Copyright 2010, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Competition, Antitrust & Foreign Investment, June 2010

On June 2, 2010, the Canadian Competition Bureau (Bureau) published its policy on information sharing in the context of hostile or unsolicited take-over transactions. To view the policy relating to hostile transactions, click here. The new policy has the potential to fuel the use of "antitrust poison pills" in hostile take-over bids. It should be noted that like other Bureau policies, the new policy is not law, but rather summarizes the Bureau's current views on this issue.

To frame the issue: on the one hand, bidders often wish to commence a Bureau review as soon as possible to take competition-related bid conditions off the table. On the other hand, targets often wish to know the status of the Bureau's review, both to evaluate possible competing bids, and in some – albeit rare – circumstances to fuel take-over defences or create regulatory delays, known as an "antitrust poison pill".

From the enactment of the merger review provisions of the Competition Act in 1986, the Bureau has articulated a strong policy of not interfering in the public market for corporate control. In this regard, the Competition Act places limits on the length of time for a merger review, and the information that the Bureau can disclose to a target. Moreover, the only obligation on the Bureau in terms of information sharing with a target is to immediately advise of the date upon which the Bureau received a filing from a bidder, so as to enable the target to submit its required half of the merger filing within the period of time set out in the Competition Act.

The Bureau's new policy, however, provides that where the Bureau shares "pertinent" information with the bidder, it will strive to disclose such information "equitably" to the target as well (subject to statutory restrictions on the disclosure of confidential information). Information the Bureau considers to be "pertinent" includes:

  • information on the complexity rating of a proposed transaction;
  • the date upon which the parties have made various filings;
  • the Bureau's preliminary and final views on market definition and other factors relevant to its assessment; and
  • its preliminary and final conclusions on whether the proposed transaction is likely to prevent or lessen competition substantially.

The Bureau notes that hostile transactions "can give rise to particularly complex considerations that may impact the straightforward application" of this policy (e.g., in circumstances involving multiple competing bids) such that a case-by-case assessment may be required.

What does this mean for businesses? For bidders in unsolicited take-over bids, the new policy increases the importance of identifying and addressing any competition issues with the Bureau as soon as possible since the new policy may lead targets to be more proactive in the merger review process than traditionally has been the case. For targets, it means that they should receive a greater degree of transparency from the Bureau than in the past. Depending on the facts, this could be of importance in respect of any possible defence strategies and perhaps in respect of discussions with a white knight, particularly where the white knight does not pose similar competition issues.

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.