Canadian COMPETITION LAW

January 9, 2013

The Competition Bureau has announced that the pre-merger notification size of transaction threshold for 2013 has been increased to $80 million (increased from the previous $77 million).  The new size of transaction threshold will come into effect on publication in the Canada Gazette.

Mergers are notifiable in Canada where they involve the acquisition of an operating business in Canada, are one of five specified types of transactions set out in the Competition Act, exceed the prescribed thresholds under the Act and do not fall within any exception.  With respect to pre-merger notification thresholds, a transaction must exceed both the “size of parties” and “size of transaction” thresholds.

Under the size of parties threshold, parties to a transaction, together with their affiliates, must have combined Canadian assets (or gross annual revenues from sales in, from or into Canada) exceeding CDN $400 million.  Under the size of transaction threshold, the book value of the target’s assets in Canada (or annual gross revenues from sales in or from Canada generated by those assets) must exceed CDN $80 million once the new threshold for 2013 is in effect (a figure that is adjusted annually).

For share acquisitions, an additional threshold must be met.  For the acquisition of public companies, the acquisition must result in the acquirer holding more than 20% of the voting shares of the target (more than 50% if more than 20% is already held).  For private companies, the acquisition must result in the acquirer holding more than 35% of the voting shares of the target (more than 50% if more than 35% is already held).

For more information about Canada’s merger control and foreign investment rules see: merger control, Investment Canada, national security, state-owned-enterprises (SOEs).

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