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Legal Guide


The definition of “merger” is very broad in the Competition Act. It means any “acquisition or establishment of control over or significant interest in the whole or a part of a business of a competitor, supplier, customer or other person”. A merger may be effected by means of a purchase or lease of shares or assets, an amalgamation or combination, or a joint venture.

The Commissioner reviews mergers and may apply to the Tribunal for a remedy in respect of a merger he or she views to be anti-competitive. The Tribunal may prohibit a proposed merger, or order full or partial divestiture or dissolution following a consummated merger, if it finds that the merger “prevents or lessens, or is likely to prevent or lessen, competition substantially” in a relevant market. In deciding whether competition would be so affected, the Tribunal is entitled to consider several factors which include:

  • •     the extent of foreign competition faced by the merging parties;
  • •     whether the business of one of the parties has failed or is likely to fail;
  • •     the extent to which acceptable substitutes to the products of the merging parties are or are likely to become available;
  • •     any barriers to entry into a market (including tariff and non-tariff barriers to international trade, interprovincial barriers to trade and regulatory controls over entry) and the effect of the merger on such barriers;
  • •     the extent of effective competition remaining post-merger;
  • •     the likelihood the merger may result in the removal of a vigorous and effective competitor; and
  • •     the nature and extent of change and innovation in a relevant market.

The Tribunal is also directed not to find a substantial lessening of competition based only on “evidence of concentration or market share”. This provision is designed to ensure that a mechanistic or arithmetical rule is not developed by the Tribunal in deciding which mergers should be prohibited. Nonetheless, the Merger Enforcement Guidelines issued by the Competition Bureau do set out certain presumptive safe harbours, based on percentage market share, that will influence its response to given mergers.

There are two important exceptions to the authority of the Tribunal to prohibit a merger. Firstly, the Tribunal cannot make such an order if the merging parties can demonstrate that there would be efficiency gains from the merger sufficient to offset the effects resulting from any lessening of competition. Secondly, certain joint ventures formed to conduct specific projects or a program of research and development, will also be exempt if certain criteria are met. The most important criterion is that the project or program would not otherwise have been undertaken.

Many of the substantive standards of the merger provisions are couched in economic language which can cause uncertainty in their practical application. Uncertainties arising from the merger criteria can be alleviated significantly by the ability of merging parties to obtain an Advance Ruling Certificate from the Commissioner, indicating that he or she would not have sufficient grounds to make an application to the Tribunal or a “no-action” letter stating that the commissioner does not, at that time, intend to make an application under section 92 of the Competition Act in respect of the proposed transaction. In some cases, such requests may become the focus for negotiations between the Commissioner and the merging parties involving conditions which will satisfy the Commissioner that the merger will not result in a substantial lessening of competition. These conditions may be embodied in a consent agreement registered with the Tribunal. As mentioned, the Commissioner has published Merger Enforcement Guidelines that describe the Competition Bureau’s enforcement policy with respect to mergers.


The Competition Act contains compulsory pre-notification requirements for transactions which exceed defined financial thresholds. Similar requirements exist in the merger laws of many jurisdictions, such as the Hart-Scott-Rodino Act in the U.S. The pre-notification requirements are designed to apply to only a relatively small number of mergers involving substantial business interests.

The two notification thresholds, both of which must be exceeded in order to trigger the notification requirement, are:

  1. i.     Size of the Parties Test - The parties to the transaction, together with their affiliates, must have assets in Canada or annual gross revenues from sales in, from or into Canada, which exceed $400 million.
  1. ii.     Size of the Transaction Test - Differing transactions thresholds apply depending upon the transaction method employed:
  1. •     Acquisition of Assets - Where a proposed transaction involves the acquisition of assets of an operating business in Canada, notification is required where the aggregate value of the assets to be acquired, or the annual gross revenues from sales in or from Canada generated from those assets, would exceed $80 million.
  1. •     Acquisition of Shares - Where a proposed transaction involves the direct or indirect acquisition of voting shares of a corporation carrying on an operating business in Canada, notification is required where the aggregate value of the assets of such corporation, or the annual gross revenues from sales in or from Canada generated from those assets, would exceed $80 million, and the person or persons acquiring the shares, together with their affiliates, would own more than either 20 percent of the voting shares, in the case of a public corporation, or 35 percent of the voting shares, in the case of a private corporation. Where the acquiring party, together with its affiliates, already owns more than 20 percent of the voting shares of a public corporation or more than 35 percent of a private corporation, then notification is required only where the proposed acquisition would result in the acquiring party, together with its affiliates, owning more than 50 percent of the voting shares of the corporation.
  1. •     Amalgamation - Where a proposed transaction involves a corporate amalgamation of two or more corporations where one or more of the corporations involved carries on, or controls a corporation that carries on, an operating business in Canada, notification is required if the aggregate value of the assets in Canada of the continuing corporation (or by corporations it will control), other than assets that are shares of any of those corporations, or the annual gross revenues from sales in or from Canada generated from those assets would exceed $80,000,000; and each of at least two of the amalgamating corporations, together with their affiliates, have assets in Canada or gross revenues from sales in, from or into Canada generated from those assets that would exceed $80 million.
  1. •     Combination - Where a proposed transaction involves a combination of two or more persons to carry on business otherwise than through a corporation, notification is required if the aggregate value of the assets in Canada that are the subject matter of the combination, or the annual gross revenues from sales in or from Canada generated from those assets, would exceed $80 million.
  1. •     Acquisition of an Interest in a Combination - Where a proposed transaction involves the acquisition of an interest in an existing combination that carries on an operating business otherwise than through a corporation, notification is required if the aggregate value of the assets in Canada that are the subject matter of the combination, or the annual gross revenues from sales in or from Canada generated from those assets, would exceed $80 million and where, as a result of the acquisition of the interest, the person or persons acquiring the interest, together with their affiliates, would hold an aggregate interest in the combination that entitles them to receive more than 35 percent of the profits of the combination or more than 35 percent of its assets on dissolution or, where the person or persons acquiring the interest are already so entitled, to receive more than 50 percent of such profits or assets.

