Significant Developments in Canadian Competition Law and Policy
There have been a number of important developments in competition and foreign investment law since March 2009. The most noteworthy of these developments include:
- The most significant amendments to the Competition Act in its history, including the introduction of a per se conspiracy offense and dual-track criminal/civil regime in the area of competitor agreements; the decriminalization of predatory pricing, price maintenance and price discrimination; and the creation of a reviewable price maintenance provision. Bill C-10 brought Canada’s merger review process more in line with that of the US, and introduced substantial changes to the Investment Canada Act such as a new national security review mechanism and revised thresholds for review.
- Issuance of a number of significant policies by the Competition Bureau including the Competitor Collaboration Guidelines, the Merger Review Process Guidelines and the Leniency Program Bulletin (see our related article discussing this last Bulletin).
- The first-ever legal action against a foreign investor for failing to comply with undertakings given as a condition of investment approval.
- Significant criminal and civil enforcement activity in the area of false and misleading advertising.
These and other significant developments are more fully described in the recent paper prepared by the Competition Law Group. Readers should be mindful that since that article was published, certain thresholds referred to in the paper have changed for 2011, as noted below.
Competition Act "size of transaction threshold" Increases for 2011
The Competition Act requires that notification of substantial mergers must be made to the Commissioner of Competition. For a merger to be notifiable, there are two thresholds that must be met, namely, the "size of transaction threshold" and the "size of parties threshold."
The Competition Act provides that for certain share acquisitions, asset acquisitions, amalgamations and combinations, or acquisitions of an interest in a combination, the "size of transaction threshold" is met where the assets in Canada or gross revenues from sales in and from Canada generated by such assets exceeds a stipulated amount. The 2011 Competition Act "size of transaction threshold" was increased to $73 million (Canadian dollars) from the 2010 threshold of $70 million. Previously, this threshold was fixed, but it will now be revised annually in accordance with an inflation index.
The "size of parties threshold" essentially requires that for a merger to be notifiable, the parties to the transaction together with their affiliates (for this purpose, "affiliate" is defined to include all corporations joined by a 50 per cent plus voting link) must have either assets in Canada or gross revenues from sales in, from and into Canada that exceed $400 million.
Where the acquisition is for shares in a corporation, the notice must be given prior to the acquisition of the shares which result in more than 20 per cent of the voting shares in the case of public corporations (35 per cent in the case of private corporations) being held by the acquiree and its affiliates and then again when the 50 per cent threshold is passed.
Investment Canada Act WTO Review Threshold Increases for 2011
Industry Canada recently announced that the 2011 Investment Canada Act threshold (applicable to most direct acquisitions of Canadian businesses by non-Canadians) will be $312 million (Canadian dollars). This threshold applies to the book value of the target’s assets. The lower threshold of $5 million will continue to apply to transactions that relate to cultural businesses or where none of the foreign parties are from a country that is a WTO member.