Court File No. T-3180-90 IN THE FEDERAL COURT OF CANADA TRIAL DIVISION B E T W E E N: SOUTHAM INC., LOWER MAINLAND PUBLISHIN~. ....... ~------~----------~ RIM PUBLISHING INC., YELLOW CEDAR PROPERTIES LTD., NORTH SHORE FREE PRESS LTD., SPECIALTY PUBLISHERS INC., ~utie is Exhibit .....: t...._ • ELTY PUBLICATIONS LTD. to the affidavit of _ ....f t.N.~.t.E.~ ....... &.~f.t.l!.TZ... - and sworn J>efore me this 4 o(_, ~THE ATTORNEY GENERAL OF CANADA, THE COMPETITION -·". ............... day of.. .............. _ TRIBUNAL and THE DIRECTOR OF INVESTIGATION ~ .Jq_~!. AND RESEARCH UNDER THE COMPETITION ACT Jnr\ ,tJ ..- , /~~ o.110ul 't~"-~sioner M,. Notary Public, etc
AFFIDAVIT OF PAUL RENAUD I, Paul Renaud of the City of Mississauga, in the Province of Ontario MAKE OATH AND SAY AS FOLLOWS:
1. I am the Vice President, Finance of The Southam Newspaper Group, a division of Southam Inc. ("Southam"), and as such have knowledge of the matters hereinafter deposed to.
2 . Southam is a company incorporated under the laws of Canada with its head office in Toronto, Ontario; and carries on through The Southam Newspaper Group, inter alia, the business of publishing newspapers and related businesses in the Provinces of Quebec, Ontario, British Columbia and elsewhere in Canada.
3. Pacific Press Limited ("Pacific Press"), a wholly-owned subsidiary of Southam, incorporated under the laws of British Columbia, owns and publishes two daily newspapers, The Vancouver Sun and The Province. Both of these are circulated throughout the Vancouver Metropolitan area and the remainder of the Lower Mainland of British Columbia. The "Lower Mainland" refers to that part of the Fraser River Valley south of Hope, including the Vancouver census Metropolitan area, Abbotsford, Chilliwack, Clearbrook, Matsqui and Mission.
C!JM!'r.IlT!OM ·r; TR;F.JRM.l m: Li\ C F ~ I ), l E MAR 4 rn91 fl D! ul D I .. _. . _.. .)t/c,,Kc T OTTA\v'A, ONT. --µ;-.?ici) Plaintiffs Defendants
- 2 -4. Pursuant to transactions which took place on January 27, 1989 and May 8, 1990, Southam acquired direct and indirect equity interests in 13 community newspapers (including The Vancouver Courier and the North Shore News), a real estate advertising publication (the Real Estate Weekly), three flyer distribution businesses and two printing businesses, all operating in the Lower Mainland.
5. The transaction completed on January 27, 1989 involved the acquisition by Southam of 49% of· the issued and outstanding shares of North Shore Free Press Ltd. ("NSFP"). NSFP publishes and distributes a controlled circulation community newspaper in north and west Vancouver, called the the North Shore News.
6. The transactions which took place on May 8, 1990, were substantially as follows:
(a) Lower Mainland Publishing Ltd. ("LMPL") was incorporated as a wholly-owned subsidiary of Southam. Through a series of transactions, Southam acquired approximately 63% of the issued and outstanding common shares of LMPL, with the remaining 37% of the common shares of LMPL being held by Madison Venture Corporation through some of its subsidiaries;
(b) LMPL acquired Southam's 49% interest in NSFP; (c) LMPL acquired from Netmar Inc. its 50% interest in the Madison Group and acquired from subsidiaries of Madison Venture Corporation their 50% interest in the Madison Group. The Madison Group which is made up of Union Ink Ltd., Specialty Publishers Inc., One Cent Publishing Ltd., BMA Holdings Limited and their subsidiaries. The Madison Group publishes and distributes free of charge the following controlled circulation community newspapers in the Lower
- 3 -Mainland: Burnaby Now, Royal City Record, Now (Coguitlam, Port Coguitlam, Port Moody), Maple Ridge--Pitt Meadows Times, Surrey Now, North Delta Today, South Delta Today, Abbotsford--Clearbrook Times, Chilliwack Times and Haney-Maple Ridge Pennysaver. Madison Group also publishes and distributes the Real Estate Weekly, and owns a one-half interest in the Richmond News;
d) NSFP acquired all of the issued and outstanding shares of Tepnyl Holdings Co. Ltd., which through its wholly-owned subsidiary, Bex Publishing Ltd. carries on the businesses of publishing the Delta Optimist and the Richmond Times;
e) NSFP also acquired 75% of the issued and outstanding common shares and 100% of the issued and outstanding preferred shares of RIM Publishing Inc. ("RIM"), which publishes The Vancouver Courier, a twice-weekly newspaper circulated in an area which comprises most of the City of Vancouver; and,
f) put/call arrangements were also put in place, which, if exercised, would result in Southam acquiring 100% control of LMPL; LMPL acquiring 100% control of NFSP and NFSP acquiring 100% control of RIM.
As a result of these transactions Southam acquired the interests referred to in paragraph 4 hereof.
7. In December, 1988, prior to the foregoing transactions, Southam notified the Director in writing of its proposed acquisition of an interest in NSFP and requested the Director's confirmation that the proposed transaction would not result in an inquiry under the Competition Act (the "Act"), or
- 4 cause the Director to make an application to the Competition Tribunal under Section 92 of the Act. Following discussions with the Director, in the course of which Southam provided additional information to respond to the Director's concerns, the Director provided Southam with the written confirmation requested on March 6, 1989. Attached as Exhibit "A" to this my Affidavit is a true copy of a letter from the Director dated March 6, 1989, confirming that Southam's proposed acquisition of an interest in NFSP would not, in the Director's opinion, result in a substantial lessening of competition.
8 . In May, 1990, Southam entered into discussions with the Director with respect to the May 8, 1990 transactions, as described herein. Southam co-operated with the Director by providing information with respect to the various transactions as well as responding to specific questions posed by the Director and his staff.
9. On June 7, 1990 at the Director's request and to facilitate his on-going review of the subject transactions, Southam provided the Director with a written undertaking to "hold separate" the businesses acquired until August 17, 1990. Attached as Exhibit "B" to this my Affidavit is a true copy of the hold separate undertakings given by Southam to the Director, dated June 7, 1990.
10. In consultation with the Director, Southam has agreed to extend the hold separate undertakings from time to time, in terms agreed upon by the parties. Attached as Exhibit "C" to this my Affidavit is a true copy of a letter from John J. Quinn to George Addy, dated August 15, 1990 consenting to an extension of the June 7, 1990 undertakings until August 24, 1990. Attached as Exhibit "D" to this my Affidavit is a true copy of a letter from George Addy to John J. Quinn, dated August 31, 1990, confirming extension of the undertakings to
- 5 -September 4, 1990. Attached as Exhibit "E" to this my Affidavit is a true copy of a letter from John J. Quinn to Andre Brantz, dated September 18, 1990 enclosing amended undertakings effective September 14, 1990. Attached as Exhibit "F" to this my Affidavit is a true copy of a letter from John J. Quinn to George Addy, dated October 5, 1990 extending the September 14, 1990 undertakings to October 10, 1990. Attached as Exhibit "G" to this my Affidavit is a true copy of a letter dated October 10, 1990, from John J. Quinn to George Addy extending the September 14, 1990 undertakings to October 11, 1990. Attached as Exhibit "H" to this my Affidavit is a true copy of a letter dated October 11, 1990 from John J. Quinn to George Addy modifying the September 14, 1990 undertakings by releasing the "Distribution Companies", Surrey/North Delta Now and the Richmond News from the undertakings. Attached as Exhibit "I" to this my Affidavit is a true copy of a letter from J.D. Kendry to Peter Humber dated October 18, 1990 extending the September 14, 1990 undertakings as modified to October 26, 1990. Attached as Exhibit "J" to this my Affidavit is a true copy of a letter dated October 24, 1990 from J. D. Kendry to Gilles Menard extending the September 14, 1990 undertakings as modified to November 2, 1990. Attached as Exhibit "K" to this my Affidavit is a true copy of a letter from J. D. Kendry dated November 15, 1990 to Gilles Menard, extending the September 14, 1990 undertakings as modified to November 23, 1990.
