Competition Tribunal Tribunal de la Concurrence Reference: The Commissioner of Competition v. Labatt Brewing Co. Ltd. et al., 2007 Comp. Trib. 9 File No.: CT-2007-003 Registry Document No.: 0032
IN THE MATTER OF an application by the Commissioner of Competition for an Interim Order pursuant to section 100 of the Competition Act, R.S.C. 1985, c. C-34, as amended;
AND IN THE MATTER OF an inquiry pursuant to paragraph 10(1)(b) of the Competition Act into the proposed acquisition by Labatt Brewing Company Limited of all of the outstanding units of Lakeport Brewing Income Fund.
B E T W E E N : The Commissioner of Competition (applicant)
and Labatt Brewing Company Limited Lakeport Brewing Income Fund Lakeport Brewing Limited Partnership Roseto Inc. Teresa Cascioli (respondents)
Date of hearing: 20070326-20070327 Presiding Judicial Member: Phelan J. Date of Reasons: March 30, 2007 Reasons signed by: Mr. Justice M. Phelan
REASONS FOR THE ORDER OF MARCH 28, 2007 DISMISSING THE APPLICATION BY THE COMMISSIONER FOR AN INTERIM ORDER UNDER SECTION 100
INTRODUCTION [1] On February 1, 2007, Labatt Brewing Company Limited ("Labatt") made an offer to buy all the outstanding units of the Lakeport Brewing Income Fund ("Lakeport Fund"). Labatt provided the prescribed long form information on February 12, 2007.
[2] On February 15, 2007, the Commissioner authorized an inquiry into the proposed acquisition of Lakeport by Labatt. On March 22, 2007, the Commissioner filed an application for an Interim Order pursuant to section 100 of the Competition Act, R.S.C. 1985, c. C-34 (the “Act”) prohibiting the Respondents from closing or taking steps toward closing the proposed acquisition by Labatt of all of the outstanding units of the Lakeport Fund. On March 28, 2007, I dismissed the application. These are my Reasons for that decision.
I. THE PARTIES [3] Labatt is a federally incorporated company which is indirectly controlled by InBev S.A./N.V., a publicly traded company based in Leuven, Belgium. Labatt is the second largest brewer in Ontario, and the third largest participant in the discount segment.
[4] Lakeport Fund is an unincorporated open-ended limited purpose trust established under the laws of Ontario. Lakeport Brewing Limited Partnership ("Lakeport") is a limited partnership consisting of Lakeport Brewing Income Fund, Roseto Inc. and Teresa Cascioli, formed under the laws of Manitoba, and an indirect subsidiary of Lakeport Fund. Lakeport is a brewer of nine proprietary types of beer which are marketed as lower-price alternatives to other brands of beer. Lakeport presently holds a 12% share of the off-premises sale of discount beer.
II. CONTEXT [5] On February 1, 2007, Labatt announced its intention to buy all outstanding Units of the Lakeport Fund, which owns a 78% interest in Lakeport. Ms. Cascioli and Roseto Inc., who hold the remaining 22%, signed an agreement with Labatt whereby they would convert their interest in Lakeport into Lakeport Fund Units. The Board of Trustees of the Lakeport Fund unanimously recommended that unitholders of the Lakeport Fund accept Labatt's offer of $28 per unit. Labatt's offer was scheduled to close on March 29, 2007.
[6] On February 12, 2007, Labatt and Lakeport supplied the Commissioner with the prescribed long form information pursuant to section 114 of the Act and R. 17 of the Notifiable Transactions Regulations, SOR/87-348, as amended. The Respondents offered from the start to be bound by a time-limited hold separate agreement with the Commissioner, in order to preserve the boundaries between Lakeport and Labatt for a month after the closing of the transaction. The hold separate would have kept the assets of Lakeport distinct from those of Labatt, but did allow some presence of representatives of Labatt in the operations of Lakeport. The Commissioner did not accept this offer.
[7] On the basis of the information received, as well as of information gathered in the course of recently examining other mergers in the beer industry, the Commissioner has concluded that she has reason to believe that grounds exist for an order under section 92 of the Act. Consequently, she commenced an inquiry on February 15, 2007, pursuant to subparagraph 10(1)(b)(ii) of the Act which reads:
10. (1) The Commissioner shall 10. (1) Le commissaire fait étudier, dans l’un ou l’autre des cas suivants, toutes questions qui, d’après lui,
... (b) whenever the Commissioner has reason to believe that
...
(ii) grounds exist for the making of an order under Part VII.1 or Part VIII, ...
cause an inquiry to be made into all such matters as the Commissioner considers necessary to inquire into with .... the view of determining the facts.
