Merger Review – Where Are We Now?

Recognizing the critical role of the Competition Act (the “Act”) in promoting dynamic and fair markets, Canada’s Minister of Innovation, Science and Industry, the Honourable François-Philippe Champagne, announced on February 7, 2022 that he would carefully consider ways to modernize and improve its operation. Following this announcement, significant competition law reform has taken place in Canada, including the passage of Bill C-19 on June 23, 2022, the passage of Bill C-56 on December 15, 2023 and the passage of Bill C-59 on June 20, 2024 (collectively, the “Bills”).

The Bills include amendments that touch on virtually all facets of competition policy in Canada, including, without limitation, merger review, abuse of dominance, criminal cartels, competitor collaborations, deceptive marketing, private rights of action and market studies. All provisions of the Bills are now in force, with the exception of a select few amendments which will come into force in 2024 and 2025.

According to the Government’s 2023 Fall Economic Statement, these amendments are “generational changes” that “will help bring Canada into alignment with international best practices to ensure that our marketplaces promote fairness, affordability, and innovation”. We would go further and describe these amendments as the most significant changes to the Act in almost 40 years – changes that fundamentally alter and transform the competition law landscape in Canada!

This blog post summarizes in one place the key changes made to the merger provisions over the past two years, including, most importantly, the introduction of rebuttable structural presumptions and the revised test for merger remedies. These changes will, in our view, have a resounding and far-reaching impact on the merger review process in Canada.

Rebuttable Structural Presumptions

In order to obtain a remedy from the Competition Tribunal (the “Tribunal”), the Commissioner of Competition (the “Commissioner”) must establish that a merger results in, or is likely to result in, a substantial prevention or lessening of competition (an “SPLC”). If the Commissioner is unable to meet this threshold, the Tribunal cannot order a remedy in respect of the merger.

Historically, the Act prevented the Tribunal from finding that a merger results in an SPLC solely on the basis of evidence of concentration or market share. However, Bill C-59 repeals this provision and, at the same time, introduces what are known as “rebuttable structural presumptions”, namely a presumption of anticompetitive effects for mergers where certain market share and/or HHI thresholds are exceeded. If and when these thresholds are exceeded, the onus shifts to the merging parties to rebut the presumption of anticompetitive effects.  

With the passage of Bill C-59, the Act now includes the same structural presumptions found in the 2023 US Merger Guidelines, which are set out below:

IndicatorThreshold for Structural Presumptions
Post-merger HHIMarket HHI greater than 1,800
Change in HHI greater than 100
Merged Firm’s Market ShareShare greater than 30%
Change in HHI greater than 100

Importantly, Bill C-59 also provides that “the Governor in Council may by regulation prescribe different values than those provided in [the Act]”. This provision appears to address concerns that the structural presumptions are included in guidelines in the US (which can be changed relatively easily) and in legislation in Canada (which is more challenging by way of process to alter).

Going forward, it will be necessary for merging parties to carefully review mergers to determine if either of the above thresholds is exceeded. While exceeding the above thresholds will not be fatal to a transaction, the merger review exercise to secure clearance from the Competition Bureau (the “Bureau”) is expected to be more rigorous and challenging, particularly where concentration levels and/or market shares are high. In this regard, the 2023 US Merger Guidelines state that “[t]he higher the concentration metrics over these thresholds, the greater the risk to competition suggested by this market structure analysis and the stronger the evidence needed to rebut or disprove it”. This approach may also be adopted in Canada. 

Remedial Standard

The merger provisions allow the Tribunal to order a remedy where it finds that a merger results in, or is likely to result in, an SLPC. Consistent with these provisions, the Supreme Court of Canada held in Southam that “the appropriate remedy for a substantial lessening of competition is to restore competition to the point at which it can no longer be said to be substantially less than it was before the merger”.

