Expert guests from government, private practice, and government relations join Counterfactual host Julia Potter of Blake, Cassels & Graydon LLP to provide key highlights and further colour on their discussion from the recent CBA Mergers Committee Brownbag session on sector-specific merger reviews taking place in parallel to Competition Act merger reviews.
In this episode of the Counterfactual podcast, we host a follow-on conversation from the recent CBA Mergers Committee Brownbag session on sector-specific merger reviews (for the transportation, financial services, and telecom industries) that take place in parallel to the Competition Act merger review process. The panelists (from government, private practice, and government relations) provide the key messages from the brownbag session and dive deeper into the key topics. The panelists explore how parallel sector-specific reviews present unique substantive and procedural challenges both for merging parties and government agencies, offering advice to merging parties on their counsel to best prepare for sector-specific reviews.
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Welcome to Counterfactual the podcast brought to you by the Competition Law and Foreign Investment Review Section of the Canadian Bar Association. Counterfactual takes a fresh look at issues relevant to business competition and related areas of regulation, and explores the real and hypothetical worlds to gain practical insights and debate policy. Hope you enjoy the show.
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Hello, and welcome to counterfactual, the official podcast of the Canadian Bar Association's Competition Law and Foreign Investment Review section. My name is Julia Potter. I'm a partner in the Competition and Foreign Investment group at Blake, Cassels & Graydon LLP and I will be your host today. In this episode, we discuss sector specific merger reviews that take place in parallel to the Competition Act merger review process, particularly for the transportation, financial services, and telecom industries. This episode is a continuation of the conversation with the panelists from the CBA Merger Committee’s March 21 session on sector specific merger reviews. Here we provide the key messages from that session, as well as a bit more color and discussion from our panelists on those key topics. Whether you attended the March 21 session or missed it, this episode is for you. So join and listen. Before we begin, here are a few words of introduction about our guests and the extensive expertise that they have in respect of sector specific majorities. First, we have Michael Koch, a partner in the business law group communications group and competition and foreign investment group at Goodmans LLP. His practice focuses on federal regulatory matters, including communications, copyright, competition and foreign investment law in both transactions and litigation. He assists financial and strategic investors, both domestic and foreign. in completing mergers and acquisitions, advises and represents telecommunications and media companies and navigating Canada's regulatory framework and before tribunals, such as the CRTC, Copyright Board of Canada and the Competition Tribunal. And he advocates on behalf of targets of government initiated investigations and proceedings brought by the Competition Bureau. He also appears before the courts on reviews of and appeals from decisions of these bodies. Next, we have Josh Chad. Josh is a partner in McMillan LLP’s competition and foreign investment group. He counsels clients in all areas of competition and foreign investment law, including complex merger reviews, national security reviews and advice. net benefit reviews, cartel and price fixing defense, abuse of dominance and marketing and advertising. In respect of recent merger review work, Josh represents Bunge and his proposed acquisition of Viterra and he represented Sunwing in its merger with WestJet, both of which had the Minister of Transport initiate parallel reviews under the Canada Transportation Act. He also advised SK Capital in its acquisition of Apotex and SYNNEX in its merger with Tech Data. We also have Elizabeth Roscoe here with us today. As the Executive Vice President at Rubicon Strategy, Elizabeth provides clients and deal teams with government and public affairs counsel as they navigate the political lane aligned with the regulatory approval process. Elizabeth worked in the federal government at which time she led many privatization files, worked for shock communications and has over 20 years of consulting experience with major transactions. Next, we have Hilary Weiss, who is counsel with the Department of Justice. She provides legal advice to the marine group at Transport Canada. She advises on the development, interpretation and enforcement of legislation and regulations. Hilary also helps the marine group draft legislation, regulations and other legal instruments. Prior to working at the Department of Justice, she practiced at a boutique litigation firm in Toronto specializing in maritime law. And finally we have Micheline Sabourin, who is counsel with the Department of Justice and provides legal advice to the rail and surface groups within Transport Canada
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She advises on the development, interpretation and enforcement of legislation and regulations, including the transportation Canada Act. Micheline also works in litigation appearing for the Minister of Transport before the Transportation Appeal Tribunal of Canada Prior to working at the Department of Justice, Micheline practice corporate commercial law in Toronto and the magic circle firm in the UK working on public private partnership.
