2014 Competition Act and Investment Canada Act Merger Review Thresholds Announced

1. Competition Act

Earlier today, the Canadian Competition Bureau (the “Bureau”) announced that the pre-merger notification Transaction-Size threshold will increase from $80 million to $82 million for 2014. The new threshold, which is revised annually and is indexed to the growth of Canadian GDP, will come into immediate effect following the publication of the Canada Gazette Part 1 (anticipated to occur on January 25, 2014).

Under the Competition Act, transactions that exceed the following thresholds generally require pre-merger notification:

(i) “Parties-Size”: where the combined Canadian assets or revenues of the parties and their affiliates in, from or into Canada exceed $400 million; and
(ii) “Transaction-Size”: where the Canadian assets or revenues of the target firm generated in or from Canada exceed $82 million.

2. Investment Canada Act

The Investment Review Division recently announced that the threshold for pre-merger review for investments involving WTO members will increase from $344 million to $354 million for 2014. This threshold is indexed annually to the growth in Canadian GDP. It is expected that the new threshold will also come into effect upon publication in the Canada Gazette Part 1 later this month.

Under the Investment Canada Act, direct investments by WTO investors in non-cultural businesses exceeding the $354 million threshold (based on the “book value” of the Canadian business’ assets) are subject to premerger review and approval by the Minister Industry that the investment is of “net benefit to Canada”.

In this regard, it should be noted that the Canadian government recently announced that the calculation of the Investment Canada Act review threshold will be changing from “book value” to “enterprise value” and increased to $600 million.  However, the timing for the move to the “enterprise value threshold remains unknown and the “book value” threshold continues to apply until this changes is effected by regulation. 

Further, the “enterprise value” threshold will not apply to investments by state-owned enterprises (“SOEs”) which will continue to be subject to the “book value” threshold.

The thresholds applicable to investments involving non-WTO investors and investments in the cultural sector remain unchanged at $5 million for direct investments and $50 million for indirect investments.

For a copy of the Bureau’s press release regarding the threshold, please click here.

For a link to the Investment Review Division's threshold for review, please click here.