Speaking Notes for Melanie L. Aitken Senior Deputy Commissioner of Competition

« An Update on Merger Remedies Policy in Canada »

British Institute for International and Comparative Law Annual Merger Control Conference Panel on Merger Remedies

London, England

November 16, 2007

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Introduction

In the area of merger remedies, as in all areas of merger enforcement, we aspire to satisfy three fundamental goals. First, the enforcement policy should be principled and transparent. In the context of merger remedies, that means we strive to ensure that resolutions are designed and implemented so as to most effectively advance well-communicated and appropriate goals, and that they are developed against knowable standards using predictable tools and procedures. Second, we continually strive to identify “better practices”; specifically, in the context of merger remedies, we have undertaken several initiatives with a view to improving our understanding of the implications of prior enforcement decisions, so as to enhance our ability to develop clearer standards and guidelines, to make merger review, and any remedies required, more effective. Third, we aim to apply the principles and practices we have articulated as consistently as possible, while, in appropriate circumstances, retaining our willingness to be flexible.

I intend, in turn, to touch on one or two initiatives that the Canadian Competition Bureau (Bureau) has undertaken to advance each of these important goals in the context of merger remedies.

Principled and Transparent Enforcement Policy

• General

In Canada, the current merger provisions of the Competition Act (Act) have been in effect for approximately 20 years. In September 2004, the Bureau issued its revised Merger Enforcement Guidelines (MEGs)¹, which provide general guidance on its analytical approach to merger review. The MEGs serve to enhance the transparency and predictability of Bureau work as they describe, to the extent possible, how the Bureau conducts its analysis of merger transactions. The MEGs do not constitute a rigid statement of how the analysis will be carried out in a particular situation, as the specifics of the case, as well as the nature of the information and data available, will determine how the Bureau assesses any proposed transaction.

Since the new Act came into force in 1986, the Bureau has sought merger remedies in over 50 cases. While most of the merger remedies negotiated by the Bureau have been successful, we have been disappointed in a number of cases, where the remedy that we believed would restore the level of competition to the requisite level turned out to be ineffective. In several cases, the divestiture failed, and the assets were ultimately returned to the merging parties ².

• Mergers Remedies Bulletin, 2006

Over time, as the Bureau has been informed by these experiences, we have progressively fine-tuned the design and implementation of merger remedies. This ongoing work has been reflected in our comprehensive Merger Remedies Bulletin (Bulletin), released in September 2006³.While the Bulletin reflects the experience and corresponding enforcement policy developed to date, it is intended to be a living document; from time to time, as the Bureau’s policy in the area of merger remedies continues to evolve, the Bureau will update the Bulletin. In the meantime, the Bulletin will serve at least as a detailed and relatively current articulation of what the Bureau seeks to achieve and how it evaluates the various tools available. Most importantly, from the Bulletin, parties can reasonably predict what the Bureau is likely to require by way of relief, in those relatively rare cases where we have concluded that there is a likely substantial lessening or prevention of competition demanding redress.

As a further initiative to enhance the transparency and appreciation of the Bureau’s approach to merger remedy design and implementation, the Bureau publishes Technical Backgrounders on selected cases⁴; we pick cases where, for example, we believe a broader understanding of our enforcement analysis can be promoted, or cases that simply have attracted significant interest. As appropriate, our Technical Backgrounders refer back to the Bulletin.

While much of the content of the Merger Remedies Bulletin would be ‘motherhood’ to any mature antitrust regime, there are areas, particularly in merger remedy design, in which there are some not insignificant differences; of course, this is the case not only among countries, but even as between agencies in the same jurisdiction⁵.

At least three of the areas covered in our Bulletin fall into that category, at least to some extent; for that reason, they may be of some particular interest.

Timely Divestiture Periods

Having canvassed other jurisdictions in its consultative process, as well as having examined the efficacy of its own vendor and trustee divestiture processes, the Bureau concluded that it would be advisable to adopt a shorter standard range for divestiture periods than had prevailed in the past.

The Bureau typically agrees to provide the vendor with an initial fixed period of time (‘initial sale period’) to sell the remedy package at the best price and terms that the vendor can negotiate with potential buyers (subject only to approval of the buyer by the Bureau). While a departure from previous practice, the Bureau has determined that three to six months is an appropriate initial sale period in which to complete the divestiture.

