Competition Act- Increase in
The Competition Bureau announced that the pre-merger
notification threshold relating to transaction-size will increase
to $80 million from the 2012 threshold of $77 million. The
"size of parties" threshold (which is not indexed to
inflation), will remain at $400 million. The Competition
Bureau must generally be given advance notice of proposed
transactions where both: (a) the target has assets in Canada or
revenues generated in or from Canada in excess of $80 million, and
(b) the parties and their respective affiliates have, in the
aggregate, assets in Canada or revenues in, from or into Canada in
excess of $400 million. As per the indexing mechanism
set out in the Competition Act, the pre-merger
notification transaction-size threshold is reviewed annually.
Investment Canada Act-Increase in General Review Threshold
The government has announced that the new 2013 threshold under
the Investment Canada Act for net benefit review of direct
acquisitions of control of Canadian businesses by World Trade
Organization (WTO) member investors, or of Canadian businesses
which are ultimately controlled by WTO members (other than
Canadians) will increase from $330 million to $344 million.
The increased threshold does not apply to acquisitions (direct or
indirect) of Canadian businesses which have a cultural
In addition, recall that in December 2012 the government
confirmed that this threshold for "net benefit review"
will be increased over a period of four years to $1 billion based
on enterprise value rather than asset value as is currently the
case. However, the increased threshold will be applicable to
private sector investments only. Direct acquisitions of
control by state-owned enterprises (SOEs) will be subject to the
existing net benefit review threshold of $344 million in asset
value (not enterprise value), adjusted annually to reflect the
change in nominal gross domestic product in the previous
year. A precise timeline for the implementation of
these changes has not been announced and legislative amendments
will be required. When these changes are implemented
(expected in 2013), there will therefore be three thresholds for
pre-closing "net benefit" review:
$5 million in book value of assets of the Canadian business for
the direct acquisition of control by non-WTO investors and
investments by any non-Canadian investor in a Canadian cultural
business (post-closing review is required for the indirect
acquisition of control of a Canadian cultural business which has
gross assets of $50 million or more, or the indirect acquisition of
a Canadian cultural business which has gross assets of $5 million
or more but less than $50 million, where the Canadian assets
acquired represent more than 50% of the aggregate gross asset value
of all assets being acquired);
$344 million (subject to annual adjustment) in book value of
assets of the Canadian business for direct acquisitions of control
Higher thresholds implemented over four years to $1 billion in
"enterprise" value for private sector
a. $600 million in enterprise value of the Canadian business for
b. increase to $800 million in enterprise value for a further
two years; and
c. increase to a threshold of $1 billion in enterprise
We expect that the government will issue revised regulations
soon to (finally) effect the commitment made back in 2009 to raise
the thresholds for private sector investment.
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The HR Guidelines focus attention on an area that is not typically regarded as an antitrust "hot spot" but has been the subject of several high-profile proceedings in recent years in the United States.
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