Never before have foreign investors faced the same level of scrutiny or uncertainty  

Bill C-20 has passed Canada’s Senate and received Royal Assent, becoming law on July 27, 2020. Part 3 of the Bill becomes the Time Limits and Other Periods Act (COVID-19) and will be of particular and urgent interest to non-Canadians contemplating the purchase of an interest in a Canadian business or the establishment of a new business in Canada.

The effect of the new law is to provide the Minister of Innovation, Science and Industry (the Minister chiefly responsible for the administration of the Investment Canada Act (ICA)) with authority to, among other things, temporarily extend time periods under the National Security Review (NSR) provisions of the ICA. The purpose of such an extension, according to the new law is to, “prevent any exceptional circumstances that may be produced by coronavirus disease 2019 (COVID-19) from making it difficult or impossible to meet … time limits… and …prevent any unfair or undesirable effects that may result from the expiry of those periods due to … exceptional circumstances.”

While the new statute says that, “this Act is to be interpreted in a manner that provides certainty in relation to proceedings and that respects the rule of law…” it is difficult to view the Act as anything other than a significant complicating factor for deal-makers. There are two primary reasons for taking this view:

  1. NSRs become most difficult for transaction proponents –especially in regard to publicly-traded corporations– when timelines become such that politicians and marketplace competitors become involved in a public debate about the transaction. Longer approval horizons propel controversy and will tend to override reasoned discussion about the actual security underpinnings of a deal; and
  1. Extensions may be applied retroactively to March 13, 2020. Any instance of retroactivity in a law creates uncertainty, making marketplace predictably more difficult to achieve. This will make Canada a less attractive destination for nervous capital, simply because investors can no longer be certain that once a deal is closed, it is truly closed — this is the nature of a law that purports to turn back the clock.

Luckily, the new law contains limits that some will find comforting: no timeline can be extended beyond December 31, 2020, and any decision on the extension of timelines –including on a retroactive basis– must occur by September 30, 2020. Investors and target companies would be well advised to seek both regulatory and government relations counsel as they contemplate deals during this period of unprecedented uncertainty created by the Government’s reaction to COVID-19.

Since the Supreme Court of Canada’s 2013 trilogy of decisions in Pro-Sys, Sun-Rype and Infineon, and its 2019 decision in Godfrey, plaintiffs have had considerable success certifying private antitrust/competition class actions in Canada.   Recent amendments to Ontario’s class action legislation may change that trend. As discussed more fully below, the most significant amendment to Ontario’s class action legislation is to the preferable procedure portion of the certification test that currently requires plaintiffs to prove that a class action would be the “preferable procedure for the resolution of the common issues”. The preferability requirements now include superiority and predominance elements akin to US Federal Rules 23(b)(3).  If interpreted like US Federal Rule 23(b)(3), certification judges will likely engage in a rigorous assessment of whether common questions of law or fact predominate over individual questions, which may, in turn, impair the certification of  private antitrust/competition class actions.

  1. Amendments to the Class Proceedings Act

As discussed in a prior blog post, Ontario Bill 161 Smarter and Stronger Justice Act, 2020 received Royal Assent on July 8, 2020. Bill 161 is omnibus legislation that includes amendments to Ontario’s Class Proceedings Act, 1993 (the “CPA”).  The amendments will apply to proposed class actions commenced after Bill 161 has been proclaimed in force. Bill 161 is not yet proclaimed into force but is expected to be so proclaimed soon in the future. Continue Reading The New Preferability Requirements in Ontario’s Class Action Legislation: Implications for Private Antitrust/Competition Enforcement

The recent decision of the Constitutional Court in Competition Commission of South Africa v Pickford Removals SA (Pty) Limited may have a material effect on the future prosecution of prohibited practices – including cartel behavior and abuses of dominance.

