Topic: Antitrust, competition and regulatory

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National security guidelines shed light on Investment Canada review process

On December 19, 2016, the Government of Canada issued long-sought guidelines to help foreign investors and their advisors understand the national security review process under the Investment Canada Act (ICA). Following amendments to the ICA in 2009 the government has had the explicit authority to review investments in Canadian businesses by non-Canadians to determine whether they “could be injurious to national security,” a term that was not defined in either the statute or the accompanying regulations.

Given the subject matter, both the previous and current governments have maintained that they are often constrained in what they can tell foreign investors … Continue Reading

Bitcoin update: cryptocurrency remains rare in M&A transactions despite potential

Bitcoin remains a fringe currency in the context of M&A transactions. Despite some notable advantages over fiat currency, the risks associated with funding a large transaction using the cryptocurrency have limited its use to deals between players in the Bitcoin space. This article provides an update to our previous article on Bitcoin’s viability as a currency for funding M&A transactions.

To date, there have been three notable M&A transactions funded with Bitcoin. Only one of these transactions was completed within the last year, with the other two closing in 2013. The initial excitement over Bitcoin’s use in M&A deals was … Continue Reading

Ontario’s Bulk Sales Act: Repeal at last?

Last year we reported on Ontario’s distinction as the only Canadian province that has not repealed its century-old Bulk Sales Act (the Act).  With its goal of creditor protection now served by more modern legislation, the Act is generally viewed as a nuisance, adding time and cost to transactions.  However, the wait may soon be over, as Ontario recently introduced legislation that would repeal the Act.

The aim of the Act is to protect creditors from a vendor selling its assets without first paying its debts owed to creditors.  The Act achieves this aim by imposing certain duties on … Continue Reading

New 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 2016.

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 … Continue Reading

Keeping up with the Competition Bureau: recent position statements

Under the Competition Act, RSC 1985 c. C-34, the Competition Bureau (Bureau) reviews mergers to assess whether they are likely to substantially lessen or prevent competition in one or more relevant markets. As stated in its Merger Enforcement Guidelines (Guidelines), the Bureau generally makes its determination by assessing the competitive effects of the merger in those markets where each party to the merger supplies products that are substitutes between each other (Relevant Market).

In an effort to promote transparency around its processes and its analytical approach to merger reviews, the Bureau publishes Position StatementsContinue Reading

Foreign investment rule changes: narrowed scope but deeper reach

On March 25, 2015 the Canadian government published two long-awaited regulations amending the Investment Canada Act. One is intended to reduce the number of transactions that are subject to pre-closing review and approval, but will increase the amount of detailed information required in routine filings for transactions that are not reviewable. The second will lengthen the period for transactions undergoing a national security review by providing the government additional time to complete such reviews.

Thresholds for Review

Under the Investment Canada Act, the acquisition of control of a Canadian business by a non-Canadian is generally subject to pre-closing review … Continue Reading

New merger review thresholds for Competition Act and Investment Canada Act

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 2015.

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 $369 million as at the end of the target’s last completed fiscal year prior to the acquisition. The 2014 threshold was $354 million. Amendments to the ICA to change … Continue Reading

Supreme Court clarifies test for merger review in Canada

Lays waste to Commissioner’s case on efficiencies, but serves as reminder of hazards of internal documents

On January 23, 2015, the Supreme Court of Canada (SCC) released its much-anticipated decision in Tervita Corp. v Canada (Commissioner of Competition). In 2011, the Commissioner of Competition (Commissioner) challenged Tervita Corp.’s merger with a potential competitor, Complete Environmental Inc., and in 2012 the Competition Tribunal (Tribunal) ruled in favour of the Commissioner and ordered Tervita to divest itself of the assets it had acquired. The Federal Court of Appeal (FCA) upheld that decision. In … Continue Reading

Hidden dangers in M&A: bribery and corruption

Embarking on an international M&A transaction can be an exhilarating time for any company, although there are a host of business and legal issues involved in choosing an appropriate target. One issue that often gets overlooked is the target company’s anti-corruption and bribery practices. As Canadian companies continue to grab up international market space, they must be wary of the hidden practices of their partnering company.

