Remarks by Kelley McKinnon, Senior Deputy Commissioner of Competition
Stikeman Elliott LLP
April 16, 2013
Thank you, it is a pleasure to be here today and a particular pleasure to join John as Interim Commissioner in discussing with you some of the current developments in competition enforcement.
I joined the Bureau last August, following Paul Collins who filled the role of Senior Deputy Commissioner of Mergers for 2 years. My goal today is to share with you an update on the work of mergers, including some statistics on our transaction reviews and some of our recent assessments of both policy and practice. Prior to getting to the stats, I want to raise a couple of themes that are relevant to effective merger review and govern our approach.
My personal perspective is formed from my experience in both private practice and the public sector at the Ontario Securities Commission. I spent many years at large law firms as litigation counsel and in an advisory role in addition to almost 6 years at the OSC where I was Chief Litigation Counsel and Deputy Director of Enforcement. Among other tasks, at the OSC I was responsible for assessing the effectiveness of all aspects of the enforcement process from the detection stage through investigation and resolution or litigation.
What you will hear from me matches the perspectives and approaches you have already heard today from Interim Commissioner Pecman.
We start with the goal of principled enforcement. To me, principled enforcement is objective, fact-based assessment of the circumstances and issues. If you start from that perspective, in my experience you get to a good result.
Secondly, we function through open and collaborative approaches with industry, the bar and other stakeholders. A clear understanding of the facts and issues will let us determine efficiently whether a proposed transaction will likely result in anti‑competitive effects so that we can resolve matters quickly if possible. Where there is no clear path to resolution, identifying the facts and outstanding issues nonetheless narrows the matters in dispute. If no resolution can be reached without resort to the powers we have under the Competition Act, we can be expected to be tough as required and always professional in approach.
Given the tight timelines in which we must conduct our reviews and the business interests that companies have in efficient responses, this open dialogue adds particular value to document and information requests and responses at all stages. We realize that responding can be costly and time consuming but we must obtain the information needed for our work. In addition, this open dialogue facilitates early resolution of issues.
In summary, as to the big picture themes, the history and the future of the mergers branch work are consistent with Commissioner Pecman's messages to you:
- principled review of transactions; and
- open dialogue during our reviews.
Part of our commitment to you is to give clarity as to what we need, to engage in pre-issuance dialogue prior to Supplementary Information Requests and to provide clear outlines of the issues and concerns we identify during our reviews. In return, we require meaningful and open cooperation from you. Greater effectiveness of our merger reviews will only happen with mutual cooperation. As an example, let me simply say that on occasion our teams are subjected to last minute document dumps where we must sort through tens of thousands of documents in a short timeframe. Not surprisingly, this is not conducive to cooperation, goodwill or efficient results.
The approach I have outlined above should result in effective, understandable, timely merger reviews. Finally, if we agree to disagree on the competitive effects of a transaction and further steps possibly including litigation must be taken, our resolution approach will be principled and professional at all times as we work to ensure the protection of consumers and the competitiveness of the market.
Now let me turn to a brief overview of the statistics that reflect the nature of our work along with an outline of some policy projects we have underway.
Compliments of the great staff who work in our mergers notification unit, I can give you an outline of our activity levels in merger review. I should note that I'm sharing preliminary stats for 2012/2013 that remain subject to final verification.
While month to month fluctuations do exist, filings and revenues have been stable for the past five fiscal years. On average, we have about 17 new filings each month and generally in the order of 215-220 filings to review per year by a dedicated group of 50 or so staff.
We track the relative number of pre-merger notifications and ARC (or Advance Ruling Certificate) requests each year. In addition, we carefully monitor our use of Supplementary Information Requests (SIRs). You'll note that in 2009/10 and in 2010/11, we issued five SIRs each year. The following year, we issued eight SIRs and in 2012/13, we issued 10 SIRs. The SIR is an important tool for mergers to obtain additional information for complex transaction reviews. It is used thoughtfully, when necessary. In contrast to the approach in the United States, as many of you will know, we will typically make our SIR requests relatively targeted. We strongly encourage parties to make meaningful use of the pre-issuance dialogue process to ensure a common understanding of the information needed.
We also carefully monitor our adherence to service standards relating to the amount of time for our reviews. We have met our service standard in over 92% of concluded matters this past year. There has been a marginal increase in the past three years in the amount of time taken for our reviews. Our statistics show a more considerable increase in the time taken for certain reviews if one looks over a longer period of time (since 2007). As a result, we are currently assessing the amount of time taken in certain types of non-complex reviews so we can identify the reasons for this and respond as appropriate.
As to cases, many of you will be aware that we entered into three Consent Agreements with parties in recent months — the Air Canada/United matter in October, 2012; the WMQ waste matter in February, 2013; and the Bell/Astral matter quite recently. Many of you will know that to resolve competition concerns in a proposed transaction, structural remedies using divestiture are the remedies which are most certain and effective and therefore are the preferred and necessary outcome in cases. There are complex circumstances, however, where additional behavioural restrictions are necessary and in those circumstances we will require sometimes quite complicated long term monitoring arrangements to ensure compliance with the restrictions to which parties have agreed.
Many of you will also be familiar with the Tervita or CCS case in which the Federal Court of Appeal recently upheld the Tribunal's decision — important for a number of reasons, including that it provides jurisprudence as to what a 'prevention' of competition case will look like. Perhaps most importantly, however, it shows that the Bureau does monitor transactions that do not meet the threshold for notification for competition concerns. That remains the case today, and we will continue to review matters giving rise to competition problems notwithstanding the monetary threshold limits.
Finally, we have a number of reviews ongoing as to our processes. We are doing these internal assessments with the goals of both efficiency and transparency in mind. Followers of our 'position statements' on closed cases where a No Action Letter was issued will know that we have increased the percentage of cases where a statement of our approach on a matter is published. We realize that it is of interest to you to see the approach we take, particularly as it relates to product market definition.
We have also responded to concerns of industry and the bar relating to the amount of information required for our upstream oil and gas reviews. As a result of concerns, we have undertaken a comprehensive internal review of our approach in consultation with industry experts and experienced practitioners. We expect to report on the results of that review at our upcoming Mergers Roundtable in Toronto on May 10th.
On these initiatives, let me close by saying that we are grateful for your input into our processes. As a result of feedback and consultation on a regular basis, we are able to remain vigilant to concerns, current on best practices and aware of the impact of our approaches. In the same vein, consultation ensures that you are aware of the importance of our work, our requirements in fulfilling our mandate, and the challenges that come with it.
It has been a pleasure having the opportunity to present this outline of the state of merger review in Canada to you. I look forward to your questions.
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