III. ISSUE [8] The Commissioner is of the opinion that she needs more time to complete the inquiry; accordingly, she has applied under section 100 of the Act for an interim order from the Tribunal forbidding the closing of the merger, pending the completion of her inquiry.
IV. SECTION 100 A) Amendments to the provision [9] The former and current versions of section 100 are attached to these reasons under Schedule A. Before 1999, section 100 included as a condition of the making of an interim order a finding by the Tribunal that the merger was "reasonably likely to prevent or lessen competition substantially". The Bureau had suggested, as early as 1995, a change in the wording in order to give it more time to complete its investigation before deciding to bring a section 92 application or to allow the merger. A Consultative Panel appointed by then Minister of Industry, the Honourable John Manley, noted in its concluding report that " there is no effective mechanism under the Act to prevent the closing of a transaction unless the Bureau has decided to challenge it before the Competition Tribunal" (Report of the Consultative Panel presented to the Director of Research and Investigation on March 6, 1996), and recommended changing the wording of section 100 in order to remove the condition of a finding of a reasonable likelihood of substantial lessening or prevention or competition ("SLC" or "SPC").
nécessitent une enquête en vue de déterminer les faits : ... b) chaque fois qu’il a des raisons de croire :
...
(ii) soit qu’il existe des motifs justifiant une ordonnance en vertu des parties VII.1 ou VIII,
[10] The timeline for the extension was altered from 21 days to 30 days, with another possible 30 days extension "because of circumstances beyond the control of the Commissioner". An application under paragraph 100(1)(a) must now always be on notice to the merging parties, whereas before the Tribunal could grant leave for an ex parte application.
[11] Despite the change in wording, and the apparent will of Parliament to endorse the recommendation of the Consultative Panel and to facilitate obtaining an extension of time to complete and inquiry, the provision retained the requirement for the Tribunal to find that its ability to remedy the effect of the merger on competition would be "substantially" impaired absent the interim order (the "impairment issue").
B) The test under section 100 [12] In order to issue an order forbidding any act directed to the completion of a merger, the Tribunal needs to consider two criteria: 1) whether an inquiry is on-going and the Commissioner needs more time to complete it, and 2) whether in the absence of an interim order, the Tribunal's ability to remedy the effect of the merger on competition would be substantially impaired because an action by a party to the merger would be difficult to reverse.
[13] The second criterion is the important and difficult one. In summary, absent an interim order forbidding any action to bring the merger closer to completion, will actions which are difficult to reverse occur which would substantially impair the Tribunal's capacity to remedy the merger, in the event it is contested.
C) Jurisprudence [14] The only other decision under section 100(1)(a) (excluding consent orders) concerned an application heard by Justice Rothstein (as he then was) in 1998, in The Director of Investigation and Research v. Superior Propane et al., (1998) CT-98/02, 85 C.P.R. (3d) 194, under the preamendment provision. The application was dismissed because Justice Rothstein did not find that it was reasonably likely that the merger would lessen or prevent competition substantially. The reasons for the dismissal could no longer be invoked today, because of the change in the wording of the provision. However Justice Rothstein also discussed the appropriateness of a hold separate agreement in the context of a section 100 application. He stated in obiter that since the hold separate agreement would be an action tending to the completion of the merger, and since the only jurisdiction of the Tribunal in a section 100 application was (and still is today) an order to forbid an action to completion or implementation of merger, Parliament had not granted the Tribunal the power to order a hold separate agreement.
[15] Case law under section 104, which offers injunctive relief once the Commissioner has filed an application under Part VIII, is not really applicable to section 100, since the test is different, and the remedies available are wider.
V. POSITION OF THE PARTIES A) The Commissioner [16] According to the Commissioner, the first two criteria under paragraph 100(1)(a) are readily established. The Commissioner has certified that an inquiry is under way, and that in her opinion more time is needed to complete it. Mr. Peters, a senior official of the Competition Bureau, indicates in his affidavit that an extension of 30 days is sought.
[17] Mr. Peters explains in his affidavit that this merger is considered by the Bureau a "very complex transaction", and that the time required to examine such a merger is ordinarily five months. Once the inquiry was launched, the Commissioner applied for section 11 orders to compel production from various stakeholders in the beer market. Time is still required to analyze this information in order to determine the appropriateness of a section 92 application.
[18] According to arguments made on behalf of the Commissioner at the hearing, the "opinion" of the Commissioner as to the time required should, by analogy with standards of review, be entitled to the highest standard of deference, and should only be questioned if it appears patently unreasonable.
