Effective May 1, 2018, merging parties will need to dig deeper to cover the fee that must be paid when filing a pre-merger notification or seeking an advance ruling certificate under the Competition Act. The fee is jumping from $50,000 to $72,000.
In justifying the increase, the Competition Bureau argues that the fee has not increased since 2003, and had the fee been adjusted annual for inflation, it would currently be approximately $65,500. They also suggested that additional funds are required given the increase in the number of transactions considered “complex” and the considerable resources that are required to evaluate those matters.
Additional details of their proposal were described in a previous post and the Bureau’s announcement of the new fees can be found here.
Proposed transactions that meet certain thresholds must be notified to the Bureau in advance of closing and cannot be completed until the expiry of the waiting period under the Competition Act. A pre-merger notification is only required for five specific types of transactions:
- the acquisition of the assets of an operating business;
- the acquisition of voting shares of a corporation that will result in the buyer and its affiliates holding greater than (i) 20% of the shares of a publicly traded corporation, (ii) 35% of the shares where none of the shares is publicly traded, or (iii) 50% of the shares if the buyer(s) already owned more than the percentages in (i) or (ii), as the case may be, before the proposed acquisition;
- the acquisition of a greater than 35% interest in non-corporate combinations;
- the amalgamation of two or more corporations; or
- the formation of a combination (e.g., joint venture) of two or more entities which will carry on business otherwise than through a corporation (e.g., a partnership).
In addition, a pre-merger notification is only required when two financial thresholds are both met:
- Size of Parties Threshold: the parties, together with their respective affiliates, must have aggregate assets in Canada or annual gross revenues from sales in, from, or into Canada in excess of $400 million; and
- Size of Transaction Threshold: 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 $88 million. In the case of an amalgamation, each of at least two of the amalgamating corporations (together with its affiliates) must exceed the $92 million threshold.
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