The Pickford decision relates to the interpretation of section 67(1) of the South African Competition Act as it stood before it was amended by the Competition Amendment Act, 2018.  The section said:

“…a complaint in respect of a prohibited practice may not be initiated more than three years after the practice has ceased

The main finding of the Constitutional Court was that section 67(1) of the Competition Act does not constitute a prescription provision, but a procedural time-bar provision, which in the event of non-compliance can be condoned.  The effect is essentially that a prohibited practice complaint does not necessarily lapse three years after a prohibited practice has ceased.

In its finding, the Constitutional Court set aside an order of the Competition Appeal Court (CAC) and the matter was remitted to the Competition Tribunal (Tribunal) for further hearing. Continue Reading Widening the net – the Constitutional Court’s softening of the time-bar defence under South African competition law

On July 6, 2020, the Competition Bureau (the “Bureau”) published its Annual Plan for 2020-21 titled “Protecting competition in uncertain times” (the “Annual Plan”). The Annual Plan provides specific action items for implementing the Bureau’s 2020-24 Strategic Vision (the “Strategic Vision”) published this February.

As discussed in our prior blog post, Competition Bureau Publishes Strategic Vision for 2020-2024, the Strategic Vision includes three broad objectives, namely: (i) protecting Canadians through enforcement, (ii) promoting competition in Canada, and (iii) investing in the organization. The Annual Plan sets out various action items for implementing each objective in the Strategic Vision.

Below we outline the salient features of the Annual Plan and the key take-aways for businesses.

I. Overview of the Annual Plan

A. Protecting Canadians through Enforcement

The Bureau will focus its enforcement efforts on key sectors of the economy, and, in particular, (i) digital services, (ii) online marketing, (iii) financial services and (iv) infrastructure. In response to COVID-19 the Bureau advised that it will be “actively monitoring the market” for COVID-19 related scams and deceptive marketing practices, and taking enforcement action accordingly.

The Bureau plans to enhance its enforcement capabilities at a practical level by:

  1. establishing a Monopolistic Practices Intelligence Unit to examine and analyze trends in the marketplace to proactively deter anti-competitive behaviour;
  2. enhancing its intelligence gathering techniques to detect anti-competitive activity earlier (e. advancing their bid-rigging detection tool using public procurement data and leveraging the bid-rigging tip line); and
  3. introducing new tools and innovative processes to optimize the Bureau’s ability to handle large volumes of data. Examples include:
    • increased automation to find efficiencies in reducing manual data entry; and
    • finalizing a cloud strategy to test new investigative tools and concepts.

In addition, the Bureau announced that it will be hosting its first virtual Digital Enforcement Summit, which seeks to enhance the Bureau’s effectiveness in the digital economy by exploring new solutions and tools, sharing best practices, and addressing emerging issues with the Bureau’s enforcement partners.

B. Promoting competition in Canada

The Bureau intends to promote competition in Canada through advocacy and international engagement. In particular, the Bureau:

  • plans to advocate for pro-competitive policy-making to advance Canada’s economic recovery;
  • will assume the presidency of the International Consumer Protection and Enforcement Network for the 2020-2021 term where it plans to focus on online advertising; and
  • plans to advocate for competition in the health and telecommunications sectors. For instance, it will continue to participate in the Canadian Radio-television and Telecommunications Commission’s review of mobile wireless services and wireline access prices.

C. Investing in the organization

The Bureau plans to enhance its digital expertise internally by:

  • training its workforce to develop and improve its proficiency in using existing and emerging technologies, such as artificial intelligence and new investigative applications; and
  • recruiting more data scientists and data engineers.

II. Implications for Businesses

Key take-aways arising from the Bureau’s Annual Plan include the following:

  • Doubling-Down on Digital Enforcement Tools: The Bureau is investing significantly in tools to pursue its enforcement priorities in the areas of digital services, online marketing, financial services and infrastructure. By establishing a Monopolistic Practices Intelligence Unit, introducing new tools for analyzing data (including finalizing a cloud-based investigative strategy and recruiting data scientists and engineers as Bureau officers) and introducing its first ever virtual Digital Enforcement Summit, the Bureau is not only signaling clear enforcement priorities but also doubling down on tools for such enforcement.
  • More Online Advertising Enforcement: With the Bureau assuming the presidency of the International Consumer Protection and Enforcement Network, we can expect the Bureau to lead by example in emerging online advertising matters, including “drip” pricing, native advertising/online reviews and privacy-related representations.
  • Performance Claims and Bid-Rigging: COVID-19 related enforcement is expected to continue not only in the areas of unsubstantiated performance claims but also in criminal enforcement. We can expect Commissioner Boswell, a former criminal prosecutor, to aggressively enforce alleged bid-rigging and price-fixing that may arise from a recessionary COVID-19 period.
  • Health and Telecommunications Advocacy: The Bureau is focusing its advocacy work on the health and telecommunications sectors. Market participants in those sectors should look out for the Bureau’s advocacy interventions and be prepared to respond.

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 of Fasken’s Antitrust/Competition & Marketing group.

So-called “excessive price” prohibitions are premised on a theory of harm that is generally rejected in competition law. Indeed, Canada’s Competition Act does not even contain a prohibition against excessive pricing. Among the many reasons for not prohibiting excessive prices are that to do so would undermine investment incentives (both of firms already in the market and potential entrants). Further, the phenomenon of excessive prices, in the absence of exclusionary conduct, is generally viewed as a temporary phenomenon that will be corrected by the market. Also, the legal uncertainty associated with the vagueness of the ‘excessive’ element in the concept could easily result in regulatory overreach.

In the context of COVID-19, the traditional arguments against prohibiting excessive prices have given way to a more consumer-oriented approach with respect to those supplying consumers directly. In response to concerns that retailers may be incentivized to substantially increase prices for products critical to the COVID-19 response, three Canadian provinces (i.e. British Columbia, Ontario & Nova Scotia) have specifically prohibited selling essential goods at unconscionable prices, or at prices markedly higher than fair market value. Other provinces appear to be more actively seeking to enforce pre-existing price gouging prohibitions in their consumer protection legislation, particularly in regards to necessary goods.

Yet, as already noted, it is unclear what constitutes an ‘excessive’ or ‘unconscionable’ price. Despite the fact that some provinces have had prohibitions on price gouging in their consumer protection legislation for decades, those provisions have been rarely used and scarcely considered by Canadian courts. At the same time, failing to comply with these provisions can have serious consequences, including financial penalties, restitution and reputational harm – and in some cases criminal fines and jail time. There is also the possibility a class action lawsuit could be instituted by a consumer on behalf of a class of consumers. What follows is a description of the price gouging laws of each Canadian province, as well as a description of their enforcement approach, where available, in order to help businesses understand how to avoid liability in respect of this particularly vague area of law. Continue Reading Price Gouging Prohibitions across Canada

Earlier this month, the South African Competition Tribunal found a firm guilty of abusing its dominance.  The firm was a small trader with a market share of 4.7%.  The illegal conduct comprised excessive pricing of face masks for a period of just over one month.  The investigation, prosecution and adjudication took less than three months.  The fine was R76 040 (around CAD $ 6000).

This case illustrates that we live in strange times.  COVID-19 has caused commercial enterprise to be reinvented overnight.  Competition regulation has been running to catch up, applying novel analysis to the novel environment.

But lifting our eyes from the present whirlwind, what does South African competition enforcement look like post-COVID for authorities, practitioners and firms?  This article speculates on what we might expect in the medium term from each major tenet of antitrust – mergers, restrictive agreements, abuse of dominance and market inquiries.


Many predict a surge in the number of mergers after the national lockdown.  First, small businesses without the financial reserves to tide them over the economic trough may surrender themselves to investment by larger, more resilient firms.  Second, large multi-product firms may divest non-core assets or poorly performing divisions.

Acquirers best placed to restore struggling start-ups and distressed assets to profitability will often be existing industry participants, including competitors.  This means the anticipated increase in the volume of merger notifications is likely to be accompanied by enhanced complexity in the competition assessment.  The authorities will need to grasp the trade-off between the survival of distressed businesses, which increases competitive vitality in the short term, against tilting the structure of markets towards increased concentration, which is generally consistent with reduced competition (and increased barriers to entry by small local firms) in the longer term.

