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Procedures
Guide
Notifiable
Transactions and Advance Ruling Certificates under
the Competition Act
[PDF: 51
KB]
PART I: INTRODUCTION
Introduction
Merger
Review under the Competition Act
Notifiable
Transactions
Purposes
of Prenotification of Proposed Transactions
PART II: NOTIFIABLE
TRANSACTIONS
Determining
Whether a Proposed Transaction is Notifiable
Step 1: Transaction
Types
Step 2: Party-Size
Threshold
Step 3: Transaction-Size
Threshold
Subsection 110(2) Asset
Acquisition;
Subsection 110(3) Voting
Share Acquisition;
Subsection 110(4) Amalgamation;
Subsection 110(5) Combination;
Subsection 110(6) Acquisition
of an Interest in a Combination
Step 4: Exemptions
Information
to be Supplied with Notices
Forms
Waiting
Periods
Transaction
to which subsection 114(3) of the Act applies
When
Would the Commissioner Request a Long Form?
Who Must
Notify?
When
Should the Parties Notify?
PART III: ADVANCE RULING CERTIFICATES
Advance
Ruling Certificate
What
Factors are Relevant to the Consideration of an ARC
Application?
What
Type of Information Should an Applicant Submit with an ARC
Application?
When
Should a Party to a Proposed Merger Transaction Request an
ARC?
PART IV: PROCEDURAL MATTERS
Merger
Notification Unit - Purpose and Process
Receipt,
Review and Acknowledgment of Notices
Receipt
and Acknowledgment of ARC Requests
Answering
Questions and Promoting Compliance
Procedural
Matters
Fees
Multiple
Step/Continuous Transactions
Below
Threshold Merger Assessments
Further
Acquisition of Voting Shares or Interest in a
Combination
Method
of Notification
Irrelevant
Information
Previously
Supplied Information
Where
Information does not Apply
When
does the Waiting Period End?
Confidentiality
APPENDIX: COVER
LETTER CHECKLIST
PART I: INTRODUCTION
The Procedures Guide is issued
by the Commissioner of Competition, who is responsible for the
administration and enforcement of the Competition
Act (the "Act"). The Guide is designed to
provide an overview of the relevant provisions of Part IX of the Act
and the Notifiable
Transactions Regulations (the "Regulations")
and to assist in determining how the Act may apply to proposed
transactions. The Guide also
addresses matters under sections 102 and 103 of the Act regarding
the issuance of Advance Ruling Certificates ("ARCs").
The Procedures Guide sets out
the general approach taken by the Competition Bureau (the "Bureau")
with respect to prenotification and ARC procedures,
and supersedes all previous Bureau statements on these matters. The
Guide is not intended to be a binding statement of
how discretion will be exercised in a particular situation and
should not be taken as such, nor is it intended to substitute for
the advice of private counsel to the parties, or to restate the
law.
The Commissioner is empowered under the Act to inquire into
mergers and apply to the Competition Tribunal ("Tribunal")
for remedial orders. The Tribunal is a quasi-judicial body
established under the Competition Tribunal Act to
adjudicate the non-criminal provisions of the Act.
All merger transactions, whether or not they are
notifiable, are subject to examination by the
Commissioner to determine whether they have, or are likely to have,
the effect of preventing or lessening substantially competition in a
definable market. The assessment of the competitive effects of a
merger is made with reference to the factors identified under
section 93 of the Act. The Bureau has issued the Merger
Enforcement Guidelines (the "MEGs") which describe the
merger enforcement policy of the Commissioner.
Part IX of the Act provides the statutory framework for
prenotification, which requires the parties to certain proposed
transactions to notify the Commissioner prior to
completing their proposed transaction. The Regulations set out the
procedure for calculating the aggregate value of assets and gross
revenues from sales for purposes of the party-size and
transaction-size thresholds in sections 109 and 110 of the Act,
respectively.
Sections 100 and 104 of the Act empower the Commissioner to apply
to the Tribunal for interim orders to prevent the completion or
implementation of a proposed merger.
Where no application has been made under section 92 of the Act,
section 100 orders may be made by the Tribunal. Under subsection
100(1) of the Act, the Tribunal may issue an interim order
forbidding the completion or implementation of a proposed merger (a)
where the Tribunal finds that in absence of an interim order an
action is likely to be taken that will substantially impair the
ability of the Tribunal to remedy the effect of the proposed merger
on competition; or (b) where the Tribunal finds that section 114 of
the Act has been contravened. Where an application has been made
under section 92, the Tribunal may, pursuant to section 104 of the
Act, issue any interim order which it considers appropriate.
