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.
Advertising Standards Canada (ASC) will be hosting Jonathan Salem Baskin as the keynote speaker for its Annual General Meeting on May 3rd.
From the ASC:
“Attend ASC’s Annual General Meeting Keynote to hear Jonathan Salem Baskin, co-author of the newly released Tell the Truth: Honesty is Your Most Powerful Marketing Tool, speak on how truth telling is the core of successful marketing communications. Baskin will discuss how consumers are using social media in their pursuit of truth, causing advertisers to totally rethink their creative strategies.
This event, his only scheduled Canadian appearance, will take place in Toronto on Thursday, May 3, 2012, and should not be missed!”
On April 10, 2012, the Competition Bureau issued a statement summarizing its review of the acquisition of Quad/Graphics Canada, Inc. by Transcontinental Inc. (a printing merger involving the retail flyer market).
The Bureau’s announcement is part of its recent initiative to increase the transparency of its merger review process, which has included the launch of a new Monthly Report of Concluded Merger Reviews (launched earlier this year with some controversy from the competition bar), new Merger Enforcement Guidelines (“MEGs”) (which govern the Bureau’s substantive review of mergers in Canada), new Merger Review Process Guidelines (reflecting the Bureau’s experience with Canada’s new two-stage merger review process since it was introduced in March, 2009) and recent public remarks by the Commissioner.
With respect to merger review summaries in particular, the Commissioner announced that the Bureau would be launching summaries of some of its merger reviews in recent public remarks:
“Among other initiatives, I am pleased to announce that, following the recommendations of an internal working group on transparency, we intend to publish more position statements that describe the Bureau’s analysis of complex merger cases, and to establish a merger register — a list of all closed merger reviews, updated on a monthly basis.”
While the Bureau had previously been issuing Technical Backgrounders for completed merger reviews, the Bureau discontinued that practice in 2009.
In the Bureau’s Quad/Graphics-Transcontinental merger review statement, the Bureau states that it issued a No Action Letter (“NAL”) to Transcontinental, based on factors including increased foreign (U.S.) competition in the relevant retail flyer market.
According to the Bureau, while it concluded that there was increased concentration in Canada, “U.S. printers with printing facilities located in close proximity to the Canadian border … are imposing competitive discipline on the retail flyer market in Canada.”
The National Competition Law Section of the Canadian Bar Association is holding its 2012 Spring competition law conference in Toronto (the 2012 Competition Law Spring Forum: Best Practices in a Time of Active Enforcement) on May 2, 2012 at the Toronto Board of Trade.
From the CBA:
“Aided by the 2009/10 changes to the Competition Act, the Canadian Competition Bureau has adopted an aggressive enforcement agenda. There are more litigated cases in the Tribunal and the Courts than ever before, including the first prosecution under the new conspiracy provisions of the Act. Commissioner Melanie Aitken has made it clear that there are more to come. Our expert panelists will provide guidance on effectively protecting your clients’ interests at all stages – from preventative compliance programs to responding to criminal or civil enforcement actions. We are delighted to announce that Commissioner Melanie Aitken will be our keynote lunchtime speaker.”
This year’s Spring conference will include panels on compliance, responding to Competition Bureau investigations, misleading advertising, developments in merger review and recent competition law developments (including the TREB abuse case, the contested Air Canada / United merger, Bell Canada advertising case and recent bid-rigging cases).
The A38 Journal of International Law has announced its second call for papers. From A38:
“The A38 Journal of International Law is a quarterly academic journal, published online, that seeks to provide an international forum for the publication of articles in the field of International Law. The Journal is currently soliciting submissions for Volume I, Issue 2, which will be published July 2012. The submission deadline for Issue 2 is May 31, 2012. We welcome submissions from academics, practitioners, students, researchers and experts from within the legal community. We have a strong preference for articles that are not descriptive, but that instead assert and defend a well-reasoned position.
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).
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
