There are various thresholds for review of acquisitions of control of Canadian businesses by non-Canadian businesses. The review thresholds in the Competition Act and the Investment Canada Act are expected to increase in 2017.
According to the Competition Bureau, the 2017 pre-merger notification threshold relating to transaction size will increase to $88 million, up $1 million from the 2016 threshold of $87 million. The threshold relating to party size remains unchanged at $400 million. Therefore, once the $88 million threshold is in effect, the Competition Bureau must generally be given advance notice of proposed transactions when the target’s assets in Canada or revenues from sales in or from Canada generated from those assets exceed $88 million, and when the combined Canadian assets or revenues of the parties and their respective affiliates in, from or into Canada exceed $400 million.
As of April 24, 2017, the review threshold for a direct acquisition of control of a Canadian business by a: (a) World Trade Organization (“WTO”) investor that is not a state-owned enterprise; or (b) non-WTO investor that is not a state-owned enterprise, where the Canadian business is controlled by a WTO investor, is $800 million in enterprise value of that Canadian business. However, Bill C-44 (i.e. the Canadian federal government’s budget implementation legislation for 2017) proposes to increase the $800 million threshold to $1 billion. Bill C-44 has completed the first reading in the House of Commons and is expected to come into force later this Spring. Once the $1 billion threshold is in effect, an enterprise value of a Canadian business exceeding $1 billion will mean that the investor must file an application for review of whether the acquisition of control of the Canadian business by the non-Canadian investor would be of net benefit to Canada.