CHAPTER 07 Competition Law
SUBSTANTIVE MERGER REVIEW Any merger may be challenged by the Commissioner before the Tribunal. “Merger” is broadly defined in the CA to mean the acquisition or establishment, direct or indirect, of control over or a significant interest in all or part of a business of a competitor, supplier, customer or other person. The Commissioner may bring an application before the Tribunal in respect of a proposed merger or in respect of a completed merger provided that the application is made within one year of closing. The Tribunal may issue an order with respect to all or any part of a proposed merger and may dissolve a completed merger or order divestiture of assets or shares. Under certain circumstances, the Tribunal may also make any other order to which the Commissioner and the parties to the merger consent. The Tribunal also has the power to grant injunctive relief. Before making any order, the Tribunal must determine that the merger prevents or lessens, or is likely to prevent or lessen, competition substantially in the relevant market. In making this determination, the Tribunal generally applies economic and legal analyses similar to those employed by U.S. courts in antitrust matters. Among the factors that the Tribunal may consider are the strength of remaining competition, whether the merger results in the removal of a vigorous competitor, whether the acquired business has failed or is likely to fail, the extent and availability of acceptable substitutes, barriers to entry, the ability of customers or suppliers to exert countervailing power, innovation in the market and the impact of the merger on non-price factors (e.g., network effects, quality, consumer choice and consumer privacy). In addition, the CA contains an efficiencies defence that provides that the Tribunal will not issue a remedial order if it finds that the merger is likely to result in gains in efficiency that will be greater than and offset the anticompetitive effects.
PRE-MERGER NOTIFICATION In addition to the substantive review procedure that may apply under the CA, advance notification may be required for certain large mergers. Subject to certain exceptions, if a proposed acquisition of assets or shares, an amalgamation or other combination to establish an operating business in Canada exceeds certain prescribed thresholds and includes a Canadian operating business, the parties to the merger are required to notify the Commissioner in advance. Parties to a notifiable merger transaction in Canada cannot complete the merger before the expiry of the statutory waiting period, similar to that in the U.S. merger review process under the Hart-Scott-Rodino Antitrust Improvements Act . The waiting period in Canada expires 30 days after the pre-merger notification filing unless, prior to the end of that 30-day period, the Commissioner issues a “supplementary information request” (SIR) to the merging parties for production of documents and/ or responses to questions (comparable to a “second request” in the U.S. merger review process). If such a request is issued, a new waiting period is triggered and expires 30 days after compliance with the request. The Commissioner may terminate or waive the waiting period (including the initial 30-day waiting period) at any time by issuing an advance ruling certificate or no-action letter indicating that the Commissioner does not intend to challenge the merger.
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