On February 2, 2015, the Competition Bureau announced an increase in the notifiable transaction-size threshold to C$86-million, a modest increase from the 2014 C$82-million threshold. The pre-merger notification transaction-size threshold is reviewed annually in accordance with the indexing mechanism set out in the Canadian Competition Act to reflect changes in Canada's gross domestic product. This new threshold for 2015 will come into effect immediately following publication in the Canada Gazette, which is expected to occur on February 7, 2015.
Upon the new threshold taking effect, the Competition Bureau must generally be given advance notice of proposed transactions when:
- the book value of the target’s assets in Canada or revenues from sales in or from Canada generated from those assets (as reflected in the most recent audited financial statements) exceed C$86-million; and
- the C$400-million “size of parties” test is met, i.e., where the combined Canadian assets or revenues of the parties and their respective affiliates in, from or into Canada exceed C$400-million.
Where a transaction is notifiable, parties must submit to the Bureau a pre-merger notification filing containing certain proscribed information (as well as substantial additional information if the Bureau issues a supplementary information request (SIR)) and are prohibited from closing until expiration, termination or waiver of the statutory waiting period set out in the Act (which is 30 days from filing complete pre-merger notification filings or, if the Bureau issues a SIR, 30 days from compliance with the SIR).
In spite of the increased notification threshold, merging parties should bear in mind that the Commissioner of Competition retains the jurisdiction to investigate and challenge a transaction within one year of closing even if it does not meet the pre-merger notification thresholds.
The threshold for transactions requiring foreign investment review under the Investment Canada Act (ICA) has likewise been increased for 2015. Direct acquisitions of control of Canadian businesses by non-Canadians are reviewable under the ICA where certain financial thresholds are met. With respect to a direct acquisition by a “WTO investor” (that is, an investor controlled by persons who are citizens of World Trade Organization member countries), Industry Canada has announced an increase in the book value of assets threshold which triggers a review requirement. The new threshold, which is effective for 2015, is C$369-million. The previous threshold was C$354-million.
The threshold for direct acquisitions by non-WTO investors and for acquisitions by non-Canadians of Canadian cultural businesses remains unchanged at C$5-million.
Investments by non-Canadians that do not exceed the review thresholds must nevertheless be notified to Industry Canada within 30 calendar days of closing.