Following the passage of Bill C-59, the remedies ordered by the Tribunal will need to restore competition to the level that would have prevailed but for the merger (in the case of a completed merger) or preserve the level of competition that would prevail but for the merger (in the case of a proposed merger), such that no lessening or prevention of competition is permitted. This represents a fundamental shift in the approach to merger remedies in Canada – a shift that merging parties will need to carefully consider when negotiating antitrust risk language in their transaction agreements.

Significantly, the revised remedial standard applies to remedies ordered by the Tribunal. As such, it appears open to the Commissioner to accept remedies – presumably by way of consent agreement – that do not fully meet this standard. However, it remains to be seen how the Commissioner will respond to the new remedial standard. At a minimum, we expect this change will embolden the Commissioner in any future remedy negotiations.

Efficiencies Defence

Bill C-56 repealed the efficiencies defence, which previously prevented the Tribunal from making an order in an otherwise anticompetitive merger where it found that the efficiencies likely to arise from a  merger were greater than, and would offset, the anticompetitive effects of the merger. When contemplating mergers, businesses must now be cognizant that efficiencies originating from such mergers will no longer be sufficient to save a merger which would otherwise be found to be harmful to competition.

Importantly, efficiencies have not been added as a factor in section 93 of the Act. That said, the Commissioner acknowledged during testimony before the Standing Senate Committee on National Finance that it will continue to be open to the Bureau consider efficiencies during the merger review process:

…the pro-competitive efficiencies of a merger could absolutely be considered in the framework of considering whether the merger substantially lessens or prevents competition. There is a line, section 93(h), that allows the Tribunal and, of course, the Bureau, to consider any other factor that is relevant to competition in a market that is or would be affected by the merger or proposed merger. All our colleagues around the world look at efficiencies in their merger reviews in the sense of whether there are efficiencies that will be pro-competitive or that will enhance rivalry. Yes, we would absolutely look at that, and if they were there, then maybe the merger could go ahead. [emphasis added]

Notwithstanding the above, it remains to be seen what types of efficiencies the Bureau is willing to consider as part of the merger review process going forward and how much weight will be given to any such efficiencies. In our view, efficiencies should continue to play an important role in the merger review process.   

Expansion of Relevant Factors When Assessing Competitive Effects

Section 93 of the Act include a non-exhaustive list of factors that the Tribunal may have regard to for the purpose of determining whether a merger is likely to result in an SPLC. Bills C-19 and C-59 have added new factors to this list, including the following:

  • “network effects within a market”;
  • “whether the merger or proposed merger would contribute to the entrenchment of the market position of leading incumbents”;
  • “any effect of the merger or proposed merger on price or non-price competition, including quality, choice or consumer privacy”;
  • “the change in concentration or market share that the merger or proposed merger has brought about or is likely to bring about”; and
  • “any likelihood that the merger or proposed merger will or would result in express or tacit coordination between competitors in a market”.

As the factors that may be considered by the Tribunal are non-exhaustive and these “new” factors were previously considered by the Bureau and the Tribunal to some degree, this is not a significant change to the law. However, it does signal that there may be an increased emphasis on the importance of these factors in future merger review.

Labour Considerations

Pursuant to subsection 92(1) of the Act, the Tribunal can make an order where it finds that a merger is likely to result in an SPLC. Bill C-59 amends subsection 92(1) to explicitly refer to labour. On a plain reading, this change clarifies that a product would include labour, such that impacts on the competitiveness of labour markets will be considered when evaluating mergers.

It is widely accepted that subsection 92(1) of the Act has always applied to labour markets. That said, as with the additional factors added to section 93, this change does signal that there may be an increased emphasis on the importance of labour markets in future merger review.

Limitation Period

Previously, the Commissioner could challenge a completed merger up to one year after closing – regardless of whether the Commissioner was notified of the transaction. Bill C-59 changes this, creating different limitation periods for notified transactions and non-notified transactions. In particular, the Commissioner can now challenge a notified transaction up to one year after closing and a non-notified transaction up to three years after closing.

