Competition Bureau Emphasizes its Expanded Intelligence Gathering Role for Non-Notifiable Mergers

September 20, 2019

In a news release on September 17, 2019, the Competition Bureau reiterated that its new “Merger Intelligence and Notification Unit” will play an expanded role in gathering intelligence about non-notifiable transactions in Canada that might raise competition concerns.

Initial announcement

In his speech at the Canadian Bar Association’s Competition Law Spring Conference, Commissioner of Competition Matthew Boswell announced that the Bureau’s Merger Notification Unit would be taking a more active role in gathering intelligence on non-notifiable transactions. In recognition of this expanded role, the unit has been renamed the Merger Intelligence and Notification Unit (MINU).

Historically, the MINU’s role was principally to handle pre-merger notification filings, which are required only for transactions that meet certain financial thresholds under the Competition Act.

The MINU will now play an expanded role in identifying and detecting non-notifiable mergers that may be likely to substantially prevent or lessen competition in a market.  The Bureau has jurisdiction under the Act to review all mergers and acquisitions, regardless of whether they meet the thresholds for pre-merger notification, within one year of closing.

Enhanced priority on reviewing non-notifiable transactions

The expanded responsibilities for the MINU signal a continued shift at the Bureau towards greater scrutiny of non-notifiable mergers. In its September 17, 2019 announcement, the Bureau encourages parties to non-notifiable transactions that could raise competition concerns to voluntarily provide information about the transaction to the Bureau early on, to avoid a post-closing review.

The MINU is also expected to be very alive to concerns expressed from market participants regarding non-notifiable transactions.

The Bureau’s increased focus in action

Since the Commissioner’s initial announcement, the Bureau has taken increased action in assessing non-notifiable transactions.

For instance, the Commissioner commenced an inquiry into the acquisition of Encore Event Technologies by PSAV. Court filings note that the Bureau was made aware of the transaction after it received complaints following announcement.

Both Encore and PSAV provide audiovisual services for events in Canada.  On June 25th, 2019, the Commissioner applied to the Federal Court for a document production order from two PSAV subsidiaries, Audio Visual Services (Canada) Corporation and Frischkorn AV, seeking documentary evidence and written responses.  While the Commissioner’s court documents note that the Bureau did receive some voluntary information from the parties following a request for information issued in March 2019, the parties’ responses were not as fulsome as would have been provided in pre-merger notification filings. In an additional, somewhat novel form of evidentiary collection in Canada, the Bureau itself used PSAV as a supplier of audiovisual services for an event it hosted in May 2019, and obtained copies of PSAV invoices as a result.

The Commissioner was granted a document production order on July 5, 2019; there has been no further public discussion about the status of the Bureau’s review.

Pro-actively identifying the competition risk

The Bureau’s increased focus on non-notifiable mergers means that pro-actively identifying any potential competition concerns posed by a proposed transaction will continue to be an even more important step for parties approaching a transaction. While the Bureau is encouraging parties to voluntarily disclose non-notifiable transactions that could give rise to competition issues, we note that the Bureau will generally not provide any form of clearance for a transaction unless a formal request is made (including the provision of significant information about the transaction) and the C$73,584 filing fee is paid.

The author would like to thank Sarah Stirling-Moffet for her contribution to this article.

 

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