• Competition Bureau Publishes Revised Merger Review Process Guidelines
  • January 19, 2012 | Authors: Daniel G. Edmondstone; James B. Musgrove
  • Law Firm: McMillan LLP - Toronto Office
  • On January 11, 2012, the Competition Bureau published a revision of its Merger Review Process Guidelines. The revised Guidelines set out the Bureau's approach to the merger review process under the Competition Act which was most recently articulated in 2009 following the significant changes to the merger notification provisions which conform more closely to the "second request" system employed in the United States.

    The revised Guidelines represent refinements rather than wholesale changes to the process articulated in 2009 and are principally concerned with the procedures to be followed when responding to a Supplementary Information Request ("SIR"). The most notable elements of the Guidelines are as follows:

    • Dialogue with the Bureau: The revised Guidelines elaborate on the Bureau's view of appropriate dialogue with the merging parties both before and after a SIR is issued. The Bureau views the pre-issuance period as an opportunity to narrow the scope of the information sought in an anticipated SIR, while the period following issuance should be used to prioritize and manage the collection of the requested information. Notably, the default period for pre-issuance consultation has been reduced from three to two business days, which is an extremely tight timeframe.

    • Search Periods and Timing Agreements: The revised Guidelines state that, absent circumstances warranting an alternative approach, the default search period for hard copy and electronic records is the year-to-date period immediately preceding the issuance of the SIR and the previous two calendar years. The default search period for data requests is the year-to-date period immediately preceding issuance and the previous three calendar years. Where the default search periods are not conducive to the facts of a specific transaction, the Bureau will consider entering into timing agreements as an alternative means of obtaining supplementary information about a proposed deal. This section of the Guidelines reflects the Bureau's practical experience with the SIR process over the last two and a half years.

    • Refreshed Data: The revised Guidelines clarify situations in which parties will be required to provide refreshed versions of previously submitted information. This may be varied in appropriate cases, and the production of rolling information in accordance with the Bureau's described priority for receipt of information may mitigate the Bureau's general insistence on this approach. As a practical matter, however, for cases in which the parties and the Bureau have not agreed on an information protocol, parties must reply to the SIR within 90 days or will have to update the filing. This is, typically, a very short time within which to respond to a SIR.

    • Review Process for Hostile Transactions: The Guidelines incorporate provisions of the Bureau's Hostile Transactions Interpretation Guideline Number 2: Bureau Policy on Running of Subsection 123(1) Waiting Periods, which provide, among other things, that the target of a hostile transaction is not permitted to influence the start of the applicable waiting period by delaying its pre-notification filing or its response to a SIR. This section of the Guidelines also states that, for hostile transactions, the Bureau will typically issue a SIR in combination with a timing agreement and/or a court order obtained pursuant to section 11 of the Act. This has the effect of compelling the target to provide information and is intended to ensure that the Bureau receives a response to the SIR on a timely basis.

    • Instructions: In addition to the general information on the Bureau's approach to merger reviews, the revised Guidelines contain specific instructions on the logistic procedures that parties are expected follow with respect to: (i) the means by which documents must be provided; (ii) the issuance of waivers applicable to foreign agencies; (iii) the manner in which parties may attempt to limit the number of information custodians; and (iv) the process of certifying compliance with a SIR.

    • Advisory Opinions: The previous version of the Guidelines noted that an advisory opinion was available to parties pursuant to section 124.1 of the Act, with respect to the applicability or interpretation of the notification provisions of the legislation. The revised Guidelines remove this reference, which, while consistent with the Bureau's recently articulated approach to advisory opinions, significantly reduces the usefulness of such opinions to merging parties.

    • Sharing of Views: The prior version of the Guidelines included a commitment by the Bureau to communicate its preliminary views on potential competition issues "as soon as possible" within the initial 30 day time period, and to indicate as soon as possible within that period whether a SIR would be issued. The commitment to do so on an "as soon as possible" basis has been removed from this iteration of the Guidelines.

    • Adjustments to Tone: While subtle, the new Guidelines change the tone of the relationship between the Bureau and merging parties. For instance, the revised Guidelines no longer include a statement on the burden which a SIR places on merging parties, change the reference to the transactions previously said to be potentially problematic from "few" to "relatively few", and soften the Bureau's previously stated commitment to minimizing the burden on merging parties into a commitment to work with the parties to narrow the issues.

    The revised Guidelines do not reflect dramatic departures from the Bureau's previous approach to the administration of the merger review process under the Competition Act. However, they introduce and clarify the shifts in the Bureau's thinking that have developed since the implementation of the two-stage U.S.-style notification process in 2009 and are consistent with the tone of recently published Bureau materials.