Canadian Competition Law Reform: A Diagnosis and Proposals for Reform of Canada’s Ineffective Merger Notification Rules

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Canada’s Competition Act, like competition laws in many other jurisdictions, contains merger notification rules. Put simply, these rules require that where parties to a M&A transaction exceed specified economic thresholds, the parties must notify Canada’s competition agency, the Competition Bureau (the “CCB”), prior to closing. The rules’ main purpose is to ensure the CCB is notified of, and given time to review, those M&A transactions deemed most likely to give rise to potential harm to competition.

Canada’s merger notification rules were originally implemented in 1986, and have been largely unchanged ever since. Canada’s rules predate the implementation of merger notification rules in most other mature economies around the world (except for the United States). There has never been a broad discussion in Canada about whether the rules are or remain effective at accomplishing their underlying policy objective, or whether reform is desirable.

Such a broad discussion about the effectiveness of Canada’s merger notification rules, and eventual reform of the rules, is long overdue. This is because the Canadian merger notification rules are ineffective at accomplishing their main policy objective of requiring M&A transactions that are most likely to give rise to potential harm to be notified. The rules are also ineffective at accomplishing numerous secondary objectives.

This paper identifies the main and two key secondary policy objectives of Canada’s merger notification rules. The remainder of the paper explains why the current merger notification rules are ineffective at accomplishing these objectives. The paper also sets out proposals for how the rules should be reformed to remedy aspects of their ineffectiveness, and all of these proposals would be commendable components of a full-scale proposal for reform.