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Thank you all for joining us today. I very much enjoyed the brown bag session. And I'm glad we get to continue the discussion on this podcast. So I guess to start us off, could each of you let us know what your key messages were coming out of the brown bag session and Michael, maybe we'll start with you.
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I think for me, one of the keys is to understand that there, there are very different types of interactions between the competition Bureau's review of mergers and sector specific review of mergers. And the industry that I'm more familiar with the communications industry is a really good example of the type of review where you could have regulators
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reviewing a transaction in parallel to the Competition Bureau, but in no way, taking advice from the Bureau directly or coordinating with the Bureau in terms of directly at least in terms of remedy or analysis. And what makes that interesting is of course, these other statutes and are referring to the Broadcasting Act, the Radio Comm Act, the Telecom Act, they do include a lot of competitive concerns and considerations, such as the price of cable service, whether different broadcasters have access to,
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to a emerged, large, larger cable system, whether or not there are multiple providers in the in the telecom or the wireless sphere. And that can lead to a lot of dissonance between separate reviews, where they're really proceeding in parallel. And where there's no real formal coordination, and counsel have to effectively become the coordinating point. And to plan for that.
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Usually, you just need more time than you think you'll need. And the ability to keep all the balls moving. So that was that that was the way I would describe my major, my major point to take away from the session. Yeah, I guess for me, I'm gonna just jump on to Michael's point about timing. I think during the session, Micheline noted that the transport review start at 150. And, you know, they can initially exempted you under 250 days. And that doesn't include the actual post sort of report negotiation process. The HSBC RBC merger was over a year. And so you, you know, you find yourself in one of these reviews, and you think, Oh, we got so much time, you know, that somebody wants to do, but we got lots of time, don't worry about it, and the deadlines and the number of balls in the air, that it just creeps up on you. So it's not like you can take a step and just relax. When you're dealing with these. There's just so much to constantly do, it is really about some there are some statutory deadlines, or some requested deadlines, but there's also, you know, needing to figure out, Okay, how are we prioritizing all the different things we have to do? And how are we going to manage trimming, basically, from day one, because if you're not on top of timing, you're getting lost, things are gonna delayed, or you're, you know, you're gonna run out of time have these, you know, seem quite long processes after the upset, and I appreciate the discussion about delays. And I think I can address can obviously, the transportation sector of all that. And that really starts and we talked about it on the brown bag is you know, to determine first of all, if your proposed transaction does fall within the criteria of a transportation undertaking. Obviously, there's some areas that are very obvious that where a filing requirement will be triggered under the CTA. Others are more a gray zone and we're seeing a lot more of that. We noted the proposed amendments to the CTA that are currently tabled and in the House of Commons that will lower the threshold to a notify the Minister of Transport with respect to transactions at ports, National Transportation transactions, of course, so I think we may see more of those discussions between
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At the Minister of Transport, and industry actors on, you know, does our transaction fall within those, those notification requirements, that has to be, you know, reviewed very much at the at the very beginning, when your clients approached you with a proposed deal. So factoring all of that timing is very important.
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From our perspective of when a transportation notification is filed with the minister, there's a very short statutory deadline in order for the Minister to determine whether or not this proposed transaction trigger is a public interest review. It's 42 days, so lowly six weeks, which, again, is a very short time to ensure that the minister has sufficient information from the parties to make that determination. And what we want to avoid is, you know, as much back and forth as possible, so
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for your clients to be very aware of information that they can provide, and anticipate those critical sector questions that will be important for the Minister to review.