Part IX of the Act and the Regulations came into force on July
15, 1987. Subsequently, Part IX was amended by S.C., 1999, c. 2, and
the Regulations were amended by SOR/2000-8. Part IX requires parties
to certain proposed transactions which exceed
certain monetary thresholds to:
| (a) |
notify the Commissioner
prior to the completion of the proposed transaction; |
| (b) |
provide specified
information; and |
| (c) |
wait a specified period
of time before completing the transaction. |
The purposes of prenotification are:
| (a) |
to provide the
Commissioner with advance notice of large proposed
transactions; |
| (b) |
to provide the
Commissioner with a period of time to undertake an analysis of
the impact of the proposed transaction; |
| (c) |
to facilitate that
analysis by ensuring that certain required information is
submitted to the Commissioner with the notice; and |
| (d) |
to help avoid the
problems associated with "undoing" a merger and restoring
firms and competition to their pre-merger state.
|
Table of
Contents
PART II: NOTIFIABLE
TRANSACTIONS
The process for determining whether a proposed transaction is
notifiable generally involves four steps. In
certain cases, each step may involve additional issues which may
need to be addressed.
| Step
1: |
Determine whether the
proposed transaction is of a type caught by section 110 of the
Act. |
| Step
2: |
Determine whether the
party-size threshold under section 109 of the Act is
exceeded. |
| Step
3: |
Determine whether the
transaction-size threshold under subsections 110(2) to 110(6)
of the Act is exceeded. |
| Step
4: |
Determine whether any
exemptions under sections 111 to 113 of the Act apply to the
proposed transaction. |
For a transaction to be notifiable, the first
three steps must be satisfied and there must not be any applicable
exemption. Section 114 of the Act requires that all parties to a
proposed transaction which exceeds the thresholds set out in
sections 109 and 110 of the Act must notify the Commissioner prior
to the completion of the transaction and supply the Commissioner
with certain statutory information. Section 123 of the Act sets out
the time frames within which a proposed transaction may not
proceed.
To be notifiable, a proposed transaction must be
one of the five types found in section 110 of the Act:
Subsection 110(2) - acquisition of assets,
Subsection 110(3) -
acquisition of voting shares,
Subsection 110(4) -
amalgamation,
Subsection 110(5) - creation of a combination, or
Subsection 110(6) - acquisition of an interest in a combination.
If the proposed transaction is one of these types, it should be
determined whether the thresholds have been exceeded.
Section 109 of the Act provides that the parties to the
transaction, together with their affiliates, must have assets in
Canada or annual gross revenues from sales in, from or into Canada
that exceed $400 million.
For each transaction type, there is a corresponding
transaction-size threshold.
A proposed acquisition of assets of an operating business is
notifiable if the aggregate value of the assets in
Canada or the annual gross revenues from sales in or from Canada
generated from those assets would exceed $35 million.
For a proposed acquisition of voting shares of a corporation
carrying on an operating business to be notifiable,
two conditions must be satisfied. First, the aggregate value of the
assets in Canada of the acquired corporation, or the annual gross
revenues from sales in or from Canada generated from those assets,
must exceed $35 million. Second, the voting-share interest of the
acquiring party in the corporation must be taken into consideration.
In an acquisition of voting shares which are publicly traded, the
proposed acquisition must result in the acquiring party holding in
excess of 20 per cent of the target corporation's voting interests
unless the acquiring party already owns a 20 per cent voting
interest, in which case the proposed acquisition must result in the
acquiring party holding in excess of 50 per cent of the target
corporation's voting interests. In an acquisition of voting shares
which are not publicly traded, the proposed acquisition must result
in the acquiring party holding in excess of 35 per cent of the
target corporation's voting interests unless the acquiring party
already owns a 35 per cent voting interest, in which case the
proposed acquisition must result in the acquiring party holding in
excess of 50 per cent of the target corporation's voting interests.
A proposed corporate amalgamation is notifiable
if one or more of the corporations carries on an operating business
and if the aggregate value of the assets in Canada of the continuing
corporation or the annual gross revenues from sales in or from
Canada generated from those assets would exceed $70 million.
A proposed combination of two or more persons to carry on
business, otherwise than through a corporation, is
notifiable if the assets being contributed to the
combination form all or part of an operating business, and if the
aggregate value of assets in Canada or the annual gross revenues
from sales in or from Canada generated from those assets would
exceed $35 million.
