The 2016 increases to the merger thresholds under Canada's
Competition Act and Investment Canada Act have
The Competition Act requires advance notification of
certain merger transactions involving operating businesses in
Canada where "size-of-parties" and
"size-of-target" financial tests both are exceeded:
The "size-of-target" test
generally requires that the value of assets in Canada to be
acquired, or owned by the corporation the shares of which are being
acquired, or the annual gross revenue from sales in or from Canada
generated by those Canadian assets, exceeds a specified threshold.
The Competition Bureau has announced that the
"size-of-target" threshold will be increased to
C$87 million for 2016. The new threshold will take effect
immediately following publication in the Canada Gazette, which is
expected to occur on February 6, 2016. This represents a $1 million
increase from the C$86 million threshold for 2015.
The "size-of-parties" test
requires that the parties to a transaction, together with their
affiliates, have assets in Canada, or annual gross revenues from
sales in, from or into Canada, exceeding C$400
million. (The "size-of-parties" threshold
remains unchanged from 2015.)
Investment Canada Act
In 2015 the thresholds in the Investment Canada Act
were raised, and changed, so as to substitute an enterprise value
test for the asset value test for direct acquisitions, except with
respect to acquisitions by State-Owned Enterprises and acquisitions
of cultural businesses.
The Investment Canada Act requires that any
Non-Canadian that acquires control of a Canadian business (whether
or not that business is controlled by Canadians prior to the
acquisition) must file either a notification or an application for
review. For the purposes of the Act, a Non-Canadian includes any
entity that is not controlled or beneficially owned by
Aside from State-Owned Enterprises, WTO Investors (firms
controlled in WTO countries) are generally required to file a
pre-closing application for review and approval when directly
acquiring a Canadian business where the enterprise value exceeds
C$600 million. The test will remain at this level
until April 2017. It will then move to C$800 million for a further
two-year period (until April 2019), and then C$1 billion until
December 2020. It will then be subject to inflationary indexing in
subsequent years. There are exceptions to the general rule as set
out in the links below. The 2016 asset size threshold has
been increased to $375 million for transactions by WTO
country State-Owned Enterprises.
go here for our 2016 Canadian Competition Act and
Investment Canada Act Filing Checklist, showing the 2016
go here for our March 2015 bulletin containing a more detailed
explanation of the changes to the to the Investment Canada
Act in 2015.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
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