The Competition Bureau and Your M&A Transaction

The Competition Bureau (the “Bureau ”) is a government body responsible for fostering and promoting competition in the marketplace. The Bureau has a broad mandate and investigates matters such as price fixing, market dominance, and deceptive marketing. The Bureau also has a significant role to play in certain M&A transactions. [i] Parties to potential M&A transactions should anticipate and address any potential Bureau review early to avoid the risk of unnecessary complications, including the involvement of the Competition Tribunal.

Bureau Review and Remedies

The Bureau has jurisdiction over all transactions that involve “an acquisition of control or a significant interest in all or part of the business of another” [ii], but focuses on transactions that may “substantially lessen competition” [iii]. While only certain mergers, those that exceed prescribed monetary thresholds, must be reported to the Bureau prior to closing [iv], the Bureau will carefully examine all transactions that may raise competition concerns.

The Bureau recently expanded the role of its Merger Intelligence and Notification Unit (the “MINU”) to focus on “active intelligence gathering” in respect of transactions which do not trigger the notification requirements. [v] The Bureau, understandably, does not identify such intelligence gathering measures. Given the Bureau’s concerns, it encourages parties to non-notifiable transactions to voluntarily engage with the MINU. [vi]

The Bureau may take one of two approaches where it believes that a transaction substantially lessens competition. The Bureau can negotiate with the parties to resolve the competition issues identified. The Bureau “generally attempts to negotiate an agreement with the merging parties without proceeding to litigation”, enabling “a less costly and more expeditious resolution of the matter” [vii]. The Bureau can also challenge the transaction before the Competition Tribunal (the “Tribunal”). The Tribunal is a specialized decision-making panel that can make a range of orders where it finds that the transaction in question “prevents or lessens, or is likely to prevent or lessen, competition substantially”. Examples of potential Tribunal orders include prohibiting parties from proceeding with the transaction, ordering the dissolution of a completed transaction, and/or the divestiture of assets or shares. [viii]

Increasing Bureau Litigation Capacity and Focus

The Bureau has signalled its intention to ramp up its enforcement approach and increase its litigation capacity, and intends to specifically target competition issues in digital markets (by creating a dedicated “Digital Enforcement and Intelligence Branch”). [ix]

The Bureau is also reacting to other topical issues such as the COVID-19 pandemic’s effect on markets and competition (though it has no plans to relax its strict requirements).

Consult Professional Advisors to Anticipate and Prepare for Bureau Review

Potential Bureau involvement in a transaction should not be an afterthought. Parties to a potential M&A transaction can seek professional advice about whether the Bureau should be notified of the transaction pre-closing, and regarding potential Bureau review more generally. Where necessary, legal counsel and professional advisors with market-specific expertise can assist parties in preparing for and participating in any Bureau review, mitigating the risk of unanticipated and costly litigation before the Tribunal.

[i] Government of Canada, “What is the Competition Bureau” (September 25, 2019), online: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/04296.html

[ii] Section 91 of the Competition Act defines merger as “the acquisition or establishment, direct or indirect, by one or more persons, whether by purchase or lease of shares or assets, by amalgamation or by combination or otherwise, of control over or significant interest in the whole or a part of a business of a competitor, supplier, customer or other person”. More simply, a merger is “an acquisition of control or a significant interest in all or part of the business of another” ( Tervita Corp. v. Canada (Commissioner of Competition), 2015 SCC 3 [Tervita] at para 42).

[iii] Section 2.9 of the Bureau’s “Merger Enforcement Guidelines” states that “[a] merger may substantially lessen competition when it enables the merged firm, unilaterally or in coordination with other firms, to sustain materially higher prices than would exist in the absence of the merger by diminishing existing competition”.

[iv] Government of Canada, “Pre-merger notification transaction-size threshold decreases to $93M in 2021” (February 11, 2021), online: https://www.canada.ca/en/competition-bureau/news/2021/02/pre-merger-notification-transaction-size-threshold-decreases-to-93m-in-2021.html

[v] Government of Canada, “Reviewing mergers - How to file a pre-merger notification” (April 1, 2021), online: https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02781.html

[vii] Procedures Guide for Notifiable Transactions and Advance Ruling Certificates Under the Competition Act - Competition Bureau Canada

[ix] Commissioner of Competition, “Pre-recorded remarks from Matthew Boswell, Commissioner of Competition” (Canadian Bar Association Competition Law Fall Conference, October 20, 2021), online: https://www.canada.ca/en/competition-bureau/news/2021/10/canada-needs-more-competition.html