For a proposed acquisition of an interest in a combination
carrying on an operating business otherwise than through a
corporation to be notifiable, two conditions must
be satisfied. First, the aggregate value of the assets in Canada of
the combination, or the annual gross revenues from sales in or from
Canada generated from those assets, must exceed $35 million. Second,
the interest acquired in the combination must be taken into
consideration. Where the acquiring party would be acquiring an
interest that would entitle it to receive more than 35 per cent of
the profits or of the assets on dissolution, the proposed
acquisition would be notifiable. Where the
acquiring party's interest on dissolution or entitlement to profits
already exceeds 35 per cent, the transaction would be
notifiable if the acquiring party's interest on
dissolution or entitlement to profits would exceed 50 per cent.
Where Steps 1-3 have been satisfied, the proposed transaction is
notifiable unless there is an applicable exemption
in either the Act or Regulations. Sections 111, 112 and 113 of the
Act set out the statutory exemptions. They include general
exemptions from the requirement to prenotify where all parties to a
transaction are affiliates of each other ("affiliates" is defined in
section 2 of the Act), or where the Commissioner has issued an ARC
pursuant to section 102 of the Act. Section 15 of the Regulations
contains the exemption for asset securitization
transactions as defined in section 2 of the
Regulations.
Section 114 of the Act provides that parties to a proposed
transaction are required to supply a notice and prescribed
information.
Parties may file either short-form information, set out in
section 16 of the Regulations, or long-form information, found in
section 17 of the Regulations. Where a short form is filed, the
Commissioner may, prior to expiry of the waiting period, request
that a long form be filed.
Although the Act does not provide for the actual forms for filing
prescribed information, the Bureau has developed forms for this
purpose. The forms list the information requirements in sections 16
and 17 of the Regulations and are intended to assist both the
parties, in the compilation of the required information and the
assembly of a complete notice, and the Merger Notification Unit, in
its timely verification of whether the notice is complete. The forms
clearly set out the information required and allow most material to
be attached as identified appendices. Parties who are required to
file notices are strongly encouraged to use the Bureau's forms.
The final part of the forms allows the parties to provide
additional information which may be relevant to the Commissioner's
assessment of the proposed transaction. Parties filing notices
regarding proposed transactions are encouraged to
volunteer such additional information. Additional information
relevant to the competition assessment could assist the Commissioner
in making a timely decision on whether a transaction should be
subject to further proceedings under the Act. The Bureau's Fee and Service
Standards Handbook contains a list of suggested information.
The Bureau's suggested short forms
(section 16 information) and long forms (section 17 information)
are available from the Bureau's website and the Bureau's Information
Centre at 1-800-348-5358 or (819) 997-4282.
Under subsection 114(2) of the Act, parties to a proposed
transaction have the option to file the short-form information
requirements or the long-form information requirements. Paragraph
123(1)(a) of the Act provides that parties filing a short
form shall not complete the proposed transaction before the
expiration of a 14-day waiting period after receipt by the
Commissioner of the prescribed information. For parties filing the
long form, paragraph 123(1)(b) of the Act provides for a
waiting period of 42 days after receipt of the prescribed
information. Further, subsection 114(2) provides that where a
short-form filing has been submitted, the Commissioner may, within
14 days after receipt, require that a long form be submitted. In
that case, the waiting period will not begin until the long-form
information has been received.
Where the proposed transaction is an acquisition of voting shares
to be effected through the facilities of a stock exchange and where
the long form is used, paragraph 123(1)(c) of the Act
provides for a waiting period of 21 trading days, or such longer
period not exceeding 42 days, as may be allowed by the rules of the
exchange before the shares must be taken up.
After expiration of the waiting period, the parties are free to
complete the proposed transaction unless, on application by the
Commissioner, the Tribunal has issued an interim order preventing
the completion of the transaction.
Three different events will allow the parties to complete a
proposed transaction without having to wait the full applicable
period found in subsection 123(1) of the Act. Pursuant to subsection
123(1), the Commissioner or a person authorized by the Commissioner
may notify the parties prior to expiration of the applicable waiting
period that the Commissioner does not intend, at that time, to make
an application under section 92 of the Act in respect of the
proposed transaction. Such a notification to the parties will be in
the form of a no-action letter. The second event occurs when an ARC
has been requested and issued under subsection 102(1) of the Act.
Pursuant to paragraph 113(b) of the Act, the issuance of an
ARC exempts the transaction from the notifiable
transactions provisions. Where a notice has been
filed under subsection 114(1) of the Act along with an ARC request,
the issuance of the ARC prior to expiration of the applicable
waiting period automatically terminates that period. Finally, where
information has been supplied in an ARC request, and where that
information is substantially similar to the information required
under subsection 114(1), the Commissioner or a person authorized by
the Commissioner may, under paragraph 113(c) of the Act,
waive the subsection 114(1) notification requirement and,
consequently, the applicable waiting period.
Subsection 114(3) of the Act was added to the prenotification
provisons in 1999 to ensure that information required from the
target of a hostile takeover bid is submitted sufficiently in
advance of the expiration of the waiting period. Such timely filing
of the information from all the parties to a proposed acquisition
assists the Mergers
Branch in carrying out its assessment of the transaction as
expeditiously as possible.
In a hostile takeover situation, where the Commissioner receives
information from an acquiror before receiving information from the
corporation whose shares are being acquired (the "target"),
paragraph 114(3)(a) of the Act requires the Commissioner to
notify the target that the prescribed short-form or long-form
information has been received. Paragraph 114(3)(b) of the
Act requires the target to supply short-form information within 10
days after being notified by the Commissioner that short-form
information has been received from the acquiror or to supply
long-form information within 20 days after being notified by the
Commissioner that long-form information has been received from the
acquiror.
In cases where subsection 114(3) of the Act applies, subsection
123(2) of the Act provides that the waiting period is determined
without reference to the day on which the information is received
from the target. In other words, the waiting period begins after the
Commissioner has received the information from the acquiror.
Where a target supplies short-form information, the Commissioner
may, under paragraph 114(3)(c) of the Act, require the
target to supply long-form information within 20 days after being
required. It is anticipated that paragraph 114(3)(c) will
be invoked after the Commissioner has made a decision under
subsection 114(2) of the Act to require long-form information from
the acquiror.
Historically, most notices under section 114 of the Act were
accompanied by short-form information, with the Commissioner rarely
requesting that long-form information be supplied. However, when a
proposed transaction appeared to raise serious issues or to be
problematic, Bureau officers would request that the parties provide
additional information.
The new long form has been revised to include some of the more
common information previously found in the voluntary submissions. In
the future, it is expected that instead of requesting a detailed
list of information on a voluntary basis, the Bureau may ask the
parties to provide the long-form information.
The revised long form is not intended to eliminate the voluntary
approach. Where the Bureau needs to clarify only a few issues or
supplement some aspects of the proposed transaction, an informal
request will still be the appropriate route. Also, if parties to a
proposed transaction file a short form and supplement it with
sufficient additional information, the long form might not be
necessary.
The decision to request a long-form submission will be made on a
case-by-case basis, according to a variety of factors. The levels of
complexity defined in the Fee and Service
Standards Handbook provide some guidance as to the circumstances
in which a long-form submission is more likely to be requested.
Where a proposed transaction is non-complex, that is, where there is
no or minimal competitive overlap between the parties to the
proposed transaction (less than 35 per cent post-merger market
share), a long-form submission will not be required. This
determination, of course, assumes that parties have provided the
relevant information on market shares at the outset and that this
information is not controversial. At the other end of the spectrum,
parties to "very complex" transactions should
expect that a long-form submission will be requested if it is not
submitted along with the section 114 notice.
For proposed transactions in the "complex"
category, the circumstances in which a long-form submission will be
required are more difficult to outline due to the wide range of
transactions included in this category. Generally,
as the level of complexity increases and a detailed review is
believed necessary, it is more likely that a long-form submission
will be required. Whether a long-form submission will be requested
for a "complex" proposed transaction will depend on the supplemental
information provided by the parties along with the short-form
submission, the quality of information obtained from other sources
and the preliminary assessment of section 93 factors.
Subsection 114(1) of the Act provides that the parties to a
proposed transaction are, before the transaction is completed,
required to notify the Commissioner of the proposed transaction and
supply the Commissioner with the appropriate information. Each party
is required to certify on oath or solemn affirmation that the
information supplied is correct and complete. Under subsection
114(4) of the Act, one party may assemble the information of all
parties and submit it, along with a notice, jointly and on behalf of
all parties. Alternatively, each party can submit a notice and the
portion of the information relating to itself. In this case, the
filing will be deemed complete only when the portions from all
parties are received, except in the case of a hostile acquisition of
voting shares to which subsection 114(3) of the Act applies. Where
it is required under subsection 114(3) for the target of a hostile
takeover bid to file prescribed information, subsection 123(2) of
the Act provides that the statutory waiting period commences when
the other parties to the proposed transaction have filed complete
information forms, without reference to when the target has
completed its filing.
