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.