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CUSMA on Foreign Investment and Competition Law in Canada

June 24, 2020

Like its predecessor, the North American Free Trade Agreement (NAFTA), the Canada-United States-Mexico Agreement (CUSMA) will influence the competition and foreign investment landscape in Canada, the U.S. and Mexico.

Notably, with CUSMA coming into force on July 1, 2020, investors can expect:

  • Enhanced cooperation and coordination between Canada, the U.S. and Mexican competition authorities
  • Continued beneficial treatment for U.S. and Mexican investors under the Investment Canada Act by means of a higher review threshold before an application for review must be submitted, as compared to investors from countries that do not have a trade agreement with Canada
  • Amendments to the Competition Act and Investment Canada Act to reflect the change from NAFTA to CUSMA


While NAFTA noted the importance of coordination and cooperation among the parties’ national competition agencies, CUSMA sets out several competition law principles that point to the parties’ commitment to opposing anticompetitive conduct and promoting such coordination and cooperation.

These principles include:

  • Maintaining and enforcing national competition laws that proscribe anticompetitive business conduct to promote competition in order to increase economic efficiency and consumer welfare
  • Ensuring procedural fairness in the enforcement of competition laws
  • Strengthening cooperation and coordination among the national competition authorities, and adopting or maintaining measures to promote such cooperation, including through investigative assistance, notification, consultation and exchange of information
  • Adopting or maintaining consumer protection laws that proscribe fraudulent and deceptive commercial activities
  • Making competition enforcement and advocacy policies as transparent as possible

As Canada’s Competition Act already embodies these policies, a relatively small number of changes will be enacted to reflect these commitments.

CUSMA further entrenches the parties’ desire for enhanced international cooperation among their competition authorities, which has been a hallmark of cross-border issues—particularly between Canada and the U.S.—for decades. CUSMA also references the Competition Committee of the Organisation for Economic Co-operation and Development and the International Competition Network for their work in respect of promoting international cooperation and coordination.

CUSMA specifically requires the adoption and maintenance of measures to permit negotiations of cooperation instruments among the parties, which Canada’s Competition Act already contains. Indeed, Mutual Legal Assistance Treaties (MLATs)—negotiated treaties that allow the party countries to request assistance with obtaining information from each other—are already in force between Canada and both the U.S. and Mexico for criminal matters. While the Competition Act also allows for the negotiation of MLATs for civil matters, these are not yet in place and the Competition Act’s requirements for MLATs—which must be negotiated by Canada’s Department of Justice and ultimately approved by Global Affairs Canada—impose strict standards for MLATs which may prove difficult for the CUSMA parties to meet.


CUSMA also enshrines certain thresholds under the Investment Canada Act that are used to determine whether an acquisition of a Canadian business by a foreign investor will require the investor to submit an application for review—in which case, the investment cannot close until the relevant minister is satisfied that the investment is likely to be of “net benefit to Canada”—or a notification filing, which can be filed post-closing; this is notable for direct acquisitions of non-cultural Canadian businesses.

Investors from the U.S. and Mexico will continue to benefit from a higher threshold—currently set at an enterprise value of C$1.613-billion—than World Trade Organization (WTO) investors—threshold currently set at an enterprise value of C$1.075-billion. State-owned investors, regardless of country of origin, will be subject to an even lower threshold, currently set at C$428-million book value.

The inclusion of these thresholds in CUSMA—and Canada’s other trade agreements—may introduce barriers, should the Canadian government decide to lower the net benefit thresholds for investors. This may be a relevant consideration as the Standing Committee on Industry, Science and Technology is preparing to study the Investment Canada Act to consider whether adjustments to the net benefit thresholds and the national security review regime need to be altered in response to the COVID-19 pandemic.

If you have any questions, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition, Antitrust & Foreign Investment group.

Please visit our Navigating CUSMA: Key Changes for Businesses hub to learn more about how CUSMA may impact your business.