Where each party assembles and submits its own information, the
parties should ensure that at least one party provides the basic
data applicable to the proposed transaction (e.g. the transaction
description) and that their separate portions of the notice are
received by the Bureau at approximately the same time, with a cover
letter explaining who will be providing the other portions,
including the fee, and when they can be expected.
Subsection 114(1) of the Act provides that notice must be given
to the Commissioner prior to completion of the proposed transaction.
Subsection 123(1) of the Act provides that the parties must wait the
applicable waiting period prior to completing the proposed
transaction. Generally, parties should file their notice as soon as
they have an agreement or, in the case of a hostile takeover,
definite plans.
When determining filing dates for proposed
transactions, the parties may wish to consider the
following factors. First, where a party files a short form and the
Commissioner requests a long form, the statutory waiting period will
be extended from 14 to 42 days. In addition, the waiting period will
not commence until the parties have supplied to the Commissioner all
the necessary long-form information. Second, while subsection 123(1)
of the Act sets out a minimum time period between filing and
completion, the Act does not provide a maximum time period.
Therefore, parties should be aware that the statutory waiting
periods under subsection 123(1) may not match the maximum time
periods set out in the Bureau's service standards for assessing
proposed merger transactions. Third, where a party
files its materials to coincide with the minimum statutory waiting
period and the Commissioner determines that the proposed transaction
raises competition issues, the Commissioner may seek from the
Tribunal an order temporarily preventing completion of the
transaction. Accordingly, parties may wish to consider planning
their transactions to close so that the scheduled
completion dates approximate the maximum time set out in the service
standards for providing the appropriate merger analysis, namely, 14
days for "non-complex" transactions, 10 weeks for
"complex" transactions and five months for "very
complex" transactions.
Prior to filing a notice and the prescribed information, the
parties should be reasonably certain of their intentions regarding
completion of the proposed transaction. Parties who submit
information to the Commissioner and subsequently abandon the
proposed transaction place an unnecessary burden on the Bureau and
may not be entitled to a refund of the fee. For more information
about the refund policy, please consult the Fee and Service
Standards Handbook.
Table of
Contents
PART III: ADVANCE RULING CERTIFICATES
An Advance Ruling Certificate ("ARC") may be issued by the
Commissioner to a party or parties to a proposed merger transaction
who want to be assured that the transaction will not give rise to
proceedings under section 92 of the Act. Section 102 of the Act
provides that an ARC may be
issued when the Commissioner is satisfied that there would not be
sufficient grounds on which to apply to the Competition Tribunal for
an order against a proposed merger. The issuance of an ARC is
discretionary. An ARC cannot be issued for a transaction which has
been completed, nor does an ARC ensure approval of the transaction
by any agency other than the Bureau.
Under paragraph 113(b) of the Act, an ARC exempts the
named transaction from the prenotification provisions under Part
IX.
Under section 103 of the Act, where the Commissioner issues an
ARC under section 102 of the Act, and where the proposed transaction
to which the certificate relates is substantially completed within
one year after the certificate is issued, the Commissioner cannot
apply to the Tribunal solely on the basis of information that is the
same or substantially the same as the information on which issuance
of the certificate was based. However, where the Commissioner
receives additional information which effectively alters the basis
on which the ARC was issued, proceedings under section 92 of the Act
cannot be ruled out. Thus, it is critical that the parties provide
full disclosure at the time an ARC is requested.
A request for, or issuance of, an ARC will not prevent any
inquiry under section 10 of the Act which the Commissioner may cause
to be made in respect of any other provision of the Act. Where an
ARC is denied, a no-action letter may be issued by the Commissioner
or a person authorized by the Commissioner.
The matters to be considered in assessing an ARC request include,
but are not limited to, the factors in sections 93 to 96 of the Act.
The Bureau has issued the MEGs that describe the merger enforcement
policy of the Commissioner and elaborate on the interpretation and
application of these factors.
Unlike the prenotification provisions in Part IX of the Act, the
Act does not indicate the information required to be supplied to the
Commissioner in support of an ARC request. Given that the decision
to issue an ARC will be based largely on information received from
the applicants for the certificate, applicants should be willing to
supply the Commissioner with information relevant to the proposed
merger and its effect on competition.
