The Competition Bureau announced today that the pre-merger notification size of transaction threshold for 2012 will increase to C $77 million (increased from C $73 million in 2011). The 2012 size of transaction threshold will come into effect on about February 11, 2012 following publication in the Canada Gazette.
The size of transaction threshold was first increased from the previous C $50 million in 2009 as a result of amendments to the Competition Act and an indexing formula introduced to adjust this threshold annually to reflect changes in Canada’s GDP (one of a number of changes to Canadian merger control to more closely align it with U.S. merger control rules, which also included the introduction of a two-stage review process).
Under the federal Competition Act both parties to specified types of transactions that exceed prescribed statutory thresholds are required to file pre-merger notification filings with the Competition Bureau.
Generally for a merger to be notifiable in Canada it must:
1. Involve the acquisition of an “operating business” in Canada.
2. Fall into one of five specified types of transactions (asset acquisitions, share acquisitions, amalgamations, non-corporate combinations or acquisitions of control in non-corporate combinations).
3. Exceed the prescribed monetary thresholds under the Competition Act (parties to a transaction have combined Canadian assets (or gross annual revenues from sales in, from or into Canada) exceeding C $400 million; and the book value of the target’s assets in Canada (or annual gross revenues from sales in or from Canada generated by those assets) exceeds C $77 million).
4. Not fall within any exception under the Act.
For share acquisitions, an additional threshold must be met. For the acquisition of public companies, the acquisition must result in the acquirer holding more than 20% of the voting shares of the target (more than 50% if more than 20% is already held). For private companies, the acquisition must result in the acquirer holding more than 35% of the voting shares of the target (more than 50% if more than 35% is already held).
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