ARCHIVED - Public Notice CRTC 2001-75

Public Notice CRTC 2001-75

Ottawa, 5 July 2001

Ownership transfers - Application of a condition precedent where approval is predicated on the divestiture of another business asset or interest

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.

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.

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.

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.

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.

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.

Secretary General

This document is available in alternate format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca