This country-specific Q&A provides an overview of the legal framework and key issues surrounding merger control law in Canada.
This Q&A is part of the global guide to Merger Control. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/merger-control
The Canadian merger control regime is governed by the federal Competition Act (‘the Act’). The Commissioner of Competition (‘the Commissioner’) is responsible for the administration and enforcement of the Act as head of an independent law enforcement agency, the Competition Bureau (‘the Bureau’). The Commissioner and the Bureau receive merger notifications and conduct merger reviews. They also have the power to launch investigations into mergers that do not require notification, and they decide whether to challenge mergers before the Competition Tribunal (‘the Tribunal’), a specialized court with legal, economics, and business expertise.
The Act contains two parts that apply to mergers – one that establishes the merger control regime (which governs when parties are legally required to notify the Commissioner before closing their transaction) and another that contains the substantive merger review provisions (which sets out the substantive test for challenging a merger and the factors that will be considered in determining whether a merger should be challenged). These parts of the statute apply independently of each other. Thus, even if a merger does not require notification, it is still subject to the substantive merger review provisions (i.e., it can still be challenged).
Pre-merger notification is mandatory if the parties exceed the applicable financial thresholds, in which case there is a statutory prohibition on closing until the applicable waiting period has expired, been waived, or terminated. The turnover of the seller as well as the exports of all parties to the transaction are relevant for determining whether the transaction triggers a notification requirement, as described in greater detail below.
Filing may be required where there is an acquisition of a minority interest, even if the interest does not confer control or decisive influence over the target, so long as the applicable financial thresholds are exceeded and an additional “size of equity” test is met (described in more detail in below).
The expiry of the statutory waiting period does not always mean that the Commissioner has completed his substantive review of a transaction. The substantive test applied by the Commissioner and Bureau in its review is whether the proposed transaction is likely to prevent or lessen competition substantially.
Importantly, the Act has a unique efficiencies defence that can “save” an otherwise anticompetitive merger if it can be shown that the efficiencies from the merger are likely to be greater than and offset any prevention or lessening of competition that is likely to result from the merger.
Is mandatory notification compulsory or voluntary?
Pre-merger notification is mandatory when a transaction exceeds the applicable financial thresholds (described in more detail below).
Is there a prohibition on completion or closing prior to clearance by the relevant authority? Are there possibilities for derogation or carve out?
Transactions that require notification, including public bids, may not be completed or closed until the applicable waiting period has expired, been waived, or terminated. The expiry of the applicable waiting period (and hence the ability to legally close the transaction) is often, but not necessarily, aligned with the conclusion of the substantive merger review.
Parties generally do not “close around” Canada. If a transaction triggers a notification requirement, the law does not prohibit merely the acquisition of assets or businesses in Canada but rather the completion of that transaction before the merger control requirements have been met. The Bureau has stated that it will not normally agree to hold-separate provisions pending completion of a merger investigation.
What are the conditions of the test for control?
Transactions need not constitute an acquisition of control over the target to be caught by the merger control regime. The merger control regime sets out bright line tests for non-controlling acquisitions, which are described in greater detail below.
Separate from the merger control regime (i.e., the question of whether the transaction triggers a pre-merger notification requirement), a transaction must qualify as a “merger” in order for the Tribunal to have jurisdiction to block or remedy it under the merger provisions of the Act.
“Merger” is defined in the Act as “the acquisition or establishment, direct or indirect, by one or more persons, whether by purchase or lease of shares or assets, by amalgamation or by combination or otherwise, of control over or significant interest in the whole or a part of a business of a competitor, supplier, customer or other person.”
Generally, the Act defines “control” to be de jure control with respect to corporations. While the Act does not define a “significant interest”, the Bureau considers both quantitative and qualitative factors when assessing whether an interest is significant. Qualitatively, a significant interest is held when the person acquiring or establishing the interest obtains the ability to materially influence the economic behaviour of the target business. The Bureau generally will not take the position that an acquisition of 10% or less of the voting shares of a company constitutes the acquisition of a significant interest (i.e., a “merger”).
