Canada’s merger review landscape: longer reviews, more complexity, increased litigation, and greater deal uncertainty

Two years after the most significant overhaul of the Competition Act’s merger review regime in a generation, the practical effects of the 2024 amendments are beginning to emerge.

The amendments expanded the Competition Bureau’s ability to challenge mergers, and directed greater attention toward smaller and serial acquisitions. The practical result is an environment characterized by longer and more intensive merger reviews, increased scrutiny of transactions that fall below the notification thresholds, and greater willingness by the Bureau to litigate. Together, these developments are increasing execution risk and emphasising the need to make regulatory risk assessments an important part of transaction planning.

What you need to know

• Merger reviews are becoming more resource-intensive, with increasing demands for documents, data, and customer evidence, as well as greater use of mandatory document production requests.
• The Bureau is devoting significant resources to non-reportable transactions and has shown a willingness to use document production subpoenas to advance investigations involving transactions not subject to pre-merger notification.
• Recent challenges to transactions such as Keyera/Plains and Nortera/B&G Foods suggest the Bureau is increasingly prepared to litigate mergers and test the scope of its enhanced powers before the Competition Tribunal.
• Parties are responding by placing greater emphasis on regulatory risk allocation, outside dates, and other transaction protections.

Longer and more intensive reviews

Recent Bureau data suggests that a growing proportion of merger reviews are being viewed by the Bureau as “complex”¹. Average review periods for complex matters have also increased, and the Bureau has reported greater use of supplementary information requests (SIRs) and “pull-and-refile” processes, a development generally associated with efforts by parties to avoid or narrow extensive document production demands.

The practical impact on transaction timelines may be even greater than the statistics suggest. In our experience, merger reviews increasingly involve detailed requests for business records, transaction documents, data sets, and customer evidence. Responding to these requests can require substantial management time and resources and materially extend deal timelines. Because the Bureau can “stop the clock” (or even decline to start it) when responses are delayed, the official data on official review timelines likely significantly under-report actual review timelines. Our analysis of the Bureau’s reporting of merger reviews suggests that, excluding extreme outliers, reviews opened after the 2024 amendments came into effect are taking over 20% longer on average than those opened prior².

The Bureau’s “no stone unturned” approach to merger assessments should be factored into transaction timelines and closing expectations. Early competition analysis and careful preparation for merger review will help ensure there are no surprises as the process unfolds.

Increased scrutiny of non-reportable transactions

The Bureau’s recent enforcement activity also demonstrates that transactions which fall below the notification thresholds are receiving heightened scrutiny.

The Bureau has repeatedly stated that it intends to devote significant attention to smaller acquisitions, serial acquisition strategies, and transactions that may contribute to concentration over time. To support those efforts, it has expanded the role of its Merger Intelligence and Notification Unit, which monitors public sources, engages with market participants, and receives information and complaints from customers, competitors, and other stakeholders.

Recent reviews of transactions show that the Bureau is willing to devote substantial resources to investigating non-reportable mergers. In several recent matters, parties to non-notified transactions have faced extensive information demands, including section 11 production orders requiring the production of documents, data, and other records.

The practical implication is straightforward: the absence of a filing obligation should not be viewed as a substitute for competition risk assessment analysis. Transactions that are not notifiable may still attract significant scrutiny, investigative burdens, and delays.

Greater uncertainty, and increased litigation and injunction risk

By convention, merger parties in Canada typically await positive approval from the Bureau in the form of an advance ruling certificate (ARC) or no-action letter (NAL) before closing a transaction. Prior to the 2024 amendments, it was rare for parties to close on mere expiry of the statutory waiting period. In our experience, the Bureau is now increasingly unwilling to issue ARCs or NALs on complex cases that they do not immediately intend to challenge but where they wish to leave the option open, leaving it to parties to close at their own risk.

The Bureau also appears increasingly willing to litigate merger cases. Recent challenges to Keyera’s acquisition of Plains’ Canadian natural gas liquids business and Nortera’s proposed acquisition of B&G Foods’ vegetable business suggest that the Bureau intends to test the new legislative framework before the Competition Tribunal. Both cases place significant emphasis on the statutory provisions introduced in 2024.

For dealmakers, an equally important development is the increasing risk of interim relief and post-closing reviews. The Bureau has demonstrated a willingness both to seek injunctions to prevent a transaction from closing pending the outcome of litigation, and to let transactions close and continue reviews or litigate thereafter.

This uncertainty and the increased litigation and injunction risk are increasingly influencing transaction planning, including approaches to timing, closing conditions, regulatory covenants, and risk allocation.

Looking ahead

The key takeaway from recent enforcement activity is that the 2024 reforms are no longer theoretical. The Bureau clearly views the amendments as a green light to pursue a more interventionist approach to merger enforcement.

That approach is translating into longer and more burdensome reviews, heightened scrutiny of non-reportable transactions, and an increased willingness to litigate. For transaction parties, the result is greater execution risk and increased importance of identifying and assessing competition issues at an early stage of the deal process.

Careful antitrust analysis, realistic transaction timelines, and thoughtful allocation of regulatory risk are becoming increasingly important components of successful deal planning in Canada.