Court File No. CT90/1 IBE COMPETITION TRIBUNAL IN THE MA TIER of an application by the Director of Investigation and Research for orders pursuant to section 92 of the Competition Act, R.S.C. 1985, c.C-34, as amended;
AND IN THE MA TIER of the direct and indirect acquisitions by Southam Inc. of equity interests in the businesses of publishing The Vancouver Courier, the North Shore News and the Real Estate Weekly BETWEEN: - and -SOUTHAM INC., LOWER MAINLAND PUBLISHING LTD., RIM PUBLISHING INC., YELLOW CEDAR PROPERTIES LTD., NORTH SHORE FREE PRESS LTD., SPECIALTY PUBLISHERS INC., ELTY PUBLICATIONS LTD.
Respondents NOTICE OF APPLICATION TO VARY CONSENT INTERIM ORDER
TAKE NOTICE THAT the Respondents will make an application to the Competition Tribunal on Wednesday, the 11th day of November, 1992 at 1:00 p.m. or as soon after that time as the motion can be heard at the Federal Court of Canada, 700 West Georgia Street, Vancouver, British Columbia.
VISITORS\REK\NOTEAPP
COMPETITION TRIBUNAL TRIBUNAL DE LA CONCURRENCE F I i NOV 11 1992 Applicant
- 2 -THE APPLICATION IS FOR: (i) an Order varying the Consent Interim Order issued March 18, 1991 and corrected by Order dated March 22, 1991 (referred to collectively as the "Consent Interim Order"), to provide that notwithstanding the terms of the Consent Interim Order:
(a) Lower Mainland Publishing Limited ("LMPL") shall be permitted to implement the plan of reorganization appended as Appendix the generality of the foregoing:
(i) LMPL shall be permitted to appoint Sam Grippo as Chief Executive Officer, to replace David Perks;
(ii) LMPL shall be permitted to appoint John Collison ("Collison") as Chief Operating Officer, with supervisory responsibility for the businesses controlled by LMPL, including the businesses of publishing the North Shore News, the Vancouver Courier and the Real Estate Weekly, provided that Collison will exercise no supervisory or management responsibility in respect of the North Shore News Homes Real Estate Supplement;
(iii) Collison will be permitted access to all confidential business information in respect of the businesses owned by LMPL, including the North Shore News, the Vancouver Courier and the Real Estate Weekly necessary to the performance of his duties as Chief Operating Officer, provided that Collison shall neither directly nor indirectly disclose to Southam or its affiliates any confidential business information in respect of the North Shore News, the Vancouver Courier or the Real Estate Weekly and
VISITORS\REK\NOTEAPP
11 A 11 hereto. Without limiting
- 3 further provided that Collison shall not have access to any confidential business information in respect of the North Shore News Homes Real Estate Supplement; and
(iv) LMPL shall be permitted to implement such other changes as are specified in the plan of reorganization.
(b) LMPL shall be permitted to implement an Employee Stock Ownership Plan which will enable qualifying LMPL employees to acquire, in the aggregate, up to 20% of the common equity of LMPL upon such terms as LMPL shall determine in its sole discretion;
(ii) such further and other Order as this Honourable Tribunal deems just in the circumstances;
THE GROUNDS FOR THE APPLICATION ARE: (i) the circumstances that led to the making of the Consent Interim Order have changed in that the Order was issued on the basis that it would only be in effect for a relatively short period of time. The Order has now been in effect for more than 18 months and its terms are too restrictive to permit the efficient operation and management of the affected business on a long term basis;
(ii) To achieve its intended purpose, the Consent Interim Order should be varied to enable LMPL to provide effective management of the North Shore News, the Vancouver Courier, and the Real Estate Weekly and to enable LMPL to meet its commitment to its employees regarding equity participation in LMPL; and
VISITORSIREKINOTEAPP
- 4 -~. . .- . .' -(iii) the proposed changes to the Consent Interim Order will not interfere with the objectives of maintaining the separate identity, competitiveness and saleability of the subject businesses.