11. By letter dated November 23, 1990 Southam's counsel advised the Director that these undertakings had expired and would not be extended beyond a two week grace period. I am advised by counsel and verily believe that this action was taken in order to encourage the Director to respond to Southam's requests for an explanation of the reasons for the Director's position. Notwithstanding this action Southam is prepared to continue to hold separate the businesses in respect
- 6 of which the Director has competition law concerns as a condition of the granting of the order sought in these proceedings. Attached as Exhibit "L" to this my Affidavit is a true copy of the letter of November 23, 1990 referred to above.
12. On November 29, 1990, the Director filed with the Tribunal an Application pursuant to Section 92 of the Act, seeking orders which, if granted, would effectively require Southam to dispose of any direct or indirect interests in the businesses carried on as the Vancouver Courier, the North Shore News and the Real Estate Weekly, which Application named Southam and others as respondents. Attached as Exhibit "M" to this my Affidavit is a true copy of the Application dated November 29, 1990.
13. I am advised by counsel and do verily believe that, if there were a full Tribunal hearing on the merits, Southam will suffer irreparable harm including:
a) vast amounts of management time and money will be expended preparing for and attending the Tribunal hearings, which could ultimately be found to be null and void;
b) Tribunal hearings would involve extensive public disclosure of confidential information pertaining to Southam and its business operations in the form of productions and oral evidence under oath which has the potential to damage Southam's competitive and business position. That is particularly so given that interventions may be granted to persons who are adverse in interest to Southam; and
- 7 -c) in the event that the Director's Application is successful, Southam may be required to divest some or all of the assets which are the subject of the Application. These assets could likely not be re-acquired in the event that the Tribunal proceedings were subsequently struck down on constitutional grounds.
No irreparable harm will come to the Director's position or the public interest, because Southam is hereby agreeing to preserve the status gyQ by continuing to hold separate those businesses in respect of which the Director has alleged competition law concerns.
SWORN before me at the City ) of Toronto in the Province ) of Ontario on December 6, ) 1990. ) A C ALBERT CAR LI GOURLEY STUDENT·AT·LAW CotrtmlHIDM', llC..ll _. tor the PROVI f1F ONTARIO for ...... ~ • Gr , nist1r1 and Solicltort. bpim Au&ust 31, 1993.
-·------~-PIBECTQRS ANQ OFFICERS COMPANY ~IREC10BS RIM PUBLISHING Perks INC. Ha;er Ballard VANCOUVER COURIER Perks (1979) LTD. Hager Ballard TEPNYL HOLDING CO. Perks LTD. Peter Bexley BEX PUBLISHING LTD. Perks Peter Be%ley LOWER MAlNLARD Perks PUBLISHING LTD. Grippo Collison NORTH SHORE FREE Perks PRESS LTD. Speck Foot (Four Speck Subsidiaries of NSFP) 26498(7) 0!0'3~t:fd
NAME OF OFFICER OFFICE HELP Hager President & Co-Publisher Balla rt! Secretary &r. Co-Publisher Hager President Ballard Secretary Peter Bezley President Sr.····· Secretary 'Peter Bexley Publisher. President & Secretary Perks coa & cEo Grippo President Aunger SeerAtary/Treasurer Speck President Foot Vice-Presic!ent & Secretary Speck President Foot Vice-President & Secretary LS=LI 06. 5 Nnr
SCHEDULE "B" Manaaerial Employees Peter Ballard Phil Hager Jim Davis Dave Bell Michael Maloney Sam Grippo John Collison Bruce Aunger Sam Joe Tim Siba Spencer Levan Derek Chamberlain NSFP. Peter Speck Doug Foot Linda Stewart Tim Renshaw Chris Johnston Peter Bexley Lynn Cameron Ernie Bexley . I
Co-publisher Co-publisher General Manager Advertising Manager Editor President Vice-President - REW Vice-President, Finance Vice-President, College &NOW Publisher Distribution Publisher, NOW Publisher Controller Advertising Manager Editor Operations Manager Publisher Business Manager Operations Manager
Schedule •c· RIM Managers:
Bez Mana;er: Peter Besley Madison Group Managers: Sam Grippo Bruce Aun9er John Collison Sam Joe
NSFP Mana9ers: Peter Speck Douglas Foot . .. · ... 2649'8(9) 210'3~tid ~001~ Hl92 S3~ti18 WO~~
Philip Hager Peter Ballaro
lhii is Exhibit " C [ _iKE, CASSELS & GRAYDON / Barristers & SoliC'itors Patent & Trade·mar).; Agents
August 15, 1990 VlA FACSIMILE Mr. George Addy Deputy Director Bureau of Competition Pplicy Place du Portage 1 Hull, Quebec KlA OC9 Dear George: Re: Southam Newspaper Group / Lower Mainland Publications Umlted re: Extension or Hold Separate Undertakln&s At our meeting with you and your colleagues yesterday, you indicated that the Merger Branch's investigation of Southam's transactions in the Lower Mainland had raised a· few competition law concerns which have not yet been satisfactorily resolved.
You indicated only four remaining areas of concern:
(1) competition between the affected weekly papers in both Delta and Richmond; • (2) tompetition for real estate advenisers in the Lower Mainland;
(3) competition for the distribution of flyer ,.· advenising in the Lower Mainland; and (4) competition between the Vancouver Courier and the Southam daily papers within the Courier's controlled circulation area.
In addition to discussing the substance of your concerns, you also indicated that a satisfactory resolution of these matters will require additional investigation and analysis by the Merger Branch. ·• . Toronto • York RPtiion • Ottawa • Montl'!'al• • Cali:ary • \'anrouvl'r • London. £n11land 0 AsMX'&alrd firm Lli'·r~ O'Br1~n
11 to the Aft~ivit of 1600·50 O'Connor Street Ottawa. Ontario KlP 6L2 Tfolephone: (613) 788·2200 Facsimile: (613} 594·3965
BUKE, CASSELS &G RAYDON - 2 -At our meeting yesterday, David Perks of Southam explained that the fall retailing season is fast approaching, and that the contemplated plan to coordinate the marketing of advenising and distribution of the affected publications would need to be completed soon in order for these publications to compete successfully with their" unencumbered rivals in the Lower Mainland. In particular, David indicated that the most time-sensitive concern raised by you involved your continued examination of any potential competitive overlap between the Yancouvcr Courier and the Southam dailies. Since the Courier would need to participate in any future cooperative arrangements with the other publications in order to insure their economic success, David expressed a strong preference that priority be given to resolving concerns with respect to the Courier. In order to permit a satisfactory resolution of your concerns with respect to the Courier and the other three matters raised, Southam is prepared to extend its current undenakings to the close of business on the 24th of August, 1990. In return, we understand that you and your colleagues will use your reasonable best efforts to resolve your concerns in respect of the Yancopver Courjer prior to the expiry of the extended undenakings on August 24th. Southam is also willing to revisit the issue of an additional extension of the undenakings in respect of the other three areas of concern noted above in order to permit the conclusion of your investigations. We feel that it would be appropriate to defer any discussion with you of such funhcr extension until a date closer to August 24th, by which time you will have had an opponunity to do additional work and to form a better idea of the additional time which will likely be required in order to complete the investigations. I trust this arrangement conforms with what we discussed at our meeting yesterday. If not or if you have any additional suggestions or comments, I would appreciate hearing from you at your earliest convenience.
