The threshold for a pre-closing net benefit review under the Investment Canada Act and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2013.
Investment Canada Act: the direct acquisition of control of a Canadian business by a non-Canadian from a WTO-member country is subject to pre-closing review and approval where the assets of the acquired business had a net book value of more than $344 million as at the end of the target’s last completed fiscal year prior to the acquisition. [The 2012 threshold was $330 million.]
Competition Act: Canada uses a two part test for determining whether a pre-merger notification is necessary. The two-part test is based on the size of the parties and the size of the transaction. The transaction size component can be adjusted annually for inflation. Under the size of the parties test, the parties, together with their affiliates, must have aggregate assets in Canada or annual gross revenues from sales in, from or into Canada, in excess of C$400 million. Under the size of transaction test, the value of the assets in Canada or the annual gross revenue from sales (generated from those assets) in or from Canada of the target operating business and, if applicable, its subsidiaries, must be greater than $80 million (or in the case of an amalgamation at least two of the amalgamating corporations must have assets or revenues from sales greater than $160 million). [The 2012 transaction size thresholds were $77 million and $154 million respectively.]
These changes are effective January 12, 2013. Please contact a member of our Antitrust, Competition and Regulatory team if you have any questions.