Review of Industrial Organization
13: 25–56, 1998.
1998 Kluwer Academic Publishers. Printed in the Netherlands.
Merger Enforcement under the Competition Act after
DONALD G. McFETRIDGE
Carleton University, Department of Economics, Ottawa, Canada
The purpose of this paper is to discuss the record of merger enforcement under
the Competition Act. The paper begins with a brief quantitative proﬁle of both
merger activity and merger enforcement activity in Canada since the passage of
the Competition Act in 1986.
This is followed by a discussion of the ﬁve Consent
Orders issued and the two contested merger cases decided by the Competition Tri-
bunal. This is followed by a more detailed discussion of two major issues that have
arisen in the contested cases. The ﬁrst is the question of product market deﬁnition
when products are differentiated. The second is the choice of welfare standard.
Both problems have also burdened merger enforcement in other jurisdictions and
the Canadian experience provides some additional insights. The paper concludes
by discussing the implications of the Canadian experience to date both for future
merger enforcement in Canada and for other jurisdictions.
II. The Merger Provisions of the Competition Act
The Competition Act provides for civil review of mergers by the Competition
Tribunal whichis comprisedof lay personsand federal courtjudges. On application
by the Director of Investigation and Research (the federal government ofﬁcial
responsible for the enforcement of the Competition Act), the Competition Tribunal
may issue a prohibition or divestiture order with respect to a merger which it deems
likely to prevent or lessen competition substantially.
The Competition Act has three provisions with regard to mergers which distin-
guishes it from the statutes of other countries. First, the Tribunal may not reach
a conclusion that a merger is likely to prevent or lessen competition substantially
From 1910 until 1986 mergers deemed likely to operate to the detriment of the interest of the
public were a criminal offence in Canada. No convictions were obtained. The difﬁculty of proving
the detrimental effects of a merger beyond a reasonable doubt as is required in a criminal proceeding
ﬁnally led to the replacement of the criminal prohibition with the provision for review of mergers
under civil law in the Competition Act of 1986. See Dunlop et al. (1997), Chapter 7 for a discussion.