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Public Notice CRTC 2001-75
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Ottawa, 5 July 2001
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Ownership transfers - Application of a condition precedent
where approval is predicated on the divestiture of another business
asset or interest
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The Commission announces that, in the future, it intends to make
its approvals of applications involving the transfer of control of
broadcasting undertakings subject to conditions precedent when the
approval is predicated on the divestiture by the purchaser of
another undertaking or of another business asset or interest. This
approach should help maintain a healthy and dynamic competitive
environment, and to ensure that applications of this type receive
equitable treatment in a reasonably timely manner.
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1. |
In Decision CRTC 2001-384 of today's date, the Commission has
granted Quebecor Média inc. authority to complete the transfer of
effective control of Groupe TVA inc. The Commission attached a
condition precedent to its approval. This condition requires that
the sale of TQS inc. be effected before the said transfer may go
forward, and that a complete application pertaining to this
divestiture be filed with the Commission in accordance with the
timetable set out in the decision. The effect of the condition
precedent is that Quebecor Média inc. cannot complete the transfer
of control of Groupe TVA inc. until all requirements imposed as
a condition precedent in Decision 2001-384 are fulfilled to the
Commission's satisfaction.
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2. |
The purpose of the condition precedent is to ensure that the sale
of an undertaking, as required by the Commission, is completed
within a reasonable period of time, thereby minimizing uncertainty
as to the ownership of undertakings.
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3. |
The recent wave of ownership consolidation in the broadcasting
industry and its creation of large corporate entities have revealed
that transfer of ownership applications, when granted a favorable
decision, conditional upon the divestiture of another asset after
the fact, can produce situations in which the required divestiture
is protracted. The Commission is concerned that such situations
raise the level of uncertainty within the industry, and can
adversely affect the financial health of the companies concerned.
Inevitably, this has an undue impact on the broadcasting system as a
whole that is not in the public interest. In order to minimize the
negative effects, the Commission has sometimes required that trusts
be created to ensure compliance with the required diversiture and to
expedite the sale of the undertaking concerned.
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4. |
In the interest of maintaining a healthy and dynamic competitive
environment, and to ensure that equitable treatment is given to
transfer of ownership applications where approval is subject to
other divestiture requirements, the Commission, in the future,
intends to make such approvals subject to conditions precedent. The
condition precedent in an approval decision will generally relate to
the transfer of an undertaking, or to the sale of assets or of other
business interests whose retention by the purchaser is considered by
the Commission not to be in the public interest. The Commission may
also impose a condition precedent related to any other requirement
whose fulfilment it considers essential for approval.
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5. |
Conditions precedent will generally be subject to short deadlines
to ensure that the required divestiture is completed
expeditiously. In setting a deadline, the Commission will take
various factors into consideration, notably the size and financial
circumstances of the undertaking concerned, the market it serves, as
well as the nature of the concern that has given rise to the
condition precedent.
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Secretary General
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This document is available in alternate format upon request and
may also be examined at the following Internet site: http://www.crtc.gc.ca
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