FILING FEE – There is a filing fee of $82,719.12 in 2023 (adjusted annually) for statutory pre-merger notification and/or an ARC/no-action letter application.
Competition Act (Canada): Substantive Provisions – The Bureau tends to focus on horizontal mergers between competitors. Vertical mergers between a customer and a supplier have rarely been a standalone basis for challenging a merger in Canada but vertical relationships between merging parties may lead to extensive questions and delay in the merger review process. SUBSTANTIVE TEST – The substantive merger provisions apply independently of the notification provisions. Thus, even non-notifiable transactions can be challenged on substantive grounds, and the Bureau actively monitors merger activity for transactions that fall below the notification thresholds. The last litigated non-notifiable merger challenge brought by the Commissioner was in 2019, and remedies (interim and final) have been obtained by the Commissioner on a consensual basis in a number of non-notifiable mergers since then. – Currently, the Commissioner may initiate a challenge to a merger on substantive grounds until one year after substantial completion of the transaction. – The test for imposing a remedy is whether the proposed merger is likely to lessen or prevent competition substantially in a market in Canada (e.g., the merged entity will be able to raise prices or to reduce service, quality or innovation). The Commissioner will also assess the merger’s impact on buying power and the merged firm’s ability to suppress prices paid to suppliers below competitive levels, as well as the impact of the merger on non-price factors or aspects of competition such as “network effects”, quality, consumer choice and consumer privacy. – Product and geographic market definition play a key role in assessing whether a merger is likely to substantially lessen or prevent competition. – Even if a proposed merger is prima facie anticompetitive, it may be possible to raise an “efficiencies” defence—namely, that the merger should not be blocked if efficiency gains from the merger are likely to be greater than, and offset, the anticompetitive effects. Despite a handful of cases in which the Bureau has decided not to challenge a transaction or aspects of a transaction on efficiencies grounds, to date it has proven very difficult to convince the Bureau to clear a merger solely on the basis of efficiencies. Merging parties wishing to do so will normally be expected by the Bureau to agree not to close their transactions pending a process for the review of efficiencies and the resulting trade-off against anticompetitive effects. That process would extend beyond statutory time frames and involve reviewing significant amounts
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Canadian Mergers & Acquisitions
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