Why consider anti-corruption and bribery practices?

According to a PricewaterhouseCoopers article, an increasing number of Canadian companies are looking overseas for expansion opportunities. In fact, 40% of Canadian CEOs see their growth coming from … Continue Reading

Bureau allows Reynolds to acquire Novelis’ North American foil business

On November 15, 2013, Reynolds Consumer Products, Inc. (Reynolds) agreed to acquire the North American division of  Novelis Foil Products for $35 million. Six months later, on May 26, 2014, the Competition Bureau (Bureau) allowed the acquisition by issuing a No Action Letter to Reynolds and announcing that the merger would be unlikely to cause a substantial lessening or prevention of competition.

Transaction Background

Both parties manufacture and supply aluminum foil wrap and semi-rigid aluminum containers. Novelis operates two manufacturing plants and three distribution facilities in Canada, while Reynolds manufactures in the U.S. and distributes to … Continue Reading

Cross-border lumber deal felled by Competition concerns

Tennessee-based Louisiana-Pacific Corporation (LP) recently abandoned its proposed acquisition of Canadian competitor Ainsworth Lumber Co. Ltd. (Ainsworth). The decision came several days after an announcement by U.S. Department of Justice (DOJ) and an announcement by the Canadian Competition Bureau (Bureau) that they each considered the transaction would likely substantially lessen competition of the sale of oriented strand board (OSB).  The Bureau and DOJ collaborated and shared information during the review of the proposed merger.

The Bureau, DOJ and the Federal Trade Commission have long coordinated reviews of cross-border mergers.  This … Continue Reading

New merger review thresholds for Competition Act and Investment Canada Act

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 2014.

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 $354 million as at the end of the target’s last completed fiscal year prior to the acquisition. The 2013 threshold was $344 million. Amendments to the ICA to change … Continue Reading

Global perspective on competition and antitrust issues

The latest edition of Norton Rose Fulbright’s Competition World is now available. This award-winning quarterly publication provides a global survey of recent competition and antitrust law developments in a practical and accessible format.

Of particular relevance in this edition is an overview of bid-rigging, which is a criminal offence in Canada and in many other jurisdictions. Canada’s Competition Bureau announced earlier this year that it had secured guilty pleas in a number of high-profile global investigations, and that Canadian courts had imposed record-setting, multi-million dollar fines.

Other notable features in this issue include:

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Canada blocks telecom deal for national security reasons

The Canadian government has used the Investment Canada Act to block the proposed acquisition of the Allstream division of Manitoba Telecom Services Inc. by Accelero Capital Holdings for national security reasons.  On October 7, 2013, the Minister of Industry, James Moore, issued a brief statement in which he noted:

MTS Allstream operates a national fibre optic network that provides critical telecommunications services to businesses and governments, including the Government of Canada.

No further details or reasons were provided.

This represents at least the second transaction to have been blocked for national security reasons by the Canadian government under Prime Minister … Continue Reading

Webinar – M&A in 2013: FCPA successor liability issues

Join us on Thursday, September 19, 2013, for a webinar on FCPA successor liability issues.

This program will provide an inside look at recent FCPA enforcement trends of the DOJ and SEC in connection with successor liability, including guidance the enforcement agencies have provided regarding M&A due diligence and current industry specific focus areas.

Register now

This presentation will:

  • discuss recent enforcement actions
  • explore trends in the agencies’ enforcement activity
  • offer practical and effective strategies and analysis procedures when considering an acquisition that presents FCPA risk to the acquiror

Speakers

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Investment Canada Act amendments raise questions for state-owned enterprises

Following its approval in December 2012 of two high-profile transactions involving foreign state-owned enterprises acquiring Canadian businesses, the Canadian government announced new policies that would guide the minister of industry in applying the Investment Canada Act (ICA) to subsequent similar transactions.  On April 29, 2013, the government introduced its budget implementation bill, Bill C-60, which contains amendments to the ICA to implement the December 2012 policies. If enacted in their current form, these amendments will provide the minister greater authority to require net benefit reviews as well as the ability to prolong reviews of transactions that may raise national … Continue Reading

Federal Court of Appeal endorses projecting future events in upholding Canadian Competition Tribunal decision

On February 11, 2013, the Federal Court of Appeal (FCA) released its reasons in Commissioner of Competition v Tervita Corporation, an appeal of the Competition Tribunal’s (the Tribunal) 2012 divestiture order against Tervita.

The case is important because it marks the first time the commissioner of competition has successfully challenged a merger based on a projection that the parties to the transaction would have become competitors if the transaction had not taken place. The FCA ruled that the “Competition Act requires [the Tribunal] to project into the future various events in order to ascertain their potential economic and commercial … Continue Reading

New Merger Review Thresholds for Competition Act and Investment Canada Act

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 … Continue Reading

Navigating the new Investment Canada rules for state-owned enterprises

On December 7, 2012, the Canadian government approved two proposed investments in Canadian energy companies by state-owned enterprises (SOEs) under the Investment Canada Act (ICA): the proposed acquisition by PETRONAS of Progress Energy Resources Corp. (Progress) and the proposed acquisition of Nexen Inc. (Nexen) by China National Offshore Oil Company (CNOOC). Norton Rose Canada represented PETRONAS before the Investment Review Division of Industry Canada.

Concurrent with these announcements by the Minister of Industry, the government unveiled new guidelines applicable to future acquisitions of control of Canadian businesses by SOEs. However, the general test under the ICA remains –such acquisitions must … Continue Reading

Mandatory Jail Time for Certain Competition Act Offences Now in Effect

Effective today, an individual convicted of certain violations of the Competition Act (Canada) may be punished with prison time instead of community service. These offences include price-fixing, bid-rigging and misleading advertising. For more information please see Norton Rose’s Legal Update on the topic prepared by our colleague Stephen Nattrass  here.

Merging parties should take note of these amendments because parties that start coordinating their businesses before the completion of the merger could be in violation of the Competition Act (Canada)This means that parties to an M&A transaction should not, pre-closing, agree with their counterparty on prices to … Continue Reading

There’s a new sheriff in town: government announces Interim Commissioner of Competition

Following the resignation of Melanie Aitken as Commissioner of Competition, the federal government announced on September 26, 2012 that John Pecman would serve as Interim Commissioner of Competition for up to one year.  Pecman, most recently Senior Deputy Commissioner – Criminal Matters Branch, has worked at the Bureau for almost thirty years and served in every enforcement branch.  In his role as head of the criminal matters branch, he was responsible for enforcing (among other things) the price fixing and bid-rigging provisions of the Competition Act.

Pecman has significant experience with merger enforcement, having been the lead officer in one … Continue Reading

Criminal charges laid for alleged breach of merger consent agreement

On September 11, 2012, the Competition Bureau announced that it laid criminal charges under section 66 of the Competition Act against Progressive Waste Solutions Ltd. and its subsidiary BFI Canada Inc. for “multiple breaches” of a June 2010 consent agreement with the Bureau.  The consent agreement resulted from the 2010 merger of IESI-BFC Ltd. and Waste Services Inc. (now know collectively as “Progressive”) and was intended to remedy concerns about a substantial lessening or prevention of competition in four cities and one county across Canada.  Under the terms of the agreement, the parties were required to divest certain assets and … Continue Reading

Leadership changes and other merger developments at the Competition Bureau

Deal Law Wire - Norton Rose Fulbright

Dealmakers should take note of several recent significant merger-related developments at the Competition Bureau:

Continue Reading

Amendments to Investment Canada Act intended to increase transparency

On April 27, 2012, the federal government announced it would amend the Investment Canada Act to allow the Minister of Industry greater flexibility in explaining why a proposed foreign takeover of a Canadian business raises preliminary concerns.  The amendments, contained in the government’s annual budget bill, will also empower the Minister to accept offers of security as a performance guarantee.

Canada’s foreign investment regime requires that any acquisition of control of a Canadian business by a non-Canadian, where the book value of the assets of the Canadian business exceeds a prescribed threshold (currently C$330 million), be reviewed and approved … Continue Reading

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