Version issued 2023
Disclaimer
These guidelines serve as an administrative document intended to provide information with respect to notices required under section 53.1 and following of the Canada Transportation Act. Despite these guidelines, the Minister of Transport may require the person who has given the notice to provide further information.
This document is not intended to provide legal advice, nor does it constitute part of Transport Canada’s legislative/regulatory framework. In the event of any inconsistencies or conflict between the legislation and/or
regulations and this document, the legislation and regulations take precedence.
Introduction
The purpose of these guidelines is to inform parties to a proposed transaction involving a transportation undertaking subject to the application of sections 53.1 to 53.6 of the Canada Transportation Act of: (i) the factors that may be considered to determine whether a transaction raises issues with respect to the public interest as it relates to national transportation, (ii) the information, including information with respect to the public interest, that should be included in any notice provided to the Minister of Transport, and (iii) the process pertaining to a notice filed under section 53.1 of the Act.
Review of mergers and acquisitions involving transportation undertakings
The Canada Transportation Act contains provisions for the review of merger and acquisition transactions involving federal transportation undertakings to determine whether they raise issues of public interest. In the first phase of the review, the Minister of Transport assesses the proposed transaction to determine whether it raises any public interest issues. If the Minister finds that no public interest issues are raised, the Minister shall issue a notice to that effect and the transaction may be completed without any further review under the Act. If, however, the Minister determines that the proposed transaction raises public interest issues, the Minister may direct the Canadian Transportation Agency or appoint and direct any other person to examine those issues. Where the Minister is of the opinion that a proposed transaction raises public interest issues as it relates to national transportation, the transaction cannot be completed unless the Governor in Council approves it. A detailed description of the review process can be found in Appendix A.
Public interest as it relates to national transportation
The Canada Transportation Act requires that the Minister of Transport assess whether a proposed transaction involving a federal transportation undertaking raises issues with respect to the public interest as it relates to national transportation. The public interest is a broad concept. Individual transactions may raise different public interest issues or concerns. The nature and scope of public interest issues which may exist in respect of any particular transaction depend on the unique facts and context of the transaction.
However, it is possible to provide general guidance to parties to transactions involving federal transportation undertakings on the factors that may be considered in determining whether the transaction raises public interest issues as it relates to national transportation.
National Transportation Policy
A discussion of public interest factors begins with consideration of the National Transportation Policy.
The National Transportation PolicyFootnote 1 recognizes that competition and market forces are the prime agents to provide viable and effective transportation services. It also provides that regulation and strategic public intervention are used to achieve economic, safety, security, environmental or social outcomes that cannot always be achieved satisfactorily by competition. It provides that the ideal system is most likely to be achieved when, among other things, rates and conditions do not constitute an undue obstacle to the movement of traffic within Canada or to the export of goods from Canada, and that the transportation system is accessible without undue obstacle to the mobility of persons, including persons with disabilities. Moreover, the National Transportation Policy provides that governments and the private sector work together for an integrated transportation system.
These objectives assist in describing the scope of public interest considerations which could be relevant to a transaction review.
Public interest factors
In assessing whether a proposed transaction involving a transportation undertaking raises issues or concerns with respect to the public interest as it relates to national transportation, the following factors could be considered:
Economic
A. Impacts on users of the transportation system
Of prime interest in any transaction involving a transportation undertaking will be the impacts on prices and the levels of access to services and facilities. In fully competitive markets these issues will be of lesser concern. In markets characterized by less competition, such impacts may take on a higher level of significance. Transactions which have the potential to improve competition, efficiency, networks or market structure and/or add capacity or investment will be less likely to raise a public interest concern compared to those which do not, or which have an adverse impact on these factors. Transitional impacts experienced by users may be a relevant public interest factor, as may be the likelihood that the benefits of the transaction could be achieved by other, less disruptive means.
