Originally published in Blakes Bulletin on Competition,
Antitrust & Foreign Investment, February 2011
In general, the Competition Bureau (the Bureau) must be notified
in advance of proposed mergers and acquisitions when the assets or
revenues of the target firm in Canada exceed C$70-million and when
the combined assets or revenues of the parties and their respective
affiliates in Canada exceed C$400-million.
In a series of 2009 amendments to the merger review process
under the Competition Act (the Act), Parliament not only
increased the transaction-size threshold from C$50-million to
C$70-million, but it also provided for an indexing formula to
adjust the threshold to reflect annual changes to Canada's
gross domestic product (GDP). The C$400-million party-size
threshold will not change until the Act is otherwise amended.
Parliament now authorizes the Minister of Industry (the
Minister) to revise the transaction-size threshold every January
and post the revised threshold amount in the Canada
Gazette (available online), unless an amount is otherwise
prescribed by regulation. The Minister announced the increase on
February 1, 2011 and is expected to post the revised amount in the
Gazette on February 12, 2011.
In January 2010, however, the Minister exercised his discretion
not to revise the transaction-size threshold due to the decline in
Canada's year-over-year GDP from 2008 to 2009, which would have
resulted in a reduction in the threshold. The revisions to the
threshold are not retroactive and come into effect when the
decision is posted in the Gazette.
The February 1, 2011 announcement by the Minister reflects an
increase to the transaction-size threshold to C$73-million to
correspond to the increase in GDP last year.
Therefore, parties to a proposed asset or share acquisition will
be required to notify the Bureau if the target's assets in
Canada or gross revenues from sales in or from Canada exceed
C$73-million. For combinations of assets, the threshold is met when
the assets in Canada transferred to the combination or the gross
revenues from sales in or from Canada of those assets exceed
C$73-million. For amalgamations, the parties will be required to
file a Notification with the Bureau if each of at least two of the
amalgamating corporations has assets in Canada or gross revenues
from sales in or from Canada that exceed the threshold.
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