JJQ:nd cc: Ian McNaughton Andre Brantz bee: Dave Perks John Phillips
-------.b-.t~,~,..,.._~~v~--ro~tM:::-:ntt:-=:~:av:il~~ Thii is Extl1 1 ....u C.. 1990 l+I Consommanon Conaumer ano et Corcol'811ons Canaca Corporate Affairs Canaca Oil"l:tlur a1s Director of enQuetes et recnercnes frMMOglt!on and F; ..a rcn -.-.a"""'. . D.iruwa1:a &u~ol PQ:IDQIJe GI CC!'ICUM~C. ~"~tcy ,.._""'_ Pl909 OU PorllQI 1 '->..,,..-~"""' 60 VICloria ~153.50,3 ,,.:11. Cueoec onntmt"11•Mif;rs 1<1.r. cc~ (11i) H3-e16i Tt1-T1, :.:: . : . =. Q-..:i::.~ E:ake, C&Ese~s • G:&y~o~ Box 25, Co=.:ne:ce Cc~=~ West '!'c::.::::, cr.-:.ar:.o ~5!. !A:-
Dea.: .J&cx: .-.-.... •==~~~= Hava;ape: a:c~r ao :.over Mai~l&:d ·~l!.&~!.:; .: wish ~o acknowled9e :ece!pt c~ yo~: !acs::.!~e c: A~qus~ 31. 19SO whe~ein So~~r.a~ Newspaper G:o~p, No~~ St.o:e r:ee PresE Lt:. &r.c ~av!d P1:ks :.ave a;:eec ~o ex~e~c ~~e c~~=e~? ~~Qer~&k~n;s 1n ~~•.&:cove c&p~icnec.~&~~·= ~c ~!::.~;~: =~ :~es~ay, Se~~e::i=er 4, !990, as ;~sc~sse~. : ~~ a~so •~c:osi~q a !~:~he: Reques: ~== =~~;==~~!=~ d.atee A~;~s~ 3:, lSSC a~~ :ook ~c:w&:c ~= :eee~v~:; yo~: :es~c~se as sec~ as poss~~~e . .,. -c-e 't ... &'t c- m ......... - •• ..., •• •• •W ...a, we ..... ,, ................... &--··-I "••- "6¥•• zww ww.-,• t~ose aspec'ts o! ~~e acct~!!!~~c: ~=~~ wh~c~ the ~!:ec~c: presen~ly has no ccr.ce:ns. We ~!!l also~· c~seusa~~9 ~~~~ ye~ ~h~ 'te~s a~c co~c!~ic~s c! :~:::e: i:.~ce:'tak~~;s ~c ~~e re~ues~ ~Y yo~: c:1en~s co~cerr.~n; :Ae Van Ne'tworx proposal . :o: jO~~: ~~rk•t~n; c: advert.isin; . ,, -!/ l George N. A~:y i Ser.~c: ~·~~~y ~1:e~~:: c: Inves:!ga~io~ and Aesearc~ Canada
-Th is ~ is - E : .xh : 1b ; 1t ; \\ - € - : ;, : -: to : t : he t A : ll i id. f iv1 ~ t ot .. BLAKE, CASSELS & GRAYDON Box 25, Commerce Court '\X.cst Toronto, Canada M5L 1A9 Barristers & Solicitors Telephone '416-863·2400 Patent & Trade Mark Agents facsimile '416·863·2653 Telex 06-219687 Our Reference. September 18, 1990 JOHN J. QUI'l'\1' Direct Dial (+16) 163·2648
VIA FACSIMILE Direct Faz: (416)863-4251 leference: 00266100212 Mr. Andre Brantz, Esq. Commerce Officer Merger Branch Bure!u of Competition Policy Place du Portage, Phase I Hull, Quebec Dear Andre:
Re: The Southam Newspaper Group re: Lower Mainlana Fublishinq Lirnitea Attached please find the Amended Undertakings in connection with the creation of Lower Mainland Publishing Ltd. The Amended Undertakings were signed in counterparts by David Perks, Peter Speck and Russ Mills, and were effective September 14, 1990. I trust this is satisfactory. Should you have any questions in connection with this matter please do not hesitate to contact me. Yours very truly, cl~ John J. Quinn JJQ/jap • ,': c: David Perks, Esq. Russ Mills Peter Speck Stanley Won9, lsq. J.D. Kendry, lsq. Ian McNaughton, Esq.
AJ:idrew Jackson, Esq.
2452B(36) Nonhumbrian HoUJc, 1.f Oevonsh.in: Square, London, England EC2M .fTE '&lcphone 01·377~00 facsimile 01·377·2917 'JClcx 94·13236
York Corporate Centre, 100 York Boulevard. Richmond Hill, C&nad:I UB 1)8 Telephone 416-733·4040 facsimile '416-764-5127 Telex 06-21968i
BUKE, CASSELS & GRAYDON AMENDED UNDERTAKINGS TO DIRECTOR September 14, 1990
Re: Southam Inc.'s Recent Bewspaper Acquisitions in the Lower Mainland of British Columbia
l. The Southam Newspaper Group, e division of Southam Inc. (•Southam•), North Shore Free Press Ltd. (•NSFP•), end David Perks, Publisher of The Gazette, Montreal, hereby provide the Director of Investigation and Research (the •DIR•) the following amended undertakings (which incorporate amendments to the original undertakings dated June 7, 1990) in connection with Southam's and NSFP's recent newspaper and related acquisitions as part of the creation of Lower Mainland Publishing Ltd. (•LMPt•) in British Columbia. 2. In these undertakings, the following definitions shall apply: (1) •Acquired Businesses• means RIM, NSFP, the~son 1"' ..... ,. Papers and the Distribution Companies and ~Acquired Business• means one of the four (identified·-by--the • ;-.~~:-".T;< contezt of use). .;..:: , ·' (b) •confidential Information• means competitively sensitive or proprietary information of the Acquired Businesses not independently known to Southam, NSFP or David Perks from sources other than LMPL end the Acquired Businesses and includes, but is not limited to, price lists, marketing methods, strategic plans or oth,:: trade _!~-~tB.1-.,°"
(c) •..n1stribution Companies• means the three operating ~anies of ~~ved in the distribution of £S, ~•melf Netmar City-Wide Distribution Systems Ltd., Fraser Valley Flyer Service Ltd. and Chilliwack Flyer Service Ltd. .. ,.-(d) •Interim Period• means the period of time commencing on the date of these undertakings and ending on October 2, 1990. ---- --'\ I' /--- ) (e) ..-Madison- "Pape~s· means the Richmond News, the South':-....... '-Delta To41y..,.....,.the Surrey/North Delta Now, and~ ~ekly. _/
~ - 2 -(f) •Managers• means the manager~ of the Acquired Businesses set forth in Schedule •B•. (g) •RIM• means RIM Publishing Inc. and Vancouver Courier (1979) Ltd. 3. During the Interim Period, Southam will: ? (a) not sell, transfer, assign, ;rant any option for the purchase of, pledge or otherwise dispose of or encumber the shares it directly or indirectly owns in LMPL; (b) not alter the boards of directors or the officers of LMPL and the Acquired Businesses as set forth in ? Schedule •A• ezcept to replace directors who voluntarily resign provided, however, that no ; replacement director shall be appointed or elected without the consent of the DIR; (c) not make any changes to the managerial employment of LMPL and the Acquired Businesses as aet forth in Schedule •B• ezcept to replace managerial employees who voluntarily resign or who are discharged for cause provided, however, that no replacement managerial employee shall be appointed without the consent of the DIR; -(d) direct the Managers to continue to operate the businesses of their respective Acquired Businesses independently of each other and of the businesses of Southam; (e) direct the Managers to maintain, in accordance with generally accepted accounting principles, separate and complete financial ledger books and records of material financial information for their respective Acquired Businesses; (f) not receive, have access to, or use any Confidential Information relating to the Acquired Businesses ezcept for •uch Confidential Information 11 would be available to Southam in the normal course of business if the Acquired Businesses had not been acquired by LMPL; (g) instruct the Managers not to make any material changes to the financial arrangements of any of the Acquired Businesses without the consent of the DIR;
