 days after compliance with a SIR, for complex mergers where a SIR is issued (this last service-standard period is co-extensive with the statutory no-close waiting period following compliance with a SIR).

The Bureau informs notifying parties of the commencement of its service standards within five business days of receiving sufficient information to assign a complexity rating, as outlined in its Competition Bureau Fees and Service Standards Handbook for Mergers and Merger-Related Matters. However, service standards are intended to be maximums and the Bureau may complete cases in less than the full service-standard period.

It is possible to speed up the timetable for clearance if the Bureau’s substantive inquiries can be satisfied before the statutory waiting or the ‘service-standard’ periods (or both) expire. The Commissioner can terminate the waiting periods early - within the initial 30-day period or within the no-close period following the issuance of a SIR - if he or she is satisfied that there is not a competitive concern. Parties and their counsel will usually provide additional information as requested by the Bureau on a voluntary basis and often submit detailed ‘competitive impact’ analyses to the Bureau to expedite completion of the review process.

As discussed in question 11 above, if the parties proceed by way of an application for an advance ruling certificate, the no-close period effectively runs until the Commissioner has either issued a certificate or provided a letter confirming that the Commissioner does not, at that time, intend to make an application under section 92 of the Act in respect of the proposed transaction together with a waiver of the filing requirements.

Also, as noted in question 11, in cases in which a formal filing has been made, the 30-day period has expired, but the Commissioner needs more time for his or her review, the Commissioner sometimes simply requests that the parties refrain from closing their transaction until the review is complete. There is no obligation to accommodate such a request, but merging parties often do so. However, there have been a number of recent cases where merging parties have chosen to close their transactions once the waiting periods have expired but prior to the Bureau finishing its review. This includes the Tervita/Newalta deal that closed in July 2018 with the Commissioner’s review remaining ongoing as of the time of this writing and the Pembina/Veresen deal that closed in October 2017 with the Commissioner’s decision not to challenge the transaction not being made until September 2018. Formal timing agreements between the parties and the Bureau may also be used to confirm that a transaction will not be closed for a period of time after the expiry of the statutory waiting period. Alternatively, the Commissioner can seek a temporary injunction to prevent the transaction from closing for a further 30 (extendable to 60) days to allow the Bureau to complete its review.

Given the foregoing, for simple transactions the review period is typically about two weeks. However, for very complex transactions, the review period can extend to 150 days, or even longer. See further discussion as to timing at question 34 below.