In many instances, the acquirers will be foreign-based multinationals and, more than ever, merging parties will be focused on reducing costs and improving efficiency.  This may magnify a tension already inherent in the South African system – enable investment and ensure firm survival, but at the same time protect jobs and promote the spread of ownership by South Africans.

Loosening the protection of employment would risk undoing the authorities’ admirable work in this area over many years.  However, often, addressing public interest issues requires acquiring firms to make significant commitments, to invest, to retain headcount, and to procure locally.  In a recessionary climate, imposing restrictive conditions on much needed investment may be particularly damaging if the appetite for M&A activity is suppressed as a result.

To compound the difficulty the authorities may face, merger control is an inherently time-sensitive endeavor.  In the post-COVID world, where survival will often be at stake, the urgency for distressed businesses to implement transactions is likely to be acute.

These circumstances will require the merger investigators to work with increased rigour, speed and vigilance.  Prioritization will be key.  Reliable screening criteria will need to be put in place to ensure scarce resources are allocated to the most high-stakes, complex and time-sensitive cases.  Purpose-built analysis will be required to marshal the trade-offs mentioned – short term survival vs long term concentration, and short term public interest protection vs long term investment incentives.  Discipline will also be required to manage the scope for opportunistic third party objections which delay investigations and distort outcomes, while ensuring that the investigators have access to the material facts.

Firms and their advisors should be cognisant of these pressures and complexities.  Where possible, parties to complex transactions should consider providing information proactively that puts the Commission in the best position to conduct this challenging assessment effectively, rather than closing their eyes and hoping for a straightforward review.

To the extent possible, realistic timelines should be built into transaction schedules which recognize the complexity created by the economic environment and the unavoidable resource constraints within the authorities that are likely to arise.

Restrictive agreements

The post-COVID economy is likely to be highly conducive to coordination between competing firms for a number of reasons.  Many markets will face reduced demand and excess supply.  Firms may be increasingly tempted to coordinate in order to avoid potentially destructive price wars that these conditions invite.  In addition, increased merger activity combined with increased attrition amongst smaller firms is likely to result in more concentrated markets.  Fewer firms in a market generally makes collusion easier to achieve and maintain.

In past economic downturns, competition authorities have been unsympathetic to so-called “crisis cartels”.  The Competition Commission’s usual zero tolerance approach to cartels should therefore be expected.  Firms should not be under illusions that tough times present an excuse to coordinate.  Industries which have enjoyed temporary block exemption from certain provisions of the Competition Act during the lockdown, often under government supervision, should disband any cooperation immediately once those exemptions cease to operate.

Abuse of dominance

The enforcement of South Africa’s abuse of dominance laws is also likely to increase after the COVID-19 crisis subsides.  The reasons for this expectation are two-fold.

First, if the anticipated spate of mergers and insolvencies materializes, large firms will become even more powerful.  Many smaller firms which previously may not have been considered dominant may (perhaps unwittingly) find themselves with substantial market power.  Axiomatically, increases in the degree and incidence of dominance are likely to foster conditions for more frequent complaints of abuse of dominance.

Second, South Africa has recently brought into effect a range of amendments to the Competition Act which (1) amplify the consequences of abuse of dominance (all abuses now carry a fine of up to 10% of turnover) and (2) introduce new prohibitions aimed at assisting small and medium businesses and firms owned or controlled by historically disadvantaged persons (“SME’s”) to participate in markets.  These new provisions comprise contraventions for dominant firms imposing unfair prices or trading terms on SME suppliers and discriminating in the price charged to SME customers (even if the differential is based on different purchase volumes). The aim of the amendments is to ensure that there is a level playing field for SME’s, and the Commission will stick to this narrative very closely.

Even without the COVID crisis, the recent amendments to the Competition Act set the stage for increased abuse of dominance enforcement.  In the aftermath of the pandemic, SME’s are likely to face the brunt of the economic headwinds.  Where dominant firms create additional hurdles for SME’s through their pricing and procurement terms, the reaction from the authorities is likely to be unforgiving.