THE FOLLOWING DOCUMENTA RY EVIDENCE WILL BE RELIED UPON AT THE HEARING OF THE APPLICATION:
(i) The Reasons and Order of the Competition Tribunal dated June 2, 1992; (ii) The Consent Interim Order dated March 18, 1992 and the Order correcting the Consent Interim Order dated March 22, 1992;
(iii) Such further and other material as counsel may advise and the Tribunal allows. AND TAKE NOTICE THAT the Respondents wish the Application to be heard in English.
DATED at the City of Toronto, this 10th day of November, 1992.
TO: Registrar Competition Tribunal 90 Sparks Street Suite 600 Ottawa, Ontario KlP 5B4
VISITORS\REK\NOTEAPP
. - 5 -.... ~: ~ AND TO: David & Company Barristers and Solicitors 2800 - 666 Burrard Street Vancouver, British Columbia V6C 2Z7
Attention: Stanley Wong AND TO: Department of Justice Justice Building Kent and Wellington Streets Ottawa, Ontario KlA OHS
Attention: Donald Houston
VISITORS\REK\NOTEAPP
.......... to _ r0 .. 9 . -.. 1 992 .13 :03 FRCJ1 TO 86046313309 P.11 APPENDIX ~A" ... LMPL LOWER MAINLAND PUBLISHING LIMITED
Attach•ent :r. LOWBR HAillJUID PUBLISBIIG LTD. Proposed Board, organization a Operating Structure -------········-······················-----······· ROARD or DIRECTQBS -coaposed of 5 or .6 persons -isugu. . •t Perks., Hills & Lambert froll Southaa: Grippo and Colli'5o·n from· HVC -:-edd an eaployee representative when~ shares are i••u•d? · •· HEETINCS OP DIRECTORS -se•iannual (schedule to be set to conforw to travel scb•dul•• of South•• reprP~P.ntA~iveR) -can schedu.le aore, if requireCI -costs are shareholders• costs (no eo•pensation) ml Tl ES_ -•et policy & direction -review overall re•ults of operations -approval pf major. expenditures & co••i~•ents -uvprovo~ senior •ana9ement oompencation -will for• .. coa11itteea, if needed. Change11J f ro11 the Status Ouo The chan~e• be re are to give addi~ional representation to Southa•, to use the Board as a policy setting vehicled, have it review overall operations, and per!or• ~Lewardship functions for the shar•bolders. 1970 Albem Str«r V.inco~. e.c. c.nm. V'Y 3X'4 604 87Ul~5 m.~ ao, ~7}""5~l • • Pave 1·. of 5 NOV 9 '92 8:58 PAGE.01f
t0.r09-1992 13:04 FRD1 TD 86046313309 P.12 ·" . -·. . ......... .... = ....... ·.·.· .. ... .. :·' ..... ..... . . . . . :. .. . ·.... ·. ... . -_. ' '.'· .. ~·.· .· -_.. . ·. ...........· .. ·. ... . _...-. . . .... ... ·~.:·.·· .. :.·: '" .-• . .. . . .. ~. ,: . .- • •• 'J, • : ·".~. . ·. SHAIRKA~ Dl T§I BOARE - PERKS -southa• to appoint, (we assuae -DWP) -Duties. -non-executive position -inT.erfaoe with .Soutbaa, so LMPL operatin9 strate9ies are not in conflict with s•G. -open & maintain ~lear co••unication chann•ls with 8RG. -continues co••untcQtion between shareholders representatives. -prot•cta the independ~nce of LMPL -aaintain contact with PP • -alert for •utual cost savings. ·~ -general business and industry knowledge input -coapensation for the pos1 tion· based upon Sava9e review. -Short Terin I>r9iect1 -contact with Co•petit1on Bureau -dealing with Courier & Iorth Shore News res or9anization -Meetings . -will chair Board Of Directors •eetings -attencJance at· selected operating co11111i ttee •eetin9s -travel costs to be rei•bursed. -Transitional over the near tera to assist in coapleting projects. Changes from th§ 'tatus Quo In the past, David ba$ been involved in acquisit.io~s, le9aliti~s and strategy of dealing 111 th the Co111petition Bureau/Tribunal. He also ha·s been the l~aison between LKPL and Speck, Rager and Ballard. 'fhe tiae required t.o be spent on tbe.se. activities in the future will be lesJS. · Also, although de"siinated CIO, it has been i•p9ssible for n"ve to, in f.act, act as such given where his h!l11e .. baile of interests are anid where LMPL is. 1 . . . . . . . . . . . Paqe 2 of 6 NOV 9 '92 8:58 PAGE.012
