Information Bulletin on Merger Remedies in Canada: IV. Trustee Provisions

60. When the sale of the asset(s) to be divested is not completed in the initial sale period, and in the manner contemplated by the consent agreement (or the divestiture order in contested cases), the Bureau will appoint a trustee to divest the asset(s).³⁶ As mentioned in section II of this Bulletin, the inclusion of trustee provisions provides some assurance that the asset(s) will be divested in a timely and effective manner. The trustee period, the duration of which shall be made public at the outset of the trustee period, will be between three and six months. The Bureau may grant a short extension of this time period in exceptional circumstances, which will be determined on a case-by-case basis.

61. Prior to the start of the trustee period, the trustee must be given sufficient time and information to become familiar with the terms of the consent agreement and the asset(s) to be divested. This ensures that the divestiture process can proceed without delay at the initiation of the trustee period.

62. During the trustee period, the trustee will have the authority to control the divestiture process, subject to oversight and approval by the Bureau only. The vendor will not normally be included in the divestiture process, including negotiations. Furthermore, the vendor will have no contact with prospective purchasers, unless otherwise approved by the Bureau.

63. During the trustee period, the trustee must have full and complete access to personnel, books, records, facilities related to the asset(s) in question, or any other information deemed relevant by the trustee to effect the divestiture. To facilitate the necessary degrees of access, the trustee will, among other things, be entitled to attend, as frequently as the trustee determines necessary, the physical premises of the vendor. The vendor will be required to respond, both promptly and fully, to all requests from the trustee. To this end, the vendor must identify a person who is responsible for responding to all trustee information requests.

64. The trustee will be required to report to the Bureau in writing, on a regular basis, all efforts to accomplish the divestiture. Such reports will include details on the steps being taken by the trustee to effect the divestiture, the identity of prospective buyers, and the status of negotiations with such prospective buyers.

65. The completion of the divestiture is subject to the Bureau’s approval only, and must be made to a "qualified" ³⁷ buyer who meets the criteria stipulated in the consent agreement (or divestiture order). The trustee shall use commercially reasonable efforts to negotiate the most favourable terms and conditions³⁸ available at that time, and if necessary to effect the divestiture, may sell the asset(s) at no minimum price³⁹ The trustee’s opinion of what constitutes “most favourable” terms and conditions is subject to approval by the Bureau only. As the trustee’s primary obligation is to divest the remedy package to a qualified buyer, the vendor’s right to challenge the terms and conditions of the divestiture is limited to situations whereby the trustee commits malfeasance, gross negligence, or acts in bad faith.

66. If at the end of the trustee period the trustee has submitted a divestiture plan or believes that the divestiture can be accomplished within a short period of time, the trustee period may be extended at the Bureau’s sole discretion. In the event that the asset(s) to be divested have not been divested within the trustee period (including any applicable extensions to this period), the Bureau may apply to the Tribunal for such order as is necessary to effect the divestiture⁴⁰ and the parties will submit in the consent agreement to the Tribunal’s jurisdiction to grant such relief required to achieve that objective. Depending on the particular circumstances of the case, the Bureau may recommend to the Tribunal that other asset(s), or steps be taken, in addition to those required in the divestiture package, are needed to effect the divestiture.

³⁶ In the case of a divestiture order in a contested case, the Bureau will seek the authority to appoint the trustee to divest the asset(s).

³⁷ This includes the buyer having, or acquiring, the capabilities and resources to operate the asset(s) and any other conditions identified in this Bulletin (e.g. for details regarding what constitutes a “qualified” buyer, see the sections in this Bulletin entitled Independence and Competitiveness of the Buyer and Obtaining Bureau Approval of a Qualified Buyer).

³⁸ “Terms and conditions” includes, among other things, the sale price of the divestiture asset(s).

³⁹ In certain circumstances, it may be necessary for the vendor to provide, or to add to, transitional means of support provided to the purchaser (e.g. supply arrangements and other forms of technical assistance) so that the asset(s) to be divested remain viable. Such transitional means of support, when deemed reasonable and necessary, will be in the discretion of the trustee to negotiate and conclude once the trustee period begins. Such discretion by the trustee is subject to the oversight and approval of the Bureau only.

⁴⁰ For clarity, “the divestiture” implies both the initial divestiture package, as well as any subsequent crown jewel asset(s).