Large firms would therefore be well advised to acquaint themselves with the abuse of dominance portions of the Competition Act, including the new provisions, and ensure that their relationships with SME suppliers and customers are managed to avoid the possibility of complaint and dispute.

Market inquiries

It is difficult to speculate on the role of market inquiries in the post-COVID world.  The likely fluctuations in most markets during the next period might militate against the use of inquisitorial and resource-intensive market inquiries, which may reach conclusions that are quickly outdated.

Until markets settle into some pattern of normality, it may be most prudent for the personnel of the authorities to be dedicated to the influx of complex mergers, and increased enforcement of the prohibited practice provisions.

Once the dust has settled, however, market inquiries will become one of the most useful tools available to the competition authorities. The recent amendments to the Competition Act allow the Competition Commission to impose binding conditions following the market investigation. The Competition Commission will, therefore, be well placed to investigate key markets which they believe may not be working efficiently and impose conditions to assist in remedying competition in those markets.


In light of Covid-19 and the likely economic recession to be experienced in South Africa and around the world, it will be interesting to see how competition authorities, practitioners and firms change their approach to interpreting and applying competition laws.  Competition authorities will, in particular, lead the charge on what approach is taken. This could be a decision to allow markets to self-correct, or a decision to increase intervention in markets to try and guide efficient outcomes. Either way, competition law enforcement will play an important role in determining how South African markets develop in the wake of the pandemic.

Competition Bureau’s Position on Advertising During COVID-19 Pandemic

In the context of COVID-19, the Competition Bureau (“Bureau”), in coordination with Health Canada, has indicated its intention to take action against companies that fail to comply with the Competition Act (the “Act”) and, in particular, its provisions relating to misleading advertising and performance claims. The Act includes a wide range of civil and criminal deceptive marketing practices provisions that apply to anyone who is promoting a product, service or business interest. Failing to comply with these provisions can have serious consequences, including financial penalties, restitution and reputational harm – and in some cases criminal fines and jail time.

On March 20, 2020 the Bureau issued a statement confirming its commitment to enforcing the Act against deceptive marking practices relating to COVID-19 and, in particular, false, misleading or unsubstantiated performance claims about a product’s ability to prevent, treat or cure the virus. Subsequently, the Bureau has actively solicited complaints from the public on its website and on social media. Even before the pandemic, the Bureau indicated in its 2019-20 Annual Plan that it intends to “[p]rioritize high-impact and consumer-focused enforcement cases” that “[f]ocus on key areas important to all Canadians including…health and bio-sciences” and that it intends to support Canadian health care by, among other things, “[pushing] for … [t]ruth in the advertising of health … products and services”. Continue Reading Regulators Crack Down on Misleading Advertising and Performance Claims Related to COVID-19

In an April 18, 2020 policy statement, the Government of Canada (“GOC”) announced that, in light of the COVID-19 pandemic, investments by non-Canadians “related to public health or involved in the supply of critical goods and services to Canadians or to the Government” would be subject to “enhanced scrutiny” under the Investment Canada Act (“ICA”).

In yet another pandemic-related initiative, the GOC on May 19, 2020, published for comment draft legislation, the Time Limits and other Periods Act (COVID-19) (the “TLPA”) that, if enacted in its current form, would create uncertainty with respect to, and may result in material extensions of, time periods for national security reviews under the ICA.

In a nutshell, the TLPA, which is meant to apply to a wide range of federal legislation, will, if enacted in its current form, have the effect of permitting the Minister under the ICA to issue orders extending by up to six months the time period within which the Minister may issue a notice that an order for a national security review may be made, and by a further period of up to six months the time period within which the Governor in Council may issue an order for a national security review. Extensions of up to six months for other aspects of the process also appear to be available. All of this is in addition to already generous time periods for national security reviews in the ICA that collectively amount to a period of up to 155 days, subject to Ministerial extensions or extensions on consent of the Minister and the investor.

