FAQs: Advance Ruling Certificates (ARCs)
Question 1: Why does the Competition Bureau need to increase its fees for merger notification and Advance Ruling Certificate (ARC) requests?
Answer: The increased fees better reflect the cost of merger review. Even at the new fee level, the Bureau continues to recover only partial costs. These changes will enable the Bureau to continue to deliver client service with enhanced efficiency and timeliness.
Question 2: What are the different possible types of notification filings?
Answer: When the notification thresholds are exceeded and a notification is required, parties may elect to file a short form filing or a long form filing including the information set out in sections 16 or 17 of the Notifiable Transaction Regulations. The statutory waiting period before parties can close a transaction is 14 days after filing for a short-form and 42 days after filing for a long-form. The Commissioner has the ability to require a long-form filing within the 14 day period after a short-form is filed although this is exercised in relatively few cases.
Parties may also request an ARC, under section 102 of the Act. The Commissioner may issue an ARC in respect of the proposed transaction where he/she is satisfied by the parties to a proposed transaction that he/she would not have sufficient grounds to apply to the Competition Tribunal for a remedial order under section 92. Issuance of an ARC exempts the transaction from application of the notifiable transactions provisions when the transaction is completed within one year of the date of issuance.
Where the Commissioner does not issue an ARC, parties may still be required to provide a merger notification filing to the Commissioner before proceeding with their transaction if the notification thresholds are exceeded. However, in these circumstances, the Commissioner has the discretion under subsection 113(c) of the Act to waive merger notification when substantially the same information required in a merger notification filing was provided in the ARC request.
Question 3: What information should be provided to the Bureau for an ARC?
Answer: The application should include a description of the proposed transaction, a description of the parties involved and an explanation of the likely competitive impact of the proposed transaction with reference to relevant competition factors as set out in section 93 of the Act. The submission of relevant market share information and any related industry studies may also assist in attempting to satisfy the Commissioner that there is no competition issue and that an ARC should be issued. Parties requesting an ARC should suggest the wording for a "Re:" line which would adequately identify the transaction and which could appear on the actual certificate.
Question 4: Can a written opinion take the place of an ARC request and/or a short-form or long-form filing?
Answer: No. The nature of a written opinion is different from that of an ARC request or a notification filing. A written opinion states the Commissioner's position on whether or not a proposed course of action or general fact scenario would cause him/her to initiate an inquiry under the Act, or whether he/she considers a particular transaction to be notifiable under Part IX of the Act. A notification filing or ARC request provides the basis for a substantive review of the likely competitive effects of a specific merger.
Question 5: What is the difference between a statutory waiting period and a service standard and how much time will the review take?
Answer: A statutory waiting period is the time period following the filing of a short-form or long-form notification during which the parties are legally prohibited from closing the transaction, being 14 days after filing of a short-form and 42 days after filing of a long-form as provided in subsection 123(1) of the Act.
A service standard is a standard time frame within which the Bureau aims to provide a response to requests for services and regulatory processes including merger filings; it is not legally binding and the parties are legally free to close at their own risk, without hearing the Bureau's views on a transaction, after the applicable statutory waiting period has expired. This is not recommended as a later challenge of the transaction may result in a full or partial dissolution of the combined entity.
Service standards vary with the complexity of the transaction: non-complex transactions have a service standard of two (2) weeks, complex transactions are ten (10) weeks and very complex transactions have a service standard of five (5) months.
Under certain circumstances, the Bureau will not be able to meet these time frames. On these occasions, parties will be provided, in advance of the service standard end date, the reasons for it not being met, and the date a response should be expected.
Question 6: If I request a written opinion and subsequently request an ARC and/or file a short-form or a long-form notification, is the fee for the written opinion deducted from the fee for the ARC request and/or short-form or long-form notification filing?
Answer: No. The nature of a written opinion is different from that of an ARC request or a notification filing.
Question 7: How much are filing fees?
Answer: Merger Notification filings and ARC requests will be subject to a fee of $50,000 per transaction.
Question 8: If I apply for an ARC, am I required to pay taxes on the $50,000 fee?
Answer: Yes, if the party requesting the ARC is resident in Canada. Applicants who are residents in foreign jurisdictions are not required to pay taxes on their filing fee. The taxes required of an applicant who is a resident of Canada depend upon the province in which they reside: residents of Newfoundland, New Brunswick and Nova Scotia must pay the harmonized sales tax (HST); residents of Quebec are required to pay both the Goods and Services Tax (GST) and the provincial sales tax (QST); while the residents of all other provinces must pay the GST.
Question 9: If I file a short-form or a long-form filing, am I required to pay taxes on the $50,000 fee?
Answer: No. Taxes are not required for the filing of a short-form or a long-form notification.
Question 10: My client would like to request an ARC. He is a resident of the U.S and I am a Canadian lawyer acting on his behalf. Is he required to pay the GST?
Answer: No. Non-residents of Canada are not required to pay the GST as provided by Schedule VI of the Excise Tax Act, Part 5, Section 9. Refer to Web site: http://laws.justice.gc.ca/, under Laws, for details. If you are uncertain whether GST applies in various scenarios, please contact your local Canada Customs and Revenue Agency office.
Question 11: I requested an ARC prior to the coming into force of the revised fees. I was subsequently informed by the Bureau that I was required to file a merger notification. Am I required to pay the new fee?
Answer: No. As in the past, the Bureau has agreed to "grandfather" any requests relating to transactions which were filed with the Bureau prior to the coming into force of the revised fee structure on April 1, 2003.
Question 12: If I apply for an ARC and I file a short-form or a long-form filing for the same transaction, am I required to pay the $50,000 fee twice?
Answer: No. Only the payment for the ARC and appropriate taxes are required.
Question 13: If I apply for an ARC and I also provide a short-form or a long-form filing for the same transaction, am I required to pay taxes on the $50,000 fee?
Answer: Yes, if you are a Canadian resident. Taxes are required for ARC requests.
Question 14: Two parties request an ARC with respect to the same transaction; one is situated in Québec, the other in Ontario. They will divide the cost evenly between the two. Does the party from Ontario have to pay the Québec Provincial Sales Tax?
Answer: No. Only the Québec party pays the Québec Sales Tax on his share of the fee.
Question 15: I requested an ARC yesterday and would like to withdraw my request. May I get a reimbursement of the fee?
Answer: Yes. Provided that the certificate has not been issued and that you withdraw your request, in writing, within 48 hours of your original certificate request, the Bureau will refund your payment.
Question 16: Out of an abundance of caution, my client would like to file a premerger notification and request an ARC. Is he required to pay $50,000?
Answer: No. Only the payment for the ARC and appropriate taxes are required.
Question 17: I participated in the consultation exercises that the Bureau undertook in developing these fees. I was surprised to learn that the GST issue was not included during the discussions. Because the fee for an ARC is substantial ($25,000), I wondered why the Bureau did not absorb the GST within the fee.
Answer: Undoubtedly, the Bureau should have clarified the application of GST as a point of discussion during the consultation exercises.
While Canadians are accustomed to paying the GST for services and most products and the Bureau did not see it as a concern for Advisory Opinions and photocopies, we did recognize that the application of the GST on $25,000 would be a substantial amount.
One of the Bureau’s main objectives, however, was to have a single flat fee of equal value for both Premerger Notification and for Advance Ruling Certificates in recognition that the objective of fees is to recover costs of providing a service. Because service is the same for premerger notification filings and advance ruling certificates, the cost to the Bureau is almost identical and this ought to be reflected in the fees.
It was therefore inappropriate to include the GST within the fee for an ARC as this would, in effect, result in the recovery of less cost than that which is recovered for a PMN.
