Law Times

www.lawtimesnews.com Law Times / February 4, 2008 Page 5 Loses two key bids to probe Labatt's acquisition of Lakeport Competition bureau may turn to Superior Court OTTAWA — The federal Competition Bureau may turn to Ontario Superior Court after losing two key Federal Court decisions last month in its at- tempt to investigate Labatt Brewing Co. Ltd.'s acquisition of Lakeport Brewing. Senior deputy commissioner of competition Melanie Aitken tells Law Times the bureau was still considering its options last week following the latest defeats in drawn-out court battles with Labatt, and resorting to Supe- rior Court was among them. Lawyers for Labatt hailed a Federal Court of Appeal rul- ing on Jan. 22 that refused to give competition commission- er Sheridan Scott more time to investigate the acquisition. Scott had appealed a decision last March by the Competi- tion Tribunal allowing Labatt to conclude its takeover despite a request from the competition bureau for more time to review the deal. And, Federal Court Justice Anne Mactavish on Jan. 28 re- versed her own prior order that would have compelled Labatt to give competition commis- sioner Scott an "enormous" amount of documents, includ- ing information the brewery had already supplied under a previous order. In making her unusual re- versal, Justice Mactavish said the Competition Bureau appli- cation upon which she based her first ruling in November was "misleading, inaccurate and incomplete." Mactavish said she was re- versing her previous ruling be- cause, among other things, the bureau's application failed to specify it was seeking "volumi- nous" information that in large part had already been released under an earlier Federal Court order last February. The bureau also failed to disclose it had even earlier tak- en the position in court that information it initially wanted and got from Labatt through the February order from Justice Simon Noël would be sufficient for the commissioner's inquiry into the takeover. "While the commissioner made me aware of the orders issued by Justice Noël, and pro- vided me with copies of those orders, I was not made aware of the commissioner's previous rep- resentation to the court that the information sought in the orders made by Justice Noël in Febru- ary of last year would likely be sufficient for the purpose of the commissioner's inquiry," Mac- tavish wrote. She expressly criticized the bureau for claiming it had not previously requested the infor- mation it was seeking from La- batt, even though it included a copy of Noël's orders in its ap- plication materials. "Thus, the fact that the com- missioner produced copies of Justice Noël's February 2007 . . . orders in its November 2007 application materials does not excuse the disingenuous and misleading representations made in the commissioner's written submissions, which stated that, 'None of the records or infor- mation sought has previously been requested from the respon- dents,'" Mactavish wrote. She noted, Labatt had provid- ed the bureau with 7,433 docu- ments under the requirements of Justice Noël's order, and pro- duction of the documents had cost the company $750,000 "in external costs alone." "Counsel advised that [Lab- att's] efforts to comply with the February 2007 order had caused Labatt's file server to crash, and that the cost of attemptin to restore lost data would have ex- ceeded a half a million dollars," Mactavish wrote. She quoted from United States of America v. Friedland about the importance of full disclosure from a party seeking immediate action through an ex parte appli- cation for a court order. "The duty of full and frank disclosure is required to mitigate the obvious risk of injustice in- herent in any situation where a judge is asked to grant an order without hearing from the other side," that ruling said. Despite the competition bu- reau's early attempts to delay closing of the Labatt acquisition of Lakeport to allow time for an inquiry into whether the pur- chase will lessen competition in the beer industry in Ontario, the deal closed on March 29, 2007. The commissioner of com- petition has three years from that date to ask the federal competition tribunal to reverse the purchase. Two lawyers for Labatt, Brian Facey and Neil Finkelstein of Blake, Cassels & Graydon LLP, did not return telephone calls. A spokesman for Labatt initially returned a call on behalf of Fac- ey, only to say he was busy and would call back later. In a posting on its web site, the law firm said the federal appeal court decision would have a "wide-ranging impact on businesses." But lawyers with McCarthy Tétrault LLP published an opin- ion on thei r firm's web site warn- ing businesses to be "cautious" about the appeal ruling. "It does not preclude or limit a substan- tive merger challenge of the La- batt/Lakeport transaction by the commissioner," the opinion said. It argued the decision has "no bearing at all on substan- tive merger rights" and added "for most mergers, the Labatt decisions will have little or no impact." NEWS *"I'm particularly impressed with the CCCA's innovative programming, networking opportunities, CLO round- tables, yearly trending through its Barometer Survey, and the newly established Mentoring Program." Barry Michael Fisher, VP, General Counsel and Corporate Secretary SAP Canada Inc. Canadian and multinational organizations require extensive knowledge of the domestic and international regulations that affect their business. That's where the CCCA comes in. A CCCA membership provides a powerful network of highly regarded business and legal professionals to help expand your reach and advance your business. To find out more, contact Kendra at 416.869.0522 ext. 221 or ccca@ccca-cba.org, or visit www.cancorpcounsel.org. The Canadian Corporate Counsel Association (CCCA) is the provider of Canadian perspectives on global challenges for in-house lawyers. But don't just take our word for it. * CBA_LT_Feb4_08.qxd 1/28/08 12:19 PM Page 1 BY TIM NAUMETZ For Law Times In a posting on its web site, the law firm said the federal appeal court decision would have a 'wide-ranging impact on businesses.' LT Don't Court Disaster Keep up-to-date on the latest judicial developments by reading Law Times CaseLaw on pages 16-18 *Pages 1-20.indd 5 1/31/08 6:56:16 PM

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