It is axiomatic that imposing and enforcing timely deadlines to the divestiture process improves the effectiveness of a remedy. For instance, the shorter the divestiture period, the less likely such factors as the deterioration of assets, the loss of customers and/or key personnel, or changing market conditions, will undermine the effectiveness of the divestiture. Furthermore, there is no evidence that a longer initial sale period will attract more buyers. That said, there can be exceptional circumstances; in such matters, which will be assessed on a case-by-case basis, the Bureau may grant a short extension of the initial sale period. The Bureau typically agrees to keep confidential the actual time allotted for the initial sale period, to discourage strategic behaviour by potential suitors.

If the vendor cannot sell the assets within the initial sale period, a trustee is typically appointed by the Bureau, who is then given a pre-determined period of time (‘trustee period’) in which to complete the divestiture. The Bureau has indicated that an appropriate trustee period, which is made public from the outset, is between three and six months⁶.The duration of the trustee period may be extended in exceptional circumstances, as determined by the Bureau on a case-by-case basis.

The Bureau’s experience with these new, and clear, timeframes has been short, but the results generally positive. Parties can readily predict the parameters within which the negotiation will proceed, and structure their affairs in anticipation of that framework. Likewise, parties required to divest are getting the job done, recognizing that it is in their best interest to complete the sale process themselves, particularly as the scope for indefinite delay, that might have served as an incentive in the past to stall, has largely disappeared. We believe that this shift has promoted more timely competitive outcomes, to the benefit of Canadian consumers and the Canadian economy.

No Minimum Price and Crown Jewel Provisions

To increase the likelihood that the divestiture will be effected during the trustee period, the Remedies Bulletin clarifies that the trustee’s primary obligation is to divest the remedy package to a qualified buyer at no minimum price⁷.While the use of no minimum price provisions has been the Bureau’s practice for some time, such provisions are now a matter of settled policy. This is consistent with the approach taken by many of the Bureau’s foreign counterparts, where no minimum price provisions are standard practice⁸.The existence of a no minimum price provision is normally confidential during the initial sale period, but made public at the commencement of the trustee sale period.

Also activated by the trustee period, and in appropriate circumstances providing the Bureau with some confidence that a viable remedy will still be effected, an additional asset package (commonly referred to as a ‘crown jewel’) may be required up front as part of the remedy. While crown jewel provisions are primarily designed to enhance the likelihood that the divestiture deemed necessary will ultimately succeed, particularly in cases where sufficient information to establish that the asset is saleable is either not available or not forthcoming, they also provide the vendor with an incentive for timely completion of the initial divestiture package; however, the Bureau is clear that such provisions are not intended to be punitive. To this end, the assets that comprise the crown jewel will, when and to the extent possible, relate to the competitive harm. Further, while it was initially expected that crown jewel provisions would be incorporated more frequently after the Bulletin was published, in practice, owing to the fact that the Bureau has taken care only to include them in circumstances appropriate to the stated objectives, there have not been any to date. The existence of a crown jewel provision is normally kept confidential during the initial sale period, but made public at the commencement of the trustee sale period.

Trustee Provisions

Another important element of an effective merger remedy agreement is the role and function assigned to the divestiture trustee. When the sale of the assets to be divested is not completed in the initial sale period, and in the manner contemplated by the consent agreement resolving matters between the Bureau and the merging parties, the Bureau will normally appoint a trustee to divest the assets. The inclusion of detailed trustee provisions directly in the agreement provides a measure of assurance that the assets will be divested in a timely and effective manner.

During the trustee period, the trustee has the authority to control the divestiture process, subject to oversight and approval by the Bureau. To this end, the vendor will not normally be included in the trustee divestiture process, including negotiations. Furthermore, the vendor is precluded from contacting prospective purchasers unless otherwise approved by the Bureau. This approach is consistent with the philosophy that the vendor has a virtually unconditioned power to control the sale process during the initial sale period (subject only to the Bureau’s approval of the buyer); and that the vendor will be most powerfully motivated to divest the required assets early, if the vendor understands that, at the expiration of that time period, the sale process will be effectively out of his hands.

To facilitate the divestiture, the trustee has full and complete access to the personnel, books, records, facilities related to the assets in question and any other information deemed relevant by the trustee. To effect the divestiture, the trustee is required to use commercially reasonable efforts to negotiate the most favourable terms and conditions⁹ available at that time, with references to all the terms of the consent agreement including the timelines for divestiture; and, if necessary, it may sell the assets at no minimum price.

The trustee’s opinion of what constitutes most favourable terms and conditions is subject to approval by the Bureau only, and the vendor’s rights to challenge such terms and conditions of the divestiture is limited to situations of trustee malfeasance, gross negligence, or acts by the trustee in bad faith.

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 discretion. In the event that the assets to be divested have not been divested within the trustee period (including any extensions to this period), the Bureau may apply to the Tribunal to effect the divestiture¹⁰.Depending on the particular circumstances of the case, the Bureau may recommend to the Tribunal that other assets be added, or steps taken in addition to those required in the divestiture package, to effect the divestiture.

The trustee divestiture provisions in the Bulletin, and as reflected in the template consent agreement attached thereto, are somewhat detailed, although still not to the notable level of particularity in the EC model. This is in part a reaction to the fact that, in the past, certain parties had sought to exploit less precise terms in order to delay, and to retain control over the process beyond what the Commissioner felt had been agreed to as appropriate in the public interest.

• Working with Foreign Competition Authorities

It is undeniable that the increasing pace of global mergers has enhanced the demand and the need for communication, cooperation and coordination among competition authorities in different jurisdictions to promote the most informed and sophisticated determinations and remedies. To this end, as articulated in the Bulletin, the Bureau routinely communicates informally with its foreign counterparts to assist in generating comprehensive and informed analyses and decisions. The Bureau also relies upon and follows a number of formal state-to-state and agency-to-agency cooperation agreements¹¹ , which facilitate the exchange of information and the progress of investigations.

In this regard, it is worth noting that we at the Bureau are sensitive to the need, in the context of multi-jurisdictional mergers where the anti-competitive effects in Canada are similar or related to those in other jurisdictions, to not only cooperate with foreign jurisdictions to expedite our reviews, but to explore coordinating remedies in the various jurisdictions. While the Bureau would never defer per se to another jurisdiction, the Bureau recognises that there can, in some circumstances, be real advantages to some form of remedy coordination—advantages to the merging parties, and indeed to the public interest protected by the Bureau, in the very efficacy and vitality of the remedy. Accordingly, the Bureau is open to, and has on several occasions explicitly agreed to accept as sufficient, remedies secured in foreign jurisdictions as acceptable fixes for anticipated anit-competitive impacts in Canada¹².For example, in Boston Scientific`s recent acquisition of Guidant¹³, the Bureau accepted the divestiture of Guidant’s interventional cardiology business to Abbott, as had been required by the FTC, as sufficient to address the Bureau’s concerns. Likewise, in the worldwide acquisition by GE of Instrumentarian, the interface facilitation guarantees required by the European Commission were considered sufficient for our purposes, once GE confirmed in writing to the Bureau that these commitments would apply globally, and would be available to third party suppliers in Canada as elsewhere. The Bureau did not require any further action or more formal recording of the remedy.

I should also point out that there is a spectrum here. Remedy coordination can mean anything from cooperation, to ensure that our remedies do not undermine or otherwise conflict with those imposed by others, to accepting with minimum memorialization the remedy as applied in Canada. It is fair to say that, the greater the extent of similarity in issues, the greater the likelihood of true coordinated remedies. In all cases, the remedy must adequately address the Bureau’s concern but, if it could, then we will make efforts to align ourselves. This is in all parties` interest. Certainly, the facts of the particular case make coordination more or less appropriate for discharging our own Canadian mandate. Suffice to say, relevant factors in that assessment include (i) whether there are Canadian-specific issues; (ii) whether the Canadian impact is particularly significant; (iii) whether assets to be divested are in Canada; and (iv) whether it is crucial to the enforcement of the terms of settlement to have a distinct Canadian deal.

Striving for Ever 'Better' Practices¹⁴

As stated in the Remedies Bulletin, the Bureau is committed to applying “a principled yet flexible and evolving approach to designing and implementing merger remedies”¹⁵.In addition to a measured response to our ongoing enforcement experience, and developing modifications to our policy, practice and tools as advisable, particularly in a rapidly evolving global marketplace, the Bureau has undertaken an important internally-managed Remedies Study to inform and thereby advance our approach.

The main objective of the study is to determine whether or not past merger remedies sought by the Bureau were effective in addressing the competition concerns identified in the relevant market(s) in issue. Through an assessment of the effectiveness of past merger remedies, the goal is to gain an understanding of the factors that either contributed to, or detracted from, the efficacy of such remedies. An understanding of such factors is necessary to further improve the Bureau’s practice with respect to the design and implementation of effective merger remedies going forward.

The Study is currently in the initial phases. We have finalized the methodology of the Study, and will shortly begin interviews with relevant market participants. Relevant market participants include the merged entity, purchasers of divested assets, and certain end-users and/or customers. While the Study will evaluate all remedy types, more emphasis will be put on evaluating behavioural and certain quasi-structural remedies. Once the Study is complete, it is the intention of the Bureau to release a public version.

The Bureau’s study, in its inspiration and design, builds on the experience and results of previous merger remedy studies in other jurisdictions, in particular the U.S. Federal Trade Commission’s ‘Study of the Commissioner’s Divestiture Process’¹⁶ , the European Commission Directorate-General for Competition’s ‘Merger Remedies Study’¹⁷ and, most recently, the U.K. Competition Commission’s ‘Understanding Past Merger Remedies: Report on Case Study Research’¹⁸.

Of perhaps some interest to this audience, there are some key differences between the methodology and anticipated outcomes of our Study, and the EU Study in particular, from which we borrowed shamelessly. I should note that our imposition extended to accepting the DG Competition’s generous offer to share the services, by way of an exchange, of one of their PhD Economists who had been a principal player in the EU Remedies Study.

Some key differences are as follows:

• The EU Study selected 40 cases, including 96 remedies, as a representative sample of decisions with remedies issued in the 5 years 1996 to 2000 inclusive. The Canadian Study will consider all 58 remedy cases in the 18 years since the current merger provisions came into force, up to 2003.
• The EU Study analysed a number of access remedies but its main findings focussed on divestiture remedies. We understand that no pure behavioural remedies were analyzed, as this type of remedy was not used in EU merger control in the period under investigation. The Canadian Study will aim to provide detailed insights into behavioural and quasi-structural remedies (which reduce barriers to entry, provide access to necessary infrastructure or key technology, or otherwise facilitate entry or expansion).
• The EU Study provided insights for a supra-national merger enforcement regime focusing on very large mergers. The Canadian Study will seek insights into a mature merger regime in an open economy of more limited size.
• The EU Study evaluated the merger remedy process in an administrative system, characterized by an acute preparedness of the merging parties to offer wide-ranging remedies. In contrast, the Canadian model involves a requirement that the Commissioner, to challenge a merger, must successfully plead her case before a specialized administrative tribunal.
• The EU Study did not venture to systematically interview market participants at large, focussing its interviews on the merging parties, the purchasers of assets or beneficiaries of licences and the relevant trustees involved in the transactions. We will aim to interview at least representative customers in the relevant markets, and thereby hope to capture some assessment of other market participants about the effectiveness of the remedy.
• The EU Study used an indicator approach to measure the effectiveness of remedies, comparing the objective of the remedy and its de facto effects. The Canadian Study may be able to further refine the effectiveness evaluation by inquiring with interviewees in more detail about different market scenarios in the absence of the merger or in the absence of the remedy.
• Finally, the Canadian Study will take advantage of the fact that others have gone before, and aim to compare and contrast its findings with those of other similar studies, in pursuit of further and more robust insights with respect to the design and implementation of effective merger remedies.

While the Study is only in the initial stages, we are excited about what it may reveal. We anticipate valuable insights into how the processes, principles, terms and conditions can be improved upon, and look forward to the continuing dialogue with our counterparts and stakeholders as we strive to develop ever better and more effective ways in which to address our joint challenges. As with our other initiatives, once any conclusions are drawn and/or recommendations developed, we will share them fully with the public¹⁹.

