On June 17, 2019 the Competition Bureau announced that it is challenging Thoma Bravo’s acquisition of Aucerna, a company that offers valuation and reporting software to Canadian oil and gas producers.
The fact that the Competition Bureau is challenging the transaction after it has been completed suggests that the transaction was not subject to pre-merger notification and that the Bureau learned about the transaction only after it closed, or at least too late to seek to enjoin its completion. Presumably, this will become clear when the Bureau’s application becomes available on the Competition Tribunal website.
It’s noteworthy that the Bureau only recently decided to place more focus on detecting potentially anticompetitive non-notifiable transactions. It may be that Thoma Bravo’s acquisition of Aucerna is an early success.
The Bureau’s action against the merger also falls within its focus on the digital economy.
In its press release, the Bureau asserts “that the transaction is a merger to monopoly in the supply of reserves software in Canada to medium and large producers”. In this regard, the Bureau will likely have to contend with significant issues pertaining to market definition and entry conditions. And of course we can anticipate the merging parties advancing the efficiencies defence.
The Bureau’s action serves as a reminder that in non-notifiable mergers that raise significant competition issues, parties must decide whether to voluntarily consult the Bureau or not. Many factors come into play in that decision including the likelihood of complaints, the parties’ appetite for risk and possible litigation, and the availability of defences (including the efficiencies defence). The parties must also turn their minds to appropriate contractual protections in their merger agreement. In this regard it’s noteworthy that the Bureau has a one-year limitation period following closing of a merger to challenge the merger.