The extension power proposed in the TLPA may be invoked up to September 30, 2020 and may have retroactive effect to March 13, 2020.  Retroactive effect creates material uncertainty and establishes a bad precedent – something that the Canadian Bar Association commented on in a recent submission to the Minister of Justice and Attorney General of Canada.

We think the GOC (or at least the Minister under the ICA) should reconsider the application of the TLPA to the ICA. Investors (and sellers) already have to deal with markets subjected to pandemic-related distress, and the challenges of securing financing and establishing valuations in the midst of the pandemic, not to mention the logistical challenges attached to negotiating and implementing transactions while working remotely.  Before adding the potential for uncertain and substantially lengthened national security review clearance time periods, the GOC (or at least the Minister) should assess whether the GOC can’t accomplish what needs to be accomplished within the already substantial clearance period. Also, the GOC ought to consider the national security investment review regimes of other jurisdictions with which Canada is in a competition for capital, to ensure Canada remains competitive.

In the meantime, those involved in transactions must take the TLPA into account when negotiating and implementing investments. Sellers may wish to reassess completion risk posed by a non-Canadian investor, and non-Canadian investors should reassess outside dates specified in merger agreements to ensure they allow for possible extensions under the TLPA.

On May 21, 2020, the Competition Bureau (the “Bureau”) released its Model Timing Agreement for Merger Reviews involving Efficiencies (the “Model Timing Agreement”), which includes guidance intended to inform businesses and their advisors of the Bureau’s approach to the analysis of efficiencies claims, the circumstances in which the Bureau will consider efficiencies claims and the timelines applicable to the Bureau’s review of efficiencies claims (the “Bulletin”). While the need for the Model Timing Agreement is debatable, the Bulletin does provide helpful guidance for the small subset of mergers in which the efficiencies defence is ultimately invoked.

This blog post discusses several key aspects of the Bulletin, including the efficiencies defence, the Model Timing Agreement and the types of information that merging parties will need to produce to substantiate their efficiencies claims. It also identifies and describes ten key takeaways for businesses going forward.

Efficiencies Defence

By way of background, the Competition Act (the “Act”) provides the Competition Tribunal (the “Tribunal”) with broad powers to remedy mergers that are likely to result in a substantial prevention or lessening of competition (an “SPLC”). Specifically, the Tribunal can, in the case of a completed merger, order dissolution of the merger or disposal of assets and shares, or, in the case of a proposed merger, order the parties not to proceed with the merger or part of the merger. In addition, the Tribunal can, with the consent of the Commissioner of Competition (the “Commissioner”) and the merging parties, order the parties to take any other action.

Section 96 of the Act, commonly known as the efficiencies defence, provides that the Tribunal cannot make a remedial order where it finds that the efficiencies likely to arise from a merger are greater than, and will offset, the anti-competitive effects of the merger. As noted in the Bulletin, “[t]his trade-off analysis involves a cost benefit analysis that assesses whether the alleged efficiency gains from the merger owing to the integration of resources outweigh the anti-competitive effects that result from the decrease in or elimination of competition that arises due to the merger”. The trade-off analysis is typically a complex process that involves the review of significant amounts of documents and data from the merging parties as well as detailed discussions among the Bureau, the merging parties, their counsel and their experts.

The Bureau has noted that, in its experience, merging parties have generally not provided efficiencies-related information or submissions at an early stage of a review. Instead, they “have waited for the Bureau to reach a definitive conclusion that the merger is likely to result in an SPLC before providing detailed information regarding efficiencies”, with the result that the analysis of efficiencies claims has been shifted late into the Bureau’s review of the transaction – a time “when the Bureau’s resources are focused on assessing the anti-competitive effects of a merger in order to make a determination of whether enforcement action is required”.

Model Timing Agreement

As noted in the Bureau’s News Release, the Model Timing Agreement “establishes timed stages for parties to engage with the Bureau, including the production of information and evidence regarding their efficiencies claims”. The timeframes contemplated by the Model Timing Agreement are set out below – although they can be amended by the parties on consent. However, the merging parties cannot close their transaction while the Bureau’s review is ongoing.