The types of transactions that are captured by the Canadian merger control regime are: (i) an acquisition of assets, (ii) an acquisition of voting shares, (iii) an amalgamation, (iv) a combination, and (v) the acquisition of an interest in a combination.
What are the conditions on minority interest in your jurisdiction?
For transactions that exceed the financial thresholds and involve the acquisition of voting shares or interests, there is an additional test known as the “size of equity” threshold that determines whether filing is mandatory. This may catch acquisitions that result in the acquirer holding more than 20 per cent of the voting shares of a public company or more than 35 per cent of the voting shares of a private company or voting interests of a non-corporate entity such as a partnership (or, in each case, more than 50 per cent of the voting shares, or interests in the case of a partnership, if the acquirer already owns the percentages stated above). As such, the Canadian merger control regime may require notification for transactions that would not amount to the acquisition of “decisive influence” for the purposes of the EU Merger Regulation.
Even if not subject to merger control (i.e., notifiable), the Bureau can still review (and challenge) an acquisition if the purchaser acquires a “significant interest” in the target. What constitutes a significant interest is described above.
What are the jurisdictional thresholds (turnover, assets, market share and/or local presence)?
In all cases, the “size of parties” threshold must be exceeded to trigger a mandatory notification. The “size of parties” test is met if the parties, together with their respective affiliates, have aggregate assets in Canada, or aggregate annual gross revenues from sales in, from, or into Canada, in excess of CAD $400 million. This means that the seller’s turnover and assets, as well as both parties’ exports, are included for the purpose of calculating whether the parties exceed this threshold.
If the “size of parties” threshold is exceeded, the transaction will be subject to the pre-merger notification provisions if the following thresholds are exceeded, which vary depending on the type of transaction as follows (financial thresholds subject to annual adjustment for inflation):
Acquisition of Assets.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada to be acquired, or the aggregate annual gross revenue from sales in or from Canada generated from those assets, is greater than CAD $88 million (for 2017).
Acquisition of Shares.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada, or the aggregate annual gross revenue from sales in or from Canada generated from Canadian assets, of the target operating business and its subsidiaries, is greater than CAD $88 million (for 2017); AND
- “Size of equity” threshold described above is met.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada that will be owned by the continuing corporation and any corporations that it controls, or the aggregate annual gross revenue from sales in or from Canada generated from those assets, is greater than CAD $88 million (for 2017); AND
- Each of at least two of the corporations that are parties to the transaction, along with their affiliates, must have assets in Canada that exceed an aggregate value of, or aggregate annual gross revenues from sales in, from, or into Canada that exceed CAD $88 million (for 2017).
A Combination or Acquisition of an Interest in a Combination.
- “Size of transaction” threshold is satisfied if the aggregate value of the assets in Canada that are the subject matter of the combination, or the aggregate annual gross revenue from sales in or from Canada generated from those assets, is greater than CAD $88 million (for 2017).
All of the notification thresholds are national in scope. They refer to all revenues / assets as opposed to only those related to the relevant product market and are assessed at the group level to include the parties and their affiliates.
While the “size of parties” threshold takes into account both the purchaser and the target, in every case apart from amalgamations, the applicable thresholds can be satisfied by the target party only. As mentioned above, the ‘size of transaction’ threshold is updated annually to account for inflation and the changes are posted in the Canada Gazette. The thresholds do not vary based on industry or sector and are the same across the country.
To be captured by Canada’s merger control regime a transaction must have some form of local presence or connection to Canada. Hence, the merger control regime only applies to “operating businesses” which are defined in the Act as “a business undertaking in Canada to which employees employed in connection with the undertaking ordinarily report for work”.
How are turnover, assets and/or market shares valued or determined for the purposes of jurisdictional thresholds?
Both assets and revenues are generally determined with reference to a party’s most recent audited annual financial statements.
The revenue thresholds refer to revenues generated on an annual basis. For the ‘size of parties’ threshold, revenues from sales in Canada (domestic sales), sales into Canada from another country (imports) and sales to another country from Canada (exports) are included. For the ‘size of transaction’ threshold, revenues generated from sales in Canada (domestic sales) and sales from Canada (exports) are included, but not revenues from sales made into Canada from another country (imports).
The value of assets in Canada is generally determined with reference to the value of the total assets as stated in the relevant party’s most recent audited annual financial statements. Subject to limited exceptions, assets on the audited financial statements of a Canadian entity are considered to be assets ‘in’ Canada. An entity is considered Canadian where it is incorporated in Canada or, in the case of an unincorporated entity, formed pursuant to a Canadian statute. For moveable assets that are listed on the balance sheet of an entity incorporated outside of Canada, but which were physically located in Canada for a portion of the relevant fiscal period, the Bureau expects the parties to include a proportion of the value of those assets in determining the value of the relevant party’s assets in Canada.
Is there a particular exchange rate required to be used for turnover thresholds and asset values?
The conversion into Canadian dollars of the gross revenues from sales reported in foreign currency must be based on the noon exchange rate quoted by the Bank of Canada on the last day of the annual period for which the gross revenues from sales are determined in accordance with the Act. This is generally the annual period covered by the most recent audited financial statements in which the gross revenues are accounted for.
The conversion into Canadian dollars of the aggregate amount of assets reported in foreign currency must be based on the noon exchange rate quoted by the Bank of Canada on the last day of the period covered by the most recent audited financial statements in which those assets are accounted for.
As of March 1, 2017, the Bank of Canada has stopped publishing the noon exchange rate and instead publishes a single “indicative” rate for each currency pair that it tracks at 4:30 p.m. every day. This indicative rate is to be used for the conversion into Canadian dollars going forward.
Do merger control rules apply to joint ventures (both new joint ventures and acquisitions of joint control over an existing business?
The Act exempts the formation of an unincorporated combination (e.g., a joint venture established through the formation of a partnership) from the merger control provisions if: (i) all the persons who propose to form the combination are parties to an agreement in writing or intended to be put in writing that imposes on one or more of them an obligation to contribute assets and governs a continuing relationship between those parties; (ii) no change in control over any party to the combination would result from the combination; and (iii) the agreement restricts the range of activities that may be carried on pursuant to the combination, and contains provisions that would allow for its orderly termination.
The formation of a joint venture that does not qualify for the exemption above (e.g., a joint venture carried on through a corporation), as well as the acquisition of an interest in an existing joint venture, may be subject to merger control if the transaction exceeds the relevant financial thresholds that are generally applicable to all transactions. There are no separate thresholds for joint ventures, and the same general rules apply regarding entities that must be included for the purpose of determining whether the thresholds are met.
For example, the “size of transaction” threshold for a joint venture established through the contribution of assets to a new corporation would be met where: (i) at least one of the persons contributes assets from an operating business, and (ii) the aggregate value of the assets in Canada or the gross revenues from sales in or from Canada generated from those assets exceeds CAD $88 million (for 2017).
The “size of transaction” threshold for the acquisition of an interest in a combination (e.g., acquiring voting interests in a partnership) would be met where: (i) the combination carries on an operating business other than through a corporation; (ii) the aggregate value of the assets in Canada that are the subject matter of the combination or the gross revenues from sales in or from Canada generated from those assets exceeds CAD $88 million (for 2017); and (iii) as a result of the acquisition, the person acquiring the interest will be entitled to over 35% of the profits of the combination or of its assets on dissolution, or where the person acquiring the interest is already so entitled, the acquiring person will be entitled to over 50% of such profits or assets.
