Transcript Section 100 Proceedings - Canadian Bar Association

Section 100 Proceedings
CBA Competition Law Section
Young Lawyer’s Initiative, June 5, 2008
Steve Sansom, Competition Bureau Legal Services
The views expressed herein are not purported to represent those of the
Competition Bureau or the Department of Justice.
Section 100 Proceedings
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Origin and Purpose of Section 100
Superior Propane (1998)
1999 Amendments
Labatt (2007-2008)
American Iron & Metal (2008)
Current Status and Issues
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Origin and Purpose
• Economic Council of Canada, Interim
Report on Competition Policy (1969)
– Effects can be extremely difficult to reverse or
offset once merger completed
– Process needed to ensure timely consideration
– Interim injunctions to stay “scrambling” of
assets while hearings in progress
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Origin – 1986 Amendments
• Short form / long form pre-merger
notification
• S. 100 (interim order prior to s. 92
application)
• S. 104 (interim order after s. 92 application
filed)
• S. 92 (final order prohibiting/dissolving
merger, etc.)
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Timing – 1986 Provisions
• Short form: 7 days
• Long form: 21 days
• S. 100: 10 days (ex parte) or 21 days
• S. 104: such order as Tribunal considers
appropriate
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When Available
• Short form: automatic if thresholds exceeded
• Long form: if required by Director/Commissioner
• S. 104: Ordinary interlocutory or injunctive relief
– Serious issue (was prima facie case)
– Irreparable harm
– Balance of convenience
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S. 100 Test – 1986 Provisions
• Reasonably likely slc / spc, and
• In the opinion of the Tribunal, likely action
would substantially impair ability to remedy
because difficult to reverse
• Or: failure to comply with s. 114
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Superior Propane (1998)
• June 26: Parties advised Bureau of possible
transaction
• July 14: Short form notification filed
• July 20: Purchase agreement signed – closing
scheduled October 30, “drop dead” December 15
• November 16: Notice of intention to close
December 7
• December 1: S. 100 application filed
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Superior Propane, Rothstein J.
(Comp. Trib.)
• “Reasonably likely”
– Lower threshold than “likely” slc in s. 92
– Higher than “serious issue” (not clear why)
– Some evidence of significant concentration or
market share required (and probably sufficient)
• If product market is propane, market shares high
• Not satisfied propane is relevant product market
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Superior Propane, Rothstein J.
(Comp. Trib.)
• “Substantially impair” ability to remedy
– Any s. 92 remedy impaired, or remaining remedies
insufficient?
– Alternatives? (Hold separate order?)
– At this stage of proceedings, should not foreclose any
remedies
• Does not contemplate hold separate (must forbid act directed
toward completion or implementation, not allow subject to
conditions)
• Intent is to preserve status quo and all s. 92 remedies
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1999 Amendments
• 1996 Consultative Panel report
• 110(6) (interest in combination)
• Short/long form information requirements
moved to regulations, modified
• Waiting periods: 14 / 42 days
• S. 100: 30 days, possible extension to 60
– (10 days ex parte for contravention of s. 114)
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S. 100 Test – 1999 Provisions
• Commissioner certifies s. 10(1)(b) inquiry
commenced
• In the Commissioner’s opinion, more time
required to complete inquiry
• In the opinion of the Tribunal, likely action
would substantially impair ability to remedy
because difficult to reverse
• (or contravention of s. 114)
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1986 vs. Current Provisions
• Reasonably likely slc / spc
• In the opinion of the
Tribunal, likely action
would substantially impair
ability to remedy because
difficult to reverse
• Commissioner certifies s.
10(1)(b) inquiry
commenced
• In the Commissioner’s
opinion, more time
required to complete
inquiry
• In the opinion of the
Tribunal, likely action
would substantially impair
ability to remedy because
difficult to reverse
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Superior Propane (2000)
• Commissioner appealed Tribunal decision
to Federal Court of Appeal
• Applied for stay and continuation of s.
104/105 hold separate order
• Linden J.A. applied RJR – MacDonald test
(serious issue, irreparable harm, balance of
convenience)
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Superior Propane, Linden J.A.
• “In my view, the metaphor of scrambled eggs is
dramatic, but not entirely apt. When one
scrambles eggs it is impossible to unscramble
them, but a merged company is not exactly like
scrambled eggs. It can be broken up, though it
may be difficult to do so. Competition can be
restored. It is not enough for it to be hard or
inconvenient to do so. To obtain a stay, the
damage must truly be irreparable and proved to be
so.”
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Labatt
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American Iron & Metal (2008)
• Alleged act that would impair ability to
remedy was not closing, but post-closing
integration
• Resolved by consent agreement to hold
separate and preserve assets and operations
for 60 days
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Current Status and Issues
• No impact on most transactions – most
parties want no action letter before closing
– Can avoid s. 100 application by providing
sufficient time for Bureau’s review and, if
necessary, negotiating remedies, before closing
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Current Status and Issues
• To issue s. 100 order, Tribunal must find
intended act or thing:
– will substantially impair ability to remedy
effect on competition
– is difficult to reverse
– is likely
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Current Status and Issues
• Impair ability to remedy
– Would another remedy eliminate alleged slc?
• Labatt: “…establish the impairment of the
Tribunal’s ability to remedy in accordance with
Canadian law.”
– Would hold separate achieve same result?
• Commissioner: Will consider hold separate if no
likely material and/or lasting harm to competition in
interim period, or to ability to remedy
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Current Status and Issues
• Difficult to reverse
– Does resale to vendor, or IPO to new
purchasers, reverse a merger?
• Likely
– Is unilateral undertaking sufficient to rebut
prior evidence of intent?
– What if no intention to act within 30/60 days?
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