The competition tribunal
Reference: Commissioner of
Competition v. Quebecor Inc., 2000 Comp. Trib. 1
File no.: CT2000005
Registry document no.: 009a
IN THE MATTER of an application by the
Commissioner of Competition pursuant to sections 92 and 105 of the Competition
Act, R.S.C. 1985, c. C-34, for a consent order; AND IN THE MATTER of the
merger between Quebecor Inc. and Le Groupe Videotron Ltée whereby the former
will acquire, inter alia, indirect control of TVA Group Inc., a
subsidiary of Le Groupe Videotron Ltée.
B E T W E E N :
The Commissioner of Competition
(applicant)
and
Quebecor Inc.
(respondent)
Date of hearing: 20010115
Members: Nadon J. (presiding), A. Reny,
V. Roy
Date of order: 20010115
Order signed by: Marc Nadon
[1] FURTHER TO the application by the Commissioner of
Competition (the "Commissioner") pursuant to sections 92 and 105 of
the Competition Act (the "Act"), R.S.C. 1985, c. C-34, for a
consent order imposing divestiture of the interests of TQS inc.
("TQS") affected by the merger between Quebecor Inc.
("Quebecor") and Le Groupe Videotron Ltée ("Videotron")
(the whole in accordance with the definitions recited herein) and prescribing
various other remedies;
[2] AND ON CONSIDERING the notice of application dated
November 10, 2000, the statement of grounds and material facts, the impact
statement of the consent order, the affidavit executed on October 31, 2000 by
Denis Corriveau, the draft consent order and the consent of the parties filed
in the present case;
[3] AND ON CONSIDERING THAT the Commissioner has
expressed his conviction, in view of the considerations expressed in the impact
statement of the consent order, that the remedies provided herein will, if
ordered, be sufficient to likely prevent or lessen competition substantially in
the French-language television advertising market in the Province of Quebec, as
described in the statement of grounds and material facts;
[4] AND ON CONSIDERING THAT the Commissioner and the
respondent are in agreement as to the conditions of the present consent order;
[5] AND IT BEING UNDERSTOOD THAT the parties are in
agreement that the Commissioner has alleged certain significant material facts,
the existence of which the respondent denies in whole or in part without,
however, objecting to the statement of grounds and material facts or to the
impact statement of the consent order, insofar as it relates to the present
application;
[6] AND IT BEING UNDERSTOOD THAT the parties are in
agreement that nothing in the present application shall be considered, now or
in the future, an admission by the respondent of any fact, submission or
argument in support of the allegation that the merger prevents or lessens, or
is likely to prevent or lessen competition substantially, in any market, or for
any reason other than that of the present application, including any other
proceeding under section 92, 100, 104 or 106 of the Act;
[7] AND AFTER being informed that the respondent
admits the jurisdiction of the Tribunal only for the purposes of the present
application and of any proceeding instituted by the Commissioner with respect
to the present consent order, specifically, an application to vary or rescind
the order;
[8] AND AFTER hearing counsel for the parties on the
present application at Ottawa on January, 15, 2001;
[9] AND BEING SATISFIED that the present
order should be rendered in this case;
THE TRIBUNAL ORDERS THAT:
Definitions
[10] The following definitions shall be applicable to
the present order:
(a) "buyer" refers to the
person, entity or group of persons or entities that acquires TQS’ interests;
(b) "shares deposited" refers
to the shares of 9076-1883 Québec inc., which holds 99.88 percent of TVA’s
votes, that are deposited as defined in the TVA trust agreement;
(c) "affiliate" refers to an
affiliated corporation within the meaning of the definition in subsection 2(2)
of the Act;
(d) "CRTC approval" refers to
the decision of the CRTC whereby the CRTC authorizes the indirect acquisition
by Quebecor Média of control of the shares deposited, according to conditions
acceptable to Quebecor Média;
(e) "Commissioner" refers to
the Commissioner of Competition appointed pursuant to section 7 of the Act;
(f) "TVA trust agreement"
refers to the trust agreement required by the CRTC, whereby any shares
deposited are delivered to Richard Drouin or his replacement appointed under
the aforesaid agreement;
(g) "CRTC" refers to the
Canadian Radio-Television and Telecommunications Commission created under the Broadcasting
Act;
(h) "divestiture" refers to
the sale, transfer, assignment, surrender or any other alienation of all TQS’
interests or assets, inter alia, the sale or indirect transfert by means
