Merger Controls First Edition - J Sagar Associates

Osler, Hoskin & Harcourt LLP Canada
affirmative comfort from the Commissioner before completing the transaction rather than simply closing upon the expiry
of the statutory waiting period, even where an SIR has not been issued and even where there is no timing agreement. In
other words, parties do not regard the expiry of the initial waiting period without an agreement with the Bureau to delay
closing as sufficient comfort to close a transaction.
To a significant degree, the continued practice of seeking affirmative comfort from the Bureau is in response to indications
from the Bureau that expiry of the initial waiting period cannot be regarded as a signal that a proposed transaction does
not raise significant competition concerns in respect of which remedies may be required. In this regard, the Bureau review
process typically begins with an assessment of the level of “complexity” of the review required. The purpose of this
assessment is to provide the parties to the transaction with a sense of the expected (but non-binding) practical timeframe
for the Bureau’s review.
Under the previous merger regime, the Bureau had three levels of complexity; however, the new regime as set out in the Fees
and Service Standards Handbook only contemplates two levels of complexity. “Non-complex” transactions are those that “are
readily identifiable by the clear absence of competition issues” as there is no/minimal overlap. “Complex” transactions are
those between competitors, or between customers and suppliers, where there are indications that the transaction may, or is
likely to, create, maintain or enhance market power. Non-complex transactions have a 14-day service standard whereas complex
transactions have a 45-day service standard. Where a SIR is issued, the applicable service standard terminates 30 days after
the parties comply with the SIR (i.e., is aligned with the statutory waiting period). 2 However, there are many transactions
designated as “complex” where no SIR is issued. In these cases, the Bureau’s practical timeframe for review extends well
beyond the 30-day waiting period. In addition, it is important to note that the applicable service standard only commences
once the Bureau is satisfied that it has all of the information necessary to conduct its analysis, and can be suspended if the
parties do not respond to subsequent questions from the Bureau in a timely manner.
Accordingly, as a practical matter, parties can expect to be faced with an SIR or at the very least a demand for a timing
agreement for transactions that are likely to raise serious competition concerns. However, the expiry of the initial 30calendar
day waiting period in Canada does not amount to substantive comfort that the Commissioner has concluded that
a transaction does not raise competition issues, as the Bureau’s review may well be ongoing at the time.
(v) Can the merger review process be expedited through pre-filing dialogue?
The Bureau does not have a formal pre-merger notification consultation process but encourages consultation prior to, or
as soon as possible after, submission of a merger notification. The Merger Review Process Guidelines explain that early
consultation can facilitate a more efficient review process, and may reduce the scope of, or necessity for, a SIR. 3
It is standard practice for the Bureau to communicate with market participants (e.g., customers, suppliers and competitors).
At least some market contacts will be made for even non-complex mergers with no or minimal overlap “unless it is very
clear that there is no need to go to the market”. 4 The applicable service standard or statutory waiting period will usually
not commence until such time as the Bureau is able to conduct market contacts.
(vi) What are the penalties for gun jumping?
The March 2009 amendments to the CA enhanced the penalties for actual or likely non-compliance with the waiting
periods, including structural penalties such as dissolution or divestiture, and a monetary penalty of up to C$10,000 per
day where parties have not complied with the filing requirements. However, we are not aware of any action having been
taken in Canada under the new gun jumping provisions.
In addition, failure to notify the Bureau of a transaction “without good and sufficient cause” is a criminal offence under
the CA and punishable by a fine of up to C$50,000 (the equivalent of the filing fee). Proceedings may be commenced not
only against a corporation but also against individual officers and directors. Failure to notify may also serve as the basis
for an interim injunction to prevent a transaction from proceeding.
Set out below is a chart illustrating the timeline for merger review under the CA:
Statutory Waiting Periods
Filing of
Pre-Merger
Notification
30-day
waiting period
Clearance
or
Issuance of SIR
or
Enter Timing
Agreement
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or
Bureau has not
completed review
but no timing
agreement
(parties free to close)
30-90 days
(or longer)
(parties to abide
by terms of timing
agreement)
(parties legally
entitled to close)
Compliance with
SIR
30-day
waiting period
(can be
extended
through timing
agreement)
Clearance
or
Application for
Interim Order
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