Competition Bureau releases model timing agreement for mergers involving claimed efficiencies
May 21, 2020 - GATINEAU, QC - Competition Bureau
Today, the Competition Bureau released its model timing agreement for merger reviews involving claimed efficiencies. The model comes with guidance for businesses and their legal counsel on the Bureau’s general approach to the analysis of efficiency claims made by merging parties in defence of a merger that is likely to harm competition.
Merging parties are expected to enter into a timing agreement for the Bureau to consider efficiencies claims, as reviewing such claims requires a detailed and resource intensive analysis. The agreement ensures that the Bureau has the time and information needed to assess the anti-competitive effects of a proposed transaction and the claimed efficiencies before deciding whether to challenge it before the Competition Tribunal.
The agreement establishes timed stages for parties to engage with the Bureau, including the production of information and evidence regarding their efficiencies claims. In turn, merging parties gain more transparency regarding the Bureau’s analysis and more certainty regarding the timing of its review.
In July 2019, the Bureau invited feedback on a draft version of the model timing agreement. Changes to the draft reflect comments received from the legal community and are informed by the Bureau’s recent investigation of CN’s proposed acquisition of H&R in 2019 – the first merger review to make use of the model.
As each transaction involving efficiencies claims presents new issues to evaluate, the Bureau will continue to review its approach and will issue updated guidance as needed.
Section 96 of the Competition Act allows for a trade-off analysis between anti-competitive effects and efficiencies resulting from a transaction. If the Bureau’s review concludes that efficiencies gained are greater than, and will offset, the anti-competitive effects, the Bureau may decide not to oppose the merger on these grounds.
It is the responsibility of merging parties to demonstrate efficiencies in submissions to the Bureau, accompanied by reliable evidence that substantiates the claims being made.
Testing claimed efficiency gains and conducting the trade-off analysis is typically a complex process. It involves the review of significant amounts of documents and data from the merging parties, and requires engagement between the Bureau and the merging parties, their counsel, businesspeople and experts.
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