Competition Bureau - Fees and Service Standards - Part 1

Performance Report - 1998

Prepared by the Competition Bureau
for the Fee and Service Standards Forum,
February 2, 1999, Toronto.

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Table of Contents

• Executive Summary
• Background
• Stakeholder Feedback
• Lessons Learned
• Annex A - Definitions of Complexity and Guidelines Related to Service Standards
• Annex B - Statistical Information
• Annex C - Helpful Hints

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Executive Summary

On November 3, 1997, the Competition Bureau introduced fees, approved by the Minister of Industry, under the Competition Act for the following services and regulatory processes:

• pre-merger notification filings,
  
  
• advance ruling certificate requests
  
  
• advisory opinion requests, and
  
  
• photocopies.

Prior to fee implementation, the Bureau experienced mounting pressure to improve services, particularly in the merger review area where important transactions were being delayed. In its report to the Director of Investigation and Research (DIR), the Consultative Panel on Amendments to the Act noted that: "...the Competition Bureau cannot address all meritorious cases ... cost recovery measures should be explored as an alternative means of addressing resource constraints, particularly if it could be assured that the Bureau would directly benefit from the imposition of any such fees ..."¹

To address the resourcing issue, the Bureau sought and obtained agreement with Treasury Board, which allows the revenue from fees to be retained by the Bureau with no reduction to the Bureau's resource base. Revenues must be re-invested in the business line from which they were generated.

During fee consultation fora held in the summer of 1997, the DIR assured stakeholders that services would be improved within 18 months of fee implementation. An influx of resources was urgently required to enable the Bureau to effectively deal with cases and take a systematic approach to reviewing and improving internal processes.

This first Fee and Service Standards Performance Report provides a summary of the activities related to fees and service standards during the Bureau's first year under a fee regime. It also provides details of improvements made in those processes involved in the fee business lines. The future will see further improvements.

This year has been very challenging for the Bureau. Workloads continue to be record-breaking. During the fiscal period, April 1, 1997 to March 31, 1998, the Mergers Branch dealt with 374 pre-merger notification filings and advance ruling certificate requests, a 23% increase compared to the previous year. For the fiscal period of 1998-99 the Bureau expects to receive about 381 filings and advance ruling certificate requests.

Service standards for merger review were met in 92% of cases.

There was a significant decrease in advisory opinion requests once fees came into effect. This was most dramatic for misleading advertising and deceptive marketing advisory opinion requests, which were reduced by 80%. It is felt that in the past the advertising community was seeking a comfort level beyond that obtained from its own expertise and legal advice. This also represents a change in statistical reporting particularly in the Multi-level marketing area. Additional details are included in the body of this report.

Background

The Competition Bureau (the "Bureau "), Industry Canada, implemented fees for certain services and regulatory processes provided pursuant to the Competition Act ("Act"). The Bureau pursued fee implementation as part of the Government's continued efforts to improve service delivery. The introduction of fees is appropriate in instances where services provide to identifiable recipients direct benefits beyond those received by the general public.

Fees accompanied by service standards were also seen as a means of encouraging a more disciplined method of identifying and measuring the Bureau's performance in targeted areas. Another objective was to ensure that those who sought services, or were bound by regulatory requirements, had timely and systematic opportunities to provide ongoing input regarding service levels, standards and fees.

In June 1997, the Bureau hosted fora for the development of the Fee and Service Standards Policy (the "Policy") for certain services and regulatory processes, provided pursuant to the Act. On November 3, 1997, the Policy came into effect. Table 1 indicates the services/regulatory processes, fees and service standards.

Table 1

Competition Act Fees & Service Standards

Service/Regulatory Process	Fee	Service Standard
Pre-merger notification filing (PMNs) and Advance Ruling Certificates (ARCs)
non-complex	$25,000	14 days
complex	"	10 weeks
very complex	"	5 months
Advisory Opinions (AOs)
Sections 52 to 60
non-complex	$500	8 days
complex	?	30 days
Other provisions
non-complex	$4,000	4 weeks
complex	"	8 weeks
Photocopies	$0.25/pg

On November 3, 1997, the Bureau also published the Fee and Service Standards Handbook² which reflects the Policy and the results of the consultations and implementation processes. The handbook contains details related to the services and regulatory processes as well as the fees and service standards that apply to each service.