l'OJ--09-1992 13:04 FRCJ1 TD 86046313309 P.13 . . ·. . :··: ·. . · . : .,:~. ·.~:.: ";: .... · .. cu1~r.fXBCVTIVB orrrc;n - GBIPPO -i11pl•aen't policy, liaison between Board & operation• -1on9~t•r• planning --co•pensation -ecquisitions • projects -contact wi-th •ember• .of the industry -approv~ls of co•aitaents · -sounding board -real es~ate. {short~t•r• project of particular expertise) -shareholder coaaunicat.ion Changes fro• the Status Ouo In the past,, Sa• has been fulf illin9 these tasks,, •a well as exte-n1ive1·y bei119 involved with the Competition Tribunal/Bureau. The n•w task of liason between Board and operations would flow fro• the designation as CEO . ........ . ' ... ' . . . . . . . . . NOU 9 '92 8:59 PAGE.013
t-OJ-09-1992 13:05 FRCJ1 TO 86046313309 P.14 ..• . :. ·. . ·· ··. .· ·. " ·~ ... . .. 'ij'f prBRAZJBG orr1s11 - SOLbJSO! -control and co-ordination of all f.he op•rating divisions -•arke't. & prod.vc~ ana.1ya1s, aev proauc:t. aevelop•ent .-technolo9ical clevelop•ent -personnel -labour -policies & procedures Changes fro1 the Status Ouo John·has been operatin9 the REW, and as well )las provided the above servioes in the past.· Before · the foraa~ion of LMPL, John was the chief operatinq officer of the •Madison• papera. He was heavily involved in .pr•paration for the co11petition hearing. . Defacto, he has bttn:i chief operatin9 officer of I.MPL before the hold separate order was issued. We hited Bick O' Connor to fill t·he newspaper operations role. last July. The changes in John's duties e.nta11 ..... having tb.e Courier and .1.s. Revs report t.o hill, rather than to t.be Chairman. Although· tbis reporting.· structure aay appear to be a radical ohange,it"ie really a formalization of what really •u•t 90 o~ at levels below·the publishers. As you know neither of t·hese publi,;hers are phy1dc·ally at tbeae papers •ore than .about a third of the ti•·e. NOV 9 '92 8:59 PAGE.014
t-OJ--09-1992 13:05 FRCl1 wHIEF FIRARf ~Ak OF?IC!R - Ap!GBR -finance -financial & opera~1n9 reporcing -taxation -acquisitions -legal -systeae planning -credit policies -capital, operating & long-tera pl.anning -shareholders communication -adainistration -liaison with investaents -corporate secretary -projects · Changes froiz the Stat.9..LJ2yQ There are no 11ubstantiative changes in assigned du ti fllR: involVe•ent With CO•peti ti on iSSUeS Will disappear. - . . . . . . . . . . . ' . . . . . . . . . . . . . . • PAgtit S Of.6 NOV 9 '92 9:00
TD 86046313309 P.15 :.!-: .... ,. .• · · " . :, _ • . .: . : . : . .• '· • : •. .~ . ...... "· .; • ;. •• ·.:• •• . ~ · . ,-: . , .· .. • . • . . , .. • • .·" 'i:,'_;..,. •. ·' ~-.:. ....... .. .·· · . .. PAGE.015
t-OJ-09-1992 13=06 FRCJ1 TD 86046313309 P.16 Conposition -Perks~ Grippo, Colliaon, Aunger, O'Connor, Speck, 8alla·rd
Duties -forua.for a4dres11n9 co-ordination issues -e•ployin; ;roup resources -raising of issues -tea11 1>uilding -avenue for SRG t.o qain a better underetandinq of operations and •ppraisal ofw: operatin9 p~rsonnel. · .. Meetings -•eets:every six weeks to eight weeks -standing :ln1Tit.ation to Board Ke•b~rs to attend, 1f they are i~ Vancouver, otherwise• -if necessary, •eetings can be scheduled for Boe rd:. Heabere.
Chanse~ fro• the Statu§ Ouo -frequency of •eet.J.1191' -invitation to Board meabers to att•nd . ' • e e • • 4 • • • 'f • • I . • '· Page 6 of 6 NOV 9 '92 9:00 PAGE.016
tor -0 ... 9 .. -. 1992 .13 =06 FRCJ1 TD 86046313309 P.17 . . . _,, •. ··~:· : ·. ':.. .•, LOWER MAINlAND PUBLISHING LIMITED
Planning for Hanagemen:t cont1nu1 ty at. the courier And lorth Shore Jfews ························-------------·-··············------(1) Peter Ballard and Phil Hager have eaployaent contracts with the Courier which expire in May of 1993. Arran9eaen~s •hould be established now with the• as to their positions and continuing e•ployaent relationship. !heir salaries should be adjusted to reflect that there are two co-publishers ins"t.ead of one. A level of 60l each of the publishers salary, based upr;rn Savage's rP.r.n••AndationR,· Bppears"to be appr~priate. ~ 'lheir preee~~ vacation ~llotaent is 6 'If.eeks which ean be cont.lnued~ H:otir-ev~rr · ,,.g wit:.h thfl pr•w•nt contract, they should not ·take vacations at the same ti•e. W• expect qnder the new •~ra~g•••nts each of t~P• would undertake a •ore active role in the day to day operations of the Courier. The new arrangeaents will be effective in Kay 1993. The new arrangem~nts should initially be for e one-year ter• eo that the· •ituation ean be evaluated.
(2) Peter Speck i&f publisher of 'l'hc N. s .. Ne.,,s. We understand that at aost be works three or four half days per week, but draws a substantial fee and expenses. Peter"• duties should be spelled out so that be is paid according to the t~me he is present at the job. There should be a transitional period of two years while Peter remains the publisher. During this period, the pos~in~ an4 h1r1ng of an •H~ucl~~8 publi5her will be co•plet.ed. Peter will train and 9uide this person t.o succeed as publisher. After the two year period, che intention would be for Peter to rem~in on a consulting baais to LHPL, and ~ola .. t,he position ot publishe1: e•~ritu~ of N.S. lie"•· 1970 Al'bdta S(tt« .... ~.-a.c.. ('"..an.c:la VSY 3X4
604 872-8155 E'aqe 1 of l n11n 604 1172-4'561 NOV 9 '92 9:01 PFIGE.017
t-DJ-09-1992 13:07 FRCl'I OROANIZATIONAL.ALTERNATNES A. Senior Manaaement 1.
-aallng &ec:cmve V.P. cpendlorMa----~~~~~ . Business CJnitB
V.P. Finance & • 'sttatlon
NOV 9 '92 9:01 PFIGE.018
TD 86046313309 P.18
EncutJve V.P. Flnn:e ·.~. oorporate & AtJm/niStJ8tiOn aupporl Mctlons
to.>-09-1992 13:07 FRCl'1 B. SU.in•• unrt suvc::mre 1. trocfuct/Servlce Graue DriY9n I I V.P. V.P. Specialty Cornfrlmity PublicatioM Newspt.tpers Van Net Publishers f : . etc. 2. Size Driven ' I I r V.P. \!P. V.P. V;JnC. REW HSN ~·r . . . . . . . .. . . . . .. .. . ,, I van,_ . I etc. ---····--- , ...... ·-·-"••. ··-- .. ·-·- ·-· ···--··-····- ... ·-···--····--· ·····---·· NOV 9 • 92 9: 01
TD 86046313309 P.19 ' .. . I I VJ! VP. DlstrtbutiOn Pdnling ·~ ... I I I \t!P.. V.P. V.P. NOWS DJstdbutiOn flrlntino . . . PUblishefs .. ··----··-·---PAGE.019