48-49 ELIZABETH II

CHAPTER 15

An Act to amend the Canada Transportation Act, the Competition Act, the Competition Tribunal Act and the Air Canada Public Participation Act and to amend another Act in consequence

[Assented to 29th June, 2000]

      Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1996, c. 10

CANADA TRANSPORTATION ACT

Amendments

1. Section 55 of the Canada Transportation Act is renumbered as subsection 55(1) and is amended by adding the following:

Affiliation

(2) For the purposes of this Part,

    (a) one corporation is affiliated with another corporation if

      (i) one of them is a subsidiary of the other,

      (ii) both are subsidiaries of the same corporation, or

      (iii) both are controlled by the same person;

    (b) if two corporations are affiliated with the same corporation at the same time, they are deemed to be affiliated with each other;

    (c) a partnership or sole proprietorship is affiliated with another partnership or sole proprietorship if both are controlled by the same person;

    (d) a corporation is affiliated with a partnership or a sole proprietorship if both are controlled by the same person;

    (e) a corporation is a subsidiary of another corporation if it is controlled by that other corporation or by a subsidiary of that other corporation;

    (f) a corporation is controlled by a person other than Her Majesty in right of Canada or a province if

      (i) securities of the corporation to which are attached more than 50% of the votes that may be cast to elect directors of the corporation are held, directly or indirectly, whether through one or more subsidiaries or otherwise, otherwise than by way of security only, by or for the benefit of that person, and

      (ii) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the corporation;

    (g) a corporation is controlled by Her Majesty in right of Canada or a province if

      (i) the corporation is controlled by Her Majesty in the manner described in paragraph (f), or

      (ii) in the case of a corporation without share capital, a majority of the directors of the corporation, other than ex officio directors, are appointed by

        (A) the Governor in Council or the Lieutenant Governor in Council of the province, as the case may be, or

        (B) a Minister of the government of Canada or the province, as the case may be; and

    (h) a partnership is controlled by a person if the person holds an interest in the partnership that entitles the person to receive more than 50% of the profits of the partnership or more than 50% of its assets on dissolution.

Definition of ``person''

(3) In subsection (2), ``person'' includes an individual, a partnership, an association, a corporation, a trustee, an executor, a liquidator of a succession, an administrator or a legal representative.

Control in fact

(4) For greater certainty, nothing in subsection (2) shall be construed to affect the meaning of the expression ``controlled in fact'' in the definition ``Canadian'' in subsection (1).

2. The Act is amended by adding the following after section 56:

Review of Mergers and Acquisitions

Notice

56.1 (1) Every person who is required to notify the Commissioner under subsection 114(1) of the Competition Act in respect of a transaction that involves an air transportation undertaking shall give notice, containing, subject to the regulations, the information required under that subsection, of the transaction to the Minister and the Agency, when notice is given to the Commissioner and, in any event, no later than when the person is required to notify the Commissioner.

Minister's determina-
tion

(2) If the Minister is of the opinion that the transaction does not raise concerns with respect to the public interest as it relates to national transportation, the Minister shall, within 42 days after a person gives notice under subsection (1), give notice of the opinion to that person.

When sections 56.2 and 56.3 do not apply

(3) Sections 56.2 and 56.3 do not apply in respect of the transaction if the Minister gives notice under subsection (2).

Definition of ``Commission er''

(4) In this section and sections 56.2, 56.4 and 56.5, ``Commissioner'' has the same meaning as in subsection 2(1) of the Competition Act.

Prohibition

56.2 (1) No person shall complete a transaction referred to in subsection 56.1(1) unless the Agency determines that the transaction would result in an air transportation undertaking that is Canadian and the transaction is approved by the Governor in Council.

Commissioner 's report

(2) The Commissioner shall, as soon as feasible, 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.

Minister to inform re concerns

(3) After receiving the Commissioner's report and before the Minister makes a recommendation for the purposes of subsection (6), the Minister shall inform the Commissioner and the parties to the transaction

    (a) of any national transportation concerns that the Minister has in respect of the transaction; and

    (b) of which of the Commissioner's concerns the Minister believes the parties should address with the Commissioner.

Measures to address concerns

(4) After conferring with the Minister and the Commissioner, the parties to the transaction shall inform the Minister and the Commissioner of any measures they are prepared to undertake to address the Minister's and the Commissioner's concerns and may propose revisions to the transaction.

