Competition Act And Investment Canada Act Thresholds For 2018

Certain merger notification thresholds under Canada's Competition Act and the foreign investment review thresholds under the Investment Canada Act are updated on a yearly basis. On February 10, 2018, the Federal Government published the increases for the pre-merger notification "transaction-size" threshold under the Competition Act, and the pre-merger review threshold under the Investment Canada Act for acquisitions involving Canadian businesses by state-owned enterprises controlled in World Trade Organization ("WTO") member states.

New Pre-Merger Notification "Transaction-size" Threshold under the Competition Act

The pre-merger notification "transaction-size" threshold for 2018 has increased to C$92 million, from the 2017 threshold of C$88 million. A proposed transaction generally requires notification to the Competition Bureau under the Competition Act where both of the following thresholds are exceeded:

Party-size threshold: The parties to the transaction, together with their affiliates, collectively have assets in Canada, or gross annual revenues from sales from or into Canada, that exceed C$400 million (this threshold remains unchanged from year to year); and, Transaction-size threshold: The size of the specific transaction will exceed C$92 million. In the case of asset or share transactions, this would mean that either the value of the assets in Canada of the target, or the annual gross revenues from sales in or from Canada generated from those assets, exceed C$92 million. Additionally, in order for pre-merger notification to be triggered with respect to voting share transactions, the percentage of voting shares held by the entity acquiring the shares would have to rise, as a result of the transaction, above 20 per cent of the total outstanding voting shares of a public corporation, or above 35 per cent in the case of a private corporation. If the entity acquiring the shares already owns shares in excess of 20 or 35 per cent (depending on the type of transaction), the transaction would have to result in the entity owning more than 50 per cent of the total outstanding voting shares of the corporation acquired. Pre-Merger Review Thresholds for Direct Investments under the Investment Canada Act

The threshold for pre-merger reviews for direct investments involving Canadian (non-cultural) businesses by WTO members (non state-owned), will remain at C$1 billion. This increase came into effect on June 22, 2017.

As also discussed in our most...