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When former Competition Bureau head Lawson Hunter set out 25 years ago to draft Canada's new Competition Act, there was no question of adopting the cumbersome U.S. model for reviewing corporate merger deals.

The U.S. system was criticized around the world for the long delays and hefty costs it imposed on companies facing merger reviews, he said. Indeed, dozens of other countries have revised or adopted new competition rules over recent decades, and none have copied the U.S. model.

“We did look at it, but our motivation at the time was to make things as certain as we can – and not give the bureau unfettered discretion,” Mr. Hunter said.

That thinking changed last week, however, when lawyers got their first look at new legislation to amend Canada's Competition Act – the first major reform since 1986 – that was buried in the sweeping measures announced in last month's 550-page budget bill.

While many of the competition changes have been long-debated and were anticipated by competition lawyers – including boosting criminal penalties for offences such as price-fixing to a maximum of 14 years in jail – practitioners were stunned to also see a new model for approving merger deals that largely mirrors the U.S. standards.

Mr. Hunter said he has never seen a such a major change introduced with so little public consultation.

“That's never been the way amendments have been done in the last 40 years that I've been involved in this,” he said.

George Addy, another former Competition Bureau commissioner who is now a lawyer at Davies Ward Phillips & Vineberg LLP, said because it is part of a budget bill, the legislation is on an accelerated schedule and there may be no public hearings to solicit comment on the proposals.

If there is consultation by the federal finance committee, he said there are many higher-profile budget provisions in the bill that will likely be the primary focus of review.

Mr. Addy said it is ironic the changes are contained in budget legislation intended to stimulate business activity.

“In fact, they'll add to the uncertainty and add to the costs in the business environment,” he said. “So you sort of scratch your head and say, ‘What's going on?'“ The question isn't easy to answer. The Competition Bureau refused comment on the proposals, while Industry Canada said the reform stems from a report tabled last summer on Canadian competitiveness by a panel headed by retired businessman Lynton (Red) Wilson.

In a written, e-mailed response to questions, a spokeswoman for Industry Canada said the review panel received 155 written submissions and heard from dozens of witnesses at public meetings.

But lawyers who made submissions to the panel said they did not address the specific idea of adopting a U.S.-style merger review process because they did not know it was on the radar screen for reform.

Lawyer Paul Crampton from Osler Hoskin & Harcourt LLP said the idea “came out of the blue” in the Wilson report, and believes the government has been unaware of the legal community's concerns.

“I don't think the government really has been sensitized to the pitfalls here,” he said.

Last week, the competition law section of the Canadian Bar Association wrote an 11-page letter to Industry Canada, urging the government to postpone making the merger changes until there has been a public consultation.

The proposed new model would require the Competition Bureau to decide within 30 days if it wants more information to more extensively review whether a merger deal would be anti-competitive. If so, companies then face a second request for detailed information, which is where the process bogs down in some U.S. cases.

The average time to comply with a second-request review in the U.S. is six to seven months, and some go much longer, according to the bar association's letter.

The average cost to companies involved in a second stage review is $5-million (U.S.) and can be as high as $25-million in complex cases. Companies typically are required to provide hundreds of boxes of information about their business and the competitive landscape of their industries.

Competition lawyer Paul Collins from Stikeman Elliott LLP said the main use of the second stage review in the U.S. is to give regulators more time to review a deal beyond the initial 30-day limit. The additional information requested as part of the review is often unnecessary, but is made simply to buy time, he argued.

U.S. lawyers complain boxes of requested data have sometimes been returned unopened after the review ends, he said.

The better solution for Canada, Mr. Collins argued, would have been to simply give the Competition Bureau more time to review deals initially, rather than adopt a whole new review process.

“Why are we killing a mosquito with a sledge hammer here,” he asks.

Industry Canada, however, said the change would only apply to an average of four to six deals a year that raise “serious concerns about their potential anti-competitive impact,” while the “overwhelming majority” of reviews would close within 30 days.

The intention is to give the bureau more time to review complex deals and stop allowing merger parties to close their deals unilaterally even if the Competition Bureau is still reviewing the transaction.

“Under the current system, parties can close a proposed merger after 42 days even if they haven't given the Competition Bureau the information it needs to determine if the merger harms the economy,” Industry Canada said.

“It is not in the public interest for merger review decision to be made with only partial information.”

Veteran competition lawyer Tim Kennish, counsel at Oslers, also defends the two-stage U.S. process, saying it is faster and more certain for 97 per cent of merger reviews that never proceed to the second stage.

He said companies would know sooner if they will be done quickly or move to a longer review.

“I think there's a trade-off here, and I think on balance it probably favours the great majority of cases,” Mr. Kennish said.

The proposed changes come on the heels of one of the Competition Bureau's most controversial cases – a bitter legal feud over approving the merger of Labatt Brewing Co. Ltd. and Lakeport Brewing.

Lawyers believe the new model stems directly from the case, which saw Labatt launch a court protest of broad scope of the bureau's requests for data about the company and the brewery industry.

The dispute culminated in a scathing Federal Court ruling early last year, which censured bureau commissioner Sheridan Scott for “misleading” the court about the bureau's review. (Ms. Scott has since left the bureau to join law firm Bennett Jones LLP, and declined comment on the proposed reforms.) Mr. Hunter said he is especially concerned that the proposed new process means the Competition Bureau could request large amounts of additional information without needing court approval to do so, leaving no checks to counter its powers.

“It's just completely open-ended and largely unaccountable I'm not even sure the American system is that loose,” he said.