From a substantive perspective, joint ventures may be reviewed under the Act’s prohibition on anticompetitive agreements among competitors regardless of whether they are subject to merger control. If they constitute the acquisition of a significant interest in a person (i.e., a merger), joint ventures also could be reviewed under the substantive merger provisions, even if they are not notifiable.
In relation to “foreign-to-foreign” mergers, do the jurisdictional thresholds vary?
The thresholds are the same regardless of where the parent entities acquiring and being acquired are located. Because: (i) the thresholds refer to assets in Canada and revenues generated either “in, from or into Canada” (for the ‘size of parties’ threshold) or “in or from Canada” (for the size of transaction threshold); and (ii) a transaction must involve an operating business in Canada (i.e., a business undertaking in Canada to which employees employed in connection with the undertaking ordinarily report for work) to be subject to Canada’s merger control regime, there must be some nexus to Canada before a foreign-to-foreign merger is caught by the Canadian merger control regime.
For voluntary filing regimes (only), are there any factors not related to competition that might influence the decision as to whether or not notify?
Additional information: Jurisdictional Test
What is the substantive test applied by the relevant authority to assess whether or not to clear the merger, or to clear it subject to remedies?
The substantive test the Bureau applies when reviewing transactions is whether the transaction is likely to prevent or lessen competition substantially in a market. Bureau guidance suggests that a substantial prevention or lessening of competition results only from mergers that are likely to create, maintain or enhance the ability of the merged entity, unilaterally or in coordination with other firms, to exercise market power.
Unlike the US or EU merger review paradigms, the Canadian regime includes an express efficiency defence to otherwise anti-competitive mergers, which applies to cases where the efficiencies brought about by the merger are likely to be greater than, and offset any effects of, the prevention or lessening of competition that results from the merger.
Are non-competitive factors relevant?
Are there different tests that apply to particular sectors?
Not applicable. While there are sectoral regulatory agencies that have the jurisdiction to review a transaction that is also notifiable to the Bureau, the Bureau does not apply a different substantive test to any sector.
Are ancillary restraints covered by the authority’s clearance decision?
The Bureau’s review will look at the competitive impact of the transaction as a whole, including any restrictions on competition that may result from the transaction agreement. There are no express provisions of the Act that govern ancillary restraints related to a merger (as there are in relation to the conspiracy provisions of the Act) and the parties must self-assess. Non-competes and other restraints that are reasonable in the circumstances and do not result in a substantial lessening of competition are generally acceptable.
What is the earliest time or stage in the transaction at which a notification can be made?
Filings can be submitted as early as desired, so long as the transaction negotiations are advanced enough that the required information can be provided to allow the Bureau to review the transaction. It is not uncommon for parties to notify the Bureau on the basis of a signed letter of intent (LOI) or a term sheet, particularly in transactions that clearly do not raise material competition issues (e.g., where there is no horizontal overlap between the purchaser and the target) where the parties are looking to close as soon as possible after signing the transaction agreement.
Parties should be aware that notification may trigger market outreach by the Bureau, which may have the effect of disclosing to industry stakeholders a transaction that has not yet been announced publicly. As noted below, in such circumstances parties can ask the Bureau to delay making its market contacts until after the transaction has been announced or disclosed.
For mandatory filing regimes, is there a statutory deadline for notification of the transaction?
For mergers that exceed the applicable filing thresholds, there is no deadline to file. However, because the merger control regime is suspensory, the parties cannot complete their transaction until they have complied with their filing obligations under the Act.
What is the basic timetable for the authority’s review?
An initial 30-calendar-day waiting period is triggered following the receipt of completed notification filings by both parties. A proposed transaction may not close until the expiry, termination or waiving of the applicable statutory waiting period.
Under what circumstances the basic timetable may be extended, reset or frozen?
If the Bureau determines that the information provided in a notification is incomplete, it will notify the relevant party of the deficiency and the applicable statutory waiting period will not commence until such information as is required to complete the notification is received. The Bureau will notify the parties shortly after receiving their initial notification forms whether it has certified the notifications as complete.
