Canada: Canadian Competition Law Desperately Needs Reform

Last Updated: March 11 2008
Article by Mark C. Katz

According to T.S. Eliot, "April is the cruellest month". But for Canada's Competition Bureau ("Bureau"), January 2008 wasn't so great either. In that month, the Bureau suffered two stinging setbacks in decisions issued by the Federal Court, both relating to the Bureau's review of Labatt's acquisition of Lakeport Brewing. The decisions also highlight some major problems with the Canadian merger review process.

In the first decision, the Federal Court of Appeal (FCA) upheld a March 2007 ruling of the Competition Tribunal ("Tribunal") denying the Bureau's application for an interim injunction to prohibit Labatt from acquiring Lakeport pending completion of the Bureau's review process. The Bureau sought the temporary injunction because, although the statutory 42-day waiting period triggered by Labatt's pre-merger notification was set to expire, the Bureau said that it required additional time to complete its substantive review of the proposed acquisition (the Bureau's substantive review of mergers is conducted pursuant to a separate, and not necessarily consistent, timetable from the waiting periods triggered by pre-merger notifications).

The Tribunal denied the Bureau's request for an interim injunction because it did not agree that allowing the transaction to proceed would impede the Tribunal's ability to order relief if the Bureau decided to challenge the merger post-closing (the Bureau has the power to challenge a merger up to three years following closing). The Bureau appealed to the FCA, essentially arguing that interim injunctions should be granted automatically unless the merging parties can show that the Bureau's application constitutes an abuse of process.

The FCA rejected the Bureau's argument on Jan. 22, stating that "[w]e do not agree that Parliament intended the role of the Tribunal to be so limited." The FCA also outlined the type of evidence it considers necessary to show that an interim order is required to preserve the Tribunal's remedial powers post-merger.

Having succeeded initially in defeating the Bureau's application for a temporary injunction, Labatt pressed ahead with its acquisition of Lakeport on March 29, 2007. But matters did not conclude there. The Bureau continued to review the transaction and, in November 2007, obtained a series of ex parte orders under s. 11 of the Competittion Act requiring Labatt, Lakeport and other industry participants to produce extensive documentation for the purposes of its investigation. Labatt then brought a motion to set aside the orders granted against itself and Lakeport. On Jan. 28, Justice Mactavish of the Federal Court Trial Division upheld Labatt's motion and set aside the orders.

In a harshly-worded rebuke of the Bureau, Justice Mactavish held that it had failed in its obligation to make full and frank disclosure of all material facts in its applications before her. In particular, the Bureau had not disclosed that it already had in its possession a "voluminous and profound" amount of information regarding the Canadian beer industry, including information secured as a result of previous orders obtained against Labatt and Lakeport. Using strong words not often heard in the genteel world of Canadian competition law, Justice Mactavish characterized the Bureau's application materials as "misleading", "inaccurate", "incomplete" and "disingenuous", and said that she would not have issued the s. 11 orders had proper disclosure been made.

The Bureau has since defended its disclosure practices, but the very strong language employed by Justice Mactavish caused the Minister of Industry to take the unusual step of publicly expressing his disappointment with the Bureau and his intention to investigate what had happened.

The two Labatt decisions come at an opportune time. A panel appointed by the federal government is currently conducting a review of Canadian competition and foreign investment policies. While foreign investment issues are likely to take up a significant part of the panel's deliberations, the Labatt decisions underscore how aspects of Canada's merger review process are in need of reform.

For one, it is time to put an end to the curious dichotomy between the Competition Act's statutory waiting periods and the Bureau's substantive merger review process. This dichotomy makes it difficult to advise clients about when the Bureau will complete its review, unless the transaction is a proverbial "no-brainer". It also can lead to the type of dilemma faced by Labatt — proceed to close at the expiry of the waiting period, and risk the Bureau seeking an interim injunction, or delay closing and hope that the Bureau will take a reasonable time to conclude its review in accordance with the nonbinding "service standard periods".

The Canadian merger review process should instead incorporate a definitive timetable that offers merging parties certainty about timing while giving the Bureau reasonable time in which to conclude its review. This is the model followed by many other jurisdictions, which generally provide for an initial review period of limited duration triggered by pre-merger notification (e.g., 30 days), followed by the possibility of a longer – but time limited – "second phase" review for more complex transactions.

Reform of the s. 11 order application process is also necessary. Practitioners have long complained about the extraordinary costs that clients must incur in responding to these orders, which can require the production of massive amounts of documents and information going back many years. The burden is particularly onerous for non-parties, who are equally obliged to produce information even though they are not directly involved in the transaction.

The biggest problem with the s. 11 application process is its ex parte nature. No one is disputing that the Bureau needs industry information to conduct its merger reviews. But s. 11 orders are often unfocussed and overly broad, largely because they are drafted by Bureau officers and government lawyers who are lacking in industry expertise. And s. 11 orders are rarely so urgent that applications without notice are required. That is why organizations such as the Canadian Bar Association have recommended that the Bureau be required to give prior notice of s. 11 applications except where it can be demonstrated that this would impair the integrity of an investigation. Indeed, it would be helpful to require the Bureau to consult with parties even before proceeding to court for an order, unless that would somehow prejudice the investigation.

The Labatt decisions confirm that – although the Competition Act is often tilted in the Bureau's favour – the courts and the Tribunal will not tolerate being treated as "rubber stamps" for Bureau enforcement actions. Even more importantly, the decisions point to failings in the Canadian merger review process that need to be addressed. The ongoing panel review process offers an excellent opportunity for advancing such reform.

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