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The Government of Canada has announced the 2024 financial thresholds for pre-merger notification and clearance under the Competition Act, and for pre-closing, “net benefit” review and approval under the Investment Canada Act (“ICA”). While the Competition Act “size of transaction” financial threshold remains the same, the ICA financial thresholds have increased. Significantly, this is the third year in a row that the Competition Act financial threshold has remained unchanged at CAD 93 million in a bid to maintain the number of transactions subject to review by the Commissioner of Competition.

On 1 December 2023, the US Court of Appeals for the Fourth Circuit reversed a Sherman Act conviction of a former executive of an aluminum products manufacturer for failure to state a per se antitrust offense. In February 2022, the former executive was found guilty of six counts: conspiracy to rig bids, conspiracy to commit mail or wire fraud, three counts of mail fraud, and one count of wire fraud. The court affirmed the mail and wire fraud convictions, but reversed the Sherman Act conviction of conspiracy to rig bids. The Fourth Circuit held that the trial court erred in applying the per se rule without considering the fact that the alleged scheme took place within the context of a “dual distribution” relationship among competing bidders, who also maintained a supplier relationship.

On 8 December 2023, Treasury and the IRS released Notice 2024-16 announcing their intent to issue proposed regulations addressing the treatment of basis under section 961(c) in certain inbound nonrecognition transactions in which a domestic corporation acquires the stock a controlled foreign corporation (CFC) from another CFC. These proposed regulations are in addition to the highly anticipated proposed previously taxed earnings and profits (PTEP) regulations expected this year. According to the Notice, the proposed regulations will provide that, in the case of certain “covered inbound transactions,” the domestic acquiring corporation’s adjusted basis in the acquired CFC stock (as determined under section 334(b) or 362(b)) will be determined as if the transferor CFC’s section 961(c) basis were adjusted basis.

In this episode of FInsight: The Global Financial Institutions Industry Podcast, Blair Robinson (Partner, New York) and Lorren Martin (Senior Associate, London) discuss how financial institutions are navigating issues around inclusion, diversity and equity (ID&E) on both sides of the Atlantic and globally, with Rachel Farr (Senior Knowledge Lawyer, London).

Last fall California doubled-down on the state’s hostility to noncompete agreements. Assembly Bill 1076 codified the landmark 2008 Edward v. Arthur Andersen decision that invalidated all employment noncompetes, including narrowly tailored ones, unless they satisfy a statutory exception. AB 1076 also added new Business & Professions Code §16600.1, requiring California employers to notify current (and certain former) employees that any noncompete agreement or clause to which they may be subject is void (unless it falls within one of the limited statutory exceptions).

Long-awaited reforms to the Canadian Competition Act (“Act”) have arrived and represent the most comprehensive amendments to the Act in over a decade. Recent and proposed amendments to the abuse of dominance provisions are likely to have a significant impact on how businesses operating in Canada assess and manage risk.

In the recent case of Soroban Capital Partners LP v. Commissioner, 161 T.C. No. 12 (2023), the Tax Court held that the limited partner exception under section 1402(a)(13) does not apply to limited partners who the Court concluded were not limited partners “as such”; thus certain “limited partners” of a partnership may be subject to Self-Employed Contributions Act tax. The Tax Court in Soroban held that determining a “limited partner” for section 1402(a)(13) purposes requires a factual inquiry into the functions and roles carried out by such limited partner. If the factual inquiry shows that a limited partner is heavily involved in the partnership’s business and/or performed services for the partnership, such limited partner’s distributive share may be subject to Self-Employed Contributions Act tax.

Modernization of Canadian competition law and foreign investment review is well underway. Recent and further proposed legislative amendments will impact how dealmakers assess substantial and procedural regulatory risk for mergers. This update summarizes the recent legislative amendments to the Competition Act (Act) that came into effect on 15 December 2023 and proposed legislative amendments to the Act and Investment Canada Act. Dealmakers should be aware of these amendments as they plan mergers involving Canadian businesses in 2024.

Looking back at 2023, it is clear that the IRS has begun to increasingly assert anti-abuse doctrines, most notably the economic substance doctrine (ESD), in contentious tax controversies. Correspondingly, courts have had more opportunities to analyze and conceptualize the various anti-abuse doctrines. Courts in Liberty Global, GSS Holdings, and Chemoil have each offered unique and sometimes conflicting analyses in this regard. When reviewing these cases at a high level, a worrisome pattern emerges of courts conceiving of the traditional three anti-abuse doctrines as simply manifestations of a much broader substance over form tax principle. Further, despite the text of section 7701(o), courts are rejecting the idea that there exist certain transactions to which the ESD does not apply.