of alienation of all the shares of a company having a direct or indirect
interest in TQS;
(i) "business" refers to TQS’
operations;
(j) "trustee" refers to the
trustee appointed under § [13] of the present order;
(k) "merger" refers to the
acquisition by Quebecor, through its subsidiary Quebecor Média, of all of
Videotron’s multiple and subordinate voting shares issued and outstanding in
accordance with the public take-over bids dated September 27, 2000;
(l) "TQS" interests” refers
to the interests of Quebecor and its affiliates in TQS;
(m)
"Act" refers to Competition Act, R.S.C. 1985, c. C-34;
(n) "period of divestiture"
refers to the period commencing at the latest on the date of CRTC
approval and ending on the date of
divestiture by Quebecor or by the trustee;
(o) "Quebecor" refers to
Quebecor Inc.;
(p) "Quebecor Média" refers
to Quebecor Média inc.;
(q) "CRTC rejection" refers to
the CRTC’s decision whereby it rejects indirect acquisition by
Quebecor Média of control over the
shares deposited or approves such an acquisition but under
conditions unacceptable to Quebecor
Média;
(r) "confidential
information" refers to information that is proprietary or sensitive in
terms of
competition relating to TVA business of
which Quebecor and its affiliates do not have
independant knowledge. Such
confidential information includes, inter alia, information relating to
client lists, price lists, marketing
methods or other trade secrets;
(s) "TQS" refers to TQS inc.;
(t) "TVA" refers to TVA Group
Inc.;
(u) "Tribunal" refers to the
Competition Tribunal established under the Competition Tribunal Act;
(v) "sale by trustee" refers
to divestiture executed under § [13] of the present offer.
Divestiture
[11] Subject to the provisions of § [12] of the present
order, Quebecor is required to divest all its rights and titles of any nature
relating to TQS’ interests, in accordance with the provisions of this order.
Quebecor must undertake divestiture immediately and endeavour to complete it as
soon as possible. In any event, divestiture must be completed by December 31,
2001. If it is not completed within the period provided in the present
paragraph, § [13] of this order shall apply.
[12] Should the CRTC reject, or Quebecor Média
withdraw, for any reason whatsoever, its application to the CRTC to acquire
control of the shares deposited, Quebecor will no longer be required to proceed
with divestiture under § [11] of this order.
Sale by Trustee
[13] Subject to the provisions of § [12], if
divestiture is not completed within the period provided under § [11] of the
present order, the Tribunal may, at the Commissioner’s request, appoint a
trustee nominated by the Commissioner, after providing Quebecor with a
reasonable opportunity to be heard concerning the identity of that person, to
effect the sale by trustee under the following conditions:
(a) once his appointment takes effect,
only the trustee shall have authority to effect the sale by trustee under this
order;
(b) the trustee shall have all the
necessary powers to conduct the sale by trustee and must do everything possible
to effect the sale;
(c) the sale by trustee shall be
effected in accordance with §§ [13] to [15] of the present order;
(d) the trustee shall proceed to divest
TQS’ interests, subject to the Broadcasting Act and the existing rights
of the other TQS shareholders, at a price and under terms as favourable to
Quebecor as may reasonably be obtained at the time, in his opinion;
(e) the trustee shall take reasonable
measures to effect the sale by trustee within six months following his
appointment;
(f) Quebecor shall take reasonable
business measures to assist the trustee in effecting the sale and shall sign
any documents and perform any other reasonable action required by the trustee
with respect to the sale;
(g) after his appointment, the trustee
shall deliver to the Commissioner and Quebecor a monthly report on any measures
that he has taken to effect the sale;
(h) the trustee shall immediately
inform Quebecor and the Commissioner of any negotiations entered into with a
potential buyer that, in his opinion, may result in a sale;
(i) any costs reasonably and duly
incurred by the trustee in relation to the sale by trustee shall be paid by
Quebecor;
(j) the net proceeds of the sale by
trustee shall be paid to Quebecor or in accordance with the latter’s
instructions;
(k) at the request of the Commissioner
or of Quebecor, any other powers that the Tribunal may deem appropriate to
grant the trustee shall be vested in him.
[14] Quebecor may only oppose the sale by trustee in
cases of breach of trust or serious misconduct by the trustee, or if the latter
violates the present order.
