Topic: Antitrust, competition and regulatory

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Timely, or too soon? Competition Bureau releases guidance on “failing firm” claims in merger reviews

On April 29, in a rare decision based on the “failing firm” rationale, the Competition Bureau announced it would not challenge the acquisition of Total Metal Recovery (TMR) Inc. by American Iron & Metal Company Inc. (AIM), because TMR would have likely exited the market without the merger.

The Bureau released a detailed position statement on the transaction, which will assist parties seeking to rely on a “failing firm” argument. This will be particularly important in the wake of the COVID-19 economic downturn, as many businesses may face failure and seek to be acquired by a competitor if they cannot … Continue Reading

Canadian Government Announces New Policy Applying “Enhanced Scrutiny” to Certain Foreign Investments During COVID-19

Market Contraction

The financial markets and global economy have experienced a precipitous decline and substantial volatility due to the economic impact of the ongoing COVID-19 pandemic. This has had a significant and immediate impact on the level of M&A activity, both in Canada and globally, as companies are shelving deals or simply walking away entirely.

In fact, Thomson Reuters, citing data from the financial research firm Refinitiv, recently reported that there was a 57% decline in M&A activity in Q1 2020 as compared to Q1 2019, as Canadian M&A activity dropped to its lowest level since 2015. Globally M&A activity … Continue Reading

Competition Bureau Issues Additional Guidance on Competitor Collaboration During COVID-19 Pandemic

Canadian businesses continue to face unprecedented challenges in light of the rapid spread of COVID-19. On March 20, the commissioner of competition provided some guidance for industry on the continuing application of the Competition Act to competitor collaborations, which we summarized in a recent bulletin. In short, the statement indicated that the Competition Bureau’s pre-existing analytical framework would continue to apply: agreements among competitors to fix prices, allocate markets or restrict output would be pursued criminally, but other agreements among competitors on matters outside these three areas would only be prohibited where they resulted, or were likely to result … Continue Reading

2020 merger review thresholds for Competition Act and Investment Canada Act

The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have now both been released for 2020. The Commissioner of Competition announced on April 1 that the threshold would remain the same as in 2019.

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, … Continue Reading

CANADA’S COMPETITION BUREAU IS KEEPING AN EYE ON SMALL M&A DEALS

The Competition Bureau (the “Bureau”) is required to review certain merger transactions that exceed various financial thresholds, based on the size of the business being acquired and the combined size of the buyer, the target business, and their affiliates. The notification thresholds under the Competition Act (the “Act”) are discussed in more detail here. The Bureau reviews transactions that exceed these thresholds (“notifiable transactions”) to assess the potential competitive effects of the deal prior to its completion, and if the Bureau concludes that a transaction is likely to substantially lessen or prevent competition, they may seek a remedy (such … Continue Reading

Spreading like weeds: alternative cannabis products are on the way!

As we have previously discussed, Canada has positioned itself as a global leader in the cannabis space. That trend is set to continue on October 17, 2019, when it is expected that alternative cannabis products, which include edibles, infused beverages and topicals containing cannabis and cannabis concentrates will be legalized in Canada. The sale of a new and wider range of products will create valuable opportunities to tap into a growing market of consumers – particularly, those less comfortable with traditional cannabis consumption methods. According to a recent report published by Deloitte, it estimated that the Canadian market for … Continue Reading

FTC announces increased HSR thresholds for 2019

On February 15, 2019 the Federal Trade Commission (“FTC”) announced the annual increased reporting thresholds under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”) of 1976, as amended.

Under the HSR Act, if certain thresholds are hit, parties proposing a merger or acquisition must file a detailed report with the U.S. FTC and Department of Justice, who will then be tasked with determining whether or not the proposed transaction will negatively impact U.S. commerce under anti-competition laws.

Below are the new thresholds and updated HSR filing fees and penalties.

Threshold 2019 Adjusted Threshold
Minimum Size-of-Transaction US$90 million
Size-of-Persons Test US$18 million
Continue Reading

2019 merger review thresholds for Competition Act and Investment Canada Act

The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2019.

