and the Bureau’s completion of its review. In such circumstances, even though the Competition Act contains no statutory impediment to closing upon expiry of any applicable waiting period until and unless the Commissioner obtains an injunction, parties often wait until positive clearance has been received from the Bureau before closing. If parties do choose to proceed to close before receiving clearance, they run the risk that the Bureau will seek to enjoin closing or challenge the transaction up to one year after closing. The Commissioner has recently demonstrated a greater willingness to seek interim injunctive relief, including in relation to mergers, pending resolution of a trial on the merits. REMEDIES – The most common remedy for a challenged merger is a consent agreement negotiated between the Commissioner and the parties to the transaction. – Remedies the Commissioner may seek from the Competition Tribunal (the specialized adjudicative body for competition matters in Canada) include injunctions to prevent or delay closing, and post-closing divestitures or dissolution. The Commissioner may also seek or accept a “hold separate” undertaking or consent agreement to permit closing pending completion of the Bureau’s review. – The Commissioner has extensive investigatory powers (e.g., compulsory information requests and/or interviews), and the use of such powers has increased in recent years. – There is no private right of action to challenge mergers in Canada under the Competition Act . HOSTILE BIDS – Competition law can be used as a shield if an unsolicited bidder is (or is potentially) a significant competitor. – Pre-merger notification by the bidder triggers a similar filing requirement for the target. The Commissioner is required to notify the target that a filing has been made. The target then has 10 days to provide pre-merger notification information to the Bureau. The target’s response time does not affect the running of the 30-day statutory waiting period, which still begins when the bidder files a complete notification. DOCUMENT PREPARATION – The Commissioner will often request or even compel parties to a merger to provide documents created by the parties or the parties’ respective advisors (e.g., offering memoranda, internal strategic plans, emails and memoranda) that can be used in the analysis or as evidence in a challenge. Note the following in order to avoid raising unfounded competition concerns by giving the wrong impression in documents: > Avoid using potentially misleading phrases such as “barriers to entry” and “dominant position.” Better phrases may include discussions of “competitive advantages,” “efficiencies” and “leading positions.”
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Canadian Mergers & Acquisitions
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