Each year, Canada's Competition Act transaction
size threshold and the Investment Canada Act threshold
applicable to the direct acquisition of a non-cultural Canadian
business by a state-owned enterprise of a World Trade Organization
member state (referred to as an SOE WTO investor) are increased in
relation to the growth in Canada's GDP in the previous
year. The threshold analysis for the Competition Act
and for SOE WTO investors under the Investment Canada Act
is based on the value of the assets/revenues set out in the
applicable entity's financial statements, not on the
transaction purchase price. The 2016 thresholds came into
effect on February 6.
Competition Act: The Competition Bureau has
announced that the 2016 transaction size threshold will be $87
million, up from $86 million in 2015.
The Competition Bureau must generally be given advance notice of
a proposed transaction if both of the following thresholds are
1. Party Size: the parties, together with their affiliates, have
assets in Canada or annual gross revenues from sales in, from
(exports) or into (imports) Canada that exceed $400 million;
2. Transaction Size: the aggregate value of the assets in
Canada to be acquired or the annual gross revenues from sales in or
from Canada generated by such assets, exceed $87 million.
Additional thresholds may apply depending on the type of
transaction (e.g. acquiring shares of a public company, acquiring
shares of a private company, amalgamation, acquiring an interest in
a non-corporate entity). For additional information about the
Competition Act thresholds and notification process please
Investment Canada Act: Industry Canada has
announced that the 2016 review threshold applicable to the direct
acquisition of control of a Canadian business, other than a defined
"cultural business", by a buyer that it is ultimately
controlled by an SOE WTO investor will be $375 million, up from
$369 million in 2015. If the threshold is exceeded, a
proposed transaction must be reviewed and approved by the Minister
of Industry before it can be closed.
The direct acquisition of a non-cultural Canadian business by an
SOE WTO investor is not the most common permutation of foreign
investment in Canada, but does occur from time to time. By
far the most common permutation of foreign investment is the direct
acquisition of a non-cultural Canadian business by a WTO investor
that is not an SOE, and the $600 million enterprise value threshold
continues to apply to this permutation of transaction.
As a result of amendments to the Investment Canada Act
regulations in March of 2015, many different thresholds now apply,
depending on whether: (i) the acquisition of control of the target
Canadian business is direct or indirect; (ii) the buyer is a WTO
investor; (iii) the buyer is an SOE; and (iv) the target Canadian
business is a cultural business. In addition, the government
has broad discretionary powers to conduct a review on national
security grounds, regardless of whether any thresholds are
exceeded. For additional information about the Investment
Canada Act thresholds and review process click
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2017.
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