- 3 -(h) not to seek any information in connection with or attempt to ezert any influence, direction or control over the Managers, including without limiting the generality of the preceding, not attempt to influence any operational, sales, distribution, circulation, marketing or financial decisions of the Acquired Businesses including decisions relating to: (i) advertising rates; (ii) persons who advertise in the newspapers owned by the Acquired Businesses; (iii) production, printing, materials procurement, marketing, distribution and other costs; (iv) contracts with third parties; (v) accounting procedures and other financial information; (vi) editorial policy; (vii) strategic planning; and (viii) administration; (i) instruct the Managers to maintain the business and goodwill of the Acquired Businesses and not to sell, lease or otherwise dispose of material assets thereof without the consent of the DIR; (j) without limiting the generality of the provisions of any of the preceding paragraphs, not take any action towards coml:>ining any of the businesses, assets or operations of the Acquired Businesses with the businesses, assets or operations of Southam or any other person; (k) without limiting the generality of paragraph 3(j), not directly or indirectly move, relocate, destroy or dismantle any assets of the Acquired Businesses, or take any steps to physically integrate those assets with the assets of any other business, without the consent of the DIR; unless, due to circumstances beyond the control of Southam or the Acquired Businesses, an Acquired Business is forced to move, relocate or dismantle any of its assets to preserve such assets and Southam has notified the DIR;
- 4 -(l) continue to abide by the terms of any contracts that are in place with any of the Acquired Businesses, provided, however, Southam shall notify the DIR if performance of any contractual obligation conflicts with these undertakings; (m) not agree to, make or su;;est any changes to the contracts referred to in paragraph 3(1) without the consent of the DIR; (o) direct LMPL and fiSFP not sell, lease or otherwise dispose of the shares or material of the Acquired Businesses during the Interim Period without the consent of the DIR. 4. Notwithstanding the fore;oin;, Southam shall be entitled to appoint David Perks, full-time publisher of I.h.e Gazette in Montreal, to provide such direction to, and control of, the Managers as is necessary to assure compliance with these undertakings and provide direction to the Managers with respect to decisions on matters that are not of a day-to-day nature, including: (a) coordination of the efforts of the Managers as necessary to maintain the viability of LMPL and the Acquired Businesses; (b) entering into new, lower cost, contracts for newsprint procurement and publication distribution and printing services, provided, however, any such contracts shall be assignable by each Acquired Business in the event of divestiture; and (c) entering into contractual arrangements with Van-Network for the joint placement of advertising, provided, however, any such contracts shall be assignable by each Acquired Business in the event of divestiture, and the assignment provisions in such contracts shall be reviewed with the DIR in advance of their execution. 5. During the Interim Period, fiSFP will: (a) not sell, transfer, ;rant any option for the purchase of, pledge or otherwise dispose of or encumber the shares it directly or indirectly owns in RIM; and (b) comply with paragraphs 3(b) through 3(o) as if they ref erred to NSFP instead of Southam to the extent they apply to RIM.
- s --6. Durin; the Interim Period, David Perks will not communicate Confidential Information and similar confidential information about the operations or assets of LMPL to Southam or NSFP without the consent of the DIR ezcept for confidential financial information required by Southam and NSFP to prepare their standard financial reports. 7. Southam and NSFP will provide to the DIR and his staff such information, other than privileged information, as the DIR may require to complete their ezamination under the Competition A.c.t of the acquisitions of the Acquired Businesses. · 8. Southam and NSFP will provide to the DIR, when requested to do so, access to the premises of LMPL and the Acquired Businesses, upon reasonable notice, and any information relatin; to the operations and assets of the LMPL and the Acquired Businesses as is required by the DIR to monitor compliance with these undertakings. 9. Ezcept as provided otherwise herein, these undertakings will terminate on the earlier of the end of the Interim Period or the date the DIR notifies Southam and NSFP that he does not intend to challenge the acquisitions of the Acquired Businesses under the provisions of the Competition Act. 10. These undertakin;s shall be binding upon David Perks and Southam, NSFP and their corporate successors, replacements or agents, and their affiliates, and on the directors, officers, servants and employees of Southam and NSFP. 11. Southam and NSFP confirm that the DIR may publicize the terms of the undertakings hereby given by Southam and NSFP. They also recognize that it is the DIR'• intention to issue public statements or press materials at an appropriate time; and they consent to the DIR'& use of this document in those statements. 12. Nothwithstanding that any or all of these undertakings have been fulfilled, the DIR retains all his rights under the Competition Act, including, without limitation, the right to bring an application under section 92 of the Act, at any time within three years of the substantial completion of the mergers. 13. In the event the DIR gives written notice to Southam, NSFP and David Perks prior to the end of the Interim Period that he will challenge any of the acquisitions under the provisions of the Competition Act, Southam, NSFP and David Perks agree to the eztension of these undertakings until the
earlier of the date th• D1' fi1•• an application with tbe Competition ~ri~~n•l pur1uant to 1.12 o~ tbe Competition Act· or two weeks have ezpirea •~bsequent to the data of notification. ».\TED this 14th day of Sept~r, ltto.
.•
... I ~~ Pe;: au11 Mills BorrR nou: nn PUSS LTD. Per: Peter Speck !)AVID PDXS
.. • earlier ot the date th• ~I• tiles a~ application with th• Compe~ltlon Tribunal pur1uanl ~o a.ta oC ~h• comPet!tton Act or two wooks h•v• ezpir•O aubse~u•nt to thA date of noti!1eation. DAT2D this 14th day of Septembfer, lttO. . #
- 6 IOU'l"IWI JIC. Peri 1tu11 Mills
.· < t earlier of the date the Dll filt1 an application with th• Competition Ttib~nal p~r•~•nt to 1.12 of the Comq•titSoc Act or two we1k1 have eapire4 1ub1•'iU•nt to the tat• of notification. nA'l'm> th11 14th day of l•Pt•mber, 1110.
