A Path To Proportionality In The SIR Process

Author:Ms Bronwyn Roe and Lisa Scheulderman
Profession:WeirFoulds LLP

In a merger review, the Commissioner of Competition has the power to issue supplementary information requests ("SIRs") to merging parties, in addition to the standard disclosure required under the Competition Act. The authors suggest that the principle of proportionality is and should be applicable to the exercise of the Commissioner's SIR power; however, current merger review procedures, including pre- and post-issuance dialogue and the Competition Bureau's internal appeal process, do not provide effective avenues for parties to challenge the scope or proportionality of a SIR. Recent decisions of the Competition Tribunal suggest that the principle of proportionality—well recognized in civil proceedings in Canada—is equally applicable in Tribunal proceedings. If a party were to take the risky course of closing a transaction over the Commissioner's objections after refusing to comply with an overbroad SIR, and in the event of a proceeding brought by the Commissioner, challenge the scope of the SIR before the Tribunal, the Tribunal would likely consider the proportionality of the SIR. The authors conclude that policy and legislative changes—including acknowledgment and implementation by the Bureau of the proportionality principle, and the oversight of SIR appeals by an independent arbiter—are necessary to better ensure proportionality in the SIR process.

Canada's Competition Act ("Act") requires parties to many mergers to submit prescribed information to the Commis­sioner of Competition ("Commissioner"), and to satisfy a waiting period before closing. The Commissioner has the power, during that initial waiting period, to request "additional information that is relevant to the Commissioner's assessment"1 of a proposed merger transaction in the form of a Supplementary Information Request ("SIR"), following the standard disclosure required under the Act.2 The Commissioner decides whether the additional information sought is relevant to the Commissioner's assessment, and a merging party's only recourse when faced with a SIR it believes to be overly broad is to challenge the SIR through an internal appeal process within the Competition Bureau ("Bureau"). While no two SIRs are identical and the length of time required to comply can vary, two to three months is not uncommon. Meanwhile, however, the transaction cannot be com­pleted until a new waiting period expiresand the new waiting period only starts upon full compliance with the SIR. Clearly, the scope of the SIRif overbroadcan unnecessarily delay closing of a transaction. In this paper, we identify the shortcomings of this internal review process and suggest that policy and legislative changes are necessary to better ensure proportionality in the SIR process. Though we do not suggest that it is...

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