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And we'll get into some of those details. Then again, what if a public interest review is launched, then as Josh was mentioning, and Michael, as well as there's, it's very important, I think, to be responsive to information requests that will come perhaps fast and furious, not only from the Minister of Transport, but equally from the Competition Bureau, since each of the departments will be doing their own internal assessments and reviews. There will be some overlap later on in the process. But with respect to the reports required under the Competition Act, and under the Canada Transportation Act, these are standalone reports. So do anticipate, perhaps parallel requests for information. Keep in mind, however, that the Minister of Transport’s mandate is very specific and a unique. So that specific information is what we'll be looking for, and be responsive to questions you may not have anticipated such as, you know, what is the fiduciary duty of certain shareholders, under shareholders agreements or veto powers of board members, things like this can come up. So as much as possible, be responsive, you know, in the time that that we are given to ensure a more efficient process. And Micheline, you should still be there that also caught my attention when you said that during the podcast, which is you know, it's only 42 days, and that's, you know, calendar days, not weekends. And so that's a short amount of time and then sort of coming from the perspective of a competition lawyer who does a bunch of Competition Act merger reviews, the two base cases are really offer a non-complex competition deal. The Bureau are supposed to finish their review within 14 calendar days. And for a more complex one that doesn't require a certificate, it's already five calendar days, you know, and so, watching that honor seen it connected to say 42 days is a short period of time, you know, at first sounds a bit interesting, how was it? How was that considered short versus, you know, 45 is the long process typically with the Bureau. And I think it speaks to the political elements of these public sector reviews, that it's not just a single case officer making the term termination and it's one person's input, it's, you get it, there suddenly needs to be a recommendation that goes to the Minister of Minister needs to consider, I presume, various other stakeholder considerations. And it's not a one or two person decision, or just as quick sign off to get something to the next step. There's a warrant process on your end. So when you say 42 days is short, it really is short in the political realm of how long it takes to get things approved published books. And your move to that next step. Josh, it's a great point and from government relations perspective and public affairs.
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There's no timeline on a minister's day. The Minister has a lot of other things that they are dealing with. And a public interest review is a regulatory process. But the political and decision making is literally within their hands. As you referenced, Minister of
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Finance might take longer to make a decision on a financial institution merger and door on cabinet appeal of a let's say a broadcasting
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licence. It has everything to do with one understanding that political decision makers motivation, and their orientation towards the decision to their understanding of how it fits with their political agenda, and other things that are outside of their purview or control. And three, that,
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while it a merger is always really seen to be urgent and needs to be approved and resolved, because of course, it impacts employees, it impacts service levels. The right modicum of regulatory and public disclosure and review, though, is in the public interest. I think that many people see these regulatory processes. And they think it's just taking time because it takes time. But in reality, there's a really important review that goes on, that builds precedent, it builds sound decision making. And it looks after, frankly, the service level that the acquiring company may be then forced to implement isn't part of the challenge that many reviews
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could actually take a lot longer than 42 days fairly. And there are others that by could use the basketball term might be slam dunks, and winter, they're all thrown into the same opera and you have clients, let's not forget the clients and all this who understand that there's a very marginal aspect to their transaction that, yes, they're being told by their lawyer. He's a transportation undertaking, but they don't believe in they may be right, in fact, could not possibly raise a public interest issue. So I wonder if there's any appetite or, or rules that could have been more of a sliding scale, as we do with the Competition Bureau as to how long a review, that initial review was what we're speaking like, take, again, it's Elizabeth, I think we've seen some of the amendments that are being proposed, either during this
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house and parliamentary study of the Competition Act, and of the Investment Canada Act, some of them are leaning toward more efficiency and regulatory review, and being a little bit more transparent than opaque. I wanted to address the you know, at that point, it's Josh that you're talking about and Michael as well about the 42 days and it could seem belong or not yet.
