Canada: Canadian Competition Bureau Releases Revised Merger Enforcement Guidelines

Last Updated: October 17 2011
Article by James B. Musgrove, Devin Anderson and Daniel G. Edmondstone

On October 6, 2011, the Competition Bureau ("Bureau") issued the final version of its revised Merger Enforcement Guidelines ("MEGs"). Intended to provide general direction on the agency's analytical approach to merger review under Part VIII of the Competition Act, the revised MEGs supercede both the previous 2004 version and the 2009 Efficiencies in Merger Review bulletin.

Although the new guidelines do not introduce fundamental departures from the Bureau's current policies and practices, they outline several nuanced shifts in the agency's economic and legal thinking. Notably, the MEGs illustrate changes in the Bureau's approach to the following areas:

  • the role of market definition in the anti-competitive effects analysis
  • the treatment of transactions involving interlocking directors and minority interests
  • the analysis of non-horizontal mergers
  • the efficiencies defence
  • unilateral and coordinated effects, and
  • the treatment of monopsony (buyer) power.

Market definition

Reflecting in part recent changes to the US Federal Trade Commission's Horizontal Merger Guidelines, the revised MEGs reduce the stated emphasis on market definition in the analysis of whether a proposed merger is expected to create or enhance market power. The new guidelines explain that the analysis of competitive effects forms part of an iterative process whereby any appropriate evidence in respect of market shares will be considered. While market definition will still be "generally undertaken" where feasible and useful, such a determination is a tool amongst others in determining a merger's likely competitive effects.

Interlocking directors and minority interests

The revised MEGs clarify that minority interests and interlocking directors may be reviewed under the Competition Act merger provisions where either: (i) they confer sufficient influence to constitute a merger; or (ii) they are ancillary to a merger (e.g. one merging party already holds a minority interest or directorship in a third competitor). In assessing the competitive effects of a minority interest or interlock, the Bureau will consider:

  • the extent of the influence of the acquirer or interlocked director and whether this influence may be used to persuade the target business to compete less aggressively
  • whether the minority interest holder or director is provided with access to confidential information that could result in coordination between the two firms, and
  • whether the minority interest or interlock may result in a change to the acquirer's pricing or other competitive incentives.

Non-horizontal mergers

The revised MEGs provide more detailed guidance on the Bureau's analysis of vertical and conglomerate mergers. The new guidelines explain that the Bureau's concern with respect to vertical mergers is whether the transaction may lead to a partial or total foreclosure of inputs or customers. In the case of conglomerate mergers, the Bureau will consider whether the transaction would provide the merged entity with ability and incentive to foreclose competitors by tying the sale of two products that are not both produced by the merged entity's competitors.

The efficiencies defence

Incorporating the 2009 Efficiencies in Merger Review bulletin, the MEGs now contain an expanded discussion of the Bureau's framework of analysis of efficiency claims made pursuant to sections 92 and 96 of the Act. Notable changes include a clarification of the parties' burdens in advancing efficiency claims and a discussion of the factors that the Bureau will consider in evaluating the merits of such claims. Consistent with recent public remarks by Bureau officials, the MEGs also state that the Bureau only will consider efficiencies where the merging parties provide sufficient supporting evidence in a timely manner.

Unilateral and coordinated effects

The MEGs contain an expanded discussion of the analysis of unilateral effects in differentiated product industries. Where products are close substitutes, the Bureau will examine whether the transaction will create an incentive for the merged firm to raise prices. This examination is shaped by an assessment of the number of buyers who would consider the products to be close substitutes, whether either firm has been a particularly vigorous and effective competitor, whether buyers are price sensitive and the anticipated response of rival firms and buyers. The revised guidelines also elaborate on the factors that the Bureau will consider in its analysis of coordinated effects and clarify that coordinated effects may be present with or without explicit agreement among firms and even if only a portion of the firms in the market are involved in the coordination. The revisions also introduce a discussion of bidding and bargaining markets in the assessment of unilateral competitive effects that has not been included in previous Bureau publications.

Monopsony power

The revised guidelines incorporate the treatment of monopsony power previously set out the Bureau's 2008 Round Table on Monopsony and Buyer Power submission to the Organization for Economic Co-Operation and Development. Buying power is said to be anti-competitive when a buyer has the ability to decrease the price of the relevant product below competitive levels by way of a reduction in the overall quantity of inputs purchased. The MEGs now contain an expanded discussion of the factors that the Bureau will consider in circumstances where a transaction would result in a merged entity that accounts for a significant portion of purchases of a product and barriers to purchasing the input are high.

Other changes

The revised MEGs also expand on the Bureau's definition of a "merger", which has been clarified to be any transaction or appointment that creates the potential to materially influence economic behaviour. Additionally, the reference to the two-year time period used in assessing whether new entrants would deter a merged entity from exercising market power has been replaced with a more flexible approach that focuses simply on whether entry is likely, timely and sufficient to prevent or counteract the effects of a material price increase.


The revisions to the Merger Enforcement Guidelines are intended clarify and reflect the Bureau's evolving approach to merger enforcement. Substantively, the updated MEGs do not reveal dramatic departures from current merger enforcement practices but do introduce nuanced shifts in the Bureau's thinking and afford the agency a greater range of economic and analytical tools.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2011 McMillan LLP

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

James B. Musgrove
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.