[19] The Commissioner submits that the last criterion must be understood as a determination of whether the action contemplated by the parties would be difficult to reverse and thus substantially impair the ability of the Tribunal to remedy the negative effect of the merger on competition. Since the closing of the transaction would be "difficult to reverse", it follows that the ability of the Tribunal would be substantially impaired. In addition, by allowing the merger to occur, the Tribunal would be precluded from making orders under paragraph 92(1)(f) of the Act, which provides for remedies where the merger has not yet been completed, including forbidding the merger or part of the merger.
THE RESPONDENTS [20] The Respondents submit that the Commissioner's application must fail for two reasons: she has failed to establish that the Tribunal's ability to remedy the effect of the merger on competition would be substantially impaired if the merger proceeded, and even if the Tribunal finds that the conditions of paragraph 100(1)(a) have been met, the Tribunal should in this case exercise its discretion to not grant the order.
[21] The first condition of the provision is obviously met: the Respondents do not dispute that the inquiry is currently going on. However, on the second condition, the Respondents argue that the opinion of the Commissioner is not properly expressed, since in her application and request for an order, the Commissioner simply asks that the merger not proceed to allow her time to finish her inquiry, without specifying the time required. The respondents argue that the Commissioner cannot delegate the responsibility to state the time required to a Bureau official.
[22] The Respondents' main arguments center on the third criterion, the substantial impairment of the Tribunal's ability to remedy the effect on competition, should the merger proceed. Essentially, the Respondents submit that there is nothing to show that the merger would impair the Tribunal's ability to order dissolution or divestiture, especially since the respondents have offered to comply with a hold separate of the type the Tribunal has endorsed in the past.
[23] The Respondents' further argue that the Tribunal should exercise its discretion and not grant the order, for two reasons: the Commissioner has had ample time to decide on the appropriateness of filing a section 92 application, given previous investigations of the beer market, and she has refused, without any attempt at negotiation, the interim remedy they were offering of the hold separate agreement.
ANALYSIS [24] This is the first section 100 application under the amended section 100 provision. The critical distinction is that the Tribunal is no longer required to make a finding that "the proposed merger is reasonably likely to prevent or lessen competition substantially" as part of its analysis. This critical distinction must be borne in mind when considering Justice Rothstein's decision in the Superior Propane case.
[25] Even with the removal of the consideration of an SLC or SPC, section 100 retains some vestige of SLC considerations when the Tribunal has to deal with its ability to remedy the effects on competition.
[26] In considering section 100, regard must be had to section 92 and section 104, within the scheme of controlling proposed and completed mergers.
[27] It is also important to bear in mind the legislative history of section 100. In particular, when Justice Rothstein rendered his judgement, the Competition Act gave the Commissioner (then the Director of Research and Investigation) initially 21 days to perform a merger review before the parties could close the transaction, barring a Tribunal order. As noted above, the Tribunal also had to find a reasonable likelihood of an SLC. The new provisions of the Act (section 123) give the Commissioner 42 days for its merger review and removes the "reasonably likely..." requirement (section 100).
[28] While these changes would suggest that a paragraph 100(1)(a) application should be a less onerous process, they also create a heightened expectation that 42 days should be sufficient to complete a merger review.
[29] However, despite the suggestion that it should be easier to put a temporary stop to a proposed merger, Parliament maintained the significant requirement that the Commissioner establish that the Tribunal's ability to remedy the effect of a proposed merger would be substantially affected if the proposed merger (or another action) were difficult to reverse. The term "action" is not defined but in this case it is the closing of the purchase of the units of the Lakeport Fund. This would indicate that Parliament did not intend to make the obtaining of this
order a relatively simple matter based principally upon the Commissioner's need for more time to examine the merger.
[30] Paragraph 100(1)(a) is not restricted to the closing of a transaction. It would also cover any pre-closing step or "action" which would cause the prejudice addressed in the section – the substantial impairment of the Tribunal's ability to remedy.
[31] There are several constituent elements to the paragraph 100(1)(a) application, and they are not the same as those of a section 104 application. These elements are: [i] the doing of an act or thing that may constitute or be directed toward the completion or implementation of a proposed merger which has not been challenged as of that moment; [ii] the certificate of the Commissioner that an inquiry under paragraph 10(1)(b) is being conducted; [iii] the Commissioner's opinion that she requires more time to complete the inquiry; [iv] the Tribunal's finding that absent an interim order, because an action would be difficult to reverse, the Tribunal's ability to remedy the effect of the proposed merger on competition would be substantially impaired; [v] the Tribunal's residual discretion to make an order. Pre-MergerAction/Pre-Section 92 Application – Inquiry [32] While paragraph 100(1)(a) may be directed at more actions than the closing of a merger transaction, in this case the only action in question is the closing of the transaction to acquire the units of Lakeport Fund. It is also evident that no application under section 92 has been made.