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Elizabeth raises a really good point that it's not there's nothing is a streamline without looking peripherally at know that when you do make a filing to the Minister of Transport, no stone will be left unturned. And that does require a lot of information and resources, in order to prepare, first of all a recommendation to the Minister to determine whether or not he or she would launch a public interest to review. So although it could see long,
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and perhaps cumbersome for when some of your clients don't even feel that a notification was required in this case, I would really encourage you to do and, and to work with your clients to just provide that information as full in a fulsome way as possible. And Hillary noted some of those points that that you know, I think are important and perhaps to be refreshed and in our memories. And we've taken this opportunity to go to, you know, the transport clients to say, you know, what makes a A plus
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notification, you know, what kind of almost template would you like to see, and we receive some really great feedback that I invite Hillary to share with us. Yeah, I think
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I think it was really great that we had that opportunity in the brown bag to share some of our thoughts on how to make that notification process under the Canada Transportation Act as kind of simple and efficient as possible, then, you know, submitting a good or great what we'll call filing is something that can really help to reduce those delays. And maybe I'll just highlight now in this forum, a few takeaway points that may be helpful for counsel and before I start, I'll say I
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Just on behalf of Micheline and I both for this podcast,
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the views and opinions that are expressed are our own, and they don't necessarily reflect those of the Minister of Transport or the Department of Justice. So I think maybe there were maybe four or five takeaways from the brown bag session on kind of tips on what makes a great filing. And the first one, I think it kind of, you know, it's something that maybe has been seen in the past. And it's, it's not sufficient to just simply append the competition bureaus, filing documents or the arc, and then not provide any additional information to the Minister of Transport.
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And this is where I think some of my fellow panelists already said, it's important to remember that the minister's review is different and separate from the competition Bureau's review, and therefore requires different information.
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It's helpful to include in the filing a description of the business activity, not just the business activity, but as it relates to national transportation. And then in addition to that, including information on global asset assets, but also more specifically, focusing on Canadian assets, and the number of Canadian employees, a description of the facility, these are all things that you should be looking to include in that filing to just sort of help reduce the back and forth.
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Second, it's really important to include data and evidence to support the claims that a transaction whether the transaction does or does not raise public interest concerns as it relates to transportation. So it's not really helpful to just make statements
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and then not back them up with evidence. So for example, saying that the transaction won't affect capacity at a port and then not provide anything additional to that, it will likely raise questions, and then, you know, cause further delays caused by requests for additional information. And so at the outset, you'll want to include information to support that, for example, data on expected shifts to shipment volumes, changes to handling capacity, things like this, that kind of support the statements that you're making in your filing. Third, including a supporting rationale for the transaction, both from the buyer and the seller to inform how the transaction will be operationalized. And kind of giving an overview of what it will look like, will really help support the Minister’s assessment of any long term impacts stemming from the transaction. And lastly, you know, often when filings come in, they they'll say that there's a neutral impact on public interest. But we wanted to kind of point out that it is beneficial to include, if there are any possible public interest benefits as they relate to transportation to set those out at the outset, as well. And, you know, I know most of you are probably familiar with the guidelines that are published online, but just a reminder that those are a really helpful document that can guide counsel when they're making these filings. So hopefully, those are some helpful takeaways for those listening. Thank you, Hillary. I think all that's been super helpful. And I really enjoyed the piece during the brown bag session where we sort of went around did everyone gave advice, I thought there was some really helpful hints and tips for practitioners to know so maybe I'll throw it back to the other panelists to see if they want to reiterate some of that advice. Or, you know, if there's been new advice that you've thought of since the brown bag to let our listeners know, I'm happy to kick off if that's okay. Just from a public affairs and government relations perspective, and I think it would align with what Micheline and Hillary from Transport Canada would view. The no surprise rule,
