Canada’s Competition Bureau has launched a review of a proposed search engine partnership between Yahoo and Google amid concerns the deal will lead to rising costs for Canadian companies that advertise online.

In July, the U.S. Department of Justice announced it was launching its own investigation into the deal Yahoo would outsource advetising placement to Google.

Some experts say the deal could have more serious implications for the Canadian market.

Google’s stranglehold on Canada’s search market is even tighter than its grip in the U.S., leading some analysts, and competitors such as Microsoft to claim that adding Yahoo to the mix will make the Google too strong in Canada, leaving it without a viable competitor and allowing it to charge more for the top ad slots on search results.

A spokeswoman for the Competition Bureau confirmed a review is under way and that the organization is co-ordinating its investigation with U.S. officials. She would not say how long the probe is expected to last, but noted: “We’re always mindful of the parties’ time frame.”

Yahoo and Google plan to implement the partnership, which only applies to the U.S. and Canada, in October.

If the bureau were to determine that the deal violates the Competition Act, it could force the companies to alter the terms of the partnership or squash it altogether.

“It comes back to ROI [return on investment] on the marketing dollar for a Canadian advertiser,” said Owen Sagness, vice-president of Microsoft Canada’s online services group. “When one company has the pricing power that Google has, that’s going to negatively impact the ROI equation for advertisers in Canada. We do expect that prices will go up.”

In Canada Google has nearly 80 per cent of the search market. Microsoft comes in at No. 2 with about 5 per cent, and Yahoo trails with less than 4 per cent.