During the initial 30-calendar-day period the Bureau may issue a subsequent information request (“SIR”). In practice if the Bureau issues a SIR, it does so on the last day of the initial 30-day period. The issuance of a SIR extends the time period during which the parties are statutorily prohibited from closing their transaction until 30 calendar days after both parties have complied with the SIR.
The Bureau and parties may also enter into to a timing agreement that contractually extends the time period during which the parties cannot close their transaction. Such an agreement may set out alternative deadlines for the completion of various steps of the information-gathering and review process, including specifying the earliest date on which the transaction can close. Timing agreements have become less common in recent years.
Are there any circumstances in which the review timetable can be shortened?
Under its non-binding service standards the Bureau may designate a merger as “non-complex”, which means it will attempt to complete its review within 14 calendar days of receiving a complete filing. In such cases it is common for the parties to forego the submission of notification forms and instead file a joint briefing letter which: (i) describes the parties, the transaction, and the reasons for which the transaction does not raise material issues under the Act; and (ii) requests a waiver of the statutory requirement to submit a full notification form.
The parties can close the transaction as soon as the Bureau completes its review and waives the statutory requirement to submit a notification form.
Which party is responsible for submitting the filing? Who is responsible for filing in cases of acquisitions of joint control and the creation of new joint ventures?
All entities/parties to a notifiable transaction are responsible for filing and each of them may be penalized for any failure to file. In a hostile bid situation, the 30-calendar-day waiting period will begin to run when the offering party files a notification, at which point the target company will receive a notice from the Bureau and must then file its notification within 10-calendar-days.
What information is required in the filing form?
The notification form must include information relating to the nature of the parties’ businesses and affiliates, as well as principal suppliers and customers of the parties and their affiliates and general financial information. While there is no “short form” notification, in certain cases (e.g., where there is no or very limited horizontal overlap between the businesses of the purchaser and the target), the parties may choose to submit only the joint briefing letter described above, requesting a waiver of the statutory requirement for each of them to file a notification.
Which supporting documents, if any, must be filed with the authority?
Along with the notification form, each filing party must submit the most recent draft of the transaction agreement, annual reports, and all documents evaluating the proposed transaction with respect to competitive factors (equivalent to ‘4(c)’ documents in the US). None of these supporting documents need to be notarized or apostilled. Powers of attorney, certificates of incorporation, and articles of association are not required.
The Bureau accepts notifications in either French or English (Canada’s two official languages). It is not necessary to translate pre-existing documents (e.g., ‘4(c)’ documents) for the purpose of a notification; however, if, at the time of filing, there is an English or French language outline, summary, extract or verbatim translation of any part of a foreign language document that is required to be submitted with the notification, all such English or French language versions (or one complete translation) must be filed along with the foreign language document. Note that a different rule applies for foreign language documents submitted in response to a SIR. Documentary materials or information in a foreign language required to be submitted in response to a SIR must be translated into either English or French. The foreign language document must be submitted with the English or French translation attached thereto.
A certification on oath or solemn affirmation of correctness and completeness of the information by a person who has the authority to bind the notifying party is required for the notification to be considered complete. A Commissioner must administer the oath or solemn affirmation.
Is there a filing fee? If so, please specify the amount in local currency.
There is a CAD $50,000 filing fee for notification. Only one fee is payable per transaction; it can be paid by either party or split between them.
Is there a public announcement that a notification has been filed?
The fact that the parties have made a notification is not publically announced at the time of filing. The Bureau maintains a publicly accessible mergers registry setting out the names of the parties to a transaction, the relevant industry code (NAICS code), and the result of the Bureau’s review (whether the Bureau issued an Advance Ruling Certificate, issued a No Action Letter, registered a Consent Agreement, or obtained a judicial decision.) The mergers registry is updated on or after the 10th calendar day of each month for merger reviews completed during the previous month.
