On April 11, 2012, the Competition Bureau issued new merger interpretation guidelines for public comment: Pre-Merger Notification Interpretation Guideline Number 15: Assets in Canada and Gross Revenues From Sales in, from or into Canada (Sections 109 and 110 of the Act).
In issuing the new guidelines the Bureau said:
“Interpretation Guideline 15 provides guidance on how to calculate the aggregate value of assets in Canada and the gross revenues from sales in, from or into Canada. It also provides information on how to determine whether gross revenues from sales are generated from assets in Canada. This guidance may assist businesses in determining whether the parties-size and transaction-size thresholds under sections 109 and 110 of the Act are exceeded.”
The Bureau has currently issued merger notification interpretation guidelines relating to the definition of an “operating business” under the Competition Act, multiple-step transactions, ordinary course acquisitions and corporate spin-offs, among others.
With respect to the new guidelines issued for public consultation, the calculation of Canadian assets and revenues is related to the “size of parties” and “size of transaction” thresholds for merger notification under sections 109 and 110 of the Competition Act. Generally speaking, for a merger to be notifiable in Canada it must: (i) involve the acquisition of an “operating business” in Canada, (ii) be one of five specified types of transactions set out in the Act, (iii) exceed the prescribed thresholds under the Act and (iv) not fall within an applicable exception.
The Bureau’s new guidelines set out, among other things, the Bureau’s position regarding determining the location of tangible, intangible and financial assets and revenues, the use of segmented financial statements and the calculation of revenues for the size of transaction threshold. The Bureau’s new guidelines also include a number of illustrative examples.
For the Bureau’s news release and new guidelines see:
Merger Interpretation Guidelines for Consultation
For more about Canada’s merger control and foreign investment rules see:
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