Competition Act And Investment Canada Act: New Merger Review Thresholds In Effect

Highlights

• The 2021 merger review thresholds under the Competition Act ("CA") and the Investment Canada Act ("ICA") (collectively, the "Thresholds") are now in full effect until the next annual adjustment.
• The Thresholds assist in determining whether a proposed transaction triggers:
  • a pre-merger notification obligation under the CA; and
  • an obligation to file an application for review under the ICA.
• This year marks the first time that the Thresholds have decreased, indicating the profound impact of the COVID-19 pandemic on the Canadian economy.
• Note, if a transaction is expected to close after February 13, 2021, we suggest revisiting the CA and ICA analysis to ensure continued compliance in light of the revised Thresholds.

Competition Act

• To determine whether a transaction triggers a pre-merger notification obligation under the CA, two financial thresholds, namely, the transaction-size threshold and the parties-size threshold, must be satisfied.
• The transaction-size threshold has decreased from CAD$96 million to CAD$93 million. The parties-size threshold remains unchanged.
• The current fee for filing a pre-merger notification is CAD$75,055.68 and is expected to be adjusted on April 1, 2022.

Investment Canada Act

• Transactions by non-Canadian investors to acquire direct control of a Canadian business may require "net benefit" clearance under the ICA prior to completing the transaction.  To determine if clearance is required, one of the thresholds for review must be satisfied.
• The thresholds for WTO investors, trade agreement investors, and state-owned or influenced investors have decreased:
  • WTO investor
    • 2020 threshold: CAD$1.075 billion
    • 2021 threshold: CAD$1.043 billion
  • Trade agreement investor
    • 2020 threshold: CAD$1.613 billion
    • 2021 threshold: CAD$1.565 billion
  • SOE
    • 2020 threshold: CAD$428 million
    • 2021 threshold: CAD$415 million
• The thresholds for cultural businesses remain unchanged.
• Note, even if the thresholds for review are not exceeded, a transaction can be reviewed on national security grounds.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.