Archive for the 'Mergers' Category
On May 11, 2012, the Saskatchewan Government published a review report on the proposed Glencore/Viterra transaction. In issuing the report, Saskatchewan’s Agriculture Minister called for conditions to “hold Glencore” to its Investment Canada Act commitments and also indicated that one competition concern included competitive effects relating to Agrium and the farm inputs (i.e., retail) markets.
Saskatchewan is calling for the following, among other things, as part of Investment Canada Act approval: Regina as Glencore’s North American headquarters, maintaining current levels of employment, a five year increase in capital investment of C $100 million and no adverse competitive effects in the farm input (i.e., retail) markets (competition is one of the relevant net benefit to Canada factors under section 20 of the Investment Canada Act).
For the Saskatchewan Government’s news release and report see:
Review of the Proposed Glencore Acquisition of Viterra and Related Transactions
On May 4, 2012, Reuters, the Globe and Mail, the Wall Street Journal and others reported that Glencore International PLC received a no action letter from the Competition Bureau that the Bureau will not challenge Glencore’s $6 billion bid for Canada’s largest grain handler Viterra Inc.
No action letters are one of two forms of clearance available to merging parties under the Competition Act (along with advance ruling certificates) and state that the Commissioner does not intend when issued to challenge a transaction under the merger review provisions of the Act, although has the power to challenge a merger for up to one year post-completion).
The quick clearance by the Bureau is not very surprising given that, among other things, Glencore’s offer was not conditional on subsequent transactions involving the sale of Viterra port terminal, grain handling and retail assets to Agrium and Richardson and the absence of competitive overlap between Glencore and Viterra (indeed the transaction appears to be structured to achieve this relatively effortless first-stage clearance).
It will be interesting, however, to see how the Bureau will review and assess the subsequent second stage Glencore sales to Agrium and Richardson, particularly given that there appears there will be some Glencore/Agrium and Glencore/Richardson overlaps in the retail (crop protection products, fertilizer, seed, small equipment, etc.) and port terminal grain handling markets. Having said that, the parties have indicated in public statements that they have chosen to allocate the later sale of assets carefully to tiptoe through potential concentration issues and reduce possible competition concerns.
At the Spring CBA Competition Conference earlier today in Toronto, the Commissioner of Competition, Melanie Aitken, delivered an interesting keynote luncheon speech that provided insight into the Competition Bureau’s recent experience under Canada’s amended Competition Act, current enforcement and future priorities.
Mergers
With respect to mergers, the Commissioner addressed recent efforts (including the 2009 Competition Act amendments) to align Canada’s merger control regime with those of other major jurisdictions, notably the U.S.
The Commissioner also addressed the Bureau’s increased monitoring of non-notifiable mergers, cited some recent merger review related statistics (including the fact that the Bureau has reduced the average time to review complex transactions from about 50 days pre-2009 to about 36 days currently and that the Bureau has triggered second phase reviews (“supplementary information requests” or “SIRs”) in 18 cases over the past three years).
The Commissioner also indicated that the ongoing BC waste case (an ongoing non-notifiable contested merger case) was uncommon, but at the same time made it clear that the Bureau would: (i) not hesitate to litigate appropriate merger cases and (ii) was interested in clarifying the law under the merger provisions of the Competition Act.
Perhaps the Commissioner’s most interesting merger related remarks were those relating to the possibility of collapsing the current standalone efficiencies defense into the general merger provisions of the Competition Act. In this regard, the Commissioner appeared to indicate that Canada’s standalone efficiencies defense was out of step with other major jurisdictions.
On April 27, 2012, the Federal Government announced that it plans to amend to Investment Canada Act (ICA) to give the Minister of Industry more freedom to disclose whether an investment is likely to be found to be of net benefit to Canada (through Bill C-38, the Jobs, Growth and Long-term Prosperity Act, introduced on April 26th). In its news release, the Government said:
“Through the Jobs, Growth and Long-term Prosperity Act, the Harper Government has introduced amendments to the Investment Canada Act to provide the Minister of Industry with a greater ability to publicly communicate information on the review process, while preserving commercial confidences. The amendments would also promote investor compliance with undertakings by authorizing the Minister to accept security, when offered by an investor, for payment of any penalties ordered by a court for a contravention of the Investment Canada Act.
The amendments would allow the Minister to disclose publicly the fact that he has sent a preliminary notice to an investor that he is not satisfied that the investment is likely to be of net benefit to Canada. They would also allow the Minister to publicly explain his reasons for sending the notice as long as it would not cause harm to the Canadian business or the investor.
The Harper Government recognizes that strong confidentiality protection is critical to ensure that investors provide the information necessary to conduct reviews as well as to prevent the harm that could come from disclosure.”
The announcement is consistent with recent statements in the Federal Budget, tabled on March 29, 2102 (see: 2012 Budget Includes Changes to Canada’s Foreign Investment Regime), in which the Government said that it would be introducing “targeted improvements” to the administration of the Investment Canada Act “in the interests of greater transparency while preserving investor confidentiality.”
Bill C-38 would, if passed, broaden the exceptions to the existing privilege protections under the ICA to allow the Minister to publicly explain why an investor has been sent a notice under subsection 23(1) of the ICA (a preliminary notice that the Minister is not satisfied that an investment is likely to be of net benefit to Canada, the relevant substantive test for approving reviewable investments under the ICA).
The ICA contains a broad privilege provision, which provides, subject to a number of exceptions, that information received in relation to the enforcement and administration of the ICA is privileged. The ICA also allows investors to make representations and submit undertakings within 30 days of receipt of an interim notice from the Minister (or as agreed between the investor and the Minister).