An important issue that arose during consultations was that of service standards and how these would be applied by the Bureau. Stakeholders requested that service standards be well defined and that the Bureau elaborate on the documentation that would be required in order for service standards to be met.

This resulted, again with the assistance of stakeholders, in definitions for complexity, a refinement of the advisory opinion description and guidelines describing the information required by the Bureau to review various business proposals. These documents have been reproduced in Annex A.

Shortly following fee implementation, the Bureau also published a series of Frequently Asked Questions³ to clarify issues related to service standards such as payments, refunds, etc.

Many issues were dealt with and many others surfaced as the Bureau adapted to operating under a fee and service standards system. As with any new process, there are several areas that require further attention. These are described in the Lessons Learned section of this report.

Stakeholder Feedback

The Bureau developed feedback cards, which are sent to clients with business replies to which fees apply. The response has been extremely positive and a concerted effort has been made to ensure that issues that are raised through this feedback process are quickly addressed. Both positive and constructive feedback are provided to the appropriate area to ensure that:

• employees are provided with feedback, and problematic operational processes can be addressed as soon as possible.

During the one-year period of November 3, 1997 to November 3, 1998, approximately 376⁴ feedback cards were sent out and 43 were completed and returned. This represents an 11% response rate. 75% of the responses noted that the service was excellent, 23% felt that the service was good and 2% noted that the service was poor. The majority of the feedback cards were received in the first few months of fee implementation. It is believed that the decline in numbers of feedback cards received since the initial influx demonstrates a general acceptance and approval of the services. Table 2 includes additional details.

Table 2

Business Line	Excellent	Good	Fair	Poor	Total
Merger Review	28	6	0	1	35
Advisory Opinions	4	4	0	0	8
Percentage	75%	23%	0	2%	100%

Lessons Learned

The introduction of fees and service standards has brought to light several issues that were not necessarily problematic prior to fees.

The Bureau has learned many lessons over the last 12 months and has tested various sections of the Act, particularly those related to Part IX (Notifiable Transactions). Parties often seek clarification regarding whether a proposed merger transaction is in fact subject to notification or if an exemption can be applied. With the advent of fees, the answer can mean a cost or saving of $25,000.

Complexity

Officers in the Mergers Branch have noted that determining whether a transaction is non-complex or very complex is fairly straight-forward. However, transactions that fall into the complex category are not as easily discerned. The complexity of a transaction is often debated by Bureau officials and counsel for the parties. Understandably, counsel is seeking to assure clients that the Bureau will complete its assessment as quickly as possible. This debate is time consuming and an unfortunate by-product of fee implementation. The definitions of complexity may require further refinement.

We also endeavour to make the right call on the level of complexity on receipt of filing, recognizing that changes to the classification may cause concern to counsel and their clients. Our ability to get it right the first time is largely a function of the quality of information that accompanies the filing and/or the Bureau's experience in a particular market. While issues may arise in the course of some reviews that cause a change in classification, experience to date suggests this does not happen very often.

Paper Burden

Parties involved in a merger review during the course of the last year will no doubt have noticed an increase in correspondence from the Bureau. Parties receive acknowledgement letters, receipts for payment, letters stating that the application is complete and the waiting period begins, letters indicating the applicable service standard and so on. In an attempt to improve services, certain inefficiencies have crept into the process. The Mergers Branch, through a process mapping exercise, is addressing these issues.

The Bureau is currently conducting a process mapping⁵ exercise of the Merger review process. Once this internal exercise is completed and certain specific efficiencies have been incorporated into the merger review process, specific areas will be benchmarked⁶ against other similar processes in Canada, the U.S., E.C. and Australia

Case Management

The Mergers Branch has implemented a more strategic approach to case management. For those cases that fall within the complex and very complex categories, workplans are prepared, counsel join the team earlier in the planning process and market contacts are conducted sooner in the review process. The intent is to make sound, well informed decisions as quickly as possible. With an influx in resources from revenues, these improvements are now possible.