- I • IOD'1'IWC Z•C, Per: au11 Mill• llOrt'JI IROU ftD PUSS ttD. Pari Pater lp•ck
Schedule •A• DIRECTORS ANP OFFICERS CQMPANX DIRECTORS RIM PUBLISHING Perks INC. Hager Ballard VANCOUVER COURIER Perks (1979) LTD. Ha;er Ballard LOWER MAINLAND Perks PUBLISHING LTD. Grippo Collison NORTH SHORE FREE Perks PRESS LTD. Speck Foot (Four Speck SubsicHaries of NSFP) ,,: 2649Bn
.4 NAME OF ·- -OFFICER OFFICE HELP Hager President Si Co-Publisher Ballard Secretary Si Co-Publisher Hager President Ballard Secretary Perks COB & CEO Grippo President Aunger Secretary/Treasurer Speck President Foot Vice-President Secretary ' Speck President Foot Vice-President Secretary '
.. . ' Schec5ule •s• RIM Mana;ers: Philip Ha;er Peter Ballarc5
Ma~ison Papers Mana;ers: Sam Grippo Bruce Aun;er John Collison
Distribution Companies Mana;er: 5SFP Mana;ers:
26498/8
John Collison Peter Speck Dou;las Foot
. 1990-BLAKE, CASSELS & GRAYDON Box 25, Commerce Coun We.st 1bronto, Canada M5L 1A9 Barristers & Solicitors Telephone 416-863-2400 Patent & Trade Mark Agents Facsimile 416-863-2653 ~lex 06-219687 Our Reference: October 5, 1990 JOHN J. QUINN Direct Dial: (416) 163·1648
VIA FACSIMILE Direct Faz: (416)863-4251 leference: 00266/00212 Mr. George Addy, Esq. Deputy Director Bureau of Competition Policy Place du Portage, Phase I Hull, Quebec Dear George: Re: The Southam Rewspaper Group Re; Lower Mainland Publishing Limited In light of our recent discussions, I am writing to confirm to you that The Southam Newspaper Group, North Shore Free Press Ltd. and David Perks have agreed to eztend the September 14, 1990 undertakings given in connection with the creation of Lower Mainland Publishing Ltd. to the close of business on October 10, 1990. Yours very truly, w»JJJ.-~ J John J. Quinn JJQ/jap ,.. c: David Perks, Esq • Stanley Wong, Esq. J.D. Kendry, lsq. Andre Brantz. laq. Ian McNaughton. !aq. Andrew Jackson, liq.
24528(39) Nonhumbrian House, 14 Devomhlre Square, London, England EC2M 4TE ~lepbone 01-377-6800 Facsimile 01·377·2917 ~lo: 94·13236
York Corpor:ate Centre, 100 York Boulevard, Richmond Hill, Canada UB US ~lephone 416-733-4040 Facsimile 416-764-5127 Tela 06-219687
~~~~~--~~~--~~~-This is Exhibit \I G " to the Affidavit of
Box 25, Commerce Court West Toronto, Canada M5L 1A9
B•rristers & Solicitors Telephone 416-863-2400 P2tent & Trade .Mark Agents Facsimile 416-863-2653 Telex 06-21968'7 Our Reference' October 10, 1990 JOHN J. QUINN Direct Dial: (416) 863-2648 VIA FACSIMILE Direct Faz: (416)863-4251 Reference: 00266/00212 Mr. George Addy, Esq. Deputy Director Bureau of Competition Policy Place du Portage, Phase I Hull, Quebec Dear George: Re: The Southam Rewspaper Group Re; Lower Mainland Publishing Limited In light of our discussions last Friday and my need to seek further instructions from our client,. I am writing to confirm to you that The Southam Newspaper Group, North Shore Free Press Ltd. and David Perks have agreed to extend the September 14, 1990 undertakings given in connection with the creation of Lower Mainland Publishing Ltd. to the close of business on October 11, 1990. Yours very truly, Cl~Q~ ~~ J. Quinn JJQ/jap ,' c: David Perks, Esq. Stanley Wonq, Esq • .Andre Brantz, Esq.
be: J.D. Kendry, Esq. M. Katz
2452B(40) Northumbrian House, J4 Devonshire Square, London. England EC2M 4TE Telephone 01·3'77-6800 facsimile 01·3':'7·291" Telex 94·13236
York Corporate Centre, JOO York Boulevard, Richmond Hill, Canada L4B JJ8 Telephone 416·'33-4040 Facsimile 416-764-5127 Telex 06-219687
<io COPY Bi.AKE. CASSEL.S 6 GRAYDON TORONTO
------~:""T'""'." Thi$ i$ Exhibit ,\ H 1.1 ~".'-:'~;::;::~· to the Affidavit of BLAKE, CASSELS & GRAYDON Box 25, Commerce Court West Toronto, Canada M5L 1A9 Barristers & Solicitors Telephone 416-863-2400 Patent & Trade Mark Agents Facsimile 416-863-2653 Telex 06-21%87 October 11, 1990 Our Reference: JOHN J. QUINN Direct Dial: (416) 863·26+8 o;rect Fax: (416)863-4251 Reference: 00266/212 VIA FACSIMILE Mr. George Addy Deputy Director The Bureau of Competition Policy Department of Consumer & Corporate Affairs Hull, Quebec KlA OC9 Dear Mr. Addy: Re: Southam Newspaper Group re: Investments in Lower Mainland Newspapers I apologize for my delay in responding to your letter of October 4 concerning the Director's decision with respect to the above-referenced transaction. I was unable to discuss your letter with all of the affected parties until last evening, and I have been unable this morning to speak to you, so I thought it best to write regarding our client's response to the Director's decision. With respect to the businesses which the Director has determined do not raise competitive concerns, our client wishes to complete their integration into the Lower Mainland Publishing Limited group without further delay. We assume the Director's decision reflects an implicit acknowledgment that these businesses will no longer be subject to the hold-seperate undertakings, as amended, dated August 14, 1990. My client, for its part, acknowledges the conditions stated in your letter of October 4, 1990, and, in particular, the qualification that the Director reserves his right to apply to the Tribunal for the statutory three year period. Your letter also identified four markets in which the Director continues to have concerns sufficient to justify the commencement of an inquiry under Section 10 of the Competition Act (the "Act") and the instruction to counsel to prepare an application to the Tribunal. Our client was surprised and disappointed that the Director has reached this decision with Northumbrian House, 14 Devon.shire Square, London, England EC2M 4TE Telephone 01-377-6800 Facsimile 01-377-2917 'IC:lex 94-13236 York Corporate Centre, 100 York Boulevard, Richmond Hill, Ca112da L4B 1)8 Telephone 416-733-4040 Facsimile 416-764-5127 Telex 06-219687
BLAKE, CASSELS & GRAYDON Page 2 respect to the first two markets identified, that is the retail advertising markets in the City of Vancouver and the North Shore. As I indicated to you in our conversation last Friday afternoon, our client acknowledges that there is justification for the Director's concerns with respect to the print advertising market in South Delta and the real estate advertising market in the Lower Mainland area. While we do not agree with all of the concerns raised with respect to the real estate advertising market, our client is prepared to dissolve the transaction with respect to the Real Estate Weekly, or to divest competitive publications in communities within the Lower Mainland where material competition law concerns exist. Moreover, our client is prepared to divest a competitive publication in South Delta. We do not agree, however, that the acquisitions of RIM and North Shore Free Press will lead to a likelihood of a substantial lessening of competition in the retail advertising markets concerned. I realize that, to some extent, our difference of opinion turns on questions of expert judgement upon which reasonable people can differ. Nevertheless, it is my conviction that the evidence we have produced provides a complete and comprehensive record of the material facts relevant to an application with respect to the two markets in question. My intensive study of this factual record has caused me to form the opinion that the Director has no reasonable basis to proceed with an application under Section 92 in respect of these two retail advertising markets. I have conveyed this advice to our client, and have been instructed to request a further opportunity to persuade you that our view of the evidence is correct. Would it be possible, at your earliest convenience, to meet with me to discuss the evidence with respect to the only two markets on which we continue to differ? I know you are terribly busy, but this investigation has been a lengthy and costly process for our client. I would very much appreciate it if we could meet as soon as possible. Would it be possible for either you, or Gilles, to call me with respect to a meeting after you have received this letter? In light of our request for a meeting, I have been instructed to extend the undertakings given by The Southam Newspaper Group, North Shore Free Press Ltd. and David Perks on September 14, 1990, in connection with the creation of Lower Mainland Publishing Ltd. to the close of business on Tuesday, October 16, 1990.