[33] The unusual nature of a paragraph 100(1)(a) application is underscored by the fact that the application is made to prevent a closing without any finding that an SLC is even reasonably likely (as was the case under the predecessor provision) and before the Commissioner has filed any pleadings or reached any conclusion about the transaction other than that she has reason to believe that grounds exist for the making of an order under section 92.
[34] As was evident from the confidential information leading to commencing an inquiry, the Commissioner has been involved in reviewing this industry until at least late 2006. The Commissioner has evidence on the structure of the market, its operation and facilities and its participants.
[35] In any event, the Commissioner meets the relatively low initial threshold for the commencement of a paragraph 100(1)(a) application. The inquiry has commenced and is clearly on-going.
Commissioner's Opinion [36] The Commissioner has certified that she requires more time to complete the inquiry. The details of the inquiry and the opinion that more time is required are more fully set forth in the evidence of the senior official responsible for the day to day operations of the inquiry.
[37] I do not accept the Respondents' argument that the Commissioner herself must attest to the time she think is required to complete the inquiry. The precise wording of the section does not mandate that level of detail. The affidavit of a senior official with knowledge of the case is sufficient for the purposes of stating the exact time frame required.
[38] As to the challenge to the time requested and the efficiency of the inquiry, the Respondent suggests that the Tribunal should not accept the Commissioner's evidence. This is not a judicial review and the issue of standard of review is of limited application. In my view, the Tribunal is not in any position, on this evidence, to hold that the Commissioner's opinion is entirely without merit. There is no way for the Tribunal, in this type of application, to inquire in depth into the manner in which the Commissioner has conducted the inquiry, what resources have been deployed, and what budgetary considerations may be in play.
[39] One can understand the Respondents' frustration with the pace of the inquiry given the history between the Bureau and Labatt, and the Commissioner's previous and recent involvement in this industry. However, the Commissioner's knowledge is more germane to the impairment issue discussed later in these Reasons.
Proposed Merger [40] It was common ground, and I agree, that in analyzing this provision and considering the impairment issue, one must perform the analysis as if the proposed merger had been completed. A proposed merger (at least in this case) does not itself cause an effect on competition. The effect on competition arises when the proposed merger becomes a completed merger.
Remedy the Effect on Competition – Impairment [41] Much was made in argument about "unscrambling eggs" which in essence means returning the matter to pre-closing market conditions, as if that was within the Tribunal's jurisdiction. The Commissioner contends that the Tribunal's ability to remedy is substantially impaired because a closing removes from the Tribunal's arsenal of remedies the power under section 92 to order a person not to proceed with the merger as well as other relief under paragraph 92(1)(f).
[42] With respect to the restoration of pre-merger conditions, Linden J.A. in The Director of Investigation and Research v. Superior Propane et al. [2000] F.C.J. No. 1518 (C.A.), in the context of a section 104 application, addressed how applicable the "scrambled eggs" analogy is. Justice Linden held that a merger is not like scrambled eggs. A merger can be broken up, competition can be restored, though it may be difficult to do and inconvenient.
[43] In considering the Tribunal's ability to remedy, one must examine the limits on the Tribunal to remedy to pre-merger conditions. The Supreme Court of Canada in The Director of Investigation and Research v. Southam, [1997] 1 S.C.R. 748 at 789-790 specifically rejected the notion of restoration to the pre-merger competitive situation which is a test used in U.S. antitrust cases. The benchmark is to "restore competition to the point at which it can no longer be said to
be substantially less than it was before the merger" – to bring matters back to the point that the SLC ceases.
[44] It is against this benchmark that the Tribunal must assess whether the closing would substantially impair the Tribunal's ability to remedy.
[45] As to the Commissioner's submission that to allow the transaction to close means that the Tribunal loses its remedies to order a stop to the proposed merger and that this constitutes a substantial impairment, there are at least two difficulties.
[46] The first is that, subject to the simple preconditions of the existence of an inquiry and a belief that more time is required, a section 100(1)(a) application would be virtually automatic because without an order, the parties are free to close, thus precluding the application of section 92(1)(f) down the road. Such an interpretation would render meaningless a consideration of the more onerous "impairment" test in paragraph 100(1)(a). If Parliament had really intended such a result, the wording of paragraph 100(1)(a) would have been amended to remove the consideration of the impairment of the ability to remedy to the benchmark level set by the Supreme Court of Canada.
