Archive for the 'Competition Law' Category
The Canadian Council of Chief Executives recently published a paper endorsing a new national security test for proposed foreign takeovers of Canadian companies entitled “Chinese Foreign Direct Investment in Canada: Threat or Opportunity”.
According to the author, Dr. Moran, a professor of international business and finance at Georgetown University, the majority of proposed foreign acquisitions “pose no plausible threat whatsoever” to national security.
From the CCCE:
“In today’s report, Dr. Moran considers two issues of central interest to Canada as Chinese foreign direct investment (FDI) grows to be a major force in the global economy: how does Chinese FDI affect the structure of natural resource industries around the world?; and when does the foreign acquisition of an existing firm constitute a national security threat to that firm’s home country?
On the first question, Dr. Moran rejects the suggestion that Chinese investments in the natural resource sector have the effect of “locking up” the world’s resource base. On the contrary, a review of several dozen recent Chinese acquisitions and procurement arrangements shows that most of them actually help to expand and diversify resource production and increase competition within the affected industry.
As to whether a given foreign takeover poses a risk to national security, Dr. Moran recommends the adoption of a new threat-assessment framework based on three distinct categories of undesirable foreign acquisitions: takeovers that would render the home country dependent on a foreign-controlled supplier that might deny or place limits on the provision of goods or services crucial to the functioning of the home economy; takeovers that would allow the transfer into foreign hands of technology or expertise that might be deployed in a manner harmful to the home country’s interests; takeovers that would give the new owner’s government, or some other hostile force, a platform for espionage, surveillance or sabotage, through the provision of goods or services crucial to the functioning of the home economy.
Acquisitions that fall into any of those three categories can legitimately be rejected on national security grounds, Dr. Moran says. However, that accounts for only a small percentage of proposed foreign takeovers. The rest, he says, may or may not deserve to be blocked on other grounds, but cannot fairly be considered threats to national security.
The adoption of this three-part threat assessment framework by Canada – and other countries – would “help to dampen politicization of individual cases, enabling swift and confident approval of those acquisitions from which genuine national security threats are absent,” Dr. Moran says. The entire international economic system would benefit, he argues, if OECD countries – and non-OECD countries such as China and India – were to accept this common threat assessment methodology.”
In March, 2009, amendments to the Canadian Investment Canada Act (“ICA”) introduced a new national security review mechanism, under which the Minister and Federal Cabinet have the power to review proposed or completed investments that may be “injurious to national security” in Canada. This relatively new national security review regime, which is distinct and administered separately from the general “net benefit” to Canada foreign investment test under the ICA, arose as a result of recommendations made by the Competition Policy Review Panel in its report entitled Compete to Win (which preceded significant amendments to Canada’s competition and foreign investment laws in 2009 and 2010).
The Ottawa Citizen, Globe and Mail and others have reported that the federal government, based on a recommendation of Heritage Minister James Moore, made a rather uncommon Cabinet order on March 27th under section 15 of the Investment Canada Act (“ICA”) triggering a cultural review of Target’s planned expansion into Canada.
The Cabinet order issued on March 27th states:
“His Excellency the Governor General in Council, considering it in the public interest, on the recommendation of the Minister of Canadian Heritage, pursuant to section 15 of the Investment Canada Act, hereby orders that the investment by Target Canada Co. to establish a new Canadian business carried on by Target be reviewed.”
Generally speaking, the ICA applies where a “non-Canadian” acquires “control” of a “Canadian business”, all as defined in the ICA (or establishes a new Canadian business, in the case of the Target expansion into Canada).
Where transactions to acquire control of a Canadian business exceed the relevant monetary thresholds under the ICA (currently Cdn. $330 million based on the book value of the target for direct investments by WTO investors), they are reviewable by Investment Canada and potentially also by Canadian Heritage if a cultural business is involved (or, if below the relevant monetary thresholds set out in the ICA, subject to a simple notification only, which are generally filed post-closing). Interestingly, there is no de minimis test for what constitutes a cultural business for the purposes of the ICA.
For investments by non-Canadians to establish a new Canadian business, as in the case of Target, a notification only is required, which may be filed any time up to completion or within 30 days post-completion. Such notifications require, among other things, the investor to provide basic information regarding the investor, the investment and type of Canadian business being established (including a description of whether the proposed investment relates to Canadian cultural business activities, such as the publication or sale of books, the production, distribution or sale of film of video, or the publication, distribution or sale of music).