B. Impacts on communities
The impact of a transaction on the development, viability, and location of a non-transportation industry (such as the tourism industry) may be a public interest factor in some cases. Impacts on labour and employment in a community or region may raise public interest concerns. Availability of affordable service in low-density markets may also be a public interest factor.
C. Impacts on other transportation undertakings
Impacts on intermodal connections and supply to other transportation undertakings such as freight consolidators might be a public interest factor in a transaction. Anticipated reactions of competitors to a transaction, or whether a transaction may adversely affect one or more transportation sectors, might also be a factor.
D. Impacts on Canada
Impacts of a transaction on Canadian competitiveness in terms of leadership, management and workforce expertise may be relevant to a public interest determination. Harmonization and productivity improvements may represent positive public interest factors. Impacts on trade, gateways and corridors will be considered. Research and development, innovation and technology impacts may also be reviewed. Impacts on taxation and government expenditure may also be factors.
E. Impacts on the undertaking(s) involved
The financial viability of the entity resulting from the merger or acquisition may be a relevant public interest factor as may be the impact of the transaction on costs and revenues of the undertaking(s) involved.
Environmental
The capacity of a transaction to improve the quality of life and the environment by reducing congestion and pollution will be a positive public interest factor.
Safety
Safety impacts of a transaction will be carefully considered where relevant. Potential of transactions to improve safety in the workplace and in our communities will be an important consideration.
Security
Transactions should not have an adverse impact on our capacity to protect our citizens and to respond to any threat. Where change of control of a key undertaking is proposed, reliability of the new owners could be a relevant public interest factor.
Social
Where appropriate, impacts of transactions on low-income workers and families may be reviewed. Wherever possible, transactions should improve access to transportation for people with disabilities. Since modern governance in both the public and private sectors demand appropriate levels of accountability and transparency, impacts in these areas may affect the public interest. Cultural impacts and those affecting Canadian sovereignty may also be public interest factors.
Notice under the Canada Transportation Act of a proposed transaction involving a transportation undertaking
Transactions subject to review
Under the Canada Transportation Act, parties to a proposed transaction must give notice to the Minister of Transport if the following conditions are met:
- The party is required to notify the Commissioner of Competition under subsection 114(1) of the Competition Act and,
- The proposed transaction involves a federal transportation undertaking.
A notice should also be submitted to the Canadian Transportation Agency if the transaction involves an air transportation undertaking so that the Agency can assess whether the transaction would result in an air transportation undertaking that is Canadian as defined in section 55(1) of the Canada Transportation Act.
For any questions regarding the application of these guidelines, please direct them to the following mailbox: MergersandAcquisitions-FusionsetAcquisitions@tc.gc.ca.
Notice contents
Notice of a proposed transaction involving a federal transportation undertaking should include the following information:
- The information that is required to be provided to the Commissioner of Competition under the Competition ActFootnote 2 or that is filed with the Commissioner of Competition together with a notification; and
- A Public Interest Impact Assessment containing information with respect to the public interest as it relates to national transportation. (See below.)
Timing of notice to the Minister
As the process under the Canada Transportation Act contemplates a concurrent review of the public interest by the Minister and of competition by the Commissioner of Competition, parties to a proposed transaction are required to provide notice of a proposed transaction involving a transportation undertaking to the Minister at the same time parties either file a request for an advance ruling certificate under s.102 of the Competition Act or submit a notification under s.114 of the Competition Act.
Fees
No fees are charged by the Minister to process a notification of a proposed transaction.
Contents of a Public Interest Impact Assessment
Parties are provided with broad discretion to determine what information to provide to address the potential public interest impacts. However, a substantial and complete notice will allow a more focused and expeditious review. This will result in fewer requests for additional information and, if warranted, fewer and more focused third-party contacts. The benefit to parties will be a quicker review since the Minister will have the opportunity to conduct a thorough examination of the public interest issues raised by a transaction.