Does the authority seek or invite the views of third parties?
When reviewing mergers that may raise potential competition issues the Bureau almost always conducts “market tests” to confirm information that has been provided by the parties and ask questions about the parties’ businesses and the relevant industry. This process involves consulting various stakeholders including customers, competitors, trade associations and consumer organizations regarding the proposed transaction. On occasion the Bureau has directly solicited the views of the public (e.g., for a retail merger where customers of the merging firms were individual members of the public), but this is not the standard practice.
The Bureau typically begins making market contacts shortly after commencing its review, but in the past has agreed to hold off on contacting market participants temporarily if a transaction has not yet been announced publicly (or the target’s employees have not been informed). While the authors are aware of a small number of transactions that clearly raised no competition concerns where the Bureau decided not to make market contacts, this is the exception and should not be expected in any given case.
What information may be published by the authority or made available to third parties?
All information submitted to the Bureau is subject to strict confidentiality obligations under the Act.
The Bureau does not publish or make publicly available the parties’ notifications, any of their supporting documentation, or other submissions made by the parties such as responses to voluntary information requests.
There is an exception to the general principal of confidentiality for sharing information with other Canadian law enforcement agencies or for the purposes of the administration of the Act. The Bureau’s view is that this exception allows it to share confidential information about a merger review with merger enforcement agencies in other jurisdictions (e.g., the US DOJ/FTC) without a waiver from the parties.
Following the termination of an investigation, the outcome of the review, along with basic information about the proposed transaction, will be included in the Bureau’s public merger registry (see above). In certain complex and important cases the Bureau may post a press release or position statement on its website as well. In those cases, the Bureau will typically share a draft of its press release and position statement with the parties before publication, to allow the parties the opportunity to correct any errors in the drafts.
Does the authority cooperate with antitrust authorities in other jurisdictions?
Interagency cooperation is extremely common, especially between the Bureau and it US counterparts, and will continue to play an important role in the Bureau’s review of cross-border and international mergers.
The Bureau currently has formal cooperation instruments relating to Canada's competition and consumer protection laws with 15 foreign jurisdictions: Australia, Brazil, Chile, Colombia, EU, Hong Kong, India, Japan, New Zealand, China, South Korea, Mexico, Taiwan, United Kingdom, and the United States.
As noted above, the Bureau takes the view that it does not require a waiver from the parties to share confidential information about their transaction with agencies in other jurisdictions.
What kind of remedies are acceptable to the authority? How often are behavioural remedies accepted in comparison with major merger control jurisdictions, such as the EU or US?
Both behavioural and structural remedies are possible but the Bureau has expressed a preference for structural solutions as they are easier to implement and administer. The Bureau’s openness to and acceptance of behavioural remedies is similar to the US and EU agencies. While the Bureau does not typically require an upfront buyer, it does express a preference for “fix-it-first” remedies, which have the effect of making the remedy appear more attractive and effective.
Remedy purchasers must be approved by the Commissioner and must meet certain criteria. In particular, the Commissioner will be concerned with whether the buyer (i) has the financial and operational capability to run the business effectively, (ii) is independent of the parties, and (iii) has the intention to be an effective competitor in the relevant market.
What procedure applies in the event that remedies are required in order to secure clearance?
Remedy negotiations and decisions can be done at any point in the merger review process and are negotiated between the parties and the Bureau. There is no formal deadline for offering remedies.
The Bureau typically market tests proposed remedies, including by seeking feedback from industry stakeholders such as customers and suppliers. The Bureau will often collaborate with foreign agencies to make remedy decisions and sometimes will waive a demand for a formal remedy in Canada if an appropriate remedy has been agreed to in another jurisdiction.
What are the penalties for failure to notify, late notification and breaches of a prohibition on closing?
