Anonymised, illustrative composite. The buyer's model was sound, the synergies were real, and the section of the Act they were meant to be argued under had been gone for over a year.
At a glance
A mid-market processor of chilled prepared foods agreed to acquire a competitor serving the same grocery and food-service customers from a plant 90 kilometres away. Enterprise value was $145,000,000 against $118,000,000 of target revenue. The whole case for the price was consolidation: closing one plant, moving volume onto the surviving line and removing duplicated overhead, modelled at $9,200,000 of annual run-rate savings by month thirty. The two businesses were the second and fourth suppliers of their category into a regional grocery channel, so nobody thought the Commissioner would wave it through — the plan had always been to meet the competitive case with the efficiencies case.
The plan was a decade out of date. Until December 2023 s.96 gave Canada a genuine defence: a merger that would otherwise be blocked survived if the efficiency gains were greater than and offset the anti-competitive effects. It is why Canadian practitioners routinely built a synergy case as a legal argument, not only a valuation one.
The section page now reads, in its entirety, “96 [Repealed, 2023, c. 31, s. 10]”. The repealing provision is one line: “Section 96 of the Act is repealed.” The summary to the same Act describes its purpose as, among other things, to “repeal the exceptions in sections 90.1 and 96 of the Act involving efficiency gains”.
This is a mechanic defined by an absence, which is why it is so easy to get wrong from memory. Nothing in the current consolidated Act flags what used to be there. A practitioner who learned Canadian merger law before 2024 has to remember to unlearn it.
The synergy build was $9,200,000: $5,400,000 from consolidating two lines onto one, $2,300,000 of procurement savings, $1,500,000 of duplicated corporate overhead. Capitalised, it accounted for roughly $41,000,000 of the $145,000,000 enterprise value — without it, the buyer had paid about 39% more than the standalone business was worth to it.
The dates decided the file. The repeal took effect on royal assent: the Act's coming-into-force section defers only one provision, providing that “Section 8 comes into force on the first anniversary of the day on which this Act receives royal assent.” Section 10, which repeals s.96, is not that provision, so it took effect on assent, 2023-12-15. The parties signed in 2026 and had filed nothing. There was no version of the timeline that reached the old law.
The transitional provision is where the precision lives, and it is the part most often paraphrased loosely. Section 12 of the Affordable Housing and Groceries Act provides: “Sections 92 and 96 of the Competition Act, as they read before the day on which sections 9 and 10 come into force, continue to apply after that day to a proposed transaction notified under section 114 of that Act before that day or to a merger that has been substantially completed before that day.”
Read the units. The old law survives for two categories only: a transaction notified under s.114 before the coming-into-force day, and a merger substantially completed before it. Not a transaction that was signed. Not one that was announced. Not one under a letter of intent. A deal that was in exclusivity on 14 December 2023 and filed in January 2024 gets the new law.
What replaced the defence is nothing in particular, and that is the honest answer. Efficiencies are not among the factors in s.93, which the Tribunal “may have regard to” in deciding the substantive question, though paragraph (h) is open-ended: “any other factor that is relevant to competition in a market that is or would be affected by the merger or proposed merger”. The narrow route that survives is the one the Bureau had already identified under the old regime, at paragraph 12.7 of its Merger Enforcement Guidelines: “cost savings from substantiated efficiency gains may be relevant to the analysis under section 92 of whether the merger is likely to prevent or lessen competition substantially”, in the limited sense that they may leave the merged firm better placed to compete. That is evidence going to the competitive effect. It is not a trade-off, and it does not save a merger that lessens competition substantially.
Two cautions on that guidance. Its Part 12 is titled The efficiency exception and opens by stating that “Section 96 of the Act provides an efficiency exception to the provisions of section 92.” The chapter describes a section that does not exist. Only paragraph 12.7's observation about s.92 survives the repeal, because it was always about s.92 rather than s.96.
The buyer argued the substantive case instead: that the regional grocery channel was not the relevant market because food-service and club channels constrained pricing, and that a national processor could enter within a year. On the evidence the Bureau assembled from retailers, that was thin.
The transaction was restructured. The buyer took the target's plant and food-service book, and the grocery-channel contracts went to a third processor before closing; price fell to $102,000,000. The $5,400,000 consolidation synergy survived, because it did not depend on holding both customer books. Roughly $3,800,000 of the modelled savings did not. See a third acquisition that flipped the burden of proof for the other half of the 2023–2024 changes, and the EBITDA bridge glossary entry on how synergy claims are presented in a model.
Running the deal to a Tribunal hearing on an efficiencies defence would have been an expensive way to lose. Those cases were always evidence-heavy — plant-level accounting, expert quantification, merger-specificity — and the fee exposure runs into the millions before anyone reaches the question of whether the section still exists.
The other cost is one the parties avoided by accident. Their purchase agreement had no break fee and a generous outside date, so the restructuring was possible without a payment. Where a deal is priced on synergies that a regulator may not permit the buyer to capture, the allocation of that risk belongs in the agreement — see the break fee glossary entry. A buyer that has capitalised $41,000,000 of synergies into its price and has no regulatory-failure mechanism is carrying that risk in full.
The tell was a citation in a memo: an authority on the efficiencies defence decided before 2024, quoted with no note on the section's status. Any provision cited from memory in Canadian competition law now needs checking — the 2022, 2023 and 2024 amendments changed a great deal, and the consolidated Act does not advertise what has gone.
The transferable habit is smaller than it sounds. Open the section page. If it says “[Repealed”, stop. If it does not, read the amendment history at the foot of the page before relying on anything you learned about it more than two years ago.
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