BLAKE, CASSELS & GRAYDON Page 3 I am sorry I didn't have an opportunity to speak with you on the phone before sending this letter. If you have any questions or concerns with respect to this matter, please do not hesitate to contact me at any time. Yours very truly,
John J. Quinn JJQ/jap c: David Perks, Esq. Russ Mi11s, Esq. Stanley Wong, Esq. Andre Brantz, Esq.
be: Ted Donegan John Phi11ips J.D. Kendry M. Katz
70130/39-41
-Th-is~is-E-xh-ib-it--:-~~'~.I.:---,,~7--tJ--.th-e-.:.~.h-.1d-av-.1:~~ rlLAKE, CASSELS &G RAYDON Barristers & Solicitors Patent & Trade-mark Agents
October 18, 1990 Jay D. Kendry Direct Dial: (416) 863-3053 YIA FACSIMILE Direct Fax: (416)863-4251 Reference: 00266/00212 Mr. Peter Humber, Esq. Senior Commerce Officer Bureau of Competition Policy Place du Portage, Phase I Hull, Quebec Dear Peter: Re: Southam Newspaper Group Re: Investments in Lower Mainland Newspapers Further to the meeting of October 15, we are collecting data for presentation to the Bureau on the concerns raised at that meeting. In light of the progress being made on this matter, we have been instructed to extend the undertakings given by The Southam Newspaper Group, North Shore Free Press Ltd. and David Perks on September 14, 1990 in connection with the creation of Lower Mainland Publishing Ltd. as modified according to the letter of October 11 of John J. Quinn to the close of business Monday, October~, 1990. Yours
•' . Kendry JDK/pa c: David Perks, Esq. Russ Mills, Esq. George Addy, Esq. Stanley Wong, Esq. Andre Brantz, Esq. J. J. Quinn, Esq. 2452B(42) Toronto • 'l'ork Region • Ottawa • Montreal" • Calgary • Vancouver • London. England 'Associated firm La\'el'). O'Brien
Box 25, Commerce Court West Turonto, Ontario M5L 1A9 Telephone: (416) 863-2400 Facsimile: (416) 863-2653 Telex: 06-21968i
__________ _,,~~----~~--This is Exhibit ,\ Z) "1 to the ~ftidavit of c. 19 9C 1•1 Corieommat1on Consumer and et Corporations Canada Corporate Affairs Canaoa Oireeteur des Director of enqu6tes et recherches Investigation and Research 9u"ttl.I de 11 lurwau c:J oco1•01o1e de 11 ecncuminee COmpetil;on Policy flllce Ou Portege 1 Fac·11milt!-Faceiml1t !O VietOfit Hur. {81g) 1153·5013 Q..ift:lee f:u1•on"lements-Merger K1AOCi (119) 953·6169 Tel-Tel: March 6, 1989 Mr. John J. Quinn Blake, Ca••el• • Graydon BOX 25 Commerce court We•t Toronto, Ontario M!SL lA9 RE1 Acquisition by Southa~ Newspaper Group of a minority intere1t in North Shore Fr•• Pre•• Lt~. Dear Mr. Quinnr You have requested confirmation that the above tran•action will not, in the opinion of the Director of Inve1tigation an4 Re1earch, cau1e him to commence an inquiry un4er •eetion 10 of th• Competition Act or to aake an application to the Competition Tribunal under ••ction 92 of the Act. The information provi4ed by you ha• been •••••••d carefullf in light of th• merger provi1ion• of the Competit on Act. I as •ati1fied that on the baeie of that information and information obtained fro• other 1ourcea, the Director doee not have groun41, at thi• time, to commence an inquiry under aection 10 in reepect of this tran1action. However, l ahould mention that thi• opinion i• 1ubject to the provi1ion1 of aection 97 which provide• that an application aay be made in re1pect 0£ a merger up to three year• after it i• aubetantially completed. Should the Director obtain inforaation which provides hi• rea•ona to . initiate an inquiry or make an application to th• ,, competition Tribunal, he will not h••itate to do ao. I wi•h to expre1a our appreciation for your initiative to bring thia matter to our attention even though, a1 you note in your letter, thi• l• not a notifiable tran1action under the Act. very tr\lly,
Howard I. W•t•ton Senior Deputy Director Canad~
lhis is bhibit '' B ,., to the Affidavit of Jle: Southam Inc.'• Recent •ewspaper Acquisitions in the Lower Mainlaru! pf British Columbia
l. The Southam Newspaper Group, a division of Southam Inc. (•Southam•), North Shore Free Press Ltd. {"NSFP•), and David Perks, Publisher of the Gazette, Montreal, here))y provide the Director of Investi;ation and Research {the •ntR•) the followin; undertakin;s in connection with Southam and RSFP's recent newspaper acquisitions relating to the creation of Lower Mainland Publishing Ltd. (•LMPL•) in British Columbia. 2. In these undertakings, the following definitions shall apply: (a) •Acquired Companies• means RIM, Bex, NSFP and the Madison Group and •Acquired Company• means one of the four (identified by the contest of use). (b) •sex• means Tepnyl Holding Inc. and Be~ Publishing Ltd. (c) •confidential Information• means competitively sensitive or proprietary information of the Acquired Companies not independently known to Southam, NSFP or David Perks from sources other than LMPL and the Acquired Companies and includes, but is not limited to, price lists, marketing methods, strategic plans or other trade secrets. (d) •1nterim Period• means the period of time commencing on the date of these undertakings and ending on August 17, 1990. (e) •Madison Group• means Union Ink, Ltd., Specialty Publishers Ltd., SMA Holdings Ltd. and One cent Publishinq Ltd. and their subsidiaries and affiliates. (f) •Managers• means the managers of the Acquired Companies set forth in Schedule ·c·. ~001~ H192 53~~18 WO~~ ss=Lt 0s. s Nnr
- 2 -(9) •RIM• means RIM Publishinq Inc. and Vancouver Courier (1979) Ltd. 3. During the Interim Period, Southam will: (a) not sell, transfer, assign, ;rant any option for the purchase of, pledge or otherwise dispose of or encumber the shares it directly or indirectly owns in LMPL; . (b) not alter the boards of Oirectots or the officers of LMPL and the Acquired Companies as set forth in Schedule •A• except directors who voluntarily resi9n provided, however, that no replacement director shall be appointed or elected without the consent of the DIR; (c) not make any changes to the managerial employment of LMPL and the Acquired Companies as set forth in Schedule •a• escept to replace managerial employees who voluntarily resiqn or who ere dischargeO for cause provided, however, that no replacement managerial employee shall be appointed without the consent of the DIR: (d) direct the Managers to continue to operate the businesses of their respective Acquired Companies independently of each other and of the businesses of Southam; (e) direct the Manaoers to maintain, in accordance with oenerally accepted accountino principles, separate and complete financial leOger books anO records of material financial information for their respective Acquired Companies; (f) not receive, have access to, or use any Confidential Information relating to the Acquired Companies ezeept ,. for such Confidential Information as would be I available to Southam in tbe normal course of business if the Acquired Companies h•d not been acquired by LMPL; (q) instruct the Managers not to make any material changes to the financial arrangements of any of the Acquired Companies without the consent of the DIR; see· 3~t::::td SS: LT 06, S Nnf
- 3 -(h) not to seek any information in connection with or attempt to exert any influence, direction or control over the Managers, including without limiting the 9enerality of the preceding, not attempt to influence any operational, sales, distribution, circulation, marketin; or financial decisions of the Acquired Companies inclu~1ng decisions relating to: (i) advertising rates; (11) persons who advertise in the newspapers owned by the Acquired Companies; (iii) pro~uction, printin;, materials procurement, marketing, distribution and other costs; (iv) contracts with third parties; (v) aceountino procedures and other financial information; (vi) editorial policy; (vii) strate;ic planning; and (viii) administration; (i) instruct the Managers to maintain the business and goodwill of the Acquired Companies and not to sell, lease or otherwise dispose of material assets thereof without the consent ot the DIR; (j) without limitin9 the generality of the provisions of any of the precedin9 para;raphs, not take any action toward& combining the businesses, assets or operations of the Acquired Companies with the businesses, assets or operations of Southam or any other person; (k) without limitin9 the generality of paragraph 3(j), not directly or indirectly move, relocate, destroy or dismantle any assets of the Acquired Companies, or take any steps to physically integrate thos& ass&ts with the assets of any other business, without the consent of the DIR: unless, due to circumstances beyond the control of Southam or the Acquired Companies, an Acquired Company is forced to move, relocate or dismantle any of its assets to preserve such assets and Southam has notified the DIR; 9S=Ll 06. s Nnr
