Who would decide how to group ridings into regions?
Regions would probably be defined by the Electoral Boundaries Commissions (one for each province), the non-partisan folks that currently define riding boundaries. Canada has done a good job of (mostly) de-politicizing this process and avoiding gerrymandering.
What kind of criteria would used to group ridings into regions?
The Electoral Boundaries Commissions already take into account “communities of interest or identity (for example, communities based around language or shared culture and history)”. They would no doubt include that criteria for regions as well.
In addition they would pay attention to the number of ridings included to balance ballot size (implying fewer ridings) with proportionality (implying more ridings).