Generally, for non-complex transactions, the
information provided should be similar to the short-form information
requirements under section 16 of the Regulations. The applicant
should focus on the matters listed in section 93 of the Act. The
submission of relevant market share information and any related
industry studies may also assist in attempting to satisfy the
Commissioner that there is no competition issue and that an ARC
should be issued. Parties requesting an ARC should suggest the
wording for a "Re:" line which would adequately identify the
transaction and which could appear on the ARC.
Where the information supplied with an ARC request is
substantially similar to the information which would be required
under section 114 of the Act, the Commissioner may, pursuant to
paragraph 113(c) of the Act, waive the requirement to file
a notice and supply information under section 114. Thus, where the
possibility exists that an ARC request made in relation to a
notifiable transaction could be rejected, the ARC
request should contain the prescribed information in order to
potentially bypass the prenotification process and its waiting
periods. The Commissioner is likely to waive prenotification where
the examination of the proposed transaction has been completed and
additional information is not required.
Given that an ARC is available only for proposed
transactions, an ARC request should be made as soon
as reasonably practicable. Prompt filing will enable the parties to
respond to any concerns the Commissioner may have so that a
certificate may be issued before the transaction is scheduled to be
completed. The Commissioner is obliged under subsection 102(2) of
the Act to consider the matter expeditiously. With the full
assistance of the parties, the Commissioner will be able to issue
the ARC in a timely fashion.
Table of
Contents
PART IV: PROCEDURAL MATTERS
The Mergers
Branch of the Bureau is responsible for prenotification under
Part IX of the Act and for the competition assessments of mergers.
The Merger Notification Unit ("MNU") of the Mergers Branch is
responsible for all prenotification matters and is the starting
point for ARC requests under section 102 of the Act.
The MNU processes all section 114 notices received by the Bureau.
The MNU reviews all section 114 notices for completeness, opens a
project on the Branch's computer database, assigns a project number
and issues the corresponding receipts and letters of acknowledgment
indicating the start and end dates of the statutory waiting periods.
The MNU also sends to the notifier an official receipt for the fee
payment. If the assessment has not been completed by the end of the
waiting period, the MNU will send the notifier a letter on the last
day of the waiting period indicating that the waiting period is
ending on that date and that the assessment is incomplete.
If a notice or other documentation received is considered
incomplete or deficient in some manner, the MNU will immediately
attempt to contact the filer to determine how to remedy the
situation.
Following its review of section 114 notices, the MNU transfers
the file to one of the two Divisions responsible for merger
assessments, based on areas of expertise and the workload of each
Division.
The MNU does not determine the complexity level of
transactions for service standards purposes.
Complexity levels are determined by those responsible for the
assessment of the proposed transaction.
The MNU processes all section 102 ARC requests received by the
Bureau. On receipt of an ARC request, the MNU opens a project on the
Branch's computer database, assigns a project number, sends an
official receipt for the fee payment with a letter of
acknowledgment. The ARC request is then transferred to either of the
Divisions in the Mergers Branch, based on areas of expertise and
workload.
The MNU is contacted daily by persons wishing to obtain
information on a variety of matters including filing
procedures, interpretation of the Act and
Regulations, and their application to a set of facts. These
questions frequently involve a determination of whether a proposed
transaction is notifiable or whether an exemption
is applicable.
Where a question relating to Part IX of the Act is detailed and
complex in nature, the caller may be asked to submit the question in
writing, take advantage of the Bureau's Compliance Program and
obtain a written advisory opinion. Since the introduction of fees in
November 1997, a fee has been charged for written advisory opinions
on the application of Part IX.
The MNU is frequently asked questions regarding procedural and
compliance matters. The following is meant to assist in answering
such questions. A suggested cover letter checklist has been included
as an Appendix.
Information about the Bureau's fees is contained in the Bureau's
Fee and
Service Standards Handbook which is available on the Bureau's
website and from the Information
Centre.
A separate notice or ARC request and the corresponding fee is
required for each proposed transaction. Most
transactions are fairly straightforward in their
structure and raise no particular prenotification concerns. However,
some proposed transactions are structured in a
complex manner and may involve numerous parties, assets and
steps.
Depending on the facts of any particular case, a series of
proposed transactions may be regarded as one
continuous, or multiple step, transaction with several steps for
which only one notice and fee is required, or it may be considered
several independent transactions for which several
notices and fees may be required. Generally, every proposed
transaction under section 110 of the Act constitutes a separate
proposed transaction for the purposes of notice under section 114 of
the Act. Similarly, every proposed transaction made subject of an
ARC request is considered a separate proposed transaction for
purposes of section 102 of the Act. However, two or more proposed
transactions under section 110 or 102 typically
will be considered one continuous transaction if all steps in the
series of proposed transactions constitute a
sufficiently connected sequence of events. For further information
on this matter, please see Interpretation Guideline No.2, available
on the Bureau's website.
