"We are always open to global investment in a way that respects and defends Canadian interests, and that is the approach we will take on foreign trade and foreign investments.” 

— Prime Minister-designate Justin Trudeau, 2015

After an unprecedented 78-day election campaign, the Canadian federal election results were announced late in the night of October 19. Canadians awoke to a new prime minister-designate and a Liberal majority government, ending nearly a decade of Conservative rule by Prime Minister Stephen Harper. 

While the dust settles on the election, attention will now be focused on the priorities of the Liberal government under Prime Minister-designate Justin Trudeau. 

While it is still early days, below we provide our initial reactions as to the implications for competition policy under the Competition Act and foreign investment review under the Investment Canada Act.

These two areas of law are critically important for mergers and acquisitions, joint ventures, and other business arrangements by both domestic and non-Canadian companies doing business or seeking to invest in Canada.

COMPETITION POLICY: BUSINESS (MAINLY) AS USUAL

The Competition Bureau is a law enforcement agency and, as such, neither its mandate nor its leadership are directly affected by changes in government. This means that the election and change of government will not result in a change in leadership or a pause in enforcement at the Competition Bureau. Commissioner John Pecman was appointed by the governor-in-council in 2013, and as such his current five-year term continues to 2018. 

At the same time, however, the new government’s economic policies and perspectives can be expected to have an impact on amendments to the law and competition policy in Canada.  Moreover, other sector-specific laws may change or be updated over time and those changes could have an impact on the enforcement of the Competition Act

In the near term, we can expect that the Competition Bureau’s current priorities will continue to govern its approach to competition matters. Canada is likely to continue to see robust competition enforcement, particularly in high-profile and consumer-facing cases. Similarly, impacts on consumers will remain of paramount importance in the context of merger control, though opportunities will remain for strategic mergers that result in significant efficiencies.

The change in government does mean that proposed legislation amending the Competition Act, namely proposed changes to the complex affiliation rules used to analyze merger thresholds, and proposed legislation aimed at addressing the price gap between items sold in Canada and the United States, will have to be reintroduced in the new Parliament, should the Liberal government see those as priorities. 

FOREIGN INVESTMENT REVIEW: TRANSPARENCY AND MERIT-BASED REVIEWS

With respect to the Investment Canada Act, a key immediate issue for the new government will be appointing a successor to former Minister of Industry James Moore (who announced his decision not to run for re-election in June). The Minister of Industry’s office is responsible for the review and approval of foreign direct investments in Canada that trigger review thresholds. Thus, the choice of minister will be of key interest to foreign investors, as will the role of the new prime minister in the review of high-profile cases. Prime Minister Harper was closely involved in a number of high-profile foreign direct investment matters during the course of his tenure, despite the portfolio resting primarily with the Minister of Industry; while under the Liberal government prior to Prime Minister Harper, the Minister of Industry traditionally played a greater role.  At this time, no names have been put forward as candidates for the post, but once the new cabinet has been formed, we will update our readers accordingly. 

The Investment Canada Act is a political statute and foreign investment policy will likely be impacted by the change in leadership. The Liberal government has (both historically and in the context of the election) voiced strong support for free trade and is generally outwardly focused and open to foreign investment, where benefits in terms of jobs and innovation are clear. 

While the new federal government will continue to closely review investments in Canada, the Liberal government has committed to evaluate foreign investment on the basis of economic merit. 

On the campaign trail, Prime Minister-designate Trudeau stated that the Liberal government is “always open to global investment in a way that respects and defends Canadian interests, and that is the approach we will take on foreign trade and foreign investments.” 

This likely means a greater focus on employment and innovation in Canadian businesses when assessing the merits of investments and whether they are of net benefit to Canada. The Liberal government has also committed to improve transparency surrounding foreign investment process and their decisions.