In the absence of the parties entering into a timing agreement that the Bureau deems acceptable, the Commissioner has indicated that he will not be willing to exercise his discretion to consider the efficiencies defence as part of the merger review process.

Information Required to Test Efficiencies Claim

Although the evidence and information required to assess merging parties’ efficiencies claims will vary from case-to-case, the Bulletin indicates that the Bureau will generally require (a) information on the merging parties’ operations and assets; (b) plans for the merging parties’ businesses in the absence of the merger; (c) analysis and planning documents relating to the implementation of the merger; (d) analysis of merger efficiencies; and (e) information from past comparable integrations. The Bulletin notes that this “evidence and information … should be provided on a with prejudice basis and be sufficiently detailed to enable the Bureau to ascertain the nature, magnitude, likelihood and timeliness of the asserted gains, and to credit (or not) the basis on which the claims are being made”.

Following the review of the merging parties’ efficiencies claims and supporting information, the Bureau will likely have further questions for the merging parties. In order to ensure that accurate and complete responses to these questions are provided, the Model Timing Agreement provides for the examination of representatives of the merging parties under oath. In addition to engaging with the merging parties and their experts, the Bureau may also use its own outside experts, including industry, economic or accounting experts, to advise on potential efficiencies arising from the merger.

Key Takeaways

There are a number of key takeaways for businesses arising from the Model Timing Agreement, the Bulletin and the historic use of the efficiencies defence.

First, the efficiencies defence is invoked in only a small subset of the mergers reviewed by the Bureau. For example, based on publically available information, the Bureau has either decided not to challenge or to seek reduced remedies based on the efficiencies defence in respect of only five mergers since 2016, including Superior Plus Corp.’s proposed acquisition of Canexus Corporation (which was subsequently blocked by the U.S. regulators), Superior Plus LP’s acquisition of Canwest Propane, Chemtrade Logistics Income Fund’s acquisition of Canexus Corporation, Calm Air’s merger with First Air and, most recently, Canadian National Railway Company’s acquisition of H&R Transport Limited. As such, the Model Timing Agreement will likely have very limited application.

Second, if merging parties anticipate raising the efficiencies defence and would like the Commissioner to consider their efficiencies claims before making an enforcement decision, they will need to enter into a timing agreement. In the absence of a timing agreement acceptable to the Bureau, it seems that efficiencies and, in particular, whether the efficiencies likely to arise from a merger are greater than and offset its anti-competitive effects, will be analyzed for the first time by the Tribunal rather than by the Bureau in advance of any prospective litigation – an outcome that increases costs, uncertainty and timelines for the Bureau and the merging parties.

Third, because the Model Timing Agreement includes terms relating to compliance with supplementary information requests (“SIRs”), it is contemplated that merging parties would enter into a timing agreement prior to the beginning of the second statutory waiting period. In this regard, the Bulletin notes that “[e]ntering into a timing agreement would not be perceived as a concession that a merger will give rise to a SPLC, but rather as a recognition that a matter involves complex competition issues that will require detailed analysis, including the quantification of a range of anti-competitive effects by the Bureau”.

Fourth, while the Model Timing Agreement is intended to “establish a schedule for the expeditious resolution of [proposed transactions]”, it may actually increase the length of the Bureau’s review (at least in certain cases). This is because the Model Timing Agreement contemplates a linear review, in which the Bureau assesses and reaches a conclusion on the competitive impact of the proposed transaction before even considering the merging parties’ efficiencies claims. In fact, the Model Timing Agreement contemplates that efficiencies submissions will generally be provided more than a month after full compliance with SIRs and that the “analysis of efficiencies and the resulting trade-off [will] occur after the end of the second waiting period”. This is in stark contrast to the position taken in the Bureau’s draft Practical Guide to Efficiencies Analysis in Merger Reviews (the “Draft Efficiencies Guide”), which encourages merging parties to provide their initial efficiencies submissions at an early stage in order to “allow the Bureau sufficient opportunity to analyze potential effects and efficiencies concurrently”. This suggests that the Bureau will no longer be willing to consider potential effects and efficiencies simultaneously – even if parties choose to provide an efficiencies submission at an earlier stage.

