The Power of Perspectives

The Canadian Bar Association

Kim Covert

Competition Bureau’s merger fee review would change more than the money

December 13 2017 13 December 2017

 

The Competition Bureau’s proposal to increase the amount it charges for a merger review is more than the first fee increase in 14 years – it represents a change in philosophy about how the Mergers Directorate is funded.

In their response to the proposal to increase filing fees to $72,000, the CBA Competition Law Section notes that previous fee analyses have “recognized that administering the Act’s merger provisions has public benefits that should be at least partially funded by taxpayers.” The current proposal assumes that the Mergers Directorate would be funded entirely by filing fees.

“The rationale for this fundamental change remains unclear,” says the submission.

“Prior CBA Section submissions on the structure of merger filing fees note that a split-funding model properly recognizes the significant public benefits arising from the Bureau’s administration of the merger provisions. These public benefits, which increase directly with the complexity of the mergers, are appropriately funded (at least in significant part) by taxpayers as a whole rather than by individual notifying parties.”

The submission offers a couple of other suggestions and comments on the proposal, including:

  • Flat fees need further examination: The case for using flat fees is compelling but as the fees rise, and with any future indexing, it should be reviewed and alternative fee structures considered. The issue is that parties in non-problematic mergers essentially subsidize the review of more complex transactions.
  • There are non-fee-based measures that could improve resource allocation in the Mergers Directorate, including raising certain thresholds and exempting pre-notification for mergers that rarely raise competition issues. “Even if analysis beyond a cursory review is necessary for certain (non-problematic) mergers … the standard for adopting an exemption should not be absolute certainty that no substantive issues will arise.”
  • There is merit in revising the Bureau’s complexity and service standard policies based on the experience accumulated since the 2009 amendments to the merger review process.

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