Susan M. Hutton and Michael Kilby
On September 22, 2006, the Competition Bureau published its Information Bulletin on Merger Remedies in Canada (Bulletin). The Bulletin is intended to provide guidance on the general principles applied by the Bureau when it seeks, designs, and implements remedies in merger cases. The Bureau intends to include, as an appendix, an outline of a model consent agreement, which it says will be published "shortly". The final Bulletin was issued just in time for the Canadian Bar Association's Annual Fall Competition Law Conference, almost a year after the initial draft bulletin in November, 2005.
The Bulletin must be read in the context of the merger remedies guidelines issued by Europe and the U.S. as part of the International Competition Network's work on improving international competition enforcement. In cooperating with other enforcement agencies internationally, Canada may rely on foreign remedies if they do not raise any Canada-specific issues.
The recently published Bulletin is substantially the same as the initial draft bulletin (highlights of which were published in the November 2005 edition of The Competitor). Similar to its predecessor, the Bulletin marks an intended tightening of the Bureau's stance toward divestitures, with shortened time-lines for divestitures, an emphasis on "fix-it-first" and "up-front buyer" solutions, and the use of "crown jewels" in the case of trustee divestitures. Noteworthy highlights include:
A preference for structural over behavioural remedies.
A strong recommendation to merging parties to use a "fix it first" approach, whereby merging parties remedy competition issues before closing the main transaction. "Fix it first" remedies also include signed agreements for a party to divest its assets, to be executed on closing, subject to Bureau approval.
If upfront divestiture is not possible, the Bureau indicates that it expects sales processes to be concluded within 3 to 6 month (the precise time period will be kept confidential). This is a shift in the Bureau's approach, which has permitted a 6 to 12 month initial divestiture period in the past.
The increased use of "crown jewels" during the trustee sale period.