The Canadian Competition Act merger review process – English
You are planning a merger. Congratulations! Getting your merger approved under the Competition Act will be essential to your success. The Competition Bureau is the agency responsible for reviewing mergers in Canada under the Competition Act. Your merger may be subject to approval by other departments as well, depending on the industries involved and other factors – check with counsel. Getting approval under the Competition Act can be broken down into four steps Step 1: Figure out if You Need to File If a merger is big enough, the Competition Act requires that the Competition Bureau be notified prior to closing. We often say these mergers are “notifiable”. You will need to consider a few factors to determine if your merger is notifiable, including: 1) Transaction threshold – does the target business have assets or gross revenues in or from Canada that exceed the monetary threshold. 2) Party threshold – do the assets or gross revenues of the parties in Canada exceed a second monetary threshold Note that even if your merger doesn’t have to be notified; the Bureau has the authority to review and challenge any merger within one year of closing. If notification is required, it’s time to think about how best to engage with the Bureau. Step 2: Decide Your Strategy for the Bureau Engagement Once you know that your merger is a “notifiable transaction,” you will want to work with counsel to decide which path to notifying the Bureau is best. In uncomplicated mergers, parties typically write a letter to the Bureau explaining why the merger is not likely to prevent or lessen competition substantially in any market in Canada. In more complicated cases parties notify their mergers by filling out a complex form and writing a more detailed letter. In addition to describing the merger and the parties’ businesses, the form requires a list of your top customers and suppliers and the production of your merger planning documents Submitting this form starts a 30-day period during which the merger cannot close. The parties usually receive an approval letter from the Bureau. Until that letter is received and the deal is closed, it must be business as usual. Note that failure to file or closing a notifiable merger before the expiration of the waiting period is a criminal offence and can mean serious consequences for the merging parties. Once you’ve notified, it’s time to move to Step 3. Step 3: Wait! During its review, the Bureau will likely ask for additional information or ask you to respond to concerns that have been raised about the merger. The Bureau will not only review information that you provide, but will contact customers, suppliers and competitors to solicit their views. It is possible that these third parties may express concerns about the merger. It is key that the stakeholders understand the importance of the merger. If the Bureau requires more information or more time to complete its review, it may issue a “supplementary information request”, or “SIR”, at the end of the first 30 day waiting period. SIRs usually require the production of large volumes of documents, including emails from senior managers and executives of the merging parties, as well as extensive sales data. If an SIR is issued, the waiting period will be extended until 30 days after both parties fully comply with the Requests. Step 4: Get Approval, Remedy or Negotiate Most mergers in Canada are approved by the Competition Bureau In some instances, however, the Bureau may still have concerns about the merger even after its review is finished. In those cases, the parties may need to restructure their merger. In rare cases, the Bureau may bring court proceedings to prevent the parties from closing. Careful planning and knowledgeable counsel will help you to anticipate the Competition Bureau’s concerns and navigate the process. We look forward to helping you – and your merger – succeed.