A Public Interest Impact Assessment of a proposed transaction should contain:
- a narrative description of the proposed transaction including the objectives of the transaction;
- a description of the transportation undertaking(s) involved in the transaction and the objectives of the transaction with respect to the transportation undertaking(s);
- a description of proposed changes to the business or strategic plans, if any, in respect of any transportation undertakings involved in the transaction;
- the parties' assessment of relevant public interest impacts related to the public interest factors set out above and any information with respect to these impacts;
- a description of any proposed mitigation or remediation of adverse public interest impacts;
- identification of major stakeholders who may be interested in the transaction (shippers, passengers, customers, suppliers, other levels of government, the general public, etc.);
- a description of any consultation which has taken place with affected stakeholders prior to notification;
- identification of any other government approvals required to complete the transaction including foreign approvals, actions taken to seek such approvals, and status of such actions;
- supporting evidence, if any, for the statements made in the Public Interest Impact Assessment;
- any other submission a party may wish to make as to whether the transaction raises issues with respect to the public interest as it relates to national transportation.
Transaction review
Submission of notice
Persons submitting notices shall do so in writing to:
Minister of Transport
Place de Ville, 330 Sparks Street
Ottawa, Ontario, Canada
K1A 0N5
As well, parties shall submit a copy of the notice to:
Assistant Deputy Minister, Policy
Transport Canada
Place de Ville, 330 Sparks Street
Ottawa, Ontario, Canada
K1A 0N5
Email: MergersandAcquisitions-FusionsetAcquisitions@tc.gc.ca
In the case of a proposed transaction that involves an air transportation undertaking, the parties shall also submit a copy of the notice to:
Secretary
Canadian Transportation Agency
60 Laval Street, Unit 01, Gatineau, QC
J8X 3G9
Email: Financial-Evaluation@otc-cta.gc.ca
Under the Canada Transportation Act, if the Minister is of the opinion that a transaction does not raise public interest issues, the Minister must provide a notice of that opinion within 42 days. Formal consideration of a notice by the Minister will only commence upon receipt of a complete notice that includes all the information required under the present guidelines.
Review of notice
Following receipt of a notice, the Minister will perform a preliminary assessment of the information received for completeness. If required, the Minister may require a person who has given notice to provide further information.
An assessment will also be made regarding whether the transaction involves a federal transportation undertaking. In cases of doubt the Minister may require additional information from parties to the transaction to resolve the question.
Confidentiality
All information submitted to the Minister will be treated as confidential consistent with section 51 of the Canada Transportation Act.
Consultation
The Minister may seek the views of stakeholders (shippers, passengers, customers, suppliers, other levels of government, the general public, etc.). When doing so the Minister will refrain from disclosing confidential information. In some cases, however, the Minister may seek consent from parties to communicate relevant confidential information in order to facilitate the consultation.
Requests for additional information
The Minister may request at any time additional information from the parties to assist in determining whether the transaction raises any public interest issues. Additional information may also be required if the Minister determines the transaction raises public interest issues and appoints someone to conduct a formal review of the transaction.
Assessment & determination
A proposed transaction will be assessed to determine whether it raises issues with respect to the public interest. Where the transaction raises no public interest issues the Minister shall give notice to that effect within 42 days after a person gives notice of the transaction. It is possible that for simpler transactions clearly raising no public interest issues that a determination will be made more quickly. Where the transaction raises public interest issues, the Minister may direct an examination of the issues by either the Canadian Transportation Agency or a person appointed under the Department of Transport Act.
Pre-notice questions
Any questions respecting the review process under the Canada Transportation Act, including whether a proposed transaction is subject to the Act or raises public interest issues relating to national transportation may informally be discussed with Transport Canada officials in advance of any official notice and without prejudice to any final determination by the Minister.