Consistent and Measured Application

• Generally

While it was generally the case prior to the issuance of our Bulletin that the Bureau approached remedy design and implementation in a consistent way, the discipline of drafting the document, and its subsequent accessibility to all stakeholders has, in our view, materially advanced the predictability, and ultimately the effectiveness and efficiency of both remedy design and execution. The availability of the template consent agreement, and the Bureau’s corresponding requirement to manage such documents internally, have advanced the pace and coherence of negotiations between the Bureau and the parties; less resources are wasted, and resolutions are finalized in a more timely manner.

As an example, in early 2007, the Bureau was required to review a series of interrelated and complex transactions in the Western Canadian grain industry. In addition to a hostile bid, there were, at the same time, friendly overtures, an ongoing challenge to a joint venture before the Tribunal, and a pending divestiture in the Port of Vancouver dating back to 2002, which had not been effected owing to extensions and an (ultimately abandoned, but time-consuming) challenge to the Tribunal alleging a change in circumstances.

In such circumstances, in discharging its responsibilities, the Bureau must of course be mindful to interfere as minimally as possible in the contest being played out in the market. In this case, the Bureau devoted significant resources, conducted a model and sufficiently thorough investigation in a timely way, and devised creative options, consistent with the Bulletin, for the parties to consider, respectively, as remedies in those few markets where we had substantiated competition concerns. Not only did this experience demonstrate a substantive capacity and a competitive result of which we can be proud, we believe the negotiation process was enhanced materially by the fact that all players understood what was likely to be required; those that ignored it, did so to their detriment. This facilitated the right outcome, in the sense that the market, not the Bureau, was able to choose the best outcomes.

While early days with our Bulletin, we are cautiously optimistic that parties seem to appreciate and to be able to work with our principled approach, and our forthright message that, whatever mechanisms we may put in place to provide parties the comfort they require to get their deal advanced, we will only require a remedy in circumstances where there is ultimately a serious issue, and only then to the extent necessary to remove the substantiality from the likely substantial lessening or prevention of competition.

In our view, this consistency in practice and application are critically important not just as a matter of principled enforcement, but in promoting sound, timely and effective resolutions where necessary.

• Transitional Provisions and the Potential for Interim Resolutions

The Bureau indicates in the Remedies Bulletin that so-called hold separate arrangements outside the context of committed remedies, will not normally be agreed to. Some commentators have suggested that this expression of our position is some kind of change, or reflects some lesser willingness to enter in hold separate arrangements than formerly; they are incorrect, and appear to be confusing important distinctions.

Specifically, there are three different scenarios in which the Bureau may consider the appropriateness of hold separate arrangements.

First, in the context of a commitment to execute a negotiated remedy, the Bureau will, and frequently does, enter into hold separate type arrangements to provide protection to the asset(s) the parties have committed to divest, simply pending that divestiture.

Second, there are circumstances, detailed below, where notwithstanding the Bureau has not completed its review of a proposed transaction, it may be appropriate to consider a hold separate. What is significant here, and no departure from prior practice, is that such circumstances are relatively unusual. They are, necessarily, bound up with the Commissioner's obligation to ensure that she does not permit material and/or lasting harm to competition pending the completion of a sufficiently thorough examination.

Third, there are injunctions in the context of ongoing litigation (under section 104 of the Act); these typically include elements that seek to preserve some measure of competition pending the outcome of a contested Tribunal hearing.

While the Commissioner does seek to include in such injunction orders components to protect the erosion of the competitive dynamic, the situation of pending litigation is unique. Most particularly, the Commissioner has determined that there is a likely substantial lessening (or prevention) of competition associated with the proposed transaction, and the parties have made a decision not to resolve those concerns. Further, in the context of a filed challenge, the architecture of the Competition Act gives the power of decision as to appropriate conditions pending litigation to the Court. In such circumstances, where the legislation assigns the discretion to the Court, the terms of such injunctions (including those entered into on consent) reflect the court's assessment as reflected in jurisprudence etc., not necessarily the Commissioner's evaluation of what is necessary, generally and in that case in particular. Accordingly, the terms of such orders cannot readily be equated, and should not be, with the circumstances in which the Commissioner, in discharging her obligation not to permit material and/or lasting competitive harm, may consider the advisability of hold separates in scenarios one and two above.

