Canada: Understanding Bill C-11: A Competition Perspective

Last Updated: November 1 2007

Introduction

Bill C-11, now proclaimed into law, has significantly changed the operation of the Canada Transportation Act (the "CTA"), including changes to the process of notification and review of mergers involving transportation undertakings.

Bill C-11: The History

On May 4, 2006 the Minister of Transport, Infrastructure and Communities ("the Minister") introduced Bill C-11 in the House of Commons. In many respects Bill C-11 copied Bill C-44, which was introduced in the House of Commons in March, 2005 and which was, in turn, largely based on Bill C-26, introduced in February of 2003. While Bills C-26 and C-44 both died on the order paper, Bill C-11 was passed by the House of Commons on February 28, 2007. On June 22, 2007, Bill C-11 received Royal Assent, becoming law and amending the CTA, the Competition Act, and several other acts.

Summary of Bill C-11

When the federal government introduced Bill C-11, it described the proposed legislation as "balancing the interests of communities, consumers, commuters and urban transit authorities with those of air and rail carriers."

Highlights of the amendments include:

  • an updated National Transportation Policy Statement in the CTA;
  • the modification and extension of provisions regarding mergers and acquisitions of air transportation undertakings to all transportation undertakings;
  • a clarification regarding the operation of the Competition Act with regard to international agreements respecting air services and railway rates, tariffs, and services;
  • the creation of a mediation process for disputes concerning federal transportation matters;
  • air transportation specific changes relating to complaints processes, advertising of prices, and the disclosure of terms and conditions of carriage; and
  • railway transportation specific changes relating to resolving complaints and other disputes, the transfer and discontinuance of the operation of railway lines, and the appointment of police constables under the Railway Safety Act.

As the changes to the National Transportation Policy Statement and the mergers and acquisitions provisions are of particular importance to competition issues in the transportation sector, they are discussed further below.

National Transportation Policy Statement

According to the government, the new policy statement in Bill C-11, which amended s. 5 of the CTA, was intended to provide a simpler and clearer articulation of established principles, as well as embracing new objectives, such as security and protection of the environment. In addition, the changes made to the section elevate the importance of competition, which is now included in the opening line of the statement. The statement stipulates that its objectives "are most likely to be achieved when competition and market forces, both within and among the various modes of transportation, are the prime agents in providing viable and effective transportation services". Removed is the more tenuous reference to a reliance on competition and market forces "whenever possible".

The re-articulated pursuit of economic objectives and reliance on competition and market forces are the most obvious elements of the Bill C-11 amendments. The longer-term changes in the country’s transportation systems that will result from these new elements are unclear.

Review of Mergers and Acquisitions

One of the most striking changes to the CTA contained in Bill C-11 is the amendment of the merger and acquisition review provisions, now found in sections 53.1 to 53.6 (previously sections 56.1 to 56.7) of the CTA. These provisions, which previously applied only to transactions involving air transportation, now require that for any transaction involving a transportation undertaking and which requires notification of the Commissioner of Competition (the "Commissioner") under s. 114(1) of the Competition Act, notification is also required to be given to the Minister.

Subsection 114(1) of the Competition Act requires notification of an acquisition, combination or amalgamation involving parties that meet certain asset ("party size") and revenue ("transaction size") thresholds. Under the Competition Act, many transactions are exempt from notification if they receive an Advance Ruling Certificate or a waiver under s. 113(c). It would appear that these transactions do not require notice to the Minister under the amendments of Bill C-11, but this is not entirely clear.

A notice to the Minister must contain the information required to be contained in any notice under s. 114(1) of the Competition Act, as well as information relating "to the public interest as it relates to national transportation" as required by guidelines published by the Minister. The guidelines are to be issued by the Ministry of Transport in consultation with the Competition Bureau.

Where the Minister is of the opinion that the proposed transaction does not raise issues with respect to the public interest as it relates to national transportation, the Minister has up to 42 days following receipt of the notice to inform the applicant. Where the Minister is of the opinion that the proposed transaction does raise issues with respect to the public interest, the Minister may direct the Canadian Transportation Agency (the "Agency") or a third party to examine the relevant issues.

Any transaction raising public interest concerns may not be completed without approval of the Governor in Council. In the case of an air transportation undertaking, the Agency must also determine that the transaction would result in an undertaking that is "Canadian" (as defined in s. 55(1) of the CTA). The Commissioner of Competition is required to report to the Minister regarding any competition aspects of the transaction within 150 days after the Commissioner is notified of the proposed transaction. The Minister is required to make this report public immediately after receiving it.

After receiving the Commissioner’s report the Minister is required to consult with the Commissioner and the parties to the proposed transaction. The parties to the proposed transaction should inform the Minister and Commissioner of any actions they are prepared to undertake to address the public interest and competition concerns raised by the transaction. Before a final recommendation is made by the Minister to inform the federal Cabinet prior to their order, the Commissioner shall comment on the adequacy of any undertakings proposed by the parties to the transaction.

Uncertainties and Issues

There are many uncertainties surrounding the application of the Bill C-11 amendments, including:

  • Because the term "transportation undertaking" is undefined in the CTA, what is the scope of that term for the purposes of s. 53.1(1)? For example, will the term apply to all businesses that transport goods or people or only those that provide such services to third parties? Will the term apply to all types of transportation undertakings or only those that have a national dimension?
  • What criteria will be applied in determining whether a transaction raises public interest issues, thus triggering a public interest review?
  • How will a public interest review mesh with existing regulation of certain transportation undertakings under the CTA, reviews of acquisitions by non-Canadians under the Investment Canada Act, and current reviews by the Commissioner under the Competition Act?

Hopefully, these and other uncertainties will be clarified when regulations and guidelines contemplated by the amendments are issued.

The impact of changes to the merger review provisions introduced by Bill C-11 will only become evident after several review processes have played themselves out in full. Until that time, Bill C-11's creation of a new, untested and uncertain bureaucratic review process may provide a disincentive effect upon potential transportation mergers. Apart from substantially enabling government review of transportation transactions, by placing ultimate discretion in the hands of the federal Cabinet, Bill C-11 is likely to introduce political considerations into the review process. What effect this will have on operators, shippers, and customers remains to be seen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

 
In association with
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Law Practice Management
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.