I think the B will handle okay (it is taller) but will go very well. I know the head of M-B Canada has spoken to that effect before, and 197hp in something this small will definitely motor it.
I can see people comparing the B with the A3, just because they're both entry lux branded cars with similar power. But the B clearly has the room advantage whereas the A3 may have the sporty/handling advantage. I think a lot of people will consider the B, as small as it looks. I can't see them pricing it much over $42K at the top end. Probably start at $30 flat - $32. Keep in mind the A3 starts at $32,8 with 200hp, and they need to slot it under the C-Class.
The Golf Plus would be a direct competitor, if it comes to Canada as rumoured of late. Doesn't have the luxo label, but overall is closest and probably wouldn't be priced much less. In Europe they're pretty much on par.