Additional questions
Questions regarding these guidelines should be submitted to:
Transport Canada, Policy Division
Place de Ville, 330 Sparks Street
Ottawa, Ontario, Canada
K1A 0N5
Email: MergersandAcquisitions-FusionsetAcquisitions@tc.gc.ca
Appendix A
Detailed Description of the Transaction Review Process
When a Notice is Required
Every person who is required to notify the Commissioner of Competition under subsection 114(1) of the Competition Act of a proposed transaction that involves a federal transportation undertaking shall, at the same time as the Commissioner is notified and, in any event, not later than the date by which the person is required to notify the Commissioner,
- give notice of the proposed transaction to the Minister; and
- in the case of a proposed transaction that involves an air transportation undertaking, also give notice of the transaction to the Canadian Transportation Agency.
What must the Notice Contain
A notice given to the Minister or to the Agency shall, subject to the regulations, contain the information required under subsection 114(1) of the Competition Act or the information provided in support of a request for an advance ruling certificate pursuant to section 102 of the Competition Act. The notice shall also contain any information with respect to the public interest as it relates to national transportation that is required under these guidelines. After receipt of a notice, the Minister may require the person who has given the notice to provide further information.
Where No Public Interest Issues are Raised
If the Minister is of the opinion that the proposed transaction does not raise issues with respect to the public interest as it relates to national transportation, the Minister shall, within 42 days after a person gives notice, give notice of the opinion to that person, in which case the transaction can be completed without any further approval under the Act.
Where Public Interest Issues are Raised
If the Minister is of the opinion that the proposed transaction raises issues with respect to the public interest as it relates to national transportation, the Minister may direct the Canadian Transportation Agency to examine those issues or appoint and direct any person to examine those issues under the Department of Transport Act. The Minister will also inform the Commissioner that a public interest review has been initiated and a report on competition concerns is required.
Public Interest Examination Report Filed
The Agency or person conducting the examination shall report to the Minister within 150 days or within any longer period that the Minister may allow.
Report of the Commissioner of Competition
The Commissioner of Competition shall within 150 days after the Commissioner is notified of the proposed transaction under subsection 114(1) of the Competition Act, or within any longer period that the Minister may allow, report to the Minister and the parties to the transaction on any concerns regarding potential prevention or lessening of competition that may occur as a result of the transaction. The Commissioner's report is made public after its receipt by the Minister.
Minister's Consultations with Commissioner
After receipt of the Commissioner's report and the report on public interest, the Minister shall consult with the Commissioner regarding any overlap between any concerns that the Minister has in respect of the proposed transaction with regard to the public interest as it relates to national transportation and any concerns in respect of the transaction that are raised in the Commissioner's report.
Minister's Request to Parties
The Minister shall request the parties to the transaction to address, with the Minister, any concerns that the Minister has in respect of the transaction with regard to the public interest as it relates to national transportation; and with the Commissioner, any concerns that the Commissioner has regarding potential prevention or lessening of competition that may occur as a result of the transaction.
After conferring with the Minister and the Commissioner respectively, regarding any concerns, parties may inform the Minister or the Commissioner, as the case may be, of any measures they are prepared to undertake to address those concerns including proposed revisions to the transaction.
Recommendation of the Minister
After obtaining the Commissioner's assessment of the adequacy of any undertaking proposed by the parties to address the concerns that have been identified and the effects of any proposed revisions to the transaction on those concerns, the Minister will make a recommendation to the Governor in Council in respect of the proposed transaction.
Approval of the Governor in Council if the transaction in the public interest
If the Governor in Council is satisfied that it is in the public interest to approve the proposed transaction, taking into account any revisions proposed by the parties and any measures they are prepared to undertake, the Governor in Council may, on the recommendation of the Minister, approve the transaction and specify any terms and conditions that the Governor in Council considers appropriate. The Governor in Council shall indicate those terms and conditions that relate to potential prevention or lessening of competition and those that relate to the public interest as it relates to national transportation.
Determination by CTA
If the transaction involves an air transportation undertaking, the Canadian Transportation Agency shall determine whether the transaction will result in an undertaking that is Canadian, pursuant to the definition of Canadian in section 55 of the Act.