Competition Act and Investment Canada Act Notification Thresholds Revised Upward

Competition Act

The Competition Bureau (Bureau) announced on January 8, 2013, that the pre-merger notification transaction-size threshold for 2013 will increase to $80 million from the 2012 threshold of $77 million. As per the indexing mechanism set out in the Competition Act (Act), the pre-merger notification threshold is reviewed annually. The 2013 threshold will come into effect following publication in the Canada Gazette, which the Bureau anticipates will occur on January 12, 2013.

The threshold is based on the book value of the target's assests in Canada (or in the case of an asset purchase, 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 Act. Once the 2013 threshold is in effect, the Bureau will generally have been given advance notice of proposed transactions when the acquired assets in Canada or revenues generated in or from Canada from such assets 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. This amount has not been reviewed and remains the same as in 2012.

Investment Canada Act

Industry Canada announced on January 5, 2013, that the review threshold for the direct acquisition of non-cultural businesses by WTO investors is likely to increase to CAD$344 million from the 2012 threshold of CAD$330 million. The official amount will be published in the Canada Gazette in the very near future. The lower threshold of CAD$5 million will continue to apply to transactions that relate to cultural businesses or where none of the parties are from a country that is a WTO member.

The threshold applies to the gross book value of the target’s assets. The Investment Canada Act (ICA) 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 obtain approval if the threshold is exceeded. For transactions below the threshold, a simple notification must be filed within 30 days after closing. Any transaction (whether above or below the threshold) can also be reviewed by the Canadian government where there is a national security concern. Pursuant to the ICA, a non Canadian includes any entity that is not controlled by Canadians.