• The Deal is Done

It is standard in Canada, as in the U.S., the EU and other jurisdictions, to accept hold separate arrangements in circumstances where the merging parties have agreed to a resolution deemed necessary by the authority. To minimally disrupt the market and to provide the parties some period of time within which to make the required divestiture(s) is fair, sound and advisable. While there is room for improvement in execution, we believe significant strides have been made in the design of such hold separate arrangements and relationships. In contrast to our experience as recently as 5 years ago, we have largely succeeded, since the Bulletin was issued, in effecting divestitures expeditiously and in accordance with the spirit as well as the strict terms of consent agreements

• Pending the Bureau’s Review

As a general matter, the Bureau will not usually accept, as a sufficient protection for the competitive dynamic, a hold separate prior to the completion of its review of a proposed transaction and the irrevocable commitment by the parties to a remedy, if one is required. The Bureau’s experience has been that, particularly in the context of an ongoing investigation where the parties have not committed to a remedy, hold separate provisions can be fraught with difficulties. Among other factors, a motivated owner and operator of the business that is trying to ensure that marketability of the enterprise is generally no longer in the picture, meaning that the relative competitive position of the entity may suffer in the interim period, leading to great uncertainty for key personnel. Key personnel may leave the business to work elsewhere because of this uncertainty, further compromising the competitive viability of the business. Remaining key personnel may anticipate in their decisions what actions are most beneficial for the merged entity and may seek to curry favour with their new masters and thereby not maintain an aggressive competitive presence in the marketplace. Further undermining any apparent protection to the competitive dynamic, parties typically seek, by indirect means through the wording of hold separates, to effect at least some measure of control or influence over the target assets, which can cause material and/or lasting harm to the competitive vigour of the subject asset(s). For this reason, given the Bureau’s primary mandate to protect and maintain competitive markets, the Bureau is not generally enthusiastic about hold separate provisions prior to the completion of its review and the commitment to a remedy, if one is required.

That said, we do believe that hold separates, even in the context where our review is not completed, have some limited application. The conditions that could persuade the Bureau that, in all the circumstances, a hold separate could be advisable are not related to whether the deal is all-Canadian or multijurisdictional. Rather, they include principled considerations relating to the viability and effectiveness of the proposed hold separate to protect the competitiveness of the business or assets in question, pending the review, and the likely impact on competition in the short, medium and long run. As in the past, such conditions would include the nature of assets sought to be segregated into a hold separate (e.g., viable, self-supporting); the volume of commerce in Canada associated with the potentially problematic aspects of the transaction, including relative to the impact of the balance of the deal in relevant markets in Canada; and whether the asset(s) or business proposed to be put into the hold separate is or are sufficiently discrete.

A good example where such conditions were met was the hold separate agreement entered into in connection with a joint venture between JRI and SWP in 2005; while the Bureau continued its investigation of the potential competitive implications of the proposed integration of certain marketing efforts, and resisted the parties` request to implement them, the Bureau did accept a hold separate with respect to the closing of the operational elements of the joint venture (involving the joint use of certain rail facilities, with no alteration and no need for the exchange of confidential information). The Bureau was able in those circumstances to conclude that it was unlikely that any material and/or lasting harm to competition would result in an interim period by allowing the parties to jointly use those rail and related assets. Accordingly, a hold separate agreement was not inappropriate, and the principled considerations that the Bureau must review led to the reasonable conclusion that any harm to competition in an interim period while the Bureau reviewed the balance of the deal (which was not permitted to proceed in the interim) would be minor and not lasting²⁰.

At a minimum, in those unusual cases where a hold separate could be acceptable prior to review and acceptance of a remedy, the provisions must include requirements that protect the independent operating viability of the held separate business. These include not interfering with operational management decisions including production, purchasing and selling decisions, relationships with customers and suppliers; not changing terms and conditions of employment relationships; and retaining key personnel and providing sufficient financial resources (bank guarantees, loans, etc.) for the held separate business to operate on the same terms and conditions it operated prior to the merger. Further, it is critical that proprietary and confidential business information is protected and not shared between the merging parties.

