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Businesses planning mergers or acquisitions in Canada are operating in a more difficult regulatory environment — and the Competition Bureau’s draft Merger Enforcement Guidelines leave a central question about the merger efficiency defence in Canada unresolved.
Senior counsel John F. Rook, KC has co-authored an Intelligence Memo for the C.D. Howe Institute examining what the Competition Bureau’s draft Merger Enforcement Guidelines (MEGs) say about efficiency — and what they leave unanswered. Co-authored with economist Larry Schwartz, a past member of the Competition Tribunal, the memo was published on March 25, 2026.
What the Draft MEGs Say About the Merger Efficiency Defence
Recent amendments to the Competition Act removed the section 96 efficiency defence and introduced a structural presumption: where post-merger market share exceeds 30 percent and the HHI exceeds 1,800, a merger is presumptively anti-competitive. What replaces the efficiency defence — section 93(h), the “any other factor” provision — is addressed in the draft MEGs only in general terms, and the guidelines do not address with precision how efficiency evidence will be weighed under that provision.
Rook and Schwartz argue that the Bureau’s position holds efficiency evidence to a higher standard than the Bureau’s own concentration evidence — a departure from the approach in U.S. merger guidelines since 1992. Merging parties retain arguments under section 93(h): where proven efficiencies exceed the deadweight loss arising from the exercise of market power, those efficiencies should count as a positive factor. But whether efficiency arguments under section 93(h) will meaningfully offset the structural presumption in practice — and at what evidentiary threshold — is precisely what the memo examines.
The draft MEGs arrive against a backdrop Rook and Vaillancourt examined in Understanding the Chilling Effect on Mergers and Market Share — their earlier analysis of how the amendments were likely to reshape merger review in Canada, written before the Bureau’s guidance was released.
Read the full memo on the C.D. Howe Institute website: Competition Bureau Draft Guidelines: Is Efficiency on Life-Support?
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