Merger Controls First Edition - J Sagar Associates

Osler, Hoskin & Harcourt LLP Canada
Note:
• Additional non-binding “service standard” review periods have been published by the Bureau to estimate the length
of the actual substantive review (14/45 days if there is no SIR depending on complexity, or the same as the statutory
waiting period if an SIR is issued).
• The statutory waiting period is not triggered if only a request for an ARC is filed.
Approach to remedies (i) to avoid second stage investigation and (ii) following second stage investigation
In a transaction that potentially raises significant Canadian competition issues, it will be much more difficult to avoid the
issuance of an SIR. This may be possible if a clear remedy with a suitable up-front buyer that would clearly resolve all
potential concerns is offered and an agreement is concluded prior to expiry of the initial waiting period. In rare cases,
closing into a hold separate after the initial waiting period may be accepted, for example, together with an undertaking to
implement any remedies requested by the Commissioner.
In cases that raise potentially less serious or extensive concerns in Canada, and/or where potential concerns in another
jurisdiction where the transaction is being reviewed are more significant and any remedies would have to be implemented
in that foreign jurisdiction, the Commissioner may be prepared to allow the initial waiting period to expire, typically
subject to the conclusion of a timing agreement.
As a general matter, the Bureau’s focus is on securing its own remedy to resolve competition concerns in Canada.
Canadian-focused remedies are more likely “when the matter raises Canada-specific issues, when the Canadian impact is
particularly significant, when the asset(s) to be divested reside in Canada, or when it is critical to the enforcement of the
terms of the settlement”. 5 For example, the IESI-BFC/Waste Services transaction raised competition issues primarily or
exclusively in Canada and not in any foreign jurisdictions. 6
In the case of international mergers, the Bureau frequently cooperates with foreign competition authorities. However, the
Bureau’s focus continues to be on the Canadian aspects of remedies. For example, while it can be expected that the Bureau
coordinated with other jurisdictions in reaching a settlement in Novartis/Alcon (Novartis agreed to divest certain assets
and licences for certain ophthalmic products, injectable miotics and ocular conjunctivitis drugs in Canada) 7 and
Teva/ratiopharm (the parties agreed to sell assets and associated licences of either Teva or ratiopharm relating to the sale
and supply of certain dosage forms of acetaminophen oxycodone tablets and morphine sulfate sustained-release tablets in
Canada) 8 , Canadian remedies were obtained in these cases.
In some cases, however, the Bureau has accepted a foreign remedy as sufficient to resolve concerns in Canada and did not
obtain a separate Canadian settlement. A recent example is Danaher Corporation’s acquisition of MDS Inc.’s analytical
technologies business, where the Bureau primarily looked to the FTC’s consent decree as sufficient to resolve concerns in
Canada. 9
Similarly, in the Nufarm/AH Marks transaction, the Bureau relied primarily on a consent decree between Nufarm and the
United States Federal Trade Commission (“FTC”) to adequately resolve competition concerns in Canada. The Bureau
indicated that it worked closely with FTC staff throughout the investigation to arrive at a proposed settlement order that
restores competition in both Canadian and the U.S. 10
In addition to Canadian-focused remedies, the Bureau strongly prefers structural remedies to behavioural remedies, and
has stated that it views behavioural remedies as generally inadequate because of:
• the difficulty in determining the appropriate duration of a behavioural remedy given the difficulty in gauging how
long it will take for new entry or expansion to be established in the affected markets;
• the direct costs of monitoring the activities of the merged entity, and the merged entity’s adherence to the terms of
the remedy;
• the costs to other market participants, who must rely on a third party (or process) to enforce adherence to the
behavioural remedy; and
• the indirect costs associated with any efforts by the merged entity to circumvent the remedy. 11
That said, however, behavioural remedies have been accepted on occasion and in a number of recent cases. For example,
in the 2010 merger of Ticketmaster Entertainment, Inc. and Live Nation, Inc., Ticketmaster agreed to sell its subsidiary
ticketing business, as well as license its ticketing system for use by Anschutz Entertainment Group, the second largest
promoter of live events in Canada and the United States. Ticketmaster is also forbidden from retaliating against any venue
owner who chooses to use another company’s ticketing or promotional services, and is subject to restrictions on anticompetitive
bundling. 12
In an even more recent example, Commissioner of Competition v. The Coca-Cola Company, 13 the Commissioner agreed
to remedies that were largely behavioural in nature in a vertical transaction. In 2010, The Coca-Cola Company sought to
acquire the North American business of its primary bottler, Coca-Cola Enterprises Inc. Prior to the acquisition, Coca-
Cola Enterprises Inc. was a publicly traded company that produced, marketed and distributed products, primarily for The
Coca-Cola Company and Dr. Pepper Snapple Group, Inc. Following the acquisition, The Coca-Cola Company would
provide these services, and the Bureau was concerned that the acquisition could allow The Coca-Cola Company to gain
Global Legal Insights ­ Merger Control First Edition
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