Vol. 143, No. 14 — April 4, 2009

Regulations Amending the Notifiable Transactions Regulations

Statutory authority

Competition Act

Sponsoring department

Department of Industry

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issue and objectives

This proposal would amend the Notifiable Transactions Regulations (the “Regulations”). The amendments to sections 3 to 9 and section 14 would update the Regulations by reflecting changes to section numbers as a result of previous amendments to the Competition Act made in 1999. The amendments are necessary to reflect proposed substantive legislative amendments to the Competition Act that are contained in Bill C-10, the Budget Implementation Act, 2009, including the correction of errors and outdated references to sections of the Competition Act. As such, these regulatory amendments are subject to Bill C-10 receiving Royal Assent. The remainder of the amendments to section 16, and the addition of the new section 17, will reduce the amount of information that parties to a proposed transaction have traditionally supplied to the Commissioner for the purposes of pre-merger notification of transactions, and would reduce Industry Canada’s paperwork burden.

Description and rationale

The proposal will

(a) amend sections 3 to 9 and section 14;

The proposal includes a number of housekeeping amendments to correct outdated references to sections of the Competition Act. Sections 3 to 9 and section 14 of the Regulations refer to sections in the Competition Act that were amended and/or renumbered in 1999. This proposal would amend sections 3 to 9 and section 14 to reflect the amended and/or renumbered sections of the Competition Act.

(b) add new sections 9.1 and 9.2, and amend sections 10 to 13;

The proposed addition of subsection 110(4.1) to the Competition Act introduces a new test for determining whether an amalgamation is notifiable. In addition to the existing test, which is retained in the revised 110(4), subsection (4.1) provides that the notification requirement does not apply unless each of two or more of the amalgamating corporations, together with its affiliates, has Canadian assets or revenues that exceed the relevant threshold. The new sections 9.1 and 9.2 of the Regulations describe how those asset and revenue amounts are determined. Consequential amendments are proposed to sections 10 to 13.

(c) repeal section 14.1;

Currently, section 14.1 of the Regulations stipulates the financial notification thresholds for the purposes of section 110 of the Competition Act. Proposed legislative amendments to add subsections 110(7) and 110(8) to the Competition Act will provide for new financial notification thresholds, and for a process for determining the financial notification thresholds in future years. As a result, section 14.1 of the Regulations will be unnecessary.

(d) amend section 16;

Section 114 of the Competition Act requires parties to certain proposed transactions to supply prescribed information to the Commissioner. Section 16 outlines the specific information required for notifications. The proposed amendments to section 16 of the Regulations are necessary to reflect proposed amendments to the Competition Act.

(i) Reference to 114(2) — changed to 114(1),

As a result of proposed amendments to the Competition Act, the prescribed information currently referred to in subsection 114(2) of the Act will now be referred to in subsection 114(1) of the Act;

(ii) Add paragraphs 16(a.1) and 16(d) to include information required under paragraph 17(b) and subparagraph 17(e)(xii),

Currently, parties to proposed transactions are required to notify the Commissioner of the transaction by providing the information prescribed in section 16 (for “short form” notifications) or section 17 (for “long form” notifications). As a result of proposed legislative amendments to the Competition Act, the existing short form and long form notification information requirements in sections 16 and 17 respectively will be removed in favour of a uniform notification information requirement for all notifiable transactions. The uniform requirement will be outlined at section 16 of the Regulations, facilitating the repeal of the current section 17. To ensure that the Commissioner continues to receive information necessary to adequately assess the proposed transaction, the provision of information that is currently only required for “long form notifications” pursuant to paragraph 17(b) and subparagraph 17(e)(xii), namely copies of legal documents that are to be used to implement the proposed transaction, and studies, surveys, analyses and reports, is being added to section 16 to form part of the new uniform requirement.

(iii) Amendment to paragraph 16(b) ¾ “foreign competition or antitrust authorities,”

This proposal will provide more clarity for parties to proposed transactions regarding the type of authorities that are to be included in the list of foreign authorities required by paragraph 16(b) of the Regulations.

(iv) Add clause 16(c)(iv)(C.1) ¾ “the total annual volume or dollar value of purchases from and sales to all suppliers and customers,”

This proposal shifts the burden of calculating the annual volume or value of purchases as a percentage of the notifying party’s total sales or purchases from the notifying parties to the Commissioner.

(e) repeal the current section 17 and add a new section 17.

As a result of proposed legislative amendments to the Competition Act, the existing short form and long form notification information requirements will be removed in favour of a uniform requirement for all notifiable transactions. The uniform requirement will be outlined in section 16 of the Regulations, facilitating the repeal of the current section 17.

A new section 17 will be added to the Regulations to facilitate the electronic submission of documents prescribed by clause 16(c)(iv)(A) by reference to the address of an Internet site from which a copy of that document can be obtained. Allowing parties to supply certain required information through electronic links will significantly reduce the volume of material required to be included in a notification filing, resulting in reduced costs and a reduced compliance burden for parties to proposed transactions.

Consultation

The proposed amendments to the Regulations are necessary to implement amendments to the Competition Act in Bill C-10, the Budget Implementation Act, 2009. In particular, these amendments relate to the introduction of a new merger review process and the elimination of the separate “short form” and “long form” notification information requirements in favour of a uniform requirement. The proposed amendments to the Competition Act stem from recommendations of the Competition Policy Review Panel, which consulted with stakeholders during its one-year mandate to review investment and competition laws and policies in Canada. These include the correction of errors and outdated references to sections of the Competition Act.

Implementation, enforcement and service standards

The proposed legislative amendments to the Competition Act that form the impetus for some of the proposed regulatory amendments will introduce new time restrictions to the merger review process. However, the Bureau will continue to make every effort to provide a response to merger notifications within the current 14-day service standard period for non-complex transactions and anticipates that the vast majority of mergers will continue to be cleared within a 30-day period.

In addition, a single notification form will replace the current short-form and long-form notification filings, to reflect the uniform notification requirement introduced by proposed legislative amendments to the Competition Act and to assist merging parties to comply with the new notification information requirements.

As noted above, many of the proposed amendments in this regulatory package are subject to Bill C-10 receiving Royal Assent in its current form. Should the relevant portions of Bill C-10 be substantially modified prior to receiving Royal Assent, or should Bill C-10 not receive Royal Assent, this regulatory package will require modification and a revised package will be submitted for pre-publication.

Contact

Colette Downie
Director General
Marketplace Framework Policy Branch
Industry Canada
C.D. Howe Building, East Tower, Room 1046A
235 Queen Street
Ottawa, Ontario
K1A 0H5
Telephone: 613-952-0211
Fax: 613-948-6393

PROPOSED REGULATORY TEXT

Notice is hereby given, pursuant to subsection 124(2) (see footnote a) of the Competition Act (see footnote b), that the Governor in Council, pursuant to subsection 124(1) (see footnote c) of that Act, proposes to make the annexed Regulations Amending the Notifiable Transactions Regulations.

Interested persons may make representations concerning the proposed Regulations within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Colette Downie, Director General, Industry Canada, Marketplace Framework Policy Branch, CD Howe Building, 235 Queen Street, Ottawa, Ontario K1A 0H5 (tel.: 613-952-0211; fax: 613-948-6393).

Ottawa, March 26, 2009

MARY PICHETTE
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE NOTIFIABLE TRANSACTIONS REGULATIONS

AMENDMENTS

1. The Notifiable Transactions Regulations (see footnote 1) are amended by adding the following after section 9:

PROVISIONS WITH RESPECT TO PARTIES TO AN AMALGAMATION

9.1 (1) For the purpose of subsection 110(4.1) of the Act, the aggregate value of assets in Canada of an amalgamating corporation, together with its affiliates, shall be determined by aggregating the aggregate values of the assets in Canada of the corporation and each affiliate.

