Dealmakers should take note of several recent significant merger-related developments at the Competition Bureau:
- Commissioner’s Resignation – The head of the Bureau, Commissioner of Competition Melanie Aitken, announced that she intends to resign in September 2012;
- New Head of the Mergers Branch – Effective August 7, 2012, there will be a new head of the Mergers Branch, which has jurisdiction to review all mergers in Canada;
- Competition Bureau Clears TMX/Maple Transaction – The Bureau completed its long-running review of the proposed acquisition of the TMX Group by Maple Group, issuing a “no action” letter on July 4, 2012; and
- Commissioner Wins Merger Challenge – The Commissioner won a novel case before the Competition Tribunal in which she had challenged a non-notifiable transaction on the grounds that it would have resulted in a significant prevention of competition.
The head of Canada’s Competition Bureau announced on June 28, 2012, that she would resign from her post in September 2012, almost two years before the end of her five-year term. From the time of her appointment as Interim Commissioner in January 2009, Melanie Aitken has overseen a whirlwind of activity at the Bureau, from the introduction of wide-ranging amendments to the Competition Act to a highly visible enforcement program. The Commissioner initiated judicial challenges in all of the main areas of the Act, including mergers, abuse of dominance, price-fixing, as well as price maintenance and misleading advertising. Because most of the enforcement actions she commenced have not yet been decided, it may be premature to speculate about her legacy, but it is clear that, by reinvigorating competition law enforcement, Commissioner Aitken raised awareness of the Competition Act in Canada’s business community and of the benefits of competitive markets for Canadians.
Major Enforcement Actions
Early in her term, Commissioner Aitken indicated that she would not shy away from bringing enforcement actions when she believed they were warranted. Actively enforcing the law would, according to Commissioner Aitken, lead to developments in the jurisprudence, which in turn would provide clarity and transparency to Canadians about what is acceptable and unacceptable conduct. Active enforcement would also serve to deter anti-competitive conduct. This commitment to active enforcement was tempered by a recognition that settling disputes and avoiding litigation was in the public interest and settlements would be reached when appropriate.
The Commissioner challenged two mergers during her tenure:
- The Commissioner of Competition v. CCS Corporation et al. Successful challenge, as a substantial prevention of competition, of the acquisition of a potential entrant by the incumbent provider of secure landfill services for solid hazardous waste from oil and gas producers. However, the May 29, 2012, decision of the Competition Tribunal has been appealed to the Federal Court of Appeal.
- The Commissioner of Competition v. Air Canada et al. On-going challenge to the transborder joint venture and various marketing cooperation and alliance agreements between Air Canada, Canada’s legacy carrier, and United Continental Holdings, Inc. and its predecessors under both the merger provisions and the civil agreement between competitors provision of the Act. This will be the first case to interpret the civil agreement between competitors provision, which was added to the Act in 2009 but only took effect in 2010. The case is scheduled to be heard by the Competition Tribunal in November 2012.
These matters remain under review by the Tribunal and the courts, as do the other cases commenced by the Commissioner.
The Commissioner announced on June 20, 2012, that Kelley McKinnon will become Senior Deputy Commissioner of the Mergers Branch effective August 7, 2012. She becomes the fourth consecutive lawyer from private practice to be appointed to that position. Currently Ms McKinnon is the head of the securities litigation group of a national Canadian law firm, and prior to that she spent five years at the Ontario Securities Commission, most recently as Deputy Director of Enforcement and Chief Litigation Counsel. She will serve a two-year term.
On July 4, 2012, the Bureau announced that it would not challenge the proposed acquisition of TMX Group by Maple Group and that it would close its file in the matter. During the course of its more than one-year long review, the Bureau had expressed serious concerns about the potential impact of the proposed transaction in two areas: equities trading, and post-trade services, including clearing, settlement and depository services. However, the Bureau also indicated that changes to the regulatory framework proposed by the OSC could address those concerns. In the end, the final recognition orders issued by the OSC assuaged those concerns and the Commissioner concluded her review.
The Competition Tribunal released its decision in the first merger challenge initiated by the Commissioner since 2005. The Tribunal found in favour of the Commissioner, concluding that the acquisition by a monopolist of a potential new entrant in the market for the supply of secure landfill services for solid hazardous waste from oil and gas producers amounted to a substantial prevention of competition. The Tribunal ordered that the acquiror divest itself of the acquired assets or shares of the acquired company. The Commissioner had sought a complete dissolution of the transaction but the Tribunal — while earlier having ruled, in an interlocutory decision, that dissolution was a potential remedy — concluded that divestiture was an effective remedy and was the least intrusive option. The challenge is of note because the transaction was not subject to the pre-merger notification process and came to the attention of the Bureau as a result of customer complaints. This case serves as a reminder that the Bureau has the power to review any transaction that falls within the very broad definition of a “merger” in the Competition Act, and that parties must assess the likelihood of a substantial lessening or prevention of competition in every transaction, not merely those which exceed the notification thresholds.