New Merger Rules: The End of Business as Usual

Abstract: Canada’s updated Competition Act has transformed merger reviews, imposing stricter standards and greater scrutiny. Key changes include the removal of the efficiencies defense, a new rebuttable presumption that mergers are anti-competitive, and heightened remedy requirements to restore pre-merger competition levels. The Competition Bureau now has more power to challenge transactions, extended timelines for investigations, and tougher penalties for non-compliance. These rules particularly target digital markets and anti-competitive practices, forcing businesses to adopt meticulous pre-merger planning and proactive remedies. While aimed at fostering competition, the complexity of the regime raises concerns about its impact on smaller firms and deal timelines.

Merging in Canada has become a challenging proposition. Over the past two years, sweeping changes to the Competition Act have upended how deals are reviewed, imposing far greater scrutiny on prospective mergers. Businesses now face an uphill battle to demonstrate that their transactions will not harm competition. The era of rubber-stamped approvals, bolstered by efficiency gains or reassurances of modest market share, is over. Canada’s new regime is tougher, more skeptical, and unapologetically designed to put competition first.

The overhaul, completed in June 2024, marks a decisive shift in merger review. The introduction of a rebuttable presumption flips the burden of proof squarely onto merging parties, who must now convince regulators that their deals are not anti-competitive. The efficiencies defense—once a get-out-of-jail card for deals that promised economic benefits—has been eliminated entirely. In its place is a higher standard for remedies, requiring that any proposed fixes restore competition to pre-merger levels, a threshold few will find easy to meet. Meanwhile, new factors, including impacts on labour markets and the potential for competitor coordination, add layers of complexity to an already formidable process.

The Bureau Sharpens Its Teeth

The Competition Bureau, armed with these enhanced powers, now casts a wider net. It has up to three years to challenge mergers that were not subject to mandatory notification, a substantial increase from the previous one-year limit. Deals designed to skirt reporting thresholds are no longer safe either; new rules catch transactions involving sales “into” Canada, and violators face hefty fines for non-compliance. The Bureau’s ability to block deals outright while investigations are underway has also been fortified, giving it a sharper edge in contentious cases.

These changes reflect a global trend toward stricter antitrust enforcement, particularly in digital markets. To keep pace, the Bureau announced in November 2024 that it would update its Merger Enforcement Guidelines (MEGs) for the first time since 2011. The revisions aim to incorporate the latest legal and economic thinking, focusing on digital technologies and emerging anti-competitive practices. As the Bureau retools its playbook, businesses should expect an increasingly sophisticated approach to identifying and challenging harmful mergers.

More Scrutiny, Less Certainty

For companies plotting a deal, these developments demand a more strategic and cautious approach. Transactions will take longer to navigate, requiring meticulous pre-merger planning and risk assessment. Non-notifiable deals, once considered less risky, are now vulnerable to post-closing challenges. Competition law considerations must be baked into transaction timelines, contracts, and agreements from the outset. The Bureau, meanwhile, is likely to intensify its scrutiny of internal documents, particularly those that touch on market shares or competitive dynamics, and may use court orders to obtain third-party data.

Remedies, too, will need to evolve. The new standard, which demands that competition be fully restored to pre-merger levels, raises the stakes for proposed fixes. Divestitures and other remedies must not only be robust but also accompanied by clear plans to secure qualified buyers for divested assets. Deals that fail to anticipate these challenges risk collapsing under the weight of protracted remedy negotiations.

A Brave New Antitrust World

These changes are not merely bureaucratic adjustments; they represent a profound shift in Canada’s competition policy. By eliminating the efficiencies defense and introducing strict thresholds for anti-competitiveness, Ottawa has signaled a zero-tolerance stance toward deals that prioritize scale over market health. The implications are particularly acute for digital giants, whose dominance often depends on swallowing smaller competitors. But the new rules are no less significant for traditional industries, where mergers will be judged with unprecedented rigor.

Despite the boldness of this overhaul, challenges remain. The complexity of the new regime could deter smaller firms from pursuing otherwise benign mergers, potentially stifling innovation. For the Bureau, the expanded powers must be matched by the resources and expertise to enforce them effectively. Striking the right balance between vigilance and overreach will be crucial as Canada navigates this uncharted regulatory terrain.

The End of Business as Usual

In this new era, the message for dealmakers is clear: the days of quick approvals and easy fixes are over. Merging parties must prepare for closer scrutiny, tougher standards, and longer timelines. For consumers, however, the hope is a marketplace where competition thrives, free from the stifling grip of consolidation. Whether this overhaul achieves its lofty ambitions or creates fresh headaches for regulators and businesses alike remains to be seen. For now, one thing is certain: in Canada, merging is no longer business as usual.

For more information go to a deep dive article from our member, Blakes

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