- 4 -(1) continue to abide by the term& of any contracts that are in place with any of the Acquired Companies, proviOed, however, Southam shall notify the DIR if performance of any contractual obligation conflicts with these undertakings; (m) not a;ree to, make or suggest any changes to the contracts referrea to in paragraph 3(1) without the consent of the DIR: (o) direct LMPL and NSFP not sell, lease or otherwise dispose of the shares of the Acquire~ Companies during the Interim Period without the consent of the DIR. 4. Notwithstandin; the foregoing, Southam shall be entitled to appoint David Perk&, full-time publisher of The Gazette in Montreal, to provide such direction to, and control of, the Manaoers as is necessary to assure compliance with these undertakings and provide direction to the Managers with respect to decisions on matters that are not of a day-to-day nature, includino: (e) coordination of the efforts of the Mane;ers as necessary to maintain the viability of LMPL an~ the Acquired Companies; and (b) entering into new, lower cost, contracts for newsprint procurement and publication distribution anO printing services, provided, however, any such contracts shall be assignable by each Acquired Company in the event of divestiture; 5. During the Interim Period, NSFP will: (a) not ••ll, transfer, grant any option for the purchase of, pledge or otherwise dispose of or encumber the . shares it directly or indirectly owns in RIM and Bex, < , , and; (b) comply with para;raphs 3(b) through 3(o) as if they ref erred to NSFP instead of Southam to thA extent they apply to Bez and RIM. 6. Durino the Interim Period, David Perks will not communicate Confidential Information and similar confidential information about the operations or assets of LMPL to Southam or NSFP without the consent of the DIR ezcept for confidential financial information required by Southam and RSFP to prepare their standarO financial reports. 9S=lt 0s. s Nnr
- 5 -7. Southam and RSFP will provide to the DIR and his staff such information, other than privileged information, as the DIR or his staff may require to complete their examination under the competition Apt of the acquisitions of the Acquired Companies. a. Southam and NSFP will provide to the DIR. when requested to do so, access to the premises of LMPL and the Acquired Companies, upon reasonable notice, and any information relatin; to the operations and assets of the LMPL and the Acquired Companies as is required by the DIR to monitor compliance with these undertakin;s. 9. Ezcept as provided otherwise herein, these undertakin9s will terminate on the earlier of the end of the Interim PerioO or the Oate the DIR notifies Southam and NSFP that he does not intend to challenge the acquisitions of the Acquired Companies under the provisions of the Competition Act. 10. These undertakin;s shall be binding upon David Perks and Southam, NSFP end their corporate successors, replacements or agents, and their affiliates, and on the directors, officers, servants and employees of Southam an~ RSFP. ll. Southam and NSFP confirm that the DIR may publicize the terms of the undertakings hereby given by Southam and NSFP. They also recognize that it is the DIR's intention to issue public statements or press materials at en appropriete time; and they consent to the DIR's use of this document in those statements. 12. Nothwithstanding that any or all of these undertakings have been fulf illeC, the DIR retains all his rights under the Competition Act, including, without limitation, the right to bring an application under section 92 of the Act, at any time within three years of the substantial completion of the mergers . . ' 13. In the event the DIR gives written notice to Southam, NSFP and David Perks prior to the en4 of the Interim Period that he will challen~e any of the acquisitions under the provisions of the Competition Act, Southam, NSFP and David Perks agree to the eztension of these undertakings until the 800"39~d ~OOlj H~92 53~~18 WO~j LS=ll 06. 5 Nnr
- 6 earlier of the date the DIR files an application with the Competition Tribunal pursuant to s.92 of the Competition Act or two week& have ezpired subsequent to the date of notification. DATED this k.f~day of June. 1990.
Per: •ORTH SHORE FREE PRESS LTD. Per: Peter Speck DAVID PD1tS
. .. ,.· < 2649B(l-6) 600. 3Elt:id L £ : L t o s • £ ~~ n r
·--
eatlier of the date the DIR files an application with the Competition Tribunal pur1u1nt to 1.tz o! the Comp1titipn Act or two weeka have ezpired subsequent to the 4ate of notification. DATED this ::z.ti. 4ay of 3une, 1990.
21491(1-6) 55:91 es. s Nnr
~ •.: V:>
llOOTIWI t•c. Pe~: Ru11 Milla 801tTE IBOU: FRO PRDS LTD. Per: Peter Speck
- JUN 07 '90 11:19 THE GAZETTE - MTL 282-2153 - ' earlier of the date th• DlR f i1•• an •PP11eetion with the competition ~ribunal pur1uant to •.92 of the ,CQ,m~tition Act or two weeks have espited 1ub1equant to the date ot. notification. DAT!D this -:J:!!:.. day cf June, 1990. 600TIWI IBC. Per: 1ulaMi ll• · · L'l'D •
l)AVtD PRUS
T-l- iis- -is- -bl-i1-b-1-t ~\.1 nLAKE, CASSELS &G RAYDON Barristers & Solicitors Patent & Trade-mark Agents
October 24, 1990 Jay D. Kendry Direct Dial: (416) 863-3053 VIA FACSIMILE Direct Faz: (416)863-4251 Reference: 00266/00212 Mr. Gilles Menard Senior Conunerce Officer Bureau of Competition Policy Place du Portage, Phase I Hull, Quebec Dear Gilles: Re: The Southam Newspaper Group Re: Investments in Lower Mainland Newspaper Further to the discussion of John J. Quinn and George Addy of yesterday, we confirm that we are preparing further submissions to the Bureau in regard to the above-mentioned acquisitions. Accordingly, we have been instructed to extend the undertakings given by The Southam Newspaper Group, North Shore Free Press Ltd. and David Perks on September 14, 1990 in connection with the creation of Lower Mainland Publishing Ltd., as modified according to a letter of October 11 of John J. Quinn, to the close of business Friday, November 2. Yours very truly, ~a';; 1<J JDK/pa
c: David Perks, Esq. , . George Addy, Esq. Stanley Wong, Esq. Andre Brantz, Esq. Ian McNaughton, Esq. J. J. Quinn, Esq. 24528(43)
Turonto • '\'Ork Region • Ottawa • Montreal• 'Associated firm l..a\'ery. O'Brien
.,..j. '.' ,.-to- -th-e -A-f-fid-a-v-it -o-f Box 25, Commerce Court West Thronto, Ontario M5L 1A9 Telephone: (416) 863-2400 Facsimile: (416) 863-2653 Telex: 06-219687
• Calgary • Vancou\'er • London, England
November 15, 1990 VIA FACSIMILE Direct Faz: (416)863-4251 Reference: 00266/00212 Mr. Gilles Menard Senior Commerce Officer Bureau of Competition Policy Place du Portage, Phase I Hull, Quebec Dear Gilles: Re: The Southam Newspaper Group Re: Investments in Lower Mainland Newspaper This is to confirm that The Southam Newspaper Group, David Perks and North Shore Free Press, Ltd. undertake to extend the current undertakings which have been given to the Director in regard to this matter until November 23, 1990. Yours very truly,
Jay D. Kendry JDK/pa c: David Perks, Esq. George Addy, Esq. Andre Brantz, Esq. Ian McNaughton, Esq. . Stanley Wong, Esq. < J. J. Quinn, Esq • J. H. Phillips, Esq. 2452B/44
