The threshold for a pre-closing net
benefit review under the Investment Canada Act and the threshold for a
pre-closing merger notification under the Competition Act have been increased for
Investment Canada Act
The direct acquisition of control of a
Canadian business by a non-Canadian from a WTO-member country is
subject to pre-closing review and approval where the assets of the
acquired business had a net book value of more than $369
million as at the end of the target's last completed
fiscal year prior to the acquisition. The 2014 threshold was $354
million. Amendments to the ICA to change the threshold to one based
on the enterprise value of the Canadian business have been passed,
but are not yet in force. In addition, the Minister can review any
investment by a non-Canadian, regardless of its value, that he has
reasonable grounds to believe may be injurious to Canada's
Canada uses a two part test for
determining whether a pre-merger notification is necessary. The
two-part test is based on the size of the parties and the size of
the transaction. The transaction size component can be adjusted
annually for inflation. Under the size of the parties test, the
parties, together with their affiliates, must have aggregate assets
in Canada or annual gross revenues from sales in, from or into
Canada, in excess of $400 million. Under the size of transaction
test, the value of the assets in Canada or the annual gross revenue
from sales (generated from those assets) in or from Canada of the
target operating business and, if applicable, its subsidiaries,
must be greater than $86 million. The 2014
transaction size threshold was $82 million.
These changes will become effective
upon publication in the Canada Gazette, Part I, expected in early
February 2015. Please contact a member of our
Antitrust, Competition and Regulatory team if you have any
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The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
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