Precondition to recommenda-
tion

(5) Before making a recommendation for the purposes of subsection (6), the Minister shall obtain the Commissioner's assessment of the adequacy of any undertaking proposed by the parties to address the Commissioner's concerns and the effects on those concerns of any proposed revisions to the transaction.

Approval of Governor in Council

(6) If the Governor in Council is satisfied that it is in the public interest to approve the transaction, taking into account any revisions to it proposed by the parties and measures they are prepared to undertake, the Governor in Council may, by order made on the recommendation of the Minister, approve the transaction and specify any terms and conditions that the Governor in Council considers appropriate. The order shall indicate which of the terms and conditions relate to potential prevention or lessening of competition and which relate to national transportation concerns.

Variation of terms and conditions

(7) On application by a person who is subject to terms and conditions specified in an order, the Governor in Council may, on the recommendation of the Minister, vary or rescind the terms and conditions. If the terms and conditions to be varied or rescinded affect competition, the Minister shall consult with the Commissioner before making the recommendation.

Commissioner 's representa-
tions

(8) If the Minister directs the Agency under section 49 to inquire into any matter or thing to assist the Minister in making the recommendation under subsection (6) or (7), the Agency shall give notice of the inquiry to the Commissioner and allow the Commissioner to make representations to the Agency.

Compliance with terms and conditions

(9) Every person subject to terms and conditions specified in an order shall comply with them.

Canadian

56.3 The Agency shall determine whether a transaction referred to in section 56.1 would result in an air transportation undertaking that is Canadian.

Substantial or complete control over domestic services

56.4 (1) If the Governor in Council is of the opinion that a licensee and its affiliated licensees have, after October 26, 1999, acquired or are about to acquire substantial or complete control over domestic services, otherwise than as a result of a transaction approved under section 56.2, the Governor in Council may, by order made on the recommendation of the Minister, direct the licensee or the affiliated licensees to take any action that the Governor in Council considers reasonable and necessary to protect the public interest from the consequences of that control, including requiring the divestiture of assets.

Precondition to recommenda-
tion

(2) The Minister shall not make a recommendation under subsection (1) unless the Minister has obtained the Commissioner's assessment of the state of competition in the domestic airline industry.

Variation or rescission

(3) On application by a person who is subject to an order made under subsection (1) and on the recommendation of the Minister, the Governor in Council may, by order, vary or rescind the order. If the order to be rescinded or varied affects competition, the Minister shall consult with the Commissioner before making the recommendation.

Order of divestiture - application by Minister

56.5 (1) If a person contravenes subsection 56.2(1), subsection 56.2(9) with respect to a term or condition that relates to national transportation concerns or an order made under subsection 56.4(1), on application by the Minister, a superior court may order the person to cease the contravention or do any thing that is required to be done, and may make any other order that it considers appropriate, including an order requiring the divestiture of assets. The Minister shall notify the Commissioner before making an application.

Order of divestiture - application by Commissioner

(2) If a person contravenes subsection 56.2(9) with respect to a term or condition that relates to potential prevention or lessening of competition, on application by the Commissioner, a superior court may order the person to cease the contravention or do any thing that is required to be done, and may make any other order that it considers appropriate, including an order requiring the divestiture of assets. The Commissioner shall notify the Minister before making an application.

Regulations

56.6 The Governor in Council may, on the recommendation of the Minister, make regulations

    (a) specifying information required in a notice under subsection 56.1(1); and

    (b) exempting classes of transactions from the application of sections 56.1 to 56.3.

Offence - subsection 56.1(1)

56.7 (1) Every person who contravenes subsection 56.1(1) is guilty of an offence and is liable

    (a) on summary conviction, to a fine of not more than $25,000; or

    (b) on conviction on indictment, to a fine of not more than $50,000.

Offence - subsection 56.2(1) or (9)

(2) Every person who contravenes subsection 56.2(1) or (9) or an order made under subsection 56.4(1) is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding $10,000,000 or to both.

Continuing offence

(3) If an offence under subsection (2) is committed or continued on more than one day, the person who commits it is liable to be convicted for a separate offence for each day on which it is committed or continued.

