Written by Andrew D. Little and Emrys Davis
Expedited hearings are now available for contested mergers and other competition law cases, due to new procedures adopted by Canada’s Competition Tribunal.
The Tribunal has released two new Practice Directions, one about expedited procedures towards an early hearing and another applying to all Tribunal proceedings. The new procedures call for streamlined discovery and more active case management by the Tribunal.
Expedited Hearing Process
The advent of an expedited hearing process is itself a significant development for competition law cases in Canada. While mostly driven by a desire to have speedier adjudication available for some merger matters, the expedited process is also available for reviewable practices under the Competition Act (such as abuse of dominance), and for alleged violations of the deceptive marketing provisions of the Act, such as misleading advertising and pricing.
The key takeaways for expedited Tribunal cases are:
- a hearing on the merits five to six months after the application is filed (which is less than half the typical time to date);
- active pre-hearing case management by a judge;
- streamlined document and oral discovery, during which parties are expected to reasonably cooperate on process issues;
- hearings of five to seven days for evidence and one to two days for argument (again, less than the experience to date); and
- the Tribunal aims to deliver its decision within a month after oral argument, further reducing the overall time.
The Practice Direction contains a number of other important features for the expedited process.
Not just on consent of both parties: the Tribunal may adopt an expedited process if both the Commissioner and the respondent(s) agree, or if one party requests it. If only one party asks for it, the Practice Direction sets out a list of factors the Tribunal will consider in deciding whether to adopt it, in the particular circumstances of the case and to ensure procedural fairness for both parties.
Simultaneous exchange of hearing evidence: under the new expedited process, the parties will simultaneously exchange evidence in two steps. First, the parties will exchange initial witness statements, lists of documents to be relied upon, and expert reports; then, about 15 days later, the parties will simultaneously exchange responding evidence in those three categories. For non-expedited matters, the parties will continue to exchange evidence as the Competition Tribunal Rules require, in three sequential steps: first the Commissioner’s case, then the respondent’s responding case, then reply evidence from the Commissioner (there will continue to be scheduling variations in merger cases if the merging parties raise an efficiencies defence).
Discovery plans: the parties must prepare and exchange discovery plans within a week of the close of pleadings. Discovery plans, which are a regular feature of civil litigation, deal with the nuts and bolts of the pre-hearing discovery process. Parties seek to agree on the key issues at stake, identify custodians of relevant documents and data, agree on the time frame for which each custodian’s documents must be collected, and identify an acceptable representative for oral examination for discovery.
Streamlined discovery procedures: a number of changes are designed to make the discovery process more targeted and efficient, with the stated aim to eliminate or reduce the number of motions associated with document and oral discovery.
The Tribunal further advised that parties “will be expected to reasonably cooperate and agree on expediting discovery and pre-hearing steps, as well as the hearing itself, including with respect to documentary discovery, examinations for discovery, and the presentation of evidence in a manner that could streamline the hearing”.
Ongoing and active case management: a judicial member will be available on short notice for case management conferences, and may provide spot rulings on oral discovery issues.
Early identification and adjudication of issues: intriguingly, the Practice Direction advises that the Tribunal will itself proactively identify and raise procedural or substantive issues for possible determination early in the expedited proceeding, and will raise them at the first case management conference.
Procedures in Non-Expedited Matters
The Tribunal issued a separate Practice Direction on timelines and scheduling, which confirms that it will be taking a “more active role” in the case management of all of its proceedings.
The Tribunal advised that it usually consider an overall timeline of 10 to 16 months, from the filing of the Commissioner’s application to the start of the hearing, to be reasonable in a Scheduling Order—with exceptions based on the specific case.
Interestingly, the Tribunal expressly recognized that the minimum times in the Competition Tribunal Rules for the delivery of witness statements, lists of documents relied upon and expert reports before the hearing have “sometimes proved to be too tight” when motions are filed near to the hearing. Thus, the Tribunal stated that it will “generally be advisable for parties and counsel to provide for more time than is currently contemplated in the Rules for the exchange of the parties’ cases”.
There is real potential in the new process rules for the Competition Tribunal. It is clear that the Tribunal is ready, willing and able to deal with an expedited proceeding. The questions now are whether a party will actually take up the opportunity to expedite a case—who will be bold enough to be first? And, will the parties be able to make it work?
We expect that some deceptive marketing matters could be determined using an expedited process, particularly if the Commissioner were to deliberately narrow the issues at stake in each case. That is, the Commissioner could bring more cases with fewer contested issues or alleged violations in each one. Respondents to these narrower cases may be attracted by quicker adjudication to minimize adverse reputational risks, prove a due diligence defence and perhaps to reduce costs in some cases.
Merger matters are a different kettle of fish. Many factors affect the merging parties’ ability to litigate at the Tribunal in the first place, from the strength of the Commissioner’s arguments for an injunction, to the merits of the case, to the availability and cost of financing during the litigation. A quicker decision will itself be attractive, potentially to bring adjudication time frames in Canada closer to timelines for injunction proceedings in the United States.
However, merging parties will need to pay close attention to the details provided in any communications with the bureau and in the Commissioner’s pleadings, to ensure the Commissioner has clearly articulated the specific grounds of concern under section 92 of the Competition Act. For the Commissioner, streamlining the discovery process in a merger matter may well be acceptable due to the extensive disclosure in required filings, and in responses to voluntary information requests and a formal supplementary information request. Sufficient resources will be a live concern to the Commissioner and counsel for an expedited merger process, although no more so than the resources necessary to seek an injunction before the Tribunal to temporarily suspend the proposed transaction.
There will be issues to work out. Some parties may perceive a trade-off, between a speedier determination on the merits on one hand, but some compromise of their right to full discovery on the other. This and other concerns must be considered in each individual case.
In every expedited matter, the Commissioner and the respondent(s)—and their respective counsel and experts—will have to commit significant resources to ensure a matter is properly litigated in the short time frame.For additional information about Tribunal proceedings and other competition law topics, please contact Andrew Little at 416.777.4808 or Emrys Davis at 416.777.6242.