Anonymised, illustrative composite. Splitting one transaction into an asset leg and a share leg is a common structuring choice for tax and liability reasons. It does not split the Competition Act analysis the same way.
At a glance
A private equity buyer negotiated a single economic transaction with Target Group, structured as two separate legal instruments closing simultaneously: an asset purchase agreement acquiring the equipment, inventory and customer contracts of Target Manufacturing OpCo’s largest division, and a share purchase agreement acquiring 100% of Target Properties & IP HoldCo, a related entity holding the real estate and intellectual property the division used. The split was chosen for ordinary tax and liability-allocation reasons, not to manage any regulatory threshold.
The deal team’s standard Competition Act screening checklist had a box for an asset acquisition and a box for a share acquisition — built for transactions that are one or the other. It had no step for a transaction that is both. Run separately: the asset leg, tested under s.110(2), showed $62M of Canadian assets and $51M of attributable gross revenue — under the threshold. The share leg, tested under s.110(3), showed HoldCo’s own assets at $58M and gross revenue at $9M — also under the threshold. Two clean answers, on two separate checklists, both saying no notification was required.
Asset leg: $62M assets, $51M revenue. Share leg: $58M assets, $9M revenue. Aggregated: $120M in combined asset value, $60M in combined attributable revenue — both well past the point where the deal team’s separate tests had each landed comfortably below it.
A pre-closing conflicts review flagged the gap: neither s.110(2) nor s.110(3) says anything about combining two legs of one transaction, because each provision is written to test one kind of acquisition on its own. Section 110(3.1) exists specifically to close that gap: “If a proposed transaction would be completed through an acquisition of assets referred to in subsection (2) and shares referred to in subsection (3), (a) the value of the assets calculated under subsection (2) and the value of the assets calculated under subparagraph (3)(a)(i) are to be aggregated for the purpose of determining if those assets exceed in aggregate value the amount determined under subsection (8); and (b) the gross revenues calculated under subsection (2) and the gross revenues calculated under subparagraph (3)(a)(ii) are to be aggregated for the purpose of determining if those gross revenues exceed in aggregate value the amount determined under subsection (8).”
Read the unit. The trigger for s.110(3.1) is not corporate affiliation, common ownership, or even a shared signing date — it is that “a proposed transaction would be completed through” both an asset acquisition and a share acquisition. One transaction, executed in two legal instruments, is still one proposed transaction for this purpose, and the Act sums the asset values (and separately the revenue figures) from both legs rather than letting either be tested in isolation. Whether the deal team called it “two agreements” or “one deal” made no difference to which arithmetic applied.
The parties filed a joint notification roughly five and a half weeks before the intended closing date. The Competition Bureau raised no substantive concern — there was no genuine overlap between the buyer and Target Group’s other operations — but closing still slipped to accommodate the statutory waiting period neither side had budgeted for when each leg had tested clean on its own.
Completing the transaction without notifying would have meant closing before giving the notice s.114(1) requires: “the parties to a proposed transaction shall, before the transaction is completed, notify the Commissioner that the transaction is proposed and supply the Commissioner with the prescribed information.” That provision does not distinguish a transaction structured as two instruments from one structured as a single agreement — the obligation to notify before completion applies either way once s.110(3.1)’s aggregation puts the transaction over the line.
The gap here was not a misreading of a provision the team had considered, the way an amalgamation case can turn on misreading s.110(4.1) — it was a provision the standard process never reached at all. The checklist tested each leg in isolation because it had been built for deals that were one thing or the other; a hybrid structure needed its own step, not a more careful reading of the two steps already there.
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