The International Competition Network’s (ICN) 2012 Annual Conference has wrapped up and the ICN has posted copies of the papers, chapters and other conference materials including in relation to the ICN’s Advocacy, Cartel, Mergers and Unilateral Working Groups.
Canada-related materials include a summary of the Canadian Competition Bureau’s information sharing mechanisms (see: Cartel Working Group – Charts Summarizing Information Sharing Mechanisms) and discussions of some of the Bureau’s criminal enforcement efforts (see: Cartel Working Group – Anti-Cartel Enforcement Manual).
On April 12, 2012, the Competition Bureau published a new Merger Review Performance Report. The Bureau’s new Report contains a summary of updated and newly issued merger-related guidelines, statistics relating to its review of mergers in the past two years (since its last merger performance report was issued in 2010) and discussions of recent initiatives and policy changes.
Some of the highlights of the Bureau’s new Report include:
Merger-review related policy objectives. The Bureau describes its new and updated merger guidelines as part of its “ongoing initiative to realign its processes, and to develop and revise its guidance documents to ensure the successful implementation of the 2009 amendments to the merger provisions of the Act and the Notifiable Transactions Regulations.” The Bureau’s new or recently updated merger-related guidelines include its Fees and Service Standards Policy for Mergers and Merger-Related Matters, Fees and Service Standards Handbook for Mergers and Merger-Related Matters, Procedures Guide for Notifiable Transactions and Advance Ruling Certificates under the Competition Act, several new Merger Interpretation Guidelines (including in relation to hostile transactions), updated Merger Enforcement Guidelines (which govern the Bureau’s substantive review of mergers), Merger Review Process Guidelines (which address the Bureau’s approach to Canada’s new two-stage merger review regime, include second phase reviews and the use of supplementary information requests (“SIRs”)).
New standard language for “no action” letters. The Bureau discusses its new standard language for “no action” letters to align its clearance language to section 123(2) of the Competition Act and “more accurately reflect the distinction between the discretionary issuance of an ARC and [a no action letter]”.
New merger remedies bulletin. The Bureau has announced, consistent with recent public remarks by the Commissioner, that it intends to update its 2007 Merger Remedies Bulletin “in the coming months” based on its August, 2011 Merger Remedies Study.
Merger position statements. The Bureau discusses its recent initiative to begin issuing position statements for certain merger reviews to “enhance its communication and transparency with stakeholders”. The Bureau also discusses some of the factors it will consider in deciding whether to issue a position statement, including the complexity and importance of issues, involvement of novel analytical tools and level of interest in the case.
Merger registry. The Bureau discusses its recently launched (in February of this year) merger register.
Merger review statistics. The Bureau’s Report includes merger review statistics, including a significant drop in reviews (a decrease of about 100 reviewed mergers between FY2007-2008 and FY2008-2009, the “biggest decline in a single fiscal year since the introduction of filing fees in 1997), the impact of filings following the increase in the size of transaction threshold in 2009 (from C $50 to $70 million at the time – the size-of-transaction threshold is currently C $77 million), a “steady influx of highly complex transactions raising serious competition concerns” (including the BHP/Potash, LSE/TMX, TMX/Maple Group and Google/Motorola transactions) and the issuance of 18 SIRs since the introduction of Canada’s two-stage merger review regime in 2009.
Review of non-notifiable mergers. The Bureau discusses its relatively recent initiative to increase its monitoring and review of non-notifiable transactions (in Canada, all mergers as defined under the Competition Act are potentially reviewable regardless of whether they require pre-merger notification). In this regard, the Bureau states that it “recently implemented a new initiative to actively monitor transactions in the Canadian marketplace”. According to the Bureau, this shift in its policy was largely driven by the reduced timeframe to challenge mergers post-closing as a result of the 2009 amendments (reduced to one year from the previous three). The Bureau states that its monitoring of non-notifiable deals includes “regular scanning of various media sources and mergers and acquisition databases, as well as the review of relevant marketplace complaints received by the Bureau.”
The Competition Bureau has published its March Report of Concluded Merger Reviews.
Launched in February amid some controversy from the competition bar (see: Competition Bureau to Issue Monthly Merger Review Reports), the Bureau’s second monthly report includes fourteen transactions in which Advance Ruling Certificates were issued in two and No Action Letters issued in the remainder.
On April 11, 2012, the Competition Bureau issued new merger interpretation guidelines for public comment: Pre-Merger Notification Interpretation Guideline Number 15: Assets in Canada and Gross Revenues From Sales in, from or into Canada (Sections 109 and 110 of the Act).
In issuing the new guidelines the Bureau said:
“Interpretation Guideline 15 provides guidance on how to calculate the aggregate value of assets in Canada and the gross revenues from sales in, from or into Canada. It also provides information on how to determine whether gross revenues from sales are generated from assets in Canada. This guidance may assist businesses in determining whether the parties-size and transaction-size thresholds under sections 109 and 110 of the Act are exceeded.”
The Bureau has currently issued merger notification interpretation guidelines relating to the definition of an “operating business” under the Competition Act, multiple-step transactions, ordinary course acquisitions and corporate spin-offs, among others.
With respect to the new guidelines issued for public consultation, the calculation of Canadian assets and revenues is related to the “size of parties” and “size of transaction” thresholds for merger notification under sections 109 and 110 of the Competition Act. Generally speaking, for a merger to be notifiable in Canada it must: (i) involve the acquisition of an “operating business” in Canada, (ii) be one of five specified types of transactions set out in the Act, (iii) exceed the prescribed thresholds under the Act and (iv) not fall within an applicable exception.
The Bureau’s new guidelines set out, among other things, the Bureau’s position regarding determining the location of tangible, intangible and financial assets and revenues, the use of segmented financial statements and the calculation of revenues for the size of transaction threshold. The Bureau’s new guidelines also include a number of illustrative examples.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