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making sure that the Minister and the Minister’s office who's responsible for overseeing the merger is provided on an NDA perspective, heads up before the announcement, I think is very important. And to those that would might be directly impacted in their writing, for example, to ensuring that the
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positioning of a merger takes into account the current public opinion on a top line basis. For example, the nuclear sector is seen to be a much more
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More positive
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contributor to the economy, both in terms of medical research environment, reliable energy, then the nuclear sector was in many years previous. And so situating change, aligned with public opinion, I think is very important for any merger that is being proposed. Also taking into account international experience, I think the
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many of your clients will be dealing in a global environment, and changes occurring throughout the globe in regulated sectors. And so utilizing those change dynamics and change factors, as you propose. And as you go forward and advocate for that merger, I think is really important. And then finally, the public interest piece. That, to me is the delineation between a
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merger proposal as it takes into account not just jobs, but the impact on consumers, the impact on those other others that are going to be whether in the supply chain, and or feeder, into that sector, though, they are very, very influential in how a merger is being positioned. So I'll stop there and throw it to another panel member, where I can quickly jump in, I wanted to pick up on one of Elizabeth's points about no surprises. And I think Elizabeth was focused on no surprises for all the politicians and everyone in the public sector, who is, you know, going to be heard about this merger. But I think there's also sort of relate to my advice during the brown bag about how to counsel your clients and dealing with a public industry view is trying to catch your client to not be surprised about sort of where the review may head or where it may turn and that, you know, you're dealing with clients who I think we spoke earlier on this podcast about how long it can take and timing. But you have clients who are demanding, you know, when are we going to close? Or when's the next step? Or when is this going to be the
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the issue to be discussed? Or, you know, what are we getting this matter addressed? And I think it is important to counsel clients so that you're not you're not dealing with necessarily strict statutory timelines, you know, you're add to a degree at the mercy of, you know, where the regulator where the reviewer wants to take the discussion, know,
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how they want to go. So you need to be telling your clients in advance, you know, giving ranges of timelines and saying if this happens, and this and that happens in that, but it you don't want to be caught in a situation where you're being overly certain or overly confident that, okay, we're going to have this address by the state or that address by that date. Because you're just you're creating, setting yourself up for potential major issue internally, if you do that, and I also wanted short to get Michael's view as to how he sort of advises his clients sort of as to timing considerations and communications, mergers and sort of, you know, how you thread that needle? Yeah, no, thanks, Josh. I think there's a, I think there's a tendency among counsel to want to give their clients a clear roadmap
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with how things are going to go. And they never go that way.
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So, so I think it's about it's really about managing expectations. I think others have said that, that well on this call, and I gave the example on the brown bag.
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of communicating, particularly in parallel reviews, where you could have one regulator, who, as you indicate, Josh does is not under any statutory timeline. And another who is and that can, you know, lead to great complexity of how you square that circle and how you give the regulator in particular the bureau who is under a time consideration and a strict one under the statute, how you can give them comfort that you're not ignoring them. And so I think there's a great premium in not only mapping out, but again in an in a in a non exhaustive way, mapping out expectations but also communicating with the regulators and letting them know don't assume that they know everything about
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The others work, although they may not something you'll know directly yourself either. But take the opportunity when you can to, to build credibility with regulators by communicating with them about where you're at in the process. And that may involve where the other regulators are at, cause they may be less up to date in terms of their communication with the other regulators
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than you are. But absolutely, Josh, I think there's a danger and being too prescriptive with your client. We've all numerous times, put out Gantt charts, other charts, only have only to have them thrown back at us 12 months later,