[15] If the trustee has not conducted the sale within
six months following his appointment, he shall immediately file with the
Tribunal a confidential report detailing the following: ( i) what measures he
has taken to effect the sale, (ii) the reasons why, in his opinion, the sale
has not been effected and (iii) his recommendations. At the same time, he shall
provide the report to Quebecor and the Commissioner, who will both have the
right to be heard by the Tribunal and to submit additional comments concerning
the sale by trustee. The Tribunal may then make any orders deemed advisable to
effect the sale by trustee.
Approval of Divestiture
[16] The divestiture is subject to the approval of the
Commissioner, who shall, for the purposes of such approval, rely on the
criteria detailed in § [17] of this order. Approval is obtained in accordance
with the procedures established in §§ [18] to [23] of this order.
[17] The divestiture must be made in favour of a buyer
who intends to operate TQS in the French-language television market in the
Province of Quebec, and who has the financial and operational abilities to
manage the business. The Commissioner must also consider the implications that
the acquisition of TQS’ interests by the buyer would have on competition.
[18] Quebecor or the trustee (depending on which one is
responsible at the time for effecting the divestiture prescribed in the present
order) shall inform the Commissioner (and in the case of sale by trustee, the
trustee shall also inform Quebecor) in writing ("notice of divestiture")
of the outcome of any binding agreement (subject to the Commissioner’s
approval) with respect to the divestiture or sale by trustee. The notice of
divestiture shall set out the details of the proposed divestiture or sale by
trustee.
[19] Within 14 days of receipt of the notice of
divestiture, the Commissioner and, in the case of sale by trustee, Quebecor,
may request additional information on the proposed divestiture. Quebecor or the
trustee, as the case may be, is required to forward the additional information within
seven days of receipt of the request, unless the Commissioner agrees in writing
to an extension.
[20] Within 14 days of the notice of divestiture or,
where the Commissioner or Quebecor requests additional information within the
period provided in § [19], within 21 days of receipt of the additional
information, the Commissioner shall advise Quebecor and, in the case of sale by
trustee, the Commissioner or Quebecor shall advise the trustee, in writing, of
any objection to the proposed divestiture or to the sale by trustee on the
grounds that it violates the provisions of the present order, and give reasons
for his objection.
[21] Where neither the Commissioner nor Quebecor
objects within the period provided in § [20] and on the strength of the
criteria detailed in § [17] of the present order, or where the Commissioner
informs Quebecor or the trustee, as the case may be, in writing that he has no
objections, divestiture may proceed.
[22] Where the Commissioner or Quebecor objects to the
proposed divestiture or to the sale by trustee under § [20], the proposed
divestiture or sale by trustee may proceed only with the approval of the
Tribunal.
[23] Where divestiture may proceed under the present
order, the Commissioner shall, within five days of the date on which
divestiture was completed, inform the Tribunal in writing that divestiture took
place.
Confidential Information
[24] For the duration of the present order, Quebecor,
its affiliates and their administrators, directors and employees shall receive,
consult or use confidential information only in accordance with the present
order.
[25] Any violation of § [24] shall be deemed a breach
by Quebecor of the present order.
Maintenance of Independent Commercial
Viability of Business
[26] Except in the case of divestiture, neither
Quebecor nor its affiliates shall, for the duration of the present order,
knowingly do anything as direct or indirect shareholders of TQS that could be
detrimental to the competitiveness, assets, operations or financial status of
TQS, without the consent of the Commissioner. Without prejudice to the general
application of the foregoing, Quebecor shall not cause, without the consent of
the Commissioner, TQS to do any of the following:
(a) divest its assets beyond the normal
course of business, with the exception of the 20 percent interest held by TQS
in the Canal Indigo, or not grant a licence with respect thereto;
(b) significantly reduce any aspect of
its client services;
(c) significantly reduce its financial
arrangements;
(d) significantly reduce its marketing,
sales or promotional operations, or any other canvassing operations with
existing or potential clients;
(e) terminate or amend without
reasonable cause any agreement relating to the employment, salary or benefits
of a director, manager or employee in the sales or marketing sector of the
business.
Supervisor
[27] After giving a seven-day notice to Quebecor, the
Commissioner may appoint a supervisor responsible for monitoring compliance
with the present order. If it objects to the appointment, Quebecor may ask the
Tribunal to make the appropriate order, giving the Commissioner a five-day
notice and explaining the reasons for its objection.
[28] Should the supervisor become unable to perform his
duties by reason of death, disability, removal for cause or for any other
reason, the Commissioner shall appoint a new supervisor within 15 days, and
that appointment shall be subject to § [27].
