New Merger Notification Requirements Now in Force
Amendments to the Notifiable Transactions Regulations came into force on February 2, 2010. These amendments reflect the significant changes to the Competition Act that took effect in March 2009 and that moved Canada’s competition laws much closer to those of the US with respect to merger review.1
Under the previous merger review process, depending on the complexity of the transaction (as it relates to competition), merging parties elected between filing either a short-form filing or long-form filing. The applicable statutory waiting period was 14 days when a short form was filed, and 42 days when a long form was filed. The Regulations were amended in light of the removal of the short-form and long-form information requirements and the introduction of a single notification form for all transactions that must be notified to the Competition Bureau. The initial waiting period for the new notification form is now 30 days, and the Competition Bureau can extend the waiting period by issuing a request for supplementary information (in which case the waiting period is extended to 30 days beyond the time required for the parties to respond to the request for information and documents).
The prescribed information under the revised Regulations includes the previous short-form information requirements, plus:
- all documents prepared or received by an officer or director analyzing the proposed transaction with respect to market shares, competition, competitors, markets, and potential for sales growth or expansion into new products or geographic regions;
- a copy of each legal document, or the most recent draft if not yet executed, that is to be used to implement the proposed transaction;
- a list of the foreign competition or antitrust authorities that have been notified of the proposed transaction by the parties, and the date on which each authority was notified; and
- the total annual volume or dollar value of purchases from, and sales to, all suppliers and customers for each principal category of product.
The requirement to provide documents analyzing the impact of the proposed transaction used to only apply for complex transactions where parties decided to file a long-form filing. This requirement, which now applies to all transactions, can be onerous because it requires a search of the records (paper and electronic — including e-mails) of officers and directors (as they are to be defined in interpretation guidelines) of the parties and their affiliates. This means that for all deals requiring notification under the Act, parties must search for and provide these types of documents to the Competition Bureau.
The amendments to the Regulations also include:
- corrections to outdated references to sections of the Act;
- directions on how to calculate certain asset and revenue amounts for amalgamations; and
- a mechanism to facilitate the electronic submission of certain documents.
McCarthy Tétrault Notes
The most significant change from these amendments is the requirement to produce documents analyzing the impact of the proposed transaction for all notifiable transactions. If a notifiable transaction is also being reviewed by US authorities, parties will be able to coordinate their collection efforts because this requirement is similar to what must be filed in the US under The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (also known as "4(c) documents"). However, the new form is more burdensome for parties to domestic transactions or international transactions that are not notifiable in the US. Companies and their external advisors should be mindful that all documents prepared or received by an officer or director that analyze the impact of a proposed transaction on competition and markets (such as Board presentations, consultants’ analyses and other formal analysis, but also informal writings including e-mails and handwritten notes) will have to be submitted to the Competition Bureau if the transaction is notifiable.
1 For more information, read our article: Government Enacts Significant Changes to Canada’s Merger Review Laws.