CHAPTER 07 Competition Law
In the context of an unsolicited takeover bid, when a bidder files a pre-merger notification under the CA, the Commissioner is required to notify the target company immediately, whereupon the target company is required to file a pre-merger notification within 10 days. The timing of the target’s response does not, however, affect the running of the waiting period.
In general, two size thresholds must be met for the mandatory pre-merger notification rules to apply.
First, the parties to the merger, together with their affiliates, must have total assets in Canada or total annual gross revenues from sales in, from or into Canada with a value that exceeds C$400 million. This is known as the “size of parties” test or threshold. Second, the transaction itself must be of a minimum size. This is known as the “size of transaction” test or threshold. For acquisitions of assets or the formation of an unincorporated business combination, the aggregate value of the Canadian assets acquired or contributed, or the annual gross revenues from sales in or from Canada from such assets, must exceed C$93 million (this is the threshold as of 2023; it is reviewed annually). Share acquisitions are subject to mandatory pre-merger notification when the aggregate value of the Canadian assets or annual gross revenues from sales in or from Canada of the corporation whose shares are acquired and all other corporations controlled by that corporation would exceed C$93 million. In addition, the acquisition must result in the acquirer holding a minimum percentage of voting shares for the mandatory pre-merger notification rules to apply. In the case of public corporations, this threshold is more than 20% (or 50% if more than 20% of the voting shares are already owned); in the case of private corporations, this threshold is more than 35% (or 50% if more than 35% of the voting shares are already owned).
Two Thresholds for Pre-Merger Notification
$400 Million
$93 Million
AND
Size of Transaction (Adjusted Annually)
Size of Parties
65
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