On April 1, 2021, the Government of Canada announced two important updates relating to merger filing fees: (i) a decreased merger filing fee ($74,905.57), and (ii) a new Service Fees Remission Policy.
Decreased Merger Filing Fee for 2021
Effective immediately, the Competition Bureau’s (the “Bureau”) filing fee for merger reviews has decreased from
Canada’s Competition Bureau (the “Bureau”) has joined an international multilateral working group that will be focusing on the analysis of pharmaceutical mergers. Initiated by the U.S. Federal Trade Commission, the working group also includes the Antitrust Division of the U.S. Department of Justice, Offices of State Attorneys General, the U.K. Competition and Markets Authority (“CMA”)
The Competition Bureau announced the 2021 transaction-size pre-merger notification threshold under the Competition Act is decreasing to C$93 million, effective February 13, 2021. Innovation, Science and Economic Development Canada also announced new, lower foreign investment review thresholds under the Investment Canada Act, effective January 1, 2021.
These thresholds are adjusted annually based on GDP formulas. As a consequence, they generally increase each year. This year’s decrease in merger review thresholds is a consequence of Canada’s economic contraction following from extensive restrictions on economic activity imposed by governments which were intended to slow the spread of COVID-19. If the economy recovers, it is likely these thresholds will increase in 2022.
Competition Act
In general terms, certain transactions that exceed prescribed thresholds under the Competition Act trigger a pre-merger notification filing requirement; such transactions cannot close until notice has been provided to the Commissioner of Competition (the “Commissioner”) and the statutory waiting period under the Competition Act has expired or has been terminated or waived by the Commissioner. Where both the “transaction-size” and “party-size” thresholds are exceeded, a transaction is considered “notifiable”.
Continue Reading 2021 Merger Review Thresholds
Competition, marketing and foreign investment law saw a number of changes in the past year. Many of these changes were in response to the continuing COVID-19 pandemic, which has changed every aspect of how Canadians, businesses and government agencies operate. Despite the pandemic, the Competition Bureau (the “Bureau”) has actively continued its enforcement activity and provided a number of guidance documents to help businesses stay onside the Competition Act (the “Act”). Similarly, Canada’s Investment Review Division also had to respond to the challenges posed by the pandemic.
Below we discuss ten key themes seen in the competition, marketing and foreign investment law space this year, and discuss what the year ahead has in store.
Continue Reading What 2020 tells us about 2021 and beyond: Fasken’s Year-End Review of the Top 10 Trends in Canadian Competition, Marketing & Foreign Investment Law
The Canadian Competition Bureau (the “Bureau”) released some informative statistics summarizing the number and characteristics of merger reviews started and concluded by the Bureau’s Mergers Directorate in its 2019-2020 fiscal year (ending March 31, 2020). In past years, similar information was presented by the Bureau at the Mergers Roundtable hosted by the Canadian Bar Association’s Mergers Committee and the Mergers Directorate, which did not happen this year due to COVID-19.
Non-Notifiable Mergers
About a year ago, the Bureau expanded the role of its Merger Notification Unit, now referred to as the Merger Intelligence and Notification Unit, to include a broader focus on active intelligence gathering on non-notifiable merger transactions that may raise competition concerns. These efforts have borne fruit, with the Bureau identifying and reviewing a number of non-notifiable transactions where the parties would not have otherwise engaged with the Bureau prior to closing. In one instance, the Bureau became aware of a non-notifiable transaction, Evonik Industries AG’s acquisition of PeroxyChem Holding Company LLC, and entered into a consent agreement with the merging parties which required the divestiture of assets in British Columbia to remedy competition concerns.
Number of Annual filings and reviews
There has been a slight increase in merger filings and reviews over the past year, although not outside the normal range for the past 10 years. Set out below is a chart outlining the total number of merger filings by year for the past 10 years.
Earlier this month, the South African Competition Tribunal found a firm guilty of abusing its dominance. The firm was a small trader with a market share of 4.7%. The illegal conduct comprised excessive pricing of face masks for a period of just over one month. The investigation, prosecution and adjudication took less than three months.
On May 21, 2020, the Competition Bureau (the “Bureau”) released its Model Timing Agreement for Merger Reviews involving Efficiencies (the “Model Timing Agreement”), which includes guidance intended to inform businesses and their advisors of the Bureau’s approach to the analysis of efficiencies claims, the circumstances in which the Bureau will consider
As previously discussed in our Refresher on the Failing Firm Defence, many companies will be facing insolvency or bankruptcy in the aftermath of COVID-19. This could lead to a situation in which financially stronger companies want to purchase struggling competitors. In this context, it is likely that the Competition Bureau will be asked to approve otherwise “problematic” mergers on the basis of what is commonly known at the “failing firm” defence.
On April 29, 2020, the Bureau issued a Position Statement providing additional guidance on the failing firm defence and, in particular, the types of information that are most relevant for a timely and efficient analysis of a failing firm. The key aspects of this guidance are summarized in this blog post.
Continue Reading Competition Bureau Provides Guidance on Failing Firm Analysis
In light of the current COVID-19 pandemic with declining demand and excess capacity in many sectors, companies will want to take advantage of opportunities to increase operational efficiencies, including through mergers and acquisitions. Where such mergers are efficiency motivated, there may be increased scope for merging parties to use the efficiencies defence in Canada – something that was successfully done by Canadian National Railway Company late last year in connection with its acquisition of H&R Transport Limited (the “Transaction”).
Competition Bureau Review
Following its review of the Transaction, the Competition Bureau concluded that the Transaction would likely result in a substantial lessening of competition for full truckload refrigerated intermodal services in eight relevant markets in Canada. In particular, the Bureau found that CN would be able to charge higher prices and provide lower quality service to customers in those markets. However, as discussed in more detail in its New Release and Position Statement issued last week, the Bureau ultimately decided to discontinue its investigation and allow the Transaction to proceed after concluding that the efficiencies defence had been satisfied.
Continue Reading The Efficiencies Defence – Here We Go Again!
The COVID-19 pandemic has impacted just about every aspect of our personal and professional lives. From where we work and shop to how we stay in touch with family, friends and colleagues – nothing is the same as it was even just a couple of months ago!
M&A practices are also changing as businesses and
