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 announced on January 8, 2013 that the "transaction size" threshold for review of acquisitions under the Competition Act will increase from the 2012 threshold of CDN$77 million to CDN$80 million. The 2013 threshold is anticipated to come into effect on or about January 12, 2013.
The transaction-size 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. The Competition Act threshold is indexed annually to account for inflation. The "size of parties" threshold remains constant at CDN$400 million.
Once implemented, 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 $80 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. Transactions involving Canadian subsidiaries, as well as the direct acquisition of Canadian businesses or assets, and shareholdings as little as 20% (for public companies) or 35% (private companies and interests in non-corporate business combinations) can trigger merger notifications in Canada.
The threshold for advance review and Ministerial approval of certain direct foreign acquisitions of control of Canadian businesses under the Investment Canada Act is typically increased in January of each year. According to Industry Canada, it is expected that the amount will increase from CDN$330 million to CDN$344 million dollars for 2013 for investments by WTO members. The official amount will be published in early 2013.
Direct acquisitions of control of Canadian businesses with cultural activities, and direct acquisitions of control of non-cultural Canadian businesses where neither the sellers nor purchasers are from WTO member states, 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 for WTO investors, regardless of the size of the assets of the Canadian business.
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