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 … Continue Reading

Oil & gas update: AER hints at more changes

In recent years the Alberta Energy Regulator (AER) has been making changes to its liability management system. In early August, the AER hinted more changes are on the way. In a news release, Jim Ellis, the regulator’s CEO, explains that a gap has been clearly identified in the current liability management system, and that the AER is working to fill it.

But what is this “hole” in the system? Imagine Company A and Company B decide to do a deal. Company A buys a couple of profitable wells along with a lot of unprofitable, unwanted wells from Company B. … Continue Reading

Foreign investment laws and increased scrutiny of M&A transactions

2018 is on pace to be a year with one of the highest total values of blocked or cancelled M&A deals in the past two decades. While this data, which was compiled by Thomson Reuters and reported by the Financial Times, is based on public M&A transactions, the reasons and insights behind it can nonetheless be applied to the private M&A context.

One of the main ways that deals have been blocked is through foreign investment laws. These laws take different forms in different countries but examples include the Investment Canada Act or the Committee on Foreign Investment in … Continue Reading

Data privacy in M&A: new reporting and notification requirements

It is time for organizations to think ahead and prepare for new requirements imposed under the Digital Privacy Act (formerly known as Bill S-4). The new requirements, which will result in significant amendments to the Personal Information Protection and Electronic Documents Act (PIPEDA), will come into force on November 1, 2018.

The new requirements impose mandatory reporting and notification for data breaches. Once in force, organizations subject to PIPEDA will be required to notify the Privacy Commissioner of Canada (the Commissioner) and affected individuals in the event of a data breach. Organizations must do so if the … Continue Reading

Will Canada soon be a global leader in the cannabis space?

Recently, the Cannabis Act was granted Royal Assent, resulting in the official passing of the legislation for legalizing cannabis in Canada. The Act is expected to be in force as of October 17, 2018.

The Canadian government’s decision to legalize recreational marijuana may significantly impact capital markets and M&A deals. The decision to legalize recreational marijuana at the federal level is unique to Canada, compared to other jurisdictions like the U.S. where it remains illegal federally and is currently regulated by states (such as Colorado, California and Washington).

While the state model in the U.S. has experienced some early success, … Continue Reading

Competition Bureau opens consultation on revised immunity and leniency programs

Last month, the Competition Bureau issued its revised immunity and leniency programs for public consultation (open until June 29), an important development as it represents the culmination of a process that began in 2015.

An initial draft of the immunity program, published last fall, was subject to public consultation and the Bureau made further revisions which aim, among other things, to clarify the Bureau’s approach.

Background

The immunity and leniency programs’ purpose is to uncover and stop criminal anti-competitive activity prohibited by the Competition Act. In fact, the programs have been described as one of the Bureau’s best tools … Continue Reading

The Competition Bureau is soliciting feedback from stakeholders on two new advocacy initiatives

The Competition Bureau recently issued a news release soliciting feedback from stakeholders regarding two of its newest advocacy initiatives:

  1. Opportunities where the Bureau can support increased competition through changes to regulations or policies; and
  2. Input on the Bureau’s draft Market Studies Information Bulletin.

Supporting Increased Competition

Using the Advocacy Suggestion Form, the Bureau is collecting perspectives on areas in which it could advocate for increased competition and innovation. Specifically, the form seeks input on sectors that should be examined, as well as the competitive issues or harms in the sectors. In investigating these two items, the Bureau is … Continue Reading

Legal update: new European data privacy law comes into force on May 25, 2018

On May 25, 2018 the European Union’s General Data Protection Regulation (GDPR) will come into force. The GDPR will create new requirements for Canadian companies that handle the personal information of European individuals. The GDPR also allows for heavy penalties to be imposed on organizations that fail to comply with this new regulatory regime. Based on this, Canadian companies who are involved in M&A transactions should be sure to determine whether the GDPR applies to a target and carefully consider the risks associated with non-compliance.