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and regretting what we had said, so manage expectations, but understand, have the client understand that it is a an iterative process in almost all cases. And just to build on that, how much changes during that process as well, there may be another merger, there may be something that happens internationally, I think I used in the brown bag, the example of where affordability has become prime in so many regulated industries. Whereas two years ago, it was more about competition. And for having a fourth carrier, particularly in the telecom market space. So things do change during a review. And that's an excellent point, Elizabeth, that you brought up, we see that here as the with transport that sometimes, uh, you know, we're thinking we're going a certain way, and then with a review of documents, etc, are the parties involved to the transaction, then we're seeking more information on a specific concern that sprays whether it be to the supply chain, to national security, or various things like that. So on our side, as well, as much as we try to be efficient, and we have, you know, with respect to the report that the Minister of Transport is, is to prepare, we have those specific deadlines. It's very difficult sometimes to ensure that all stakeholders concerns are, you know, collected and raised, which we'll build on further concerns, etc. So we're in the same but you know, as your clients are, we're in the same situation, and we're trying to manage, you know, the clients at transport to gather that information, and try to be as efficient as possible. I'm curious, though, Josh, you've been involved in in transactions,
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in reviews, public interest reviews, with Transport Canada, and in your practice, I was wondering if any thing has surprised you with respect to the processes of question, I think, just, you know, the volume of different places of these reviews can go surprises me, as well, as I think Elizabeth just made about things changing over time. And, you know, just the importance of keeping up with the news and reacting to Okay, our clients in the news, would this, is this going to impact the review? are politicians going to care about this news? And just, you know, when you're dealing with reviews that take a year, uh, what happens? And so just keeping your
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ear to the ground to hear what's happening and saying, okay, discussing first internally, do we have to do something that now that this happened? Do we need to, you know, write a note to transport explaining, you know,
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you'll have seen this in the news, this is what you should take away from it, or this is what it actually means or don't be worried, but like,
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it's just, it's constantly reacting to the changes of, you know, just the news cycle, is, I think, the most interesting or the most surprising that I found versus maybe competition reviews. Yeah, and I think the length of time that these reviews can, you know, I think you raise a really good point, Josh, it's, it's, it's, it's the length that that creates great potential for things to change. I mean, there are others on this podcast, who are more familiar with politics than I am, but, you know, in politics, it's an adage I think that things everything can change before the election and sure enough, these transactions are a large enough sometimes to move the agenda, the public agenda themselves and be take long enough or that ship of the public agenda is to turn it around. And so it can be a it can be a wild ride. And I think as another panelist indicated, it's important not to, to react too much
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To the news to think about where it's coming from. But often in the fullness of time you look back and say, yeah, that this all started back on that day when that happens. So you have to maybe not have a quick reaction, but certainly look forward to where we are events meet a que and your file. Absolutely. The one thing I know for sure, you don't want to be an issue during a political campaign? Definitely not. That that's risk. Well, I think this has been a really excellent follow on discussion from the brown bag. And I think for me, it just reiterating what you've all said is that it becomes so clear that with these kinds of transactions, there's a huge amount of planning, coordination, managing all the moving pieces, there's parties, their counsel, GR representatives, the regulators, the politicians, the media, there's a lot happening. And it's never a straight line between the start to the end. And you know, you need to plan but also be ready to pivot away as needed and, go over the review takes you. And so I think all the advice you've given today in the background on that has been super helpful for our listeners. So I guess just to end off, I just want to thank you all very much for your time today. I've really enjoyed speaking with you all on this very interesting topic both on the brown bag and on this, you know, follow up discussion. And just want to thank you all on behalf of the Counterfactual Podcast and our listeners for today's discussion. And we wish you all the best. And for our listeners if you did miss the brown bag discussion that was on March 21, it was recorded. So do feel free to reach out to the CBA national section to ask for a copy. Thanks, everybody. Have a great day. Thanks so much. Thank you. Thank you for listening, Counterfactual is produced and distributed by the Competition Law and Foreign Investment Review section of the Canadian Bar Association. The opinions expressed by the participants in this podcast are their own and do not necessarily represent those of their employer or other organizations. If you enjoyed this podcast or would like to join the Canadian Bar Association, please visit www.cba.org/sections/competition-law.
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