Timing for everything?
Rationale behind draft mergers timing document unclear.
The draft Model Mergers Timing Agreement sent out for consultations earlier this year by the Competition Bureau, appears to be a solution in search of a problem — or a solution that will create its own problems, adding unnecessary delays and costs to merger reviews.
In its submission to the Bureau, the CBA’s Competition Law Section says it’s “not clear what problem” the draft agreement seeks to address. To begin with, the document is aimed at merger reviews where merging parties raise efficiencies claims, but “most mergers are pro-competitive and efficiencies cases are relatively rare.”
“We see no obvious need for a model timing agreement that would automatically apply to all merger reviews…” the Section says. A blanket approach is “overly broad and unnecessary,” and “it would be helpful if the Bureau gave background or identified specific concerns it is trying to address.”
While the draft agreement’s intent is to “establish a schedule for the expeditious resolution” of proposed mergers, it would in some cases actually extend the length of the Bureau’s review.
“The proposed linear approach will unnecessarily delay the merger review process, particularly given the lengthy timelines in the draft timing agreement,” the Section says. Instead, it recommends that the efficiencies assessment should take place at the same time as its assessment of a deal’s competitive effects. A parallel process would be more likely to encourage constructive dialogue and cooperation.
The Bureau already spends “enormous resources” reviewing complex mergers, “spending unnecessary additional time reviewing efficiency-enhancing mergers is counter-productive,” the Section says.
In any case, a one-size-fits-all approach is not appropriate for all mergers, the Section says. Instead, the timing agreement should include a range for each timeframe, with the timing decided on a case-by-case basis within that range.
The Section raises a number of specific concerns about the draft agreement, and also notes that the agreement itself raises its own questions for the Bureau. For example:
- Are the timing agreements enforceable, and what is the remedy?
- Will the Bureau commit to timing for any oral examinations?
- If the parties don’t enter into a timing agreement that the Bureau deems acceptable, will the Commissioner exercise discretion to consider the efficiencies defence as part of the review process or will it be left to the Tribunal?