2024 thresholds for Canadian merger reviews

Thresholds for mergers and acquisitions under the Competition Act and Investment Canada Act have been announced for 2024.

For a third consecutive year, the two monetary thresholds under the Competition Act remain the same (including the size-of-transaction threshold, which has historically been adjusted annually). Investment Canada Act thresholds have increased by around 3% from last year.

Important changes to both the Competition Act and the Investment Canada Act regimes are currently under way. Bill C-56 recently amended the Competition Act, and additional changes in Bill C-59 are still pending in Parliament. Significant reforms to the Investment Canada Act to bolster national security reviews are also currently in final legislative stages.

What you need to know

• The size-of-transaction threshold for merger notification under the Competition Act remains the same for a third consecutive year at $93 million for 2024. The size-of-parties threshold, which is not adjusted annually, is $400 million.
• The 2024 thresholds for reviews of direct acquisitions of control of Canadian businesses that are not “cultural businesses” by foreign investors under the Investment Canada Act have increased from:
  • $1.931 billion to $1.989 billion in enterprise value of the Canadian business for private “trade agreement” investors, which includes investors from the US, UK, EU and Japan, among others;
  • $1.287 billion to $1.326 billion in enterprise value of the Canadian business for private investors from countries that are members of the World Trade Organization (WTO); and
  • $512 million to $528 million in asset value of the Canadian business for state-owned or influenced enterprises (SOEs).
• Merger reviews under both the Competition Act and the Investment Canada Act are currently undergoing significant changes.

The details

Competition Act thresholds

Pre-merger notification under the Competition Act is generally required for transactions where the target has assets in Canada or gross revenues from sales in or from Canada generated from those assets that exceed $93 million and where the parties to the transaction have assets in Canada or gross revenues from sales in, from or into Canada that exceed $400 million. In some cases, additional share or partnership interest ownership levels must also be satisfied.

Under the Competition Act, annual GDP-linked threshold adjustments for the “size-of-transaction” thresholds were introduced in 2009 on the thought that the Bureau should not be reviewing relatively smaller transactions year over year. However, the adjustments are not mandatory. Since 2022 the government policy has been to decrease the thresholds when the GDP index drops and freeze them when it increases. Had the threshold been increased at the rate of economic growth, the federal government says this year’s threshold would have been around $120 million.

Merger reviews under the Competition Act are undergoing significant changes. The efficiencies defence was repealed last year, and proposed amendments will effectively increase the number of reviewable mergers and make them easier to challenge. Read our previous bulletins on Bill C-56 and Bill C-59 for more.

Investment Canada Act thresholds and national security reviews

Under the Investment Canada Act, annual threshold adjustments are mandatory, and so have increased again for 2024.

The Investment Canada Act generally requires that a non-Canadian investor proposing to acquire direct control of a Canadian business receive approval that the investment is of “net benefit” to Canada if the enterprise value of the Canadian business is equal to or greater than $1.989 billion in the case of private trade agreement investors and $1.326 billion in the case of private WTO investors. A lower threshold of $528 million, based on the book value assets of the Canadian business, applies to acquisitions by SOEs.

Lower thresholds of $5 million (for direct acquisitions) and $50 million (for indirect acquisitions) also apply to investments by an investor who is not a "WTO investor" and acquisitions of Canadian “cultural businesses”, which includes businesses involved in the production or distribution of books, music, film and other media, such as video games.

An acquisition of control of a Canadian business, whether direct or indirect, that does not exceed these thresholds will still generally require notification, which may be made post-closing.

Any investment (either in part or in whole) in, or the establishment of, a Canadian business by a non-Canadian investor may be reviewed if there are reasonable grounds to believe that the investment could be injurious to national security, regardless of whether the relevant financial thresholds are met. Investments that are not required to be notified may be voluntarily notified to achieve regulatory certainty around national security issues in advance of implementation.

The Investment Canada Act is also undergoing legislative reforms to bolster national security reviews. Read our previous bulletin, “Significant national security amendments coming to the Investment Canada Act”, for more.