The Government of Canada recently increased the monetary thresholds under the Competition Act and Investment Canada Act for most transaction types. Companies whose transactions exceed the applicable monetary and control thresholds under these statutes are required to submit a filing and undergo a review before they can close their transactions.

It is always important to check with counsel to assess which thresholds apply given the technical nature of the rules and related guidance from the agencies.

Competition Act

  • The transaction size threshold increased to C$96-million for the remainder of 2019. This threshold is based on the book value of the assets in Canada of the target and its subsidiaries being acquired or the gross revenues in, or from Canada generated by those assets. Special rules apply for amalgamations.
  • The party size threshold remains unchanged at C$400-million. This threshold is based on the book value of the assets in Canada of all parties to the transaction or the gross revenues in, from or into Canada generated by those assets.
  • The Competition Bureau has one year from closing to review and challenge mergers even if they do not exceed the applicable monetary or control thresholds.

Investment Canada Act

  • The Investment Canada Act applies to all investments in Canadian business, directly or indirectly through non-Canadian parent companies, by non-Canadian investors.
  • Unlike the Competition Act, there is only one monetary threshold (transaction size), but it varies depending on the nationality of the buyer, whether the buyer is a state-owned enterprise, or whether the Canadian business is a cultural business.
  • The threshold for investors based in countries with a trade-agreement with Canada increased to C$1.568-billion in enterprise value – see table below. The threshold for investors based in other World Trade Organization countries increased to C$1.045-billion in enterprise value.
  • State-owned enterprise investors saw an increase in their threshold to C$416-million in book value of assets of the Canadian business being acquired, while the threshold for all other investments, including investments in Canadian cultural businesses, remained the same.
  • For control acquisitions below the applicable threshold and for the establishment of new Canadian businesses, investors are still required to submit a notification filing, but they can do so up to 30 days after closing.
  • In addition, no monetary or control thresholds apply for reviews on national security grounds.

Here is a list of countries whose investors are eligible for the C$1.568-billion threshold:

Country of Investor Origin

Australia

Greece

Peru

Austria

Honduras

Poland

Belgium

Hungary

Portugal

Brunei*

Ireland

Republic of Korea

Bulgaria

Italy

Romania

Chile

Japan

Singapore

Colombia

Latvia

Slovakia

Croatia

Lithuania

Slovenia

Cyprus

Luxembourg

Spain

Czech Republic

Malaysia*

Sweden

Denmark

Malta

United Kingdom

Estonia

Mexico

United States

Finland

Netherlands

Vietnam

France

New Zealand

Germany

Panama

* Once the Comprehensive and Progressive Agreement for Trans-Pacific Partnership has been ratified.