Written by Adam Kalbfleisch and Kyle H. Donnelly
On February 9, 2018, the Competition Bureau announced the 2018 size of transaction pre-merger notification threshold under the Competition Act would increase to $92 million (the 2017 threshold was $88 million). Acquisitions may be subject to mandatory pre-notification where the aggregate value of the target firm's assets in Canada, or the gross revenues from sales in or from Canada generated from those assets, exceeds the size of transaction threshold. The size of parties threshold ($400 million), and shareholdings threshold in the case of share deals, must also be met for a mandatory notification to be required. The 2018 threshold came into effect immediately following publication in the Canada Gazette Part 1, which occurred on February 10, 2018.
Similarly, Innovation, Science and Economic Development Canada (ISED) recently announced the 2018 review threshold for investments by state-owned enterprises under the Investment Canada Act. The 2018 threshold for World Trade Organization (WTO) investors that are state-owned enterprises will be $398 million based on the book value of the Canadian business' assets, up from $379 million in 2017.
The thresholds for review for direct acquisitions of control of Canadian businesses by private sector investor WTO investors ($1 billion) and private sector trade-agreement investors ($1.5 billion) remain the same, and are both based on the "enterprise value" of the Canadian business being acquired. Private sector investors from the European Union, United States, Mexico, Chile, Colombia, Honduras, Panama, Peru and South Korea are subject to the higher “trade-agreement” investor threshold.