Where both the size of parties threshold and the size of transaction threshold are exceeded, all persons who are proposing the transaction are required, before completing the transaction, to notify the Commissioner that the transaction is proposed and to supply the information required under the Competition Act.

In addition, in cases where the parties believe that there will be little or no adverse competitive impact resulting from the transaction, they may instead of, or in addition to, the notification filing, prepare and submit a request for an Advance Ruling Certificate from the Commissioner certifying that there are not sufficient grounds to apply to the Tribunal under section 92 of the Competition Act. The issuance of an Advance Ruling Certificate by the Commissioner exempts the transaction from the notification requirements under the Competition Act. However, regardless of the determination of whether there is significant overlap between the parties to a proposed transaction, the information that would be provided in an Advance Ruling Certificate request would still commonly be provided in a brief or “white paper” accompanying a notification filing, to assist the Competition Bureau in analyzing the competitive impact of the transaction in Canada.

A notifiable transaction may not be completed until after the expiry of a 30-day statutory waiting period, unless the Commissioner grants an earlier termination. The Commissioner may, within the 30-day period, require additional information (commonly called a Supplementary Information Request (“SIR”)) from applicants. In such an instance, the initial 30-day review period is extended to 30 days from the date on which all the SIR information has been provided to the Commissioner.

The Tribunal may issue an interim order of short duration (generally up to 30 days, with the possibility of an extension to 60 days) prohibiting completion or implementation of a merger where the Commissioner requires additional time to complete his or her inquiry, and where the Tribunal finds that action may be taken in the interim which would substantially impair the ability of the Tribunal to remedy the effect of the proposed merger on competition.

The Commissioner’s review of a transaction may extend beyond the applicable waiting period, particularly where the transaction involves competitive overlap between the businesses of the parties. The Competition Bureau has published service standards for the review of notifiable transactions and preparation of Advance Ruling Certificates for mergers, with maximum turnaround times determined by the complexity of the transaction. The maximum turnaround times are 14 calendar days for “noncomplex”, and 45 calendar days for “complex” transactions, except where a SIR is issued, in which case it will be 30 calendar days commencing the day on which the Commissioner has received a complete response to the SIR from all SIR recipients. The Bureau has provided definitions for these varying levels of complexity. At the same time, the Competition Bureau requires a $50,000 filing fee for notifiable transactions. Where an advance ruling certificate is requested, the fee is also $50,000. Where both a notification and an advance ruling certificate are submitted with respect to the same proposed transaction, only one filing fee of $50,000 is required. While parties to a transaction are not prohibited from closing after the expiry of the statutory waiting periods (unless the Tribunal has issued an interim order preventing closing), they do so at their own risk.

Upon completion of the Commissioner’s review of a transaction, he or she may decide to: (i) challenge the transaction, ultimately before the Tribunal if the parties insist on proceeding with the transaction without addressing the Commissioner’s concerns; (ii) issue a “no-action” letter indicating that the Commissioner does not, at that time, intend to make an application under section 92 of the Competition Act in respect of the proposed transaction; or (iii) issue an Advance Ruling Certificate which bars the Commissioner from challenging the transaction, provided that the facts were accurately represented to the Commissioner by the parties. While a no-action letter does not legally prevent the Commissioner from challenging a transaction, the receipt of a no-action letter is commonly considered a satisfactory closing condition in merger transactions.

It is common where an Advance Ruling Certificate is being requested without a formal notification, to request, as an alternative, a no-action letter and a waiver of the obligation to notify the Commissioner and supply information.

It is important to note that, even if a transaction does not trigger the merger notification provisions under the Competition Act, it may be reviewed by the Commissioner under the substantive provisions in the Act, referred to above, relating to mergers which substantially lessen or prevent competition, up to one year after substantial completion of the merger. 


There are a number of exemptions from the pre-notification requirements. All transactions between affiliated parties are exempt, as are those transactions where the Commissioner has issued an Advance Ruling Certificate. Also exempt from the pre-notification requirements are: (i) acquisitions of real property or goods in the ordinary course of business, if the acquiring person or persons would not hold all or substantially all of the assets of an operating segment of a business; (ii) acquisitions of voting shares or of an interest in a combination solely for the purpose of underwriting the shares or the interest; (iii) acquisitions of voting shares or of an interest in a combination where the acquisition would result from a gift, intestate succession or testamentary disposition; (iv) acquisitions resulting from foreclosures by a creditor in the ordinary course of business; (v) acquisitions of certain Canadian resource property where the acquirer intends to carry out exploration or development activities; (vi) asset securitization transactions; and (vii) certain limited classes of joint ventures.

Certain mergers in Canada may be subject to requirements outside the Competition Act provisions. For example, financial institution mergers may be subject to approval of the federal Minister of Finance, and transportation sector mergers and acquisitions may be subject to merger review provisions in the Canada Transportation Act.

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