Fifth, the Model Timing Agreement requires that merging parties provide a significant amount of information to the Bureau to support their efficiencies claims, including making representatives available for examinations under oath – something that was recently done as part of the Bureau’s review of the CN/H&R merger. Preparing for oral examinations will impose a tremendous burden on company representatives, who will need to be prepared to discuss a wide range of issues “on any matter relevant to the claimed efficiencies”.

Sixth, the Bulletin indicates that the Bureau will consider both quantitative and qualitative efficiencies as part of its analysis. However, as reflected in the Tribunal’s decision in CCS Corporation and the Bureau’s Draft Efficiencies Guide, efficiencies will be included in the trade-off analysis only where they (a) result in productive, dynamic or allocative benefits; (b) are likely to be brought about by the merger; (c) do not arise only as a result of a redistribution of income between two or more persons; (d) accrue to Canada or Canadians; and (e) would be lost in the event of the order being sought by the Bureau (referred to as “order specific”) (collectively, the “Five Screens”). Given the complexity of assessing potential efficiencies against the Five Screens and the timelines imposed by the Model Timing Agreement, parties that intend to make efficiencies claims should consider retaining experts at an early stage – including both an accounting expert to quantify the efficiencies likely to arise from the transaction and an economist to quantify the anti-competitive effects against which the efficiencies will be balanced.

Seventh, it appears that the Model Timing Agreement, the associated timeframes and the shift to a linear review are premised on an interpretation that section 96 of the Act involves a market-by-market trade-off analysis. However, this market-by-market approach is inconsistent with the statutory language and governing jurisprudence. For example, in its decision in Superior Propane, the Tribunal stated that “section 96 of the Act applies to the transaction in its entirety” and that “[t]here is no requirement that gains in efficiency in one market or area exceed and offset the effects in that market or area”. This market-by-market approach will likely be challenged in the next efficiencies case that proceeds to the Tribunal.

Eighth, given the timelines contemplated by the Model Timing Agreement, merging parties that intend to raise efficiencies claims will need to ensure that sufficient time is built into transaction timelines. In this regard, it is worth noting that the Bureau took about four months to review the parties’ efficiencies claims in the CN/H&R merger, consistent with the timelines in the then draft model timing agreement.

Ninth, the lengthy timeframes in Model Timing Agreement are not necessarily conducive to encouraging constructive dialogue and cooperation. Rather, the lengthy timeframes may have the opposite result, as merging parties may choose to close their transactions immediately following the expiry of the second 30-day statutory waiting period in order to begin realizing efficiencies as soon as possible instead of agreeing to the Model Timing Agreement.

Finally, the Bulletin notes that “[the Bureau] will continually reassess its process for analyzing efficiencies in merger reviews for whether there is a more effective manner to undertake this analysis” and that “[it] remains open to receiving feedback in relation to the Model Timing Agreement, and will update this guidance as the process continues to evolve”. It will be interesting to follow developments in this regard – particularly if merging parties push back on the lengthy timelines with a view to implementing efficiency-enhancing mergers more quickly.

If you have questions regarding the merger review process, including the potential application of the Model Timing Agreement or the efficiencies defence, you can reach to any member of Fasken’s Antitrust/Competition Marketing 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 Antitrust/Competition Marketing group.


As previously discussed in our Refresher on the Failing Firm Defence, many companies will be facing insolvency or bankruptcy in the aftermath of COVID-19. This could lead to a situation in which financially stronger companies want to purchase struggling competitors. In this context, it is likely that the Competition Bureau will be asked to approve otherwise “problematic” mergers on the basis of what is commonly known at the “failing firm” defence.

On April 29, 2020, the Bureau issued a Position Statement providing additional guidance on the failing firm defence and, in particular, the types of information that are most relevant for a timely and efficient analysis of a failing firm. The key aspects of this guidance are summarized in this blog post.

Continue Reading Competition Bureau Provides Guidance on Failing Firm Analysis