Tag archives: Competition Act

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

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

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

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

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

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

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

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

Competition law implications of M&A

Ever wondered why competition regulators in both Canada and the US sometimes put the brakes on M&A deals? As mature markets become increasingly concentrated while smaller players are bought out and entities merge to achieve greater economies of scale, we continue to see headlines featuring the involvement of competition regulators in M&A transactions. But if we value the concept of ‘free markets,’ why are governmental bodies involving themselves in private transactions?

Adam Smith, one of the earliest proponents of modern capitalism, was a strong supporter of competition (antitrust) law. In his Inquiry Into the Nature and Causes of the Wealth 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

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

Doing business in Canada: M&A considerations

canadian-flag-on-buildingCanada is a top destination for foreign companies and investors attracted to our wealth of natural resources, stable and sound political and financial systems, and world-class infrastructure. While Canada is an open economy and welcoming of foreign investment, there are issues that corporations and investors should keep in mind when doing business in Canada. Norton Rose Fulbright’s guide, Doing Business in Canada, provides a general overview of the principal corporate, tax and other legal considerations that would be of interest to foreign businesses wishing to establish or acquire a business in Canada.

Of particular interest in the M&A context, … 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

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

Doing business in Canada – Competition and foreign investment laws

The federal Competition Act sets out a framework to promote and maintain fair competition and applies to Canadians and non-Canadians alike.

canadian-flag-on-building

The chapter on Competition and Foreign Investment Laws (pdf 186kb) in our guide to Doing business in Canada addresses sections of the Competition Act relevant to an acquirer of an existing Canadian business, and also speaks to practical considerations, confidentiality and regulation of anti-competitive practices.

In addition, the chapter considers the applicability of the Investment Canada Act in M&A transactions and, more specifically, what constitutes a reviewable or notifiable transaction thereunder.

In light of recent changes to the Investment 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

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

Higher Investment Canada Act & Competition Act Thresholds for 2012

 Under the Investment Canada Act, Canada’s foreign investment review law,  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 exceed a prescribed threshold.  Effective February 25, 2012, that threshold is $330 million, up from the 2011 threshold of $312 million. 

Under the Competition Act, Canada’s antitrust law, there is a two-part test for determining whether a pre-merger notification is necessary. The test is based on the size of the parties and the size of the transaction.  Under … Continue Reading

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