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2022 merger review thresholds

February 17, 2022 | Eric Dufour, Reema Mahbubani

Highlights

  • The 2022 merger review thresholds under the Competition Act (the “CA”) and the Investment Canada Act (the “ICA”) (collectively, the “Thresholds”) are now in full effect until the next annual adjustment.
  • The Thresholds assist in determining whether a proposed transaction triggers:
    • a pre-merger notification obligation under the CA; and
    • an obligation to file an application for review under the ICA.

Competition Act

  • To determine whether a transaction triggers a pre-merger notification obligation under the CA, two financial thresholds, namely, the transaction-size threshold and the parties-size threshold, must be satisfied.
  • Both thresholds remain unchanged for 2022.
    • To exceed the transaction-size threshold, the target (on a consolidated basis) must have a book value of assets in Canada or annual gross revenues generated from those assets of more than CAD$93 million.
    • To exceed the parties-size threshold, both the purchaser and the target, together with all affiliates, must have a combined book value of assets in Canada or annual gross revenues in, from or into Canada of more than CAD$400 million.
  • The current fee for filing a pre-merger notification is CAD$74,905.57 and is expected to be adjusted in April 2022.

Investment Canada Act

  • Transactions by non-Canadian investors to acquire control of a Canadian business may require “net benefit” clearance under the ICA prior to completing the transaction. To determine if clearance is required, one of the thresholds for review must be satisfied.
  • The thresholds for WTO investors, trade agreement investors, and state-owned or influenced investors have increased:
    • WTO investor
      • 2021 threshold: CAD$1.043 billion
      • 2022 threshold: CAD$1.141 billion
    • Trade agreement investor
      • 2021 threshold: CAD$1.565 billion
      • 2022 threshold: CAD$1.711 billion
    • SOE
      • 2021 threshold: CAD$415 million
      • 2022 threshold: CAD$454 million
  • The thresholds for cultural businesses remain unchanged.
  • It is important to note that even if a threshold for review is not exceeded, a transaction can be reviewed on national security grounds.

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