[47] The second is related to the first – the rationale for stopping a proposed merger is that the remedies of dissolution and divestiture post-merger would not effectively remedy the SLC. The Commissioner's position ignores the issue of whether the closing would substantially impair the Tribunal's ability to remedy the SLC. The focus of this aspect of paragraph 100(1)(a) is on the ability to remedy, not on the availability of a particular remedy.
[48] The Commissioner must establish that the impairment to the Tribunal's ability to remedy is substantial. The nature and level of proof will be dictated by the circumstances of the case, but it is not sufficient to say that pre-merger conditions cannot be restored or compensated. The Commissioner must establish that absent an order, the Tribunal's remedies post-merger would not be effective to eliminate the SLC.
[49] On the record before me, I am not satisfied that the Commissioner has met this threshold. Much of the evidence before the Tribunal was addressed to whether the Hold Separate Agreement ("HSA") proposed by the Respondents was appropriate or adequate. For reasons later discussed, the merger must be assessed against paragraph 100(1)(a) without regard to the Hold Separate Agreement in which the Commissioner refuses to participate and in which the Commissioner's involvement is essential.
[50] The Commissioner's principal expert on issues of the implications of mergers, Dr. Nelson, raised a number of competitive issues, but his evidence suffers from the infirmity of addressing all issues from the perspective of U.S. law, which aims at restoring competition to pre-merger conditions.
[51] In response to questions concerning Dr. Nelson's evidence on the effects of the merger (not pre-conditioned by a Hold Separate) and the impairment of the Tribunal's ability to remedy, the Tribunal was directed to paragraph 44 of his report. His conclusion was that the Tribunal
could not order compensation to the consumer who paid supra-competitive prices for beer post-closing. The difficulty is that the conclusion is directed to meeting the U.S. legal test, not the one articulated by the Supreme Court of Canada. It is clear throughout his report that his conclusions are based on the restoration of pre-merger conditions, even his concluding remarks which touch upon the remedy of divestiture are based on a restoration of the pre-merger market conditions.
[52] The Tribunal is mindful that the Commissioner has been involved with this industry recently and over an extended period. The Commissioner has now had more than 40 days to review this specific transaction, yet there is insufficient evidence presented as to market structure and conditions to establish the impairment of the Tribunal's ability to remedy in accordance with Canadian law.
[53] The Respondents' rebuttal evidence is substantially directed to the transaction as they were prepared to have it, with a Hold Separate. The Respondents do not really address the non-impairment issue absent a HSA, but that was not their burden – it was the Commissioner's.
Difficult to Reverse/Hold Separate [54] The Applicant says that the merger is difficult to reverse. The Respondents contend that this is not the case because they would enter into a HSA and give an undertaking to the Tribunal to comply with its terms. There was considerable evidence about the merits of the HSA. Much of the Commissioner's evidence concerned its inadequacy and the facility with which its terms could be breached. As to the potential for breaching the HSA, absent evidence that one cannot rely on Labatt to comply, the Tribunal cannot assume (nor is it powerless to punish) that the agreement would be breached.
[55] It is generally not for this Tribunal to force the Commissioner to enter into agreements. The Tribunal can only address the facts as they are – not as a party might like them to be.
[56] The HSA was said to be modelled on that used in the Superior Propane case, with the suggestion that it was unreasonable for the Commissioner to refuse to enter into it.
[57] The HSA is heavily dependent on the active involvement of the Commissioner; indeed, it cannot operate without the Commissioner. Other hold separates such as standstill agreements not dependant on the Commissioner's participation may raise less troublesome issues, but this HSA cannot operate without a participant who remains unwilling to participate. Even if the Tribunal under its power to impose terms could require the Commissioner to enter into the HSA, I would not do so because it would be an unworkable situation.
[58] The Commissioner may have sound policy reasons not to enter into the HSA, but however meritorious her policy it has this consequence: this transaction becomes difficult to reverse, but not necessarily difficult to address.
[59] As to "difficult to reverse", the relevant parts of paragraph 100(1)(a) read:
... the Tribunal finds that in the absence of an ... il conclut qu’une personne, partie ou non au interim order a party to the proposed merger or any fusionnement proposé, posera vraisemblablement, other person is likely to take an action that would en l’absence d’une ordonnance provisoire, des substantially impair the ability of the Tribunal to gestes qui, parce qu’ils seraient alors difficiles à remedy the effect of the proposed merger on contrer, auraient pour effet de réduire sensiblement competition under that section because that action l’aptitude du Tribunal à remédier à l’influence du would be difficult to reverse; [...] fusionnement proposé sur la concurrence, si celui-ci devait éventuellement appliquer cet article à l’égard de ce fusionnement; [...]
