Canada’s competition watchdog says a new policy to post the results of merger reviews on its website each month is all about transparency. But critics say the Competition Bureau’s move violates the sanctity of corporate confidentiality, and the law.
Melanie Aitken, the Commissioner of Competition credited with taking a tougher approach after the federal regulator was granted new powers in 2009, has repeatedly cited the new merger registry in speeches as part of her drive to open up the bureau’s operations.
The first list, posted last week on the reviewing mergers section of the Competition Bureau’s website (www.competitionbureau.gc.ca), may seem innocuous. It contains little information beyond the names of the companies involved. Many of the deals on it, such as Google’s acquisition of Motorola Mobility, are already public.
But others are deals between private companies that would not normally be pushed into the public domain.
Some lawyers who specialize in competition matters say it represents a shift in the traditional relationship between the bureau and corporations. They are concerned that the bureau’s drive for transparency will end up pushing corporate information, flirtations and battles that would once have stayed under the radar into the public realm.
Richard Wagner, a senior partner with Norton Rose Canada in Ottawa, warns that the move could be a precedent for the Competition Bureau to release even more information: “One of the concerns is, is this a thin edge of the wedge of even more disclosure?”
The merger list will thrust some deals between private companies into the spotlight that would otherwise have remained unknown. But Mr. Wagner said future scenarios could also involve revealing when a company files a complaint against a competitor, or other information supplied to the regulator by companies involved in a deal.
He said the merger registry is a major departure for the bureau, which traditionally has been a stickler for keeping secret the reams of data that companies provide to it in merger reviews.
“When you go there physically, the security is very high,” Mr. Wagner said of the bureau’s Gatineau, Que., office. “We walk through an area where we can’t see any files, we go into a boardroom, and that’s it. They don’t let you wander the halls because there’s lots of confidential information floating around that office, and they’ve been very good historically on maintaining confidentiality.”
The Canadian Bar Association has also protested against the bureau’s move to post merger review information on the website. In a letter signed by McCarthy Tétrault LLP’s Donald Houston, chairman of the CBA’s competition law section, the association says the Competition Act obligates the bureau to keep merger review information confidential, unless the companies involved have made it public.
“We think, just as a matter of principle, the law requires this information be kept confidential,” Mr. Houston said in an interview. “That should be respected.”
The Bureau said that it is aware of the concerns, and takes the issue of confidentiality very seriously.
“The information that is in the register is simply very basic information including the names of the merging parties, the industry sector involved, and the outcome of the Bureau’s review,” a spokesperson said. “The release of this information is consistent with the goals of transparency and to inform Canadians with important information about the Bureau’s work.”
Mr. Houston added that, apart from the legality issue, it is difficult to see how the minimal information included in the merger registry increases transparency. The regulator’s website says nothing about why deals were approved or turned down: “If the object is transparency, it is my view that the merger registry does nothing to advance that goal.”
The bureau’s practice of publishing “position papers” on significant cases would add more transparency to its inner workings, he argued. In the past, these papers were cleared with the merging parties to ensure no confidential information became public. The bureau has said it plans to publish more of these on the website.
Mr. Houston and other leading competition lawyers acknowledged that only in a small number of cases would the merger registry do any harm, because most deals are made public by the companies involved.
But Debbie Salzberger, a partner at Blake Cassels & Graydon LLP in Toronto, said a public announcement that the bureau has issued a “no-action letter” – a notice tentatively okaying a deal – could alert competitors and tempt them to launch complaints to try to block the transaction.
“Businesses need to be made aware that information that they may have thought was confidential, i.e. the mere fact of their filing, is now going to be on a website for others to look at,” Ms. Salzberger said.
In most cases, when the Competition Bureau is probing the possible anti-competitive effects of a potential merger, it asks competitors for their views, alerting them to the deal. But Adam Fanaki, a lawyer with Davies Ward Phillips & Vineberg in Toronto and a former senior official at the bureau, said this does not mean that making it completely public is acceptable.
“Contacting a limited number of industry participants as part of a confidential inquiry can be very different from disclosing the transaction broadly to the public through the bureau’s website,” Mr. Fanaki said.