Canada: Canada Enacts New Prior Approval Process for Transportation Mergers

On June 22, 2007, amendments to Canada's principal federal transportation legislation, the Canada Transportation Act ("CTA"), came into force. Among other things, the amendments establish a new "public interest" review process for mergers involving "transportation undertakings" falling under federal jurisdiction. The new CTA process is additional to – and to some degree supersedes – the current merger review process under the Competition Act. The CTA process has been enacted notwithstanding concerns about how it will apply in practice and the impact it may have on mergers in the transportation industry.

Public Interest Review Under the CTA

The new CTA merger review provisions apply to transactions that "involve a transportation undertaking" and that are subject to pre-merger notification under the Competition Act. (Pursuant to Part IX of the Competition Act, and subject to certain exemptions, proposed transactions exceeding specified financial thresholds must be notified to the Competition Bureau prior to closing and cannot be completed until a prescribed waiting period has expired.)

Parties subject to the CTA will now have to submit their pre-merger notifications not only to the Competition Bureau, but to the federal Minister of Transport as well. The parties also will be required to submit information relating to the "public interest" aspects of the transaction insofar as the effect on national transportation is concerned. The specific considerations to be addressed will be set out in guidelines to be drafted by the Minister (in consultation with the Bureau).

Following notification, the Minister will have 42 days to decide whether the proposed transaction raises any "public interest" issues. Where the Minister determines that a transaction does not raise any such issues, notice will be provided to the parties that the public interest merger review provisions of the CTA do not apply. In that case, the usual review process and substantive provisions of the Competition Act will apply.

However, where the Minister determines that a proposed transaction does raise public interest issues, the Minister can direct the Canadian Transportation Agency (the "Agency"), or any other person, to investigate such issues and report to the Minister within 150 days. In those circumstances, the usual Competition Act review process will cease to apply, and the Competition Bureau will be obliged instead to report any concerns about a "potential prevention or lessening of competition" to the Minister and the parties within 150 days of being notified under the Competition Act. The Bureau's report will be made public immediately after the Minister receives it.

Once the Agency and Bureau reports are received, the Minister will recommend to the federal Cabinet whether the transaction should be approved or not. Prior to making this recommendation, the Minister will consult with the Bureau as necessary and also give the parties an opportunity to respond to any public interest or competition concerns raised, including offering undertakings to address these concerns.

The ultimate fate of the transaction will then be up to the federal Cabinet to determine. In deciding whether the transaction is in the "public interest", the Cabinet will be entitled to consider any undertakings proposed by the parties, and could approve the transaction subject to terms and conditions relating both to the public interest and any potential prevention or lessening of competition.

Failure to notify under the new CTA provisions is a criminal offence, as are closing without Cabinet approval where required and failing to adhere to any terms and conditions imposed by Cabinet. In addition to the corporation itself, any officer or director who authorized or participated in the offence is liable. Penalties include fines and/or imprisonment.


The proposed amendments to the CTA were criticized on a number of grounds prior to enactment. For example:

  • The concept of "transportation undertaking" is undefined in the legislation, which creates uncertainty as to the scope of its application. The new merger review process no doubt applies to transportation businesses already within federal jurisdiction, such as inter-provincial or cross-border railways, airlines, pipelines, or trucking and shipping firms. However, based on case law decided in other contexts, the new process also may apply to businesses that provide important ancillary services to federal undertakings, yet do not transport anything across provincial or international borders (e.g., stevedoring companies).
  • The new CTA process applies to mergers that "involve" transportation undertakings. This means that it may apply not only to acquisitions of transportation undertakings, but also to acquisitions by transportation undertakings, including acquisitions that do not necessarily involve the transportation of goods or persons (e.g., if an airline operator acquires a parts manufacturer).
  • When the public interest process is invoked, the Competition Bureau will be required to apply a different review standard than the one otherwise used to assess mergers under the Competition Act. Thus, the CTA requires the Competition Bureau to report to the Minister on any concerns regarding a "potential prevention or lessening of competition" resulting from the proposed merger. This is a different – and lower – threshold than normally applies to merger review under the Competition Act, where the Bureau has to consider whether the proposed transaction is likely to result in a substantial prevention or lessening of competition. Although the Bureau has indicated that it intends to continue to apply the usual standard under the Competition Act to transportation mergers, it is not clear why the CTA, on its face, establishes a different standard.

Although the proposed amendments were reviewed by committees of both the House of Commons and the Senate, no changes were made to deal with these criticisms.

More generally, no clear explanation has been provided as to why the transportation industry requires a special review process that is different from that applicable to other industries. Even if the various uncertainties surrounding the legislation are clarified, the establishment of the new process means that at least some transportation mergers will be potentially subject to a two-tiered review (and even to a three-tiered review if the Investment Canada Act applies), with all of the potential for conflict and delay that multiple regulatory reviews entail.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

Mark C. Katz
In association with
Related Topics
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions