Copyright 2011, Blake, Cassels & Graydon LLP

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.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.