C-101, together with the consequential publication of regulations and guidelines, enacted several changes to the Competition Act (Canada) (the “Competition Act”)2 and the Investment Canada Act (the “IC Act”)3 on March 12, 2009. During the past year, there have also been a number of noteworthy changes in both the law and administrative procedure under these two Canadian statutes. What follows is a brief outline of some of those changes, organized by topic:

Competition Act (Canada)

Mergers

  • the parties and affiliates threshold4 has remained at $400 million but the transaction threshold5 is now $77 million in 2012 for all 5 types of transactions subject to notice under Part IX of the Act, with adjustments for subsequent years based on calculations related to Canada’s nominal gross domestic products at market prices 
  • the Competition Bureau has issued updated Merger Enforcement Guidelines6 that contain new commentary regarding, among other things, interlocking directorates, the impact of competitive effects of a merger and monopsony power
  • the Bureau has issued revised Merger Review Process Guidelines7 offering, in particular, increased guidance on the relatively new concept to Canada of a supplementary information request8 (a “SIR”). The recent Merger Review Performance Report9 noted that 18 SIRs had been issued since the enactment of Bill C-10
  • the Bureau has announced10 that henceforth the Bureau will publish a monthly summary report regarding completed mergers listing the names of the parties to a transaction, the industry sector involved and the result of the Bureau’s review. This increased transparency is meant to assist the Commissioner of Competition in monitoring mergers postclosing11. Nonetheless, this new practice has received a good deal of informal commentary about confidentiality12 under the Competition Act

Cartel Enforcement

  • the Bureau has announced13 that two entities have pleaded guilty to participating in a price-fixing cartel for polyurethane foam. While the fines were said to total $12.5 million, it is understood that the actual amount paid was considerably less following bankruptcy protection14 sought by the parties. Further, while the release announced that this guilty plea was the first of its kind under the new conspiracy section, it is also noted that the cartel is said to have taken place over a period of 11 years15

Notable Civil Enforcement 

  • the Commissioner has begun her application to the Competition Tribunal16 under the price maintenance section17 seeking remedial orders against Visa and MasterCard who are alleged to have imposed restrictive and anti-competitive rules on merchants who accept their credit cards. It is observed18 that Canadian merchants pay twice as much as their counterparts in Europe, Australia and New Zealand, albeit still slightly less than the amounts paid by similar businesses in the US

Investment Canada Act

  • the threshold for review for so-called WTO transactions dealing with foreign direct investments (that are not cultural businesses) closing in 2012 is $330 million19. Draft regulations were proposed in 200920 to change the threshold test from value of the assets to an enterprise value of the assets incorporating the concept of the market capitalization of the entity and, at the same time, having the effect of increasing the threshold for review in stages to $1 billion, as further indexed. These draft regulations did not come into force because, it is understood, that significant criticisms were received concerning the drafting. Following the Industry Minister’s announcement,21 revised, draft regulations have been published for comment22
  • since enactment in 1985, there still has been only one rejection by the Industry Minister under the IC Act, namely the MacDonald, Dettwiler Canadarm transaction23. While the much-heralded BHP Billiton proposed acquisition of Potash Corporation24 was not approved by the Industry Minister, BHP in fact withdrew its application before the inevitable turn-down
  • the test for approval continues to be net benefit to Canada25, albeit some politicians have called for a strategic asset26 concept in the wake of the BHP / Potash case
  • the federal government prevailed in its case27 against US Steel alleging breaches of undertakings to continue the employment of a specific number of individuals, which undertakings were given in relation to US Steel’s 2007 acquisition of Stelco
  • notwithstanding the government’s existing ability under the IC Act to deal with highly sensitive matters of national concern (Potash) and that apparent court victory (US Steel), the government has recently proposed amendments28 to the IC Act that would allow (i) more public transparency during the review process, allowing the Minister to signal publicly the reasons given to an investor that its investment may not be approved, and (ii) the government to accept security for any penalty that might henceforth be imposed for a breach of the IC Act. The Industry Minister has also announced29 the publication of a guideline that will make formal mediation procedures available under the IC Act, thereby providing a voluntary means of resolving disputes in relation to whether an investor has failed to comply to an undertaking