Physical Improvements

The Branch also identified inefficiencies in the physical lay-out of the office. Non-merger occupants of the 19th floor were relocated in the fall of 1998 to provide the space required to streamline the Pre-notification Unit and allow for new merger staff to be located on the same floor. This is expected to generate certain efficiencies.

While the Merger Branch has seen an increase of about ten employees, a realignment of functions between officers and support staff has also reaped benefits. Officers are available to focus on their areas of expertise, while support staff are provided with more challenging and career enhancing opportunities. The streamlining of non technical processes is expected to generate benefits in terms of timeliness.

Service Partners

Another benefit has been a renewed commitment on the part of organizations that provide services to the fee-business lines. There is a recognition by those in the Bureau's finance and technology areas and those who provide the Bureau with legal expertise that any delays in their respective areas can have serious impacts on service standards. Work is underway to streamline many of these complementary processes.

Advisory Opinions

With the adoption of a new definition for advisory opinions ⁷, the number of requests for these has seen a dramatic decrease. In the Fair Business Practices Branch, there has been an 80% decrease in advisory opinion requests. The reasons for this decrease include such things as:

• a change in counting methodology, and
  
  
• better information from parties.

Additional details are included in Annex B.

Also, included as Annex C are helpful hints to ensure that services will be provided in a timely manner.

Next Steps

As indicated in this report, the Bureau is currently reviewing processes in the fee-generating areas in an attempt to improve services and turnaround times.

With the process mapping and benchmarking exercises in the Mergers Branch, the Bureau expects to streamline its operations, improve its monitoring and reporting systems and make the most efficient use of Bureau resources, especially for revenues.

The Mergers Branch is also developing a series of interpretation guidelines to address various issues, including those that will arise from the implementation of Bill C-20. Stakeholders will be included in consultations in the near future related to these information products.

Many of these changes are motivated in part by the Government's New Expenditure Management System (NEMS), which requires departments to continuously look for ways of improving services. The focus is on Performance Management and Measurement, a new way of managing and reporting that puts a greater emphasis on outcomes, stakeholder requirements, horizontal service delivery, efficiency and effectiveness.

The Bureau is also gearing up to function in an electronic commerce environment. As a Department, Industry Canada is committed to having a full range of services available to stakeholders electronically beginning by December 1999. Staff of the Bureau are working in partnership with other areas of the Department and government to ensure that processes and infrastructure are in place to meet this commitment.

| Table of Contents | Annex A | Annex B | Annex C |

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Footnotes

¹ Report of the Consultative Panel on Amendments to the Competition Act. March 6, 1996.

² Competition Bureau, Industry Canada. Fee and Service Standards Handbook pursuant to the Competition Act. Release 2. May 1, 1998.

³ Competition Bureau, Industry Canada. Fee and Service Standards Policy pursuant to the Competition Act, Frequently Asked Questions. June 15, 1998.

⁴ Early during the implementation period, feedback cards were not sent on a systematic basis. This has now been rectified.

⁵ "Process Mapping" can be defined as the mapping (in flowchart format) of operational areas for the purpose of identifying and implementing process improvements.

⁶ "Benchmarking" is the process of continuously comparing and measuring organizational operations and results against the best known practices and results of others for the purpose either of maintaining an existing high level of performance, or of attaining a higher success level.

⁷ The specific opinion for which fees will be charged will be based on the written request and information submitted by the applicant as well as on previous jurisprudence, previous opinions, Bureau knowledge and the stated policies of the Director. The Bureau will not undertake third party contacts or verifications.

The Bureau will continue to provide other preliminary views that do not fall within the scope of the advisory opinion as defined above. This may be in the form of a request for the review of existing or proposed business conduct where the requester wishes the Bureau to seek third party advice. There will not be a fee at this time, nor will there be service standards for a reply. As this type of activity is more within the realm of an investigation, the request will be measured against other priorities within the Bureau and resources will be assigned accordingly.