[60] There are two possible interpretations of the last part of the paragraph, "because that action would be difficult to reverse". One is that the substantial impairment to the Tribunal's ability to remedy the effect on competition is the very fact that the action is difficult to reverse. If an action is difficult to reverse, the Tribunal's ability is substantially impaired. The other construction is that the Tribunal's ability to remedy is impaired because it can no longer impose a certain remedy because the action that was allowed will certainly be difficult to reverse, and this action was important enough to substantially affect the remedy. In other words, the remedy is tied to this action. If the remedy is to sell an asset, and that asset no longer exists, then the Tribunal is substantially impaired.
[61] The French version adds a degree of confusion. It states clearly that absent an interim order, a party may take an action (poser des gestes) which, because they are difficult to counter (contrer), will substantially impair the Tribunal's ability to remedy the effect on competition. Contrer does not have the meaning of "reverse". It means rather, the action of an opposing force to correct a situation. This would support the second construction and is consistent with the Tribunal's remedies to counter an SLC. The action (gestes) is not considered as to whether it can be reversed, but as to whether it can be countered. Again, the issue is whether the remedy is impaired, rather than considering strictly the reversibility of the action.
[62] Of the two constructions, the second is preferable, since the first leads to an absurd result. One could argue that actions are always difficult to reverse (the scrambled egg analogy), and so the Tribunal ability would always be substantially impaired, and the test is meaningless. In the second interpretation, the importance of the action is what makes its difficulty to reverse significant – the Tribunal is deprived of a meaningful remedy because it is understood that the action is difficult to reverse.
[63] The Commissioner argued that by allowing the acquisition to go forward, the Tribunal was depriving itself of the possibility of eventually, in a section 92 application, ordering the parties not to merge. However, the Commissioner did not show how the lack of that remedy would substantially impair the Tribunal from remedying the effect on competition, if an SLC or an SPC were established. In other words, the Commissioner did not show that the acquisition prevented the Tribunal from imposing remedies which could be sufficient to remedy the SLC, and that by losing the possibility of forbidding the merger, the Tribunal was substantially impaired.
Discretion [64] Returning to Justice Rothstein's consideration of paragraph 100(1)(a) in Superior Propane where he raises the "extraordinary" (not "ordinary", as appears in some case reports) type of jurisdiction given to the Commissioner (Director) to seek this remedy, he held that even if the Commissioner had met the test for paragraph 100(1)(a), the Tribunal might still refuse the application.
[65] The exercise of that discretion does not arise in this case because the Commissioner has not met the conditions of paragraph 100(1)(a). Given the Tribunal's finding, there is no need to consider further this issue of discretion.
CONCLUSION [66] For these reasons, the Tribunal dismissed the Commissioner's application. DATED at Ottawa, this 30 th day of March, 2007. SIGNED on behalf of the Tribunal by the presiding judicial member. (s) Michael L. Phelan
SCHEDULE A [67] Current section 100: Competition Act, R.S. c. 19 (2 nd Supp.) s. 45, as amended by S.C. 1999 c.2 s.24.
100. (1) The Tribunal may issue an interim order forbidding any person named in the application from doing any act or thing that it appears to the Tribunal may constitute or be directed toward the completion or implementation of a proposed merger in respect of which an application has not been made under section 92 or previously under this section, where (a) on application by the Commissioner, certifying that an inquiry is being made under paragraph 10(1)(b) and that, in the Commissioner’s opinion, more time is required to complete the inquiry, the Tribunal finds that in the absence of an interim order a party to the proposed merger or any other person is likely to take an action that would substantially impair the ability of the Tribunal to remedy the effect of the proposed merger on competition under that section because that action would be difficult to reverse; or (b) the Tribunal finds, on application by the Commissioner, that there has been a contravention of section 114 in respect of the proposed merger. (2) Subject to subsection (3), at least forty-eight hours notice of an application for an interim order under subsection (1) shall be given by or on behalf of the Commissioner to each person against whom the order is sought.
(3) Where the Tribunal is satisfied, in respect of an application for an interim order under paragraph (1)(b), that (a) subsection (2) cannot reasonably be complied with, or (b) the urgency of the situation is such that service of notice in accordance with subsection (2) would not be in the public interest, it may proceed with the application ex parte. (4) An interim order issued under subsection (1) (a) shall be on such terms as the Tribunal considers necessary and sufficient to meet the circumstances of the case; and (b) subject to subsections (5) and (6), shall have effect for such period of time as is specified in it.