[29] For the purpose of monitoring compliance with the
present order by Quebecor, the latter shall, without prejudice to any privilege
provided by the legislation, allow the supervisor access, during regular office
hours and in the presence of Quebecor’s lawyers:
(a) to the administrators, directors
and employees of Quebecor and its affiliates;
(b) to Quebecor’s financial information
and records relating to TQS’ interests;
(c) to excerpts from the minutes of
board meetings of Quebecor and its affiliates on the subject of TQS’ interests;
[30] For the purpose of monitoring compliance with the
present order by Quebecor, the supervisor may, without prejudice to any
privilege provided by the legislation, demand access during regular office
hours and in the presence of Quebecor’s lawyers:
(a) to the premises of Quebecor and its
affiliates;
(b) to any information concerning the
financial records, operations and assets of TQS;
(c) to TQS’ management meetings.
[31] Where necessary, Quebecor shall take every
reasonable measure to comply with such a demand by the supervisor.
[32] Quebecor shall neither exert nor attempt to exert
any influence, authority or control over the supervisor that could prejudice
the performance of his obligations under the present order.
[33] Where the supervisor is of the opinion that
Quebecor is not in compliance with the present order, he shall immediately
inform the Commissioner, who shall inform Quebecor thereof in writing, giving
details of the violations.
[34] At the Commissioner’s request, the supervisor
shall provide him with a sworn report in writing concerning compliance with the
present order.
[35] No actions or omissions under the present order
shall entail the personal liability of the supervisor.
[36] The supervisor shall not communicate confidential
information obtained in the performance of his duties to anyone, other than the
Commissioner to the extent required by the present order.
Term of TVA Trust Agreement
[37] The TVA trust agreement shall remain in effect at
least until the first of the following: (1) date on which the Commissioner
informs the Tribunal in writing that divestiture has been completed; (2) date
on which, following rejection by the CRTC, the sale of the shares deposited has
been concluded in accordance with the TVA trust agreement; (3) date on which,
following CRTC approval, arrangements having the same effect as the TVA trust
agreement and provisions equivalent to §§ [24] and [25] of the present order
have been introduced with respect to TQS; or
(4) date on which Quebecor Média
abandons, for any reason, its application to the CRTC to
acquire control of the shares
deposited.
General Provisions
[38] Quebecor shall provide a copy of the present order
to its administrators, as well as to TVA, TQS and any affiliate of Quebecor
that has a direct or indirect interest in TQS, and to their administrators,
directors and managers. Quebecor shall inform the board of directors, directors
and managers of TQS of the obligation on both it and its affiliates to operate
and manage TQS in accordance with the provisions of the present order. Quebecor
shall do everything possible to ensure that the operation and management of TQS
are in accordance with the present order.
[39] Any notices, reports or other communications
provided or permitted under the present order shall be made in writing and
delivered in person to the party to whom they are addressed, or sent by
registered mail or fax to the persons mentioned in Schedule A of this order.
[40] The Tribunal shall retain jurisdiction with
respect to any application by the Commissioner or by Quebecor to rescind or
amend any provision of the present order in case of change of circumstances or
for any other reason.
[41] In case of disagreement as to the interpretation
or application of the present order, including decisions by the Commissioner
made in execution of the present order, or any breach of the present order by
Quebecor, the Commissioner or Quebecor may ask the Tribunal to make a new
order.
Duration of Consent Order
[42] The present order shall remain in effect until the
Commissioner informs the Tribunal in writing that divestiture has taken place,
until either of the contingencies mentioned in § [12] of the present order
occurs, or until the Tribunal makes a completely new order.
DATED at Ottawa, this 15th day of
January, 2001.
SIGNED on behalf of the Tribunal by the
presiding judicial member.
(s)
Marc Nadon
[43] Schedule A: Notice
To the Commissioner:
François Handfield
Duane Schippers
Lawyers for the Commissioner of
Competition
Department of Justice
Competition Law Section
Industry Canada, Legal Services
Place du Portage, Phase I, 22nd Floor
50, rue Victoria
Hull, Quebec
K1A 0C9
Telephone: (819) 997-3325
Fax: (819) 953-9267
To the respondent:
Denis Gascon
Ogilvy Renault
Barristers and Solicitors
1981, avenue McGill College, Room 1100
Montreal, Quebec
H3A 3C1
Telephone: (514) 847-4747
Fax: (514) 286-5474
APPEARANCES
For the applicant:
Commissioner of Competition
François Handfield
Duane Schippers
For the respondent:
Quebecor Inc.
Denis Gascon