Failure to notify is a criminal offence, punishable by a maximum fine of CAD $50,000 under the Act. To date there have been no convictions for failure to notify. In 2015, the Bureau published a news release identifying a party that had voluntarily informed the Bureau of its inadvertent failure to notify two transactions; the Bureau required that party to adopt a compliance policy that would prevent similar oversights from occurring in the future. If a party realizes that it has inadvertently failed to notify a transaction, it should consult Canadian legal counsel immediately to discuss how to proceed.
The Commissioner can apply to the court for a range of remedies against parties who close prior to the expiry of the waiting period, including fines of up to CAD $10,000 per day for each day the parties closed in advance of being legally permitted to do so.
What are the penalties for incomplete or misleading information in the notification or in response to the authority’s questions?
If a notification or a supplementary information request response is considered incomplete by the Bureau, then the notifying party will be advised and the applicable statutory waiting period will not commence until all required information is received.
Any person who provides misleading information to the Bureau could be subject to criminal sanctions, including a fine in the discretion of the court and a term of imprisonment of up to ten years.
Can the authority’s decision be appealed to a court? In particular, can third parties who are not involved in the transaction appeal the decision?
Neither the merger review agency (the Bureau) nor the Commissioner (the head of the Bureau) can block a transaction itself. If the Bureau determines that a merger should be blocked or remedied, outside of reaching a settlement agreement with the merging parties to resolve its concerns consensually, the Bureau must apply to the Tribunal for an order prohibiting or remedying the merger.
Tribunal decisions can be appealed to the Federal Court of Appeal as a matter of right with respect to legal questions. Questions of fact can only be appealed with leave of the Federal Court of Appeal. The Tribunal decision must be appealed within 30-calendar-days after pronouncement. Subject to a limited exception involving the ability to challenge a consent agreement which directly affects them, third-parties who are not involved in a transaction do not generally have the right to appeal a decision of the Tribunal. As appeals from the Tribunal are extremely rare, there is no typical time frame for the process – however, the most recent appeal to the Federal Court of Appeal in a merger decision took approximately 8 months (Tervita/Complete Environmental Inc.). That decision was subsequently appealed to the Supreme Court of Canada, with the entire appeal process taking approximately 32 months.
What are the recent trends in the approach of the relevant authority to enforcement, procedure and substantive assessment?
Cross-border collaboration between the Bureau and the U.S. DOJ/FTC is becoming more common and more extensive (Agrium/PCS, Dow/DuPont, Sherwin-Williams/Valspar, ChemChina/Syngenta, Superior/Canexus). Despite this, the Bureau continues to enforce its own Canadian legislation and may reach a different result than the relevant U.S. authority, particularly where the unique Canadian efficiencies defence is engaged (Superior/Canexus).
Are there any future developments or planned reforms of the merger control regime in your jurisdiction?
The Canadian merger review and notification process was substantially reformed in 2009. Further proposed amendments to the Act were introduced on September 28, 2016, but have not yet become law. The effect of these amendments would be a more consistent application of the merger notification rules between corporate and non-corporate entities. Bill C-25 passed First Reading in the Senate on June 21, 2017, and is expected to be reviewed by the Senate after the summer recess. These proposed amendments are technical in nature and less significant than the 2009 changes. They would broaden the scope of the “affiliates” definition in the Act in an effort to close some legislative gaps that currently result in the inconsistent treatment of corporate and non-corporate entities.
Specifically, the proposed amendments (i) introduce a new definition for “entity” which, in addition to a corporation, also includes non-corporate entities such as a partnership, sole proprietorship, trust or other unincorporated organization capable of conducting a business; and (ii) expand the concept of “control” for non-corporate entities in a way that is consistent with the current approach to corporations. These broadened affiliation rules may result in more transactions being subject to the notification provisions (because the assets and revenues of additional entities may be captured by the new rules), while at the same time allowing certain business groups more freedom in relation to inter-affiliate dealings that will no longer be subject to certain provisions of the Act.