On March 4, 2024, while attending the 2024 Prospectors & Developers Association of Canada’s annual convention, Canada’s Minister of Innovation, Science and Industry[1], François-Philippe Champagne, received a question about Québec-based SRG Mining Inc.’s (“SRG”) proposed plan to redomicile to the United Arab Emirates after agreeing to sell 19.4 percent of the company to China-based Carbon ONE New Energy Group Co., Ltd. (“Carbon One”).

Despite SRG’s belief that redomiciling would obviate the need to obtain the Government of Canada’s approval of the proposed deal, Minister Champagne reacted by stating that Canada would challenge the proposed avoidance of the Government of Canada’s review: “It’s never smart to try to circumvent the rules…[The federal government is prepared to use] every tool at our disposal [to make sure Canadian law is respected].

Shortly after Minister Champagne’s comments, SRG announced that it was no longer proceeding with the Carbon One transaction.

Continue Reading Canada Threatens to Challenge SRG Proposed Redomiciling Plan Removing the Need for Investment Canada Review

On March 22, 2024, Bill C-34 received royal assent, becoming the National Security Review of Investments Modernization Act. First introduced in the House of Commons by the Minister of Innovation, Science and Industry (the “Minister”) on December 7, 2022, the National Security Review of Investments Modernization Act represents the most significant amendment to the Investment Canada Act (the “ICA”) since the introduction of national security provisions in 2009. Notably, the new legislation:

  • Creates a suspensory pre-closing filing requirement and waiting period for investments in certain (yet-to-be) prescribed sensitive sectors, such as the interactive digital media sector and the critical minerals sector, for instance;
  • Creates a new authority for the Minister to initiate national security reviews under section 25.3 of the ICA and to accept undertakings to mitigate national security risk (previously, the authority for both of the foregoing rested with the Cabinet of Canada); and
  • Increases the maximum penalty for non-compliance with the ICA to $25,000 for each day of contravention, up from $10,000.
Continue Reading The National Security Review of Investments Modernization Act Receives Royal Assent

What antitrust scrutiny can U.S. private equity expect in Canada? 

Numerous recent proceedings by the U.S. Federal Trade Commission and Department of Justice have made antitrust issues top of mind for U.S. private equity (PE). 

Given the frequent investment by U.S. sponsors into Canada, it is prudent to query whether a similar increase in regulatory scrutiny of PE is occurring north of the border.

The short answer is yes, and several examples are illustrative.

Writing in the ABA’s M&A Deal Points, we review these precedents for the benefit of U.S. PE considering a Canadian acquisition or minority investment.

We also consider certain differences between U.S. and Canadian antitrust law, as well as the practical impacts greater regulatory oversight of PE by Canadian competition authorities is having on risk mitigation and deal dynamics.

Enjeux antitrust dans le secteur du capital-investissement au Canada

À quel degré de surveillance antitrust les sociétés de capital-investissement américaines peuvent-elles s’attendre au Canada?

De nombreuses procédures récentes de la Federal Trade Commission et du Department of Justice des États-Unis ont fait des enjeux antitrust une priorité pour le secteur du capital-investissement américain.

Étant donné les investissements fréquents des promoteurs américains au Canada, il est prudent de se demander si l’on assiste également à un resserrement de la surveillance réglementaire de ce secteur au nord de la frontière.

La réponse courte est « Oui », et plusieurs exemples l’illustrent bien.

Dans l’infolettre du comité des fusions et acquisitions de l’American Bar Association (PDF, 2,879 KB) (ABA M&A Committee’s Deal Points Newsletter) (en anglais seulement), nous examinons ces précédents à l’intention des sociétés de capital-investissement américaines qui envisagent d’acquérir une société canadienne ou une participation minoritaire dans une société canadienne.

Nous y faisons ressortir certaines différences entre les lois antitrust américaines et canadiennes, ainsi que les répercussions pratiques d’une plus grande surveillance réglementaire du secteur du capital-investissement par les autorités canadiennes en matière de concurrence sur l’atténuation des risques et la dynamique des opérations.

Pour plus d’informations ou pour discuter d’un sujet, veuillez nous contacter.

On March 1, 2024, the Government of Canada unveiled two new foreign investment policies relating to the interactive digital media sector: one relating to national security reviews and the other to cultural investment reviews.

The policies define “interactive digital media” (“IDM”) as, without limitation, “digital content and/or an environment in which users can actively participate or that facilitates collaborative participation among multiple users for the purposes of entertainment, information or education, and commonly delivered via the Internet, mobile networks, gaming consoles or media storage devices.”

Continue Reading Canada to Subject Interactive Digital Media Investments to Enhanced Scrutiny

Competition Act Merger Notification Thresholds

The Canadian government has announced that the transaction-size threshold for pre-notification under the Competition Act will remain at C$93M for 2024. This is the third year that the transaction-size threshold has been fixed at this level, despite inflationary pressures throughout this period.