100. (1) Le Tribunal peut rendre une ordonnance provisoire interdisant à toute personne nommée dans la demande de poser tout geste qui, de l’avis du Tribunal, pourrait constituer la réalisation ou la mise en oeuvre du fusionnement proposé, ou y tendre, relativement auquel il n’y a pas eu de demande aux termes de l’article 92 ou antérieurement aux termes du présent article, si : a) à la demande du commissaire comportant une attestation de la tenue de l’enquête prévue à l’alinéa 10(1)b) et de la nécessité, selon celui-ci, d’un délai supplémentaire pour l’achever, il conclut qu’une personne, partie ou non au fusionnement proposé, posera vraisemblablement, en l’absence d’une ordonnance provisoire, des gestes qui, parce qu’ils seraient alors difficiles à contrer, auraient pour effet de réduire sensiblement l’aptitude du Tribunal à remédier à l’influence du fusionnement proposé sur la concurrence, si celui-ci devait éventuellement appliquer cet article à l’égard de ce fusionnement; b) à la demande du commissaire, il conclut qu’il y a eu contravention de l’article 114 à l’égard du fusionnement proposé. (2) Sous réserve du paragraphe (3), le commissaire, ou une personne agissant au nom de celui-ci, donne à chaque personne à l’égard de laquelle il entend demander une ordonnance provisoire aux termes du paragraphe (1) un avis d’au moins quarante-huit heures relativement à cette demande.
(3) Si, lors d’une demande d’ordonnance provisoire présentée en vertu de l’alinéa (1)b), le Tribunal est convaincu : a) qu’en toute raison, le paragraphe (2) ne peut pas être observé; b) que la situation est à ce point urgente que la signification de l’avis aux termes du paragraphe (2) ne servirait pas l’intérêt public, il peut entendre la demande ex parte. (4) Une ordonnance provisoire rendue aux termes du paragraphe (1) : a) prévoit ce qui, de l’avis du Tribunal, est nécessaire et suffisant pour parer aux circonstances de l’affaire; b) sous réserve des paragraphes (5) et (6), a effet pour la période qui y est spécifiée.
(5) The duration of an interim order issued under paragraph (1)(a) shall not exceed thirty days. (6) The duration of an interim order issued under paragraph (1)(b) shall not exceed (a) ten days after section 114 is complied with, in the case of an interim order issued on ex parte application; or (b) thirty days after section 114 is complied with, in any other case.
(7) Where the Tribunal finds, on application made by the Commissioner on forty-eight hours notice to each person to whom an interim order is directed, that the Commissioner is unable to complete an inquiry within the period specified in the order because of circumstances beyond the control of the Commissioner, the Tribunal may extend the duration of the order to a day not more than sixty days after the order takes effect.
(8) Where an interim order is issued under paragraph (1)(a), the Commissioner shall proceed as expeditiously as possible to complete the inquiry under section 10 in respect of the proposed merger. [68] Former section 100: Competition Act, R.S., 1985, c. 19 (2nd Supp.), s. 45. 100. (1) Where, on application by the Director, the Tribunal finds, in respect of a proposed merger in respect of which an application has not been made under section 92 or previously under this section, that (a) the proposed merger is reasonably likely to prevent or lessen competition substantially and, in the opinion of the Tribunal, in the absence of an interim order a party to the proposed merger or any other person is likely to take an action that would substantially impair the ability of the Tribunal to remedy the effect of the proposed merger on competition under section 92 because that action would be difficult to reverse, or (b) there has been a failure to comply with section 114 in respect of the proposed merger, the Tribunal may issue an interim order forbidding any person named in the application from doing any act or thing that it appears to the Tribunal may constitute or be directed toward the completion or implementation of the proposed merger.
(5) La durée d’une ordonnance provisoire rendue en application de l’alinéa (1)a) ne peut dépasser trente jours. (6) La durée d’une ordonnance provisoire rendue en application de l’alinéa(1)b) ne peut dépasser : a) dans le cas d’une ordonnance provisoire rendue dans le cadre d’une demande ex parte, dix jours à compter du moment où les exigences de l’article 114 ont été respectées; b) dans les autres cas, trente jours à compter du moment où les exigences de l’article 114 ont été respectées.
(7) Lorsque le Tribunal conclut, sur demande présentée par le commissaire après avoir donné un avis de quarante-huit heures à chaque personne visée par l’ordonnance provisoire, que celui-ci est incapable, à cause de circonstances indépendantes de sa volonté, d’achever une enquête dans le délai prévu par l’ordonnance, il peut la proroger; la durée d’application maximale de l’ordonnance ainsi prorogée est de soixante jours à compter de sa prise d’effet.