The American Bar Association, Section of Antitrust Law has published its Spring 2012 edition of Antitrust.
Stories and articles in the Spring edition include Convergence in International Merger Control (Larry Fullerton and Megan Alvarez), The ICN: A Decennial Retrospective (Ian John and Joshua Gray), the Role of Anti-Cartel Compliance Programs in Preventing Cartel Behaviour (Joseph Murray and William Kolasky), The Year of the Metal Rabbit: Antitrust Enforcement in China (Jim O’Connell) in 2011 and New Directions in Russian Competition Law (Sarah Reynolds).
On April 5, 2012, the U.S. DoJ published a rather interesting speech by the Deputy Assistant Attorney General of the U.S. DoJ, Antitrust Division, Fiona Scott-Morton, entitled “Contracts that Reference Rivals”.
The speech addresses one very specific and interesting aspect of vertical arrangements – namely when antitrust enforcement officials should scrutinize supply and other vertical contracts that reference and depend on information outside the buyer-seller relationship (e.g., competitor information):
“Consider first a contract between firms over the purchase of an input. Some contracts lay out a price per unit which the buyer must pay; others describe a quantity volume schedule open to all buyers, with one per-unit price for purchase of a limited number of units and a, typically lower, per-unit price for purchases of large numbers of units. I will call these standard contracts, and they are the benchmark I have in mind. By contrast, a contract between a buyer and a seller may refer to, and its terms may depend on, information outside the buyer-seller relationship: information from other transactions to which those same firms are party. Those references may be either explicit or implicit, and they can involve a host of factors, including price terms, non-price terms, terms pertaining to the buyer’s rivals, or terms pertaining to the seller’s rivals. I call these Contracts that Reference Rivals, or CRR.
An example of CRR is a purchase agreement containing a market share discount: the buyer will receive a discount on incremental units, or perhaps all purchased units, if it buys 90% or more of its needs from one seller. Note that the price the buyer pays on its purchases from one seller are linked to its purchases at rival sellers. Buying more than 10% of its needs from the rival sellers will increase the price paid in the contract.
Over the years, a number of investigations at the Antitrust Division have involved contracts that reference other transactions in the marketplace. Likewise, economists have studied many types of CRRs. The goal of this paper is to provide a brief survey of past and current CRR cases as well as the findings in the economic literature. The short preview of my conclusions is that the economics literature has identified many circumstances where CRRs have the potential to harm consumers and competition, particularly — but not always — when they involve firms with market power. CRRs have thus been, and will continue to be, the subject of antitrust scrutiny, both at the government and in private litigation.”
Corporate Counsel recently published a rather interesting article by Catherine Dunn discussing the increase in the U.S. Department of Justice’s antitrust enforcement caseload and compliance efforts by U.S. companies (see: Antitrust Compliance is Becoming a Top Issue for U.S. Companies).
The article discusses, among other things, the fact that the DoJ’s antitrust pipeline is presently full (described as “white-hot”), cooperation between U.S. and international enforcement agencies, the complexities of cross-border investigations and a more flexible and “holistic” approach by companies to compliance, including competition/antitrust compliance.
The National Competition Law Section of the Canadian Bar Association recently posted upcoming events for its 11 Competition Law Committees, including: a Competition Bureau merger fee forum and roundtable (April 13th), Young Lawyers and Corporate Counsel Committees brownbag (“Working Effectively with In-house Counsel on Competition Files”) (April 19th), a criminal matters roundtable meeting with the Bureau (May 1st), the Competition Law Spring Forum (May 2nd), Mergers/Young Lawyers luncheon (“Merger Review Fundamentals”) and a foreign investment review conference (June 1st).
Stanford University Press will be publishing a new book in May in a new series on global competition law entitled The Global Limits of Competition Law.
From Stanford University Press:
“Over the last three decades, the field of antitrust law has grown increasingly prominent, and more than one hundred countries have enacted competition law statutes. As competition law expands to jurisdictions with very different economic, social, cultural, and institutional backgrounds, the debates over its usefulness have similarly evolved.
This book, the first in a new series on global competition law, critically assesses the importance of competition law, its development and modern practice, and the global limits that have emerged. This volume will be a key resource to both scholars and practitioners interested in antitrust, competition law, economics, business strategy, and administrative sciences.”
The Antitrust law Section of the American Bar Association recently issued a catalogue of its 2012 antitrust publications, which includes publications in the following areas: mergers, civil litigation, criminal enforcement, international antitrust, intellectual property, among others.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
