Canada increases merger review and foreign investment review thresholds 


March 2011

Competition Bulletin
The Minister of Industry recently published increases to the Competition Act (mergers) and Investment Canada Act (foreign investments) review thresholds in the Canada Gazette. The new thresholds take effect from February 12, 2011.

Mergers and acquisitions in Canada that exceed the thresholds set out in the Competition Act must be pre-notified to and reviewed by the Competition Bureau prior to closing. There are two thresholds — both of which must be triggered — for a transaction to be prenotifiable in Canada: (1) the "Parties-Size" threshold, by which all parties to the transaction (together with all of their affiliates) must collectively have assets in, or sales in/from/into, Canada that exceed C$400 million in value; and (2) the "Transaction-Size" threshold, by which the assets or shares being acquired must have a value, or generate sales in/from Canada, exceeding C$73 million. The latter threshold has been increased from C$70 million for 2011.

Additionally, investments by non-Canadians must be notified to, and may in some instances be reviewable by, the federal Department of Industry or federal Ministry of Canadian Heritage. Generally speaking, for 2011, the review threshold for direct investments by WTO-nation investors has been increased from C$299 million to C$312 million. However, the notification and review provisions in this area are complex, applying different standards depending on the nationality of the investor, whether the investment is direct or indirect, and the industry or sector in which the investment is made. For example, lower thresholds apply for some investments in "cultural businesses". Please contact your McMillan lawyer to confirm whether a proposed investment may be reviewable.

These amendments are significant as they represent the first use of new powers, added to the Competition Act and Investment Canada Act in 2009, by which the Minister of Industry may choose to increase notification/review thresholds on an annual basis to reflect rising GDP and inflation levels. In 2010, the Industry Minister declined to do so, and his decision to exercise these powers in 2011 may reflect increased optimism about the pace of economic recovery in Canada following the global financial crisis.

By John Clifford and Casey Halladay

Please contact a member of McMillan's Competition and Antitrust Group or Foreign Investment Review Group to discuss any of these issues further.

a cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2011©