To assist the MNU, parties submitting notices of proposed
transactions with complex structures should: (i)
ensure that the transaction description in the notice is as complete
and detailed as possible; (ii) address the issue in the cover letter
and explain why the proposed transaction should require only one
notice; and (iii) in the case of a short-form information filing,
consider including the relevant legal documentation.
Where a proposed transaction does not exceed either the party- or
the transaction-size threshold and the parties wish to receive
written confirmation that the Commissioner will take no further
action in the matter, they should submit an ARC request along with
the appropriate filing fee. Where an ARC is denied, a no-action
letter may be issued by the Commissioner or a person authorized by
the Commissioner. Instead of a no-action letter, the parties may
request an advisory opinion. The Mergers
Branch does not receive many advisory opinion requests because
these opinions are based solely on the information supplied with the
request, not on all the information necessary for a complete merger
assessment.
Parties are always welcome to bring to the Bureau's attention any
transaction which may not exceed the prescribed thresholds. If
parties to such a transaction do not request an ARC, no-action
letter or advisory opinion, they will be advised orally as to the
Commissioner's determination on the matter.
Where a person has already exceeded the 20 per cent or 35 per
cent threshold for an acquisition of voting shares or the 35 per
cent threshold for an acquisition of an interest in a combination,
another notice under section 114 of the Act will generally be
required if the same person will exceed the 50 per cent threshold
after making a further acquisition of either voting shares or an
interest in a combination. However, where a person intends at the
time of the initial acquisition to make such a future acquisition,
subsection 115(2) of the Act provides that a notice of the intended
future acquisition may be given along with the initial filing. Where
such a notice is given, the parties will not be required to give
notice and supply information under section 114 for the future
acquisition if two conditions are met: (1) the future acquisition is
carried out in accordance with the notice given under subsection
115(2), and (2) an additional notice is given in writing to the
Commissioner within 21, and at least seven, days before the future
acquisition. It should be noted that pursuant to subsection 115(4)
of the Act, the exemption under subsection 115(3) will not apply to
a future acquisition which is not completed within one year after
the date of notice given under subsection 115(2).
The hours of the MNU are from 9:00 a.m. to 5:00 p.m. Eastern Time
on business days. Questions concerning notifiable
transactions should be directed to the MNU, tel:
(819) 953-4297.
In the interests of confidentiality and timeliness, it is
recommended that prenotification filings and ARC requests be
delivered by courier directly to the Competition Bureau's main
reception area, 21st floor, 50 Victoria Street, Place du Portage,
Phase I, Hull, Qu bec, K1A 0C9. Please ensure that the cover letter
and envelope, especially the courier packaging, clearly state
"Attention: Merger Notification Unit".
Notices and ARC requests may be faxed to the MNU at (819)
953-6169. For faxed notices, the original affidavits should be
received the next business day. For both faxed notices and ARC
requests, the fee should be received as soon as possible thereafter.
Please send voluminous documents by courier and avoid using fax
transmission. If the document must be faxed due to timing factors,
please inform the MNU in advance.
Parties submitting documents should assess whether there is any
benefit in faxing material, which is often incomplete. If the
original complete package will be sent by overnight courier, there
may not be any significant benefit in sending an incomplete fax the
previous day. If the faxed documentation is complete, the only
advantage of faxing ahead of courier delivery would be that the
waiting period may start a business day earlier.
One copy of a short-form filing or ARC request is all that is
necessary. However, for long-form filings, two copies of the filing
should be submitted along with an affidavit certifying that all the
information contained in both copies is identical. Given that
long-form filings are usually requested in complex or very complex
cases, the additional copy will assist Mergers Branch staff in
expediting its review of the proposed transaction.
Notices and ARC requests should be complete when they are
submitted. Submitting notices in portions introduces the risk that
something might be misplaced if not properly identified. Also, it
becomes difficult to determine when the file is complete and when
the waiting period begins.
Please ensure that someone knowledgeable about the filing is
available to answer questions at the time of the filing should some
issues need to be clarified or if some documents are missing.
Subsection 116(2) of the Act provides that parties submitting a
section 114 notice may withhold information on the grounds that the
information is not relevant to a competition assessment. Parties
making use of subsection 116(2) should identify which information is
not being supplied and explain why the information is not considered
relevant. Section 116 affidavits which state: "The information not
supplied has not been supplied because it is not relevant" are
unsatisfactory.
