Competition Act Transaction-size Threshold Maintained for 2022
Certain classes of transactions that exceed prescribed thresholds require pre-merger notification under Canada's Competition Act. Such transactions cannot be completed until notice has been given to the Commissioner of Competition and the statutory waiting period has expired or, alternatively, has been terminated early or waived by the Commissioner. One of these thresholds, the transaction-size threshold, is subject to an annual index adjustment. On February 7, 2022, the Minister of Innovation, Science and Industry announced that the transaction-size threshold would remain at C$93 million for 2022 (which is the same threshold as for 2021). In general terms, this threshold looks at the aggregate value of assets in Canada of the target and its subsidiaries (or of the assets in Canada that are the subject of the transaction) or the annual gross revenues from sales in and from Canada generated by those assets.
The other threshold, the size of parties threshold, is not indexed annually, and remains at C$400 million. Accordingly, where the size of transaction threshold is exceeded, a merger will require pre-merger notification where the other elements of the notification test are also met (i.e., the "operating business" condition, the C$400 million size of parties threshold and, where applicable, the equity threshold) and no exemption applies.
Investment Canada Act Thresholds Increase
Acquisitions of control of a (non-cultural) Canadian business by a non-Canadian may be subject to a net benefit review under the Investment Canada Act where the applicable financial thresholds are exceeded. The review thresholds for 2022 are set out below:
- C$1.711 billion in enterprise value for acquisitions of control by private sector trade agreement investors (increased from C$1.565 billion in 2021); and
- C$1.141 billion in enterprise value for acquisitions of control by private sector WTO investors (increased from C$1.043 billion in 2021); and
- C$454 million in asset value for acquisitions of control by State-owned enterprise WTO investors (increased from C$415 million in 2021); and
- The thresholds for review for acquisitions of control by non-WTO investors and for acquisitions of a cultural business were maintained at C$5 million dollars in asset value for direct investments and C$50 million dollars in asset value for indirect transactions.
As in past years, transactions that fall below these thresholds and/or involve the indirect acquisition of control of a Canadian business by a WTO or trade agreement investor are subject to a notification obligation, but also remain subject to potential national security review (determined on a case-by-case basis).
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