Bill C-10, An Act to implement certain provisions of the budget tabled in Parliament on January 27, 2009 and related fiscal measures (the “Budget Implementation Act”) was introduced on February 9, 2009 by Finance Minister Jim Flaherty. The Competition Law amendments proposed significant changes to Canada’s merger review and cartel laws bringing the regime much closer to those in the U.S. With respect to the Investment Canada Act, the amendments dramatically increase the thresholds for review of WTO investments.
Miller Thomson Analysis
Competition Law Amendments
The Competition Law amendments significantly change provisions of the Competition Act with respect to merger review, reviewable conduct and criminal law. Below are highlights of these changes.
Increased threshold for Pre-Notification – the existing $400 million "size of parties" threshold will remain, but the amendments increase the "size of transaction" threshold from $50 to $70 million (with further increases annually).
Waiting Period – the waiting period increases from 14 to 30 days for uncomplicated transactions. For complicated transactions, the Competition Bureau will have the ability to extend the period by an additional 30 days beyond the time required for parties to respond to a request for information and documents.
Post Closing Application – the post-closing period to launch an application to challenge a transaction decreases from 3 to 1 year.
Abuse of Dominance – the amendments introduce administrative monetary penalties of up to $10 million for a first finding of abuse of dominant position and up to $15 million for subsequent findings.
Deceptive Marketing – the amendments increase the potential fines for deceptive marketing practices from $100,000 for a first offence and $200,000 for subsequent offences, to $10 and $15 million, respectively.
Criminal Law Provisions
Dual-Track Approach – the new regime distinguishes between “hard-core” cartel-type activities (agreements aimed at price fixing or controlling prices, maintaining or lessening production, allocating sales, territories or markets) and other agreements that may have anticompetitive effects. For the cartel-type activities, the maximum prison term rises from 5 to 14 years, while maximum fines increase from $10 to $25 million. For agreements other than cartel-type activities that may have anti-competitive effects, the Commissioner of Competition can bring an application to the Competition Tribunal for a prohibition order to cease the offending conduct. However, the conduct will not be subject to monetary or criminal sanction.
Repeal of Provisions – provisions related to criminal price discrimination, predatory pricing and price maintenance are repealed.
Investment Canada Act Amendments
The Budget Implementation Act also introduces significant changes to the Investment Canada Act. Below are highlights of theses changes.
Increase in WTO Thresholds – the review threshold for transactions involving the acquisition of a Canadian business will increase to $1 billion over 5 or 6 years (depending on the timing of the investment made) based on a statutory formula. This is an increase from the $312 million threshold in the existing legislation.
Removal of Sector Specific Thresholds – the $5 million dollar threshold for investments in financial services, transportation and uranium businesses will be removed, however, the cultural businesses threshold will remain in place.
National Security Review – the amendments introduce a broad national security review test that allows the Federal Cabinet to review investments that “could be injurious to national security,” regardless of the size of transaction. The Governor in Council will have the ability to take any measures to protect national security.
Coming into Force
The amendments to both Acts received Royal Asset on March 12, 2009. All of the discussed amendments to the Competition Act are currently in force, with the exception of the dual-track amendments which will be delayed for one year. With respect to the Investment Canada Act amendments, all changes are now in force (with most changes retroactive to February 6, 2009), with the exception of the increased WTO thresholds, which will come into force on a day fixed by the Governor in Council.