When informing the Commissioner under subsection 116(2) of the
Act, the parties are requested to provide sufficient information
about themselves and their affiliates, including names of affiliates
and the nature of their businesses, to allow a determination that
the omitted information is not relevant. Parties who withhold too
much information about themselves and their affiliates assume the
risk that the notice may be considered inadequate and that
commencement of the waiting period will be delayed until additional
information is received.
Pursuant to subsection 116(2.1) of the Act, where information
required under section 114 of the Act has been previously supplied
to the Commissioner, the person supplying the information may,
instead of supplying information again, inform the Commissioner
under oath or solemn affirmation of the matters in respect of which
information has previously been supplied and when it was supplied.
Parties making use of subsection 116(2.1) should supply the project
numbers relating to the previous filings.
Where information is requested on an information form, but is not
supplied because it does not apply, the party should indicate why
the information does not apply. Writing "n/a" on the form may
confuse information that does not apply with information that is not
available and does not explain why either is the case.
Section 123 of the Act provides that a proposed transaction
should not be completed before the expiration of 14 days after the
day on which a short-form information filing was received and, in
the case of a long-form information filing, 42 days. Thus, if a
short-form filing is received on February 1, the letter of
acknowledgment will indicate that the waiting period expires on
February 15. The parties are free to close their transaction at
12:01 a.m. on February 16. Parties who complete a transaction prior
to expiry of the waiting period may have committed an offence under
subsection 65(2) of the Act, unless they have received by then a
no-action letter or an ARC informing them that the Commissioner does
not intend to challenge the proposed transaction.
Pursuant to subsection 29(1) of the Act, information obtained
pursuant to sections 114 and 102 of the Act is confidential.
However, subsection 29(1) does permit the communication of such
information to Canadian law enforcement agencies or for the purposes
of the administration or enforcement of the Act. Subsection 29(2) of
the Act provides that the confidentiality provisions do not apply in
respect of any information that has been made public. Although
information provided voluntarily to the Commissioner does not fall
within the scope of subsection 29(1), it is the policy of the
Commissioner to treat such information as if it were covered under
subsection 29(1).
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Cover letters submitted with section 114 notices and section 102
ARC requests assist in processing documents in a timely manner.
While most cover letters are complete, occasionally the addition of
another item of information would be of assistance. The following
checklist may be used to ensure that a cover letter is as complete
as possible.
Attention: Merger Notification Unit
Please ensure that your correspondence and envelope or package
covering clearly indicate that it is to be directed to the attention
of the Merger Notification Unit.
The "Re:" Line and Project Numbers
This line is often used to determine how to identify and capture
the file for correspondence and databank purposes. It is helpful if
all the parties to a proposed transaction use the same Re: Line,
which should clearly indicate who is acquiring whom. For example,
"Xcorp acquisition of Ycorp" or "Zcorp sale of receivables to ABC
Trust" is helpful, while "Xcorp acquisition of Assets" or simply
"Xcorp" is not. In subsequent correspondence, please identify the
case by referring to the project number provided by the MNU in the
letter of acknowledgment for each filing.
What is being Submitted or Requested
Please state clearly by the end of the first page of the cover
letter what is being submitted, what is being requested or both.
Who Acts for Whom; Who Will be Submitting What
Where a notice or ARC request is going to be submitted in parts
at different times or from different sources, each cover letter
should indicate who will be submitting what on behalf of which party
and when any additional information may be expected and from whom.
Please provide names and phone numbers of contact persons.
Fees, GST and Official Receipts
Please indicate in the cover letter whether a cheque is enclosed
for the fee and in what amount. If it is not enclosed, please
indicate when the MNU can expect to receive it. Please include the
name to whom the official receipt should be issued. Any claim that
the GST is not payable on the grounds of non-residence should be
clearly stated in the letter.
Closing Date
Please indicate the date on which the parties expect to close the
proposed transaction.
Confidentiality
Please indicate whether the proposed transaction has been made
public or when the parties expect to announce it.
Multiple-Step Transactions
If the notice or ARC request relates to a proposed transaction
with a complex, multiple-step structure, please indicate why the
transaction should require only one notice and, hence, one fee.
Competition Assessment
Voluntary information regarding the impact of the proposed
transaction in the relevant market is helpful for both notices and
ARC requests. Where such information is substantial, it may be
included in the information forms for section 114 filings or as
separate documents for ARC requests.
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