• Emerging Models

Appreciating that, particularly in complex and competitive bid scenarios, parties may have overwhelming strategic needs to secure regulatory certainty, the Bureau has recently begun to explore the potential for another resolution model for the pre-determination phase. Specifically, in circumstances when parties are particularly concerned that delay may be hugely influential in whether a bid can proceed (for example, when a strategic bidder is competing with a pure equity investor), the Bureau is open to creative solutions, provided we protect our fundamental responsibility to sufficiently review the merger and our ability to remedy any concerns. To that end, we have considered a resolution along the lines of the US Department of Justice ‘pocket decrees’; namely, if the parties so request, and provided we have some ability to test the market, we will be prepared to consider a remedy commitment prior to the end of our review; while the requirement may be more than we determine ultimately is necessary at the end of our review, we will do our best, at this early stage, to understand the market and analyze the impact sufficiently well to identify a remedy that will both satisfy our responsibility to preserve an acceptable remedy and advance the parties’ interest in certainty. In turn, we would, of course, agree that, if our investigation ultimately reveals no (or a lesser) competitive problem, we would adjust our requirements accordingly. As appears to have been the case in the US²¹ , this may prove to be a creative and accommodating way for parties to deal with regulatory risk in a manner acceptable for their immediate strategic purposes.

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¹Merger Enforcement Guidelines (September 2004)

²For example, in Abitibi/Donahue (2001), the divestiture of a newsprint mill was not completed. In Air Canada/Canadian Airlines (1999), the divestiture of the regional airline of Canadian was not completed. In Chapters/Indigo (2001), the divestiture of various bookstores was not completed.

³Competition Bureau, Information Bulletin on Merger Remedies in Canada (Government of Canada: Ottawa, 2006)

⁴http://www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/h_00147e.html

⁵For example, the U.S. Department of Justice and the Federal Trade Commission have different views on the acceptability of so-called “fix-it-first” remedies.

⁶Information Bulletin on Merger Remedies in Canada, at para 33

⁷Information Bulletin on Merger Remedies in Canada, at para 35

⁸In particular, the U.S. DOJ, UK, and EC regularly use no minimum price provisions.

⁹Information Bulletin on Merger Remedies in Canada, at para 65

¹⁰Information Bulletin on Merger Remedies in Canada, at para 66

¹¹See the Bureau’s current Cooperation Agreements

¹²This could arise in circumstances where issues with a multi-jurisdictional merger are the same in Canada as a foreign jurisdiction. In one case, the foreign jurisdiction may conclude that, owing to costs or the size of markets, it should order the sale of a business, including intellectual property rights, on a worldwide basis. In a different case, the foreign authority might conclude that, owing to costs or scale of business, it would be sufficient to simply order the sale of the business, including the intellectual property rights, within its own jurisdiction. In the latter case, Canada would need its own Canada-specific remedy.

¹³May 11, 2006: International Remedies Resolve Canadian Issues in Boston Scientific, Guidant Merger The Competition Bureau did not challenge the acquisition of the Guidant Corporation (Guidant) by Boston Scientific Corporation (Boston Scientific). The Bureau determined that the consent order Boston Scientific signed with the United States Federal Trade Commission (FTC) and commitments made to the European Commission (EC) adequately resolved competition concerns in Canada.

¹⁴William E. Kovacic, US FTC, 2006: Using Ex Post Evaluations to Improve the Performance of Competition Policy Authorities

¹⁵Information Bulletin on Merger Remedies, para 2

¹⁶U.S. Federal Trade Commission (Washington: 1999): http://www.ftc.gov/os/1999/9908/divestiture.pdf

¹⁷European Commission Directorate General of Competition (Brussels: 2005): http://ec.europa.eu/comm/competition/mergers/studies_reports/remedies_study.pdf

¹⁸U.K. Competition Commission (January 2007): http://www.competition-commission.org.uk/our_role/analysis/understanding_past_merger_remedies.pdf

¹⁹See, for example, Mark Neumann and Margaret Sanderson, CRA International, August 1, 2007: Ex Post Merger Review: An Evaluation of Three Competition Bureau Merger Assessments

²⁰Competition Tribunal Website: http://www.ct-tc.gc.ca/CMFiles/CT-2005-009_0010_38LEJ-12202005-8713.pdf?windowSize=popup

²¹See: http://www.usdoj.gov/atr/public/press_releases/2007/221503.htm