(8) Dans le cas où une ordonnance provisoire est rendue en vertu de l’alinéa (1)a), le commissaire est tenu d’achever l’enquête prévue à l’article 10 avec toute la diligence possible. 100. (1) Dans les cas où, à la suite d’une demande du directeur, le Tribunal conclut, à l’égard d’un fusionnement proposé relativement auquel il n’y a pas eu de demande aux termes de l’article 92 ou antérieurement aux termes du présent article : a) soit que le fusionnement proposé, en toute raison, aura vraisemblablement pour effet d’empêcher ou de diminuer sensiblement la concurrence et que, à son avis, en l’absence d’une ordonnance provisoire une personne, partie ou non au fusionnement proposé, posera vraisemblablement des gestes qui, parce qu’ils seraient alors difficiles à contrer, auraient pour effet de réduire sensiblement l’aptitude du Tribunal à remédier à l’influence du fusionnement proposé sur la concurrence, si celui-ci devait éventuellement appliquer l’article 92 à l’égard du fusionnement proposé ; b) soit qu’il y a eu manquement à l’article 114 à l’égard du fusionnement proposé, le Tribunal peut rendre une ordonnance provisoire
interdisant à toute personne nommée dans la demande de poser tout geste qui, de l’avis du Tribunal, constituerait ou tendrait à la réalisation du fusionnement proposé ou à sa mise en œuvre.
(2) Subject to subsection (3), at least forty-eight hours notice of an application for an interim order under subsection (1) shall be given by or on behalf of the Director to each person against whom the order is sought.
(3) Where the Tribunal is satisfied, in respect of an application made under subsection (1), that (a) subsection (2) cannot reasonably be complied with, or (b) the urgency of the situation is such that service of notice in accordance with subsection (2) would not be in the public interest, it may proceed with the application ex parte. (4) An interim order issued under subsection (1) (a) shall be on such terms as the Tribunal considers necessary and sufficient to meet the circumstances of the case; and (b) subject to subsection (5), shall have effect for such period of time as is specified therein. (5) An interim order issued under subsection (1) in respect of a proposed merger shall cease to have effect (a) in the case of an interim order issued on ex parte application, not later than ten days, or (b) in any other case, not later than twenty-one days, after the interim order comes into effect or, in the circumstances referred to in paragraph (1)(b), after section 114 is complied with.
(6) Where an interim order is issued under paragraph (1)(a), the Director shall proceed as expeditiously as possible to commence and complete proceedings under section 92 in respect of the proposed merger.
(2) Sous réserve du paragraphe (3), le directeur, ou une personne agissant au nom de celui-ci, donne à chaque personne à l’égard de laquelle il entend demander une ordonnance provisoire aux termes du paragraphe (1) un avis d’au moins quarante-huit heures relativement à cette demande.
(3) Si, lors d’une demande présentée en vertu du paragraphe (1), le Tribunal est convaincu : a) qu’en toute raison, le paragraphe (2) ne peut pas être observé; b) que la situation est à ce point urgente que la signification de l’avis aux termes du paragraphe (2) ne servirait pas l’intérêt public, il peut entendre la demande ex parte. (4) Une ordonnance provisoire rendue aux termes du paragraphe (1) : a) prévoit ce qui, de l’avis du Tribunal, est nécessaire et suffisant pour parer aux circonstances de l’affaire ; b) sous réserve du paragraphe (5), a effet pour la période qui y est spécifiée. (5) Une ordonnance provisoire rendue en application du paragraphe (1) à l’égard d’un fusionnement proposé cesse d’avoir effet : a) dans le cas d’une ordonnance provisoire rendue dans le cadre d’une demande ex parte, au plus tard dix jours ; b) dans les autres cas, au plus tard vingt et un jours, après la prise d’effet de l’ordonnance provisoire ou dans les circonstances prévues à l’alinéa (1) b), à compter du moment où les exigences de l’article 114 ont été rencontrées.
(6) Lorsqu’une ordonnance provisoire est rendue en vertu de l’alinéa (1) a), le directeur doit, avec toute la diligence possible, intenter et mener à terme les procédures visées à l’article 92 à l’égard du fusionnement proposé.
COUNSEL For the applicant: The Commissioner of Competition: Finlay, Bryan Miller, William J. latrou, Nikiforos Levine, Robert Vermette, Marie-Andrée
For the respondents: Labatt Brewing Company Limited: Finkelstein, Neil R Facey, Brian A. Beagan Flood, Catherine Wood, Micah V.
Lakeport Brewing Income Fund, Lakeport Brewing Limited Partnership, Teresaa Cascioli and Roseto Inc.:
Kay, Katherine L. Neylan, Shawn C.D. Kilby, Michael D.