The GDPR regulates the processing by an individual, a company or an organization … Continue Reading

Competition Act Merger Filing Fees Increases to $72,000

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 … Continue Reading

Canadian Securities Administrators are seeking comments on soliciting dealer arrangements

The Canadian Securities Administrators (the “CSA”) have issued CSA Staff Notice 61-303 and Request for Comment – Soliciting Dealer Arrangements (the “Notice”) on the use of soliciting dealer arrangements. “Soliciting dealer arrangements” generally refer to agreements entered into between issuers and investment dealers under which the issuer agrees to pay to the dealers a fee for each security successfully solicited to tender to a bid in the case of a take-over bid, or to vote in favour of a matter requiring securityholder approval. In many cases, the payment of any fee is contingent on “success” and/or … Continue Reading

Are megadeals coming back?

The year of 2017 witnessed a worldwide slowdown in the number of megadeals[1]. According to a recent Mergermarket Report (the Report), the global total for the number of deals worth US$4 billion or more decreased from a peak of 158 in 2015 and 133 in 2016 to 129 in 2017.  In Canada, the number of deals valued CAD$500 million or more decreased from 74 in 2016 to 55 in 2017, as reported by Duff & Phelps. However, there have been recent hints suggesting that the spring for megadeals is just around the corner.

After polling the … Continue Reading

2018 merger review thresholds for Competition Act and Investment Canada Act

The threshold for certain pre-closing net benefit reviews under the Investment Canada Act (ICA) and the threshold for a pre-closing merger notification under the Competition Act have been increased for 2018.

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 … Continue Reading

FTC announces increased HSR thresholds for 2018

On January 26, 2018 the Federal Trade Commission announced increased reporting thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. These reporting thresholds are revised annually based on changes in the US gross national product, and the increases will apply to all transactions that close after the effective date, which likely will be in late February or early March.

Please check out our legal bulletin for more details.

Stay informed on M&A developments and subscribe to our blog today.Continue Reading

Facilitation payments exception repealed in Canada

Last week, we covered the topic of facilitation payments and discussed some implications should the exception of facilitation payments be officially repealed in the Corruption of Foreign Public Officials Act (CFPOA). The repeal has now come to fruition. Global Affairs Canada has announced the removal of the facilitation payments exception from the CFPOA, with the repeal to come into force October 31, 2017. This exception was repealed by Bill S-14: An Act to amend the Corruption of Foreign Public Officials Act.

What was the exception?

The following is the facilitation payments exception in the CFPOA that has … Continue Reading

Facilitation payments and considerations for Canadian businesses

As previously reported, the growth in cross-border transactions has been significant in 2017 thus far. This, coupled with the growing importance of anti-corruption and anti-bribery legislation on an international level, serves as a reminder to companies that laws surrounding the governance of foreign bribery and corruption are still evolving.

The Corruption of Foreign Public Officials Act (CFPOA) is of particular importance to Canadian businesses, as it applies to all businesses (including not-for-profit organizations) formed under the laws of Canada or any of its provinces or territories. In 2013, the Canadian government amended the CFPOA in an attempt … Continue Reading

Competition Act merger filing fees likely to jump in 2018

The Canadian Competition Bureau has started the process to increase 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 currently $50,000, and the Bureau is seeking permission to increase the fee to up to $72,000, effective April 1, 2018.  Any change to the filing fee must be approved by the Minister of Innovation, Science and Economic Development.

Merger notification regime

Proposed transactions that exceed the merger notifications thresholds in the Competition Act cannot be completed until certain steps have been taken.  A pre-merger notification is … Continue Reading

From renegotiation to reticence: how changing NAFTA may slow the PE market

Renegotiating or withdrawing altogether from the North American Free Trade Agreement (NAFTA) has been a focal point of both President Trump’s presidential campaign and his administration. This threat of renegotiation or withdrawal has also been the source of immense speculation from lawyers, economists, politicians and the like regarding the expected implications for the economy, key Canadian industries and business generally. Now, with preliminary negotiations underway, these months of speculation may finally be put to the test.

NAFTA: a brief overview

In 1994, the United States, Canada and Mexico entered into NAFTA – a free-trade agreement that expanded upon an earlier … Continue Reading

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