Canada’s influence in mega-deals is becoming increasingly important in getting the deal done and continues to position the country as a strategic asset in an increasingly global marketplace.
If companies have assets located in Canada or business conducted in Canada that meets a threshold, they must co-operate not only with Canada’s Competition Bureau but also with any other jurisdiction that would have authority over the deal.
“This is something that we have to think about pretty frequently,” says David Rosner, partner with Blake Cassels & Graydon LLP in Toronto.
“If the nature of mergers and acquisitions that’s going on right now continues, it’s something we will think about more and more.”
Rosner says that the Competition Bureau has taken action in order to ensure that it is ready to review these increasingly large multinational deals, starting with setting up formal co-operation mechanisms with other jurisdictions and agencies in order to give themselves the ability to co-ordinate and create avenues for co-operation.
“With respect to the United States, they have issued guidance, telling people how they intend to go about co-ordinating in a cross-border case, which is really helpful,” says Rosner.
“One of the other things they’re doing is they continue to send their own personnel to other jurisdictions, both to get the benefit of other people’s best practices, but also to establish relationships of trust with officials in other agencies.”
Rosner lists Washington, Brussels and Australia as jurisdictions where the bureau has sent members of its staff for months at a time.
He says that when his firm gets a global merger, it is quick to advise its clients as to the bureau’s dynamic.
“Part of that advice is that the bureau is going to co-ordinate globally, so the advice in Canada has to be, ‘How are you going to react to that?’” says Rosner.
He says companies need to realize that they need to engage with the Competition Bureau as soon as they engage with other agencies outside of Canada, not only because the bureau will be aware that they are doing so, but not engaging would mean missing an opportunity to make important submissions and understand the bureau’s thinking.
Melanie Aitken, a former Competition Bureau commissioner and now managing principle of Bennett Jones LLP’s Washington, D.C. office, agrees that early co-operation is the best approach.
“The other agencies will be looking for waivers to share the information, and we’ve given the information to the Canadian bureau,” says Aitken.
“If the U.S. authorities want it, there’s no sense in resisting that. This is in the context of a transaction, and even if it’s not notifiable in the U.S. for some reason but the U.S. is looking at the deal — it’s a human process, why irritate them? Don’t make them think you’re hiding something.”
Aitken says that if the context is that the American company has information and is wondering if it should share it with the Canadian bureau, her advice would be to do so.
“You want the agency to feel like they have what they need, and you want them to feel like they’re not being ignored because they’re ‘merely’ Canada.”
Aitken adds that when she was commissioner, it was the bureau’s position that it doesn’t require a client’s authorization to share information with another agency provided the bureau has decided that such sharing would promote the administration and enforcement of the Competition Act.
“In a deal context, the bureau will tend to talk to the party first before they share information provided to it, and I don’t think the bureau would likely share it if a party ever said no, which they typically don’t,” says Aitken.
“But, theoretically, and the bureau has taken the position formally . . . it isn’t up to the parties if sharing that information with another authority is in the interests of the administration and enforcement of the Canadian Competition Act.”
Rosner says he advises clients to be sure that what they’re telling Canadian authorities such as the bureau has to also make sense in the other jurisdictions where the transaction is taking place, and conversely, what is said in the other jurisdiction needs to make sense to the Canadian bureau.
Lawyers should also take care to ensure that the documents that are being shared with other jurisdictions don’t contain any hidden surprises that could lead to an investigation down the road.
“I’ve been involved in situations where information that has been provided to the Competition Bureau or other regulators has subsequently been relied upon by that regulator, often in an unrelated investigation or prosecution,” says D. Michael Brown, partner with Norton Rose Fulbright in Toronto.
“One of the first things you should be doing in the context of any major merger transactions, when you’re thinking about any of the regulatory filings that you’re going to have to make, that might be a good time to do some due diligence to see if there is any conduct of concern,” says Brown.
He says that while the firm would advise its clients to ensure they have fulsome compliance programs in place ahead of any merger, any time there is a notifiable transaction with regulators in one or more jurisdictions, it’s a good time to ensure there isn’t something that could come to light during the review that could get the client into trouble later.
Brown says it can also mean ensuring that you’re not over-producing.
“It can be seen sometimes as more convenient to give the same thing to every regulator,” says Brown, citing an example of taking the package of documents prepared for the broadest request by one regulator and giving those same documents to all other regulators, thereby increasing the risk of a collateral investigation or proceeding.
Rosner says there is also the potential for other jurisdictions to take the advice of another regulator such as the Competition Bureau and start separate investigations for things that don’t necessarily make sense in their jurisdiction.
“What does that mean for their ability to review quickly and appropriately?” asks Rosner, who says the information sharing could lead to sprawling investigations that may not necessarily be appropriate.
“How do people think about information they receive from foreign agencies in terms of understanding that it’s specific to that jurisdiction and may or may not apply to where they’re reviewing?,” he says.
“That’s a challenge for the agency to manage, but it’s a challenge for the companies because they don’t get to participate in that bilateral communication between the agencies.”