Historically, merging parties rarely notified the Commissioner of small transactions that were not subject to mandatory pre-merger notification in Canada – even transactions that could potentially raise competition concerns. However, the revised approach to the limitation period may create an incentive for merging parties to make a competition filing in advance of closing in the case of non-notifiable transactions – something that will need to be assessed on a case-by-case basis.


Bill C-59 amends sections 100 and 104 of the Act such that parties are enjoined from completing a merger where an application for an injunction under these sections has been filed until the Tribunal has disposed of the application for the interim injunction. In effect, this creates an automatic “interim interim” injunction, where an injunction has been sought in the merger context. It will be necessary for merging parties to consider the impact that this change could have on transaction timing and take it into account when negotiating the outside date.

Pre-Merger Notification

Proposed transactions may be subject to pre-merger notification in Canada where certain financial thresholds are satisfied. Prior to the passage of Bill C-59, these financial thresholds were as follows:

  • Size-of-Parties: The parties to the transaction (together with their affiliates) have (a) in the aggregate, assets in Canada with a book value of more than $400 million or (b) in the aggregate, annual gross revenues from sales in, from or into Canada of more than $400 million.
  • Size-of-Transaction: The book value of the assets in Canada being acquired, or the gross revenues from sales in or from Canada generated from those assets, exceeds $93 million.

Bill C-59 has made two technical changes to the size-of-transaction threshold, each of which will result in additional transactions being subject to pre-merger notification in Canada.

(a) Sales Into Canada Need to be Included

Historically, when calculating the size-of-transaction threshold, only assets in Canada or sales in or from Canada generated from those assets were taken into account. However, Bill C-59 revises the calculation of this threshold to include the value of sales in, from or into Canada generated from assets in or outside of Canada. This change could result in a merger of two foreign companies with no assets in Canada being subject to pre-merger notification in Canada if the target has sufficient sales into Canada and an operating business in Canada. Notably, this brings the Canadian notification regime closer to many international regimes (such as those in Europe), which consider primarily a company’s turnover within a country.   

(b) Aggregation of Components of Proposed Transaction

Historically, if a proposed transaction involved both an acquisition of assets and an acquisition of shares, there was no requirement to aggregate that applicable asset and gross revenue values across each component of the transaction for the purpose of determining whether the size-of-transaction threshold was exceeded. Rather, each component of the transaction was looked at separately, with the result that a proposed transaction would not be notifiable if neither component of the proposed transaction exceeded the size-of-transaction threshold on its own – even if the proposed transaction exceeded this threshold when considered wholistically.

This is no longer the case. Specifically, as a result of the recent amendments, the applicable asset and gross revenue values must now be aggregated across the various components of a proposed transaction. For example, if a transaction involves both an acquisition of assets and an acquisition of shares, then (1) the value of the assets in Canada for the asset component will need to be aggregated with the value of the assets in Canada for the share component and (2) the applicable gross revenues for the asset component will need to be aggregated with the applicable gross revenues for the share component. This change is intended to fill a perceived gap in the pre-merger notification provisions.

(c) Anti-Avoidance Provision

In addition to the two technical changes summarized above, Bill C-19 introduced an anti-avoidance provision. This provision states that “[i]f a transaction or proposed transaction is designed to avoid the application of [the pre-merger notification provisions, these provisions] apply to the substance of the transaction or proposed transaction”. In other words, notification and pre-closing approval is required for transactions that were deliberately structured to avoid the application of the Act’s pre-merger notification regime.

If you have questions about the amended merger provisions, you can reach out to any member of Fasken’s Competition, Marketing & Foreign Investment group. Our group has significant experience advising clients on all aspects of Canadian competition law.

The information and guidance provided in this blog post does not constitute legal advice and should not be relied on as such. If legal advice is required, please contact a member Fasken’s Competition, Marketing & Foreign Investment group.