Businesses need to consider competition concerns even on small takeover deals that might not have attracted regulatory scrutiny in the past, says a senior competition lawyer.
Randall Hofley, who is returning to private practice at Blake, Cassels & Graydon LLP after a two-year secondment to the Competition Bureau, says the agency’s recent move to more actively investigate mergers or acquisitions – regardless of size – means companies considering a deal need to think about competition issues early in the process.
Merging companies must notify the bureau of transactions when the target company’s assets or revenue from sales in Canada exceed $96-million. In September, the bureau announced an expansion of its Merger Intelligence and Notification Unit to allow for active investigation of deals that don’t meet that threshold (“non-notifiable” transactions).
“What it means is businesses will need to be more pro-active,” Mr. Hofley said in an interview with The Globe and Mail. “A decade ago, you might have looked at a set of facts and said, ‘The bureau is never going to take that case.’ Now, you might have to pause and think about that. The margins have shifted."
The bureau’s move follows a global trend by antitrust regulators to crack down on digital giants such as Facebook or Google snapping up startups before they become a threat. But Mr. Hofley says he believes the bureau’s focus will also extend beyond the digital economy to other sectors where innovation is critical, including pharmacare and information technology.
He said companies need to consider early on whether a transaction will raise competition concerns and also prepare to defend the deal if the bureau does investigate. “So, not only to anticipate if there were concerns, but also to be prepared to explain why there shouldn’t be a concern.”
Mr. Hofley, who has been a partner in Blake’s competition law practice for about a decade after the firm wooed him away from rival Stikeman Elliott LLP, sat on the Competition Bureau’s senior management committee during his time there, when he acted as general counsel and senior enforcement officer. He worked closely with the bureau’s new Commissioner of Competition, Matthew Boswell, who began a five-year term last May.
Mr. Boswell is a former Crown lawyer and also worked in the enforcement branch of the Ontario Securities Commission. “He’s a law enforcer through and through,” Mr. Hofley says. “Given his background, I think increasingly I’d expect him to play a more active role in the bureau’s enforcement matters.”
Still, the bureau itself needs additional resources, Mr. Hofley says, adding that he was surprised at the lack of funding growth at the agency when he arrived, having done a previous stint there more than a decade earlier.
“The bureau is a very resource-constrained organization. And they could do more to benefit Canadians and, frankly, to conduct investigations and merger reviews in a more efficient manner for businesses, if they had additional resources.”
The bureau had about 360 full-time employees in 2018-19 and its budget was $52.5-million.
It is an independent law-enforcement agency, investigating civil matters such as mergers as well as criminal matters that can include price-fixing and bid-rigging. If the bureau believes charges are warranted in a criminal case, it refers it to the Public Prosecution Service of Canada.
On the civil side, the bureau itself can file applications with the Competition Tribunal, which handles matters that include deceptive marketing practices and abuse of dominance. The bureau currently has one active matter before the tribunal, a case challenging the acquisition of a grain elevator that gives new owner Parrish & Heimbecker control of the only two grain elevators along a 180-kilometre stretch of the TransCanada Highway between Manitoba and Saskatchewan.