The thresholds for review of acquisitions involving Canadian businesses will soon increase under both the Competition Act and the Investment Canada Act.
The Competition Bureau (Canada) announced on February 7, 2012 that, effective February 11, the pre-merger notification transaction-size threshold for 2012 will increase to Cdn$77 million from the 2011 threshold of Cdn$73 million. The threshold is based on the book value of assets in Canada of the target (or in the case of assets, of the assets in Canada being acquired), or the gross revenues from sales "in or from" Canada generated by those assets, calculated in accordance with the Notifiable Transactions Regulations under the Competition Act. After February 11, 2012, the Competition Bureau must generally be given advance notice of proposed transactions when the acquired assets in Canada or revenues generated in or from Canada exceed $77 million, and when the combined Canadian assets or revenues "in, from or into" Canada of the parties together with their respective affiliates exceed $400 million.
Industry Canada has previously announced that the threshold for advance review and Ministerial approval of direct foreign acquisitions of control of Canadian businesses (those located in Canada, regardless of the current nationality of control), by investors who are themselves ultimately controlled by persons who are citizens in WTO member countries, will be Cdn$330 million for transactions closing on or after January 1, 2012, based on the book value of assets of the Canadian business (wherever located), as of the most recently completed fiscal year. Direct acquisitions of control of Canadian businesses with cultural activities, and direct acquisitions of control of non-cultural Canadian businesses where neither sellers nor purchasers are non-Canadian WTO-investors, are still subject to a review threshold of Cdn$5 million. Indirect acquisitions of control of non-cultural Canadian businesses (pursuant to the acquisition of control of their non-Canadian parents) are not subject to review if either seller or purchaser is a non-Canadian WTO-investor, regardless of the size of the assets of the Canadian business.
Both the Competition Act and the Investment Canada Act thresholds are indexed annually, to account for inflation
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