Officers, etc., of corporations

(4) If a corporation commits an offence under subsection (1) or (2), any officer, director or agent of the corporation who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and is liable on conviction to the punishment provided for the offence whether or not the corporation has been prosecuted or convicted.

Sections 174 and 175 do not apply

(5) Sections 174 and 175 do not apply in respect of an offence committed under subsection (1) or (2).

3. Subsections 64(2) and (3) of the Act are replaced by the following:

Notice of discontinu-
ance of certain services

(1.1) If a licensee proposes to discontinue its year-round non-stop scheduled air service between two points in Canada and that discontinuance would result in a reduction, as compared to the week before the proposal is to take effect, of at least 50% of the weekly passenger-carrying capacity of all licensees operating year-round non-stop scheduled air services between those two points, the licensee shall give notice of the proposal in the prescribed form and manner to the prescribed persons.

Discussion with elected officials

(1.2) A licensee shall, as soon as practicable after giving notice under subsection (1) or (1.1), provide an opportunity for elected officials of the municipal or local government of the community of the point or points, as the case may be, to meet and discuss with the licensee the impact of the proposed discontinuance or reduction.

Notice period

(2) A licensee shall not implement a proposal referred to in subsection (1) or (1.1) until the expiry of 120 days, or 30 days if the service referred to in that subsection has been in operation for less than one year, after the notice is given or until the expiry of any shorter period that the Agency may, on application by the licensee, specify by order.

Considera-
tions re whether exemption to be granted

(3) In considering whether to specify a shorter period under subsection (2), the Agency shall have regard to

    (a) the adequacy of alternative modes of public transportation available at or in the vicinity of the point referred to in subsection (1) or between the points referred to in subsection (1.1);

    (b) other means by which air service to the point or between the points is or is likely to be provided;

    (c) whether the licensee has complied with subsection (1.2); and

    (d) the particular circumstances of the licensee.

Definition of ``non-stop scheduled air service''

(4) In this section, ``non-stop scheduled air service'' means an air service operated between two points without any stops in accordance with a published timetable or on a regular basis.

4. Section 66 of the Act is replaced by the following:

Unreasonable fares or rates

66. (1) If, on complaint in writing to the Agency by any person, the Agency finds that a licensee, including affiliated licensees, is the only person providing a domestic service between two points and that a fare, cargo rate or increase in a fare or cargo rate published or offered in respect of the service is unreasonable, the Agency may, by order,

    (a) disallow the fare, rate or increase;

    (b) direct the licensee to amend its tariff by reducing the fare, rate or increase by the amounts and for the periods that the Agency considers reasonable in the circumstances; or

    (c) direct the licensee, if practicable, to refund amounts specified by the Agency, with interest calculated in the prescribed manner, to persons determined by the Agency to have been overcharged by the licensee.

Complaint of inadequate range of fares or rates

(2) If, on complaint in writing to the Agency by any person, the Agency finds that a licensee, including affiliated licensees, is the only person providing a domestic service between two points and that it is offering an inadequate range of fares or cargo rates in respect of that service, the Agency may, by order, direct the licensee, for a period that the Agency considers reasonable in the circumstances, to publish and apply in respect of that service one or more additional fares or cargo rates that the Agency considers reasonable in the circumstances.

Relevant information

(3) When making a finding under subsection (1) or (2) that a fare, cargo rate or increase in a fare or cargo rate published or offered in respect of a domestic service between two points is unreasonable or that a licensee is offering an inadequate range of fares or cargo rates in respect of a domestic service between two points, the Agency shall consider

    (a) historical data respecting fares or cargo rates applicable to domestic services between those two points;

    (b) fares or cargo rates applicable to similar domestic services offered by the licensee and one or more other licensees using similar aircraft, including terms and conditions of carriage and, in the case of fares, the number of seats available at those fares;

    (b.1) the competition from other modes of transportation, if the finding is in respect of a cargo rate, an increase in a cargo rate or a range of cargo rates; and

    (c) any other information that may be provided by the licensee, including information that the licensee provides under section 83.

Alternative domestic services

(4) The Agency may find that a licensee is the only person providing a domestic service between two points if every alternative domestic service between those points is, in the opinion of the Agency, unreasonable, taking into consideration the number of stops, the number of seats offered, the frequency of service, the flight connections and the total travel time.