Mergers are subject to pre-closing notification in Canada if certain thresholds are met. These thresholds include a transaction-size threshold and a party-size threshold.

The transaction-size threshold is satisfied if:

  • The book value of the Canadian assets that are being acquired, or the assets of the entity the shares of which are being acquired and any entities it owns, exceeds C$93 million, or
  • the gross revenues from sales in or from Canada generated by these assets exceed C$93M.

 Parliament is currently considering amendments to this test that, if passed, will expand the revenue threshold to include revenues from sales into Canada, as well as sales in or from Canada.  

The party-size threshold is satisfied if:

  •  the book value of the assets in Canada, or
  • the gross annual revenues from sales in, from or into Canada,

of the parties and their affiliates, exceed C$400M. In a share transaction, the parties are the target and the acquiror(s) and a percentage share ownership threshold must also be exceeded.

Both the transaction-size and party-size thresholds must be satisfied in order for a merger to be subject to pre-closing notification.

Investment Canada Act Review Thresholds

Non-Canadian investors that acquire control of a Canadian business must file a notification or application for review under the Investment Canada Act. A notification can be filed up to 30 days after closing. If the threshold for review is exceeded, then a review application must be submitted prior to closing and the statutory period for review must have expired or the application must have been approved prior to closing.

Certain review thresholds are increased annually based on changes in Canadian GDP. The new 2024 threshold for direct acquisitions of a non-cultural Canadian business by trade agreement investors that are not state-owned enterprises (SOEs) is C$1.989B enterprise value of the Canadian business. If the foreign investor is not a trade agreement investor but is a WTO member country investor and is not an SOE, the 2024 review threshold is C$1.326B enterprise value of the Canadian business.

The review threshold for direct investments by WTO SOE investors in a Canadian business that is not a cultural business has also increased to total assets of the Canadian business of C$528M.

On November 27, 2023, the Federal Government passed a Notice of Ways and Means Motion to introduce a bill entitled An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, which was tabled on November 30, 2023 as Bill C-59 (the “Bill”). The Bill proposes amendments that implement some of the goals discussed in the 2023 Fall Economic Statement , including significant and far-reaching amendments to Canada’s Competition Act (the “Act”).

Continue Reading Canada Proposes a Significant Expansion of Private Competition Litigation:  the Breakdown and Takeaways

Merger review under the Competition Act (the “Act”) is undergoing significant change. As discussed in our previous blog post, the Federal Government has proposed significant amendments to the Act. These amendments, which are included in Bill C-56 and Bill C-59 (together, the “Bills”) and touch on virtually all facets of competition policy in Canada, represent “generational changes” that, according to the Government’s 2023 Fall Economic Statement, are intended to “help bring Canada into alignment with international best practices to ensure that our marketplaces promote fairness, affordability, and innovation”.

Continue Reading Proposed amendments to the merger review process in Canada: Implications for businesses

Federal Government Releases Proposed Bill relating to Fall Economic Statement – including Significant Competition Act Amendments

and  –

Revised text of Bill C-56 Released

On November 27, 2023, the Federal Government passed a Notice of Ways and Means Motion to introduce a bill entitled An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, which was tabled on November 30, 2023 as Bill C-59 (the “Bill”). The Bill proposes amendments that implement some of the goals discussed in the 2023 Fall Economic Statement  to strengthen competition in Canada (as discussed in our previous blog post).

Continue Reading Significant Competition Act Amendments on the Horizon

As of October 27, 2023, Quebec has eliminated its unique regulatory system which previous applied to publicity contests[1] which were offered in Quebec. In this regard, Bill 17: An Act to amend various provisions for the main purpose of reducing regulatory and administrative burden repealed the provisions of the Act respecting lotteries, publicity contests and amusement machines (the “Act”), and annulled the Rules respecting publicity contests (the “Rules”).

Continue Reading Changes to Quebec Contest Rules

On November 21, 2023, the Federal Government released its 2023 Fall Economic Statement (the “Statement”). The Statement lays out the Federal Government’s multifaceted plan to improve housing in Canada, support the middle class, bolster the economy and create a stable financial sector. Additionally, the Statement outlines the Federal Government’s desire to strengthen competition in Canada through proposed amendments to the Competition Act (the “Act”). More specifically, the Statement discusses changes aimed at combatting alleged dominance abuses by large companies, modernizing merger reviews, protecting consumers from misleading claims and enabling private entities to engage in legal proceedings related to anti-competitive practices. These changes, according to the Statement, “will help bring Canada into alignment with international best practices to ensure that our marketplaces promote fairness, affordability, and innovation.”

Continue Reading Federal Government Releases Fall Economic Statement – with New Competition Act Amendments Previewed