, L i1 Box 25, Commerce Court ~'est BLAKE, CASSELS & GRAYDON Toronto, Canada MSL 1A9 Barristers & Solicitors Telephone 416-863·2400 Patent & Trade Mark Agents Facsimile 416-863-2653 Telex 06-219687 Our Reference: November 23, 1990 JOHN JQUIK~ Direct Dial (416) 863·2648
Direct Fax: (416)863-4251 Reference: 00266/00212 VIA FACSIMILE (613) 953-6169 Mr. George Addy Deputy Director The Bureau of Competition Policy Department of Consumer & Corporate Affairs Hull, Quebec KlA OC9 Dear Mr. Addy: Re: Southam Newspaper Group/Investments in Lower Mainland In your letter of October 4, 1990, you advised that the Director has concerns that certain aspects of the above-referenced transactions prevent or lessen, or are likely to prevent or lessen, competition substantially in a number of Lower Mainland advertising markets. You identified these markets as the following: (a) the retail advertising market in the City of Vancouver; (b) the retail advertising market in the North Shore; (c) the print advertising market in South Delta; and (d) the real estate advertising market in the Lower Mainland area of British Columbia. Your letter also indicated that the Director· ••. has concerns that certain aspects of the transactions prevent or are likely to prevent competition substantially in the print advertising market in the Lower Mainland area of British Columbia." At the conclusion of your letter, you asked that our client extend its "hold-separate" undertakings for an additional 30 days for the Northumbrian House, 14 Devonshire Square, London, England EC2M 4TE Telephone 01·377-6800 Facsimile 01·37"7·2917 Tela 94-13236
York Corporate Centre, JOO York Boulevard, Richmond Hill, Canada L4B 1)8 Telephone 416-733-4040 Facsimile 416-764-SU7 Telex 06-219687
BLAKE, CASSELS & GRAYDON Page 2 purpose of permitting your counsel additional time to prepare an application to the Competition Tribunal in respect to the matters outlined above. Our client has now extended those undertakings for more than SO days since your letter of October 4. These extensions have been in addition to the first extensions from the original August expiry date. At our meeting with Stan Wong, Gilles Menard, Andre Brantz and Ian McNaughton in your offices last Monday, Mr. Wong indicated that he is still in the process of drafting the Director's application. Our client is extremely frustrated by and ·disappointed in the lack of progress in achieving a constructive resolution of this investigation. Our client believes that our extensive submissions with respect to retail advertising in the North Shore and City of Vancouver have been largely ignored by Mr. Wong and the Bureau personnel conducting this investigation. In my letter to you of October 11, I indicated that our client is prepared to make substantial concessions with respect to both the South Delta community newspaper market, and the only remaining community market in which a significant competitive overlap exists with respect to real estate advertising, that is the North Shore market for real estate advertising. Since our discussions at our meeting with you of October 15, our client has developed these proposals in more concrete detail. Attached to this letter please find Appendix A, which pertains to the South Delta market, and Appendix B which deals with real estate advertising. We would appreciate your comments after you have had an opportunity to discuss them with your counsel and Bureau colleagues. As I indicated earlier, our client has been increasingly frustrated and disappointed at the continued refusal of Mr. Wong and Bureau personnel to engage in a meaningful dialogue on the available evidence surrounding '. competition in retail advertising in the City of Vancouver and the North Shore. Our submissions on these matters have been voluminous and comprehensive. Yet, our submissions have been answered by vague rejections and anecdotal replies. I offer the following as an example of our frustrations. At our meeting on November 19, 1990, Mr. Wong indicated that, indeed, •substantialw competition for major retail advertisers does exist between the relevant conununity papers and the Southam Oaily papers. In support of this assertion, Mr. Wong presented two examples of retail advertisers who use both the dailies and the North Shore News and Vancouver Courier for advestising. One of
BUKE, CASSELS & GRAYDON Page 3 those advertisers is Save-On Foods. Save-On Foods is one of only three advertisers we have identified to date that makes substantial use of the Southam dailies and both community papers at issue. The other two are Safeway and Sears Canada. Safeway and Save-on use flyers as their primary advertising vehicle. Save-on has recently started to use community newspaper advertising as a substitute for flyers because such advertising can also provide the total market coverage which is highly prized by food retailers. Both Safeway and Save-on have continued to use ads in the dailies to complement this total market coverage. Sears is the other company which makes significant use of the Southam dailies and both the community newspapers. However, as fully explained in our letter of November 9, 1990, this is another example of complementary use. The national head-off ice of Sears runs national campaigns which go into mass media (~, Southam Papers). The local store managers, who have significant ad budgets, use local media (~, community papers) to promote local stores. For example, a client of North Shore News is the Metrotown Store of Sears Canada. A client of the Vancouver Courier is the Burnaby Store of Sears Canada. It should be noted that the Burnaby Sears Canada Store just started placing ads in the Vancouver Courier on April l, 1990 on an experimental basis. As a result, we do not see the advertising practices of this set of three advertisers as demonstrating or even suggesting that our framework for analyzing this case is inaccurate or incorrect. To the contrary, we addressed these issues in great detail in our previous correspondence and in particular our letter of November 9, 1990. Moreover, no explanation has been given to us about how these examples actually fit into the theory of the Director's case. We are advising our client that its position ultimately will be upheld by the Tribunal and that the Bureau ~ is wrong. We have no grounds at all for thinking or advising 1~ otherwise. Please immediately try to convince us that you have a case that competition will be reduced. If not, please confirm that there are no grounds for further proceedings by the Director. I look forward to your responses on the Appendices and on the main issue.
.· BLAKE, CASSELS &G RAYDON Page 4 The undertakings ezpire today. They will not be eztended. Therefore the two-week grace period applies. Yours very truly, :J:::f-0<:3~
JJQ/jap Encls.
c: Howard Wetston Stan Wong David W. Perks - Lower Mainland Publishing Ltd. Russell A. Mills - The Southam Newspaper Group John H. Phillips - Blake, Cassels & Graydon~
Glenn F. Leslie - Blake, Cassels & Graydontl"
70130/80-83
T~ ,;; I .~ £x r, ..• , ,: \\ ('-! ' I lu :il;,, \I . • 1 ,1~3 ~1, I 01 ; 19 '-/ (~
. . . . SUBJECT TO PROTECTIVE ORDER - . - ..... -Hi. COMPITI'l'ION ftIBOJlAL IN .THE MATTER of an application by the Director of Investiqation and Research for orders pursuant to ••ction 92 of the competition Act, R.s.c. 1985, c.C-34, as amended; ANO IN THE MA'ITER ot the direct and indirect acquisition• by Southam Inc. of equity int•r••ts in th• busin••••• ot publishinq The Vancouver Courier, th• North Shore News and th• Baal Estate Weekly B E T W E E: N: Tlll DIRICTOI or Irl'llTIQATIOK AND R!8!ARC11
80t1TBAX I•C., LOWS. KAIK'LAHD PUILIIBINQ LTD., RIX Pt11LIIBI•O I•C., YELLOW Cll)~ PROPERTI!I LTD., NORT'B IBOa.I r1SI Pllll LTD., IP!CIAl.TY ~~Ll8Bl:al I•C., ILT'Y Pt11LICATIOK8 LTD. Respondents
No . - .. -·--..-.......:; ... •" ~ c 7- c;c/1 cc:.~::~~.~:Jr1 nm~:m~t T:'!"! .::~~ !l~ l:~ CCllC:.ir'.i:Et:cc p ~ • N'J'J 29 1590 (8$ ~ E c u I ··---· -····· .. Al T OTTAWA. CNT. ·r#;~) Applicant -and-