(2) For the amalgamating corporation and each affiliate, the aggregate value of its assets in Canada shall equal the aggregate amount of those assets as stated in the audited financial statements referred to in section 6.

9.2 (1) For the purpose of subsection 110(4.1) of the Act, gross revenues from sales in, from or into Canada of an amalgamating corporation, together with its affiliates, shall be determined by aggregating the gross revenues from sales in, from or into Canada of the corporation and each affiliate.

(2) For the amalgamating corporation and each affiliate, the gross revenues from sales in, from or into Canada shall equal the aggregate amount of those gross revenues as stated in the audited financial statements referred to in section 7.

2. The portion of section 10 of the Regulations before paragraph (a) is replaced by the following:

10. For the purposes of subsections 110(2) to (4), (5) and (6) of the Act, the aggregate value of assets in Canada

3. The portion of section 11 of the Regulations before paragraph (a) is replaced by the following:

11. For the purposes of subsections 110(2) to (4), (5) and (6) of the Act, the gross revenues from sales in or from Canada generated from the assets in Canada

4. The portion of subsection 12(1) of the Regulations before paragraph (a) is replaced by the following:

12. (1) If the aggregate value of a person’s assets cannot reasonably be determined in accordance with subsection 8(2) or 9.1(2) or section 10, the aggregate value of the assets

5. The portion of subsection 13(1) of the Regulations before paragraph (a) is replaced by the following:

13. (1) If gross revenues from a person’s sales cannot reasonably be determined in accordance with subsection 9(2) or 9.2(2) or section 11, the gross revenues

6. Subsection 14(1) of the Regulations is amended by replacing the reference to section 86 with a reference to section 114.

7. Section 14.1 of the Regulations and the heading before it are repealed.

8. (1) The portion of section 16 of the Regulations before paragraph (a) is replaced by the following:

16. (1) For the purposes of subsection 114(1) of the Act and subject to subsection (2), the following information is to be supplied to the Commissioner:

(2) Paragraph 16(b) of the Regulations is replaced by the following:

(a.1) a copy of each legal document, or the most recent draft of that document if it is not yet executed, that is to be used to implement the proposed transaction;

(b) a list of the foreign competition or antitrust authorities that have been notified of the proposed transaction by the parties and the date on which each authority was notified;

(3) Subparagraph 16(c)(iv) of the Regulations is amended by striking out “and” at the end of clause (C) and by adding the following after that clause:

(C.1) statements identifying, for each of those principal categories of products, the total annual volume or dollar value of purchases from and sales to all suppliers and customers, and

(4) Section 16 of the Regulations is amended by adding “and” at the end of paragraph (c) and by adding the following after that paragraph:

(d) in respect of each party, and each of its affiliates referred to in subparagraph (c)(iii), all studies, surveys, analyses and reports that were prepared or received by a senior officer for the purpose of evaluating or analysing the proposed transaction with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into new products or geographic regions and, if not otherwise set out in that document, the names and titles of the individuals who prepared the document and the date on which it was prepared.

(2) Instead of being supplied with a report or financial statement referred to in clause (1)(c)(iv)(A), the Commissioner may be supplied with the address of an Internet site from which a copy of those documents can be obtained without charge, which is operational at the time the address is supplied and which remains operational prior to the expiry of the period referred to in subsection 123(1) of the Act.

9. Section 17 of the Regulations is repealed.

10. The Regulations are amended by replacing the references to sections 81 and 82 with references to sections 109 and 110, respectively, in the following provisions:

(a) paragraph 3(b);

(b) subsections 4(1) and (2);

(c) subsection 5(1);

(d) sections 6 and 7;

(e) subsection 8(1); and

(f) subsection 9(1).

COMING INTO FORCE

11. These Regulations come into force on the day on which they are registered.

[14-1-o]

Footnote a
R.S., c. 19 (2nd Supp.), s. 45

Footnote b
R.S., c. C-34; R.S., c. 19 (2nd Supp.), s. 19

Footnote c
R.S., c. 19 (2nd Supp.), s. 45

Footnote 1
SOR/87-348

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