In our July, 2008 bulletin http://www.fasken.com/competition_polic y_review/ we discussed the June 26, 2008 Report of the Competition Policy Review Panel (the “Wilson Report”).
Prime Minister Stephen Harper has, in the midst of the current election campaign, provided his first substantive response to the Wilson Report. In his September 12 speech to the Halifax Chamber of Commerce, the Prime Minister announced that, if re-elected on October 14, 2008, the Conservative Party will implement a number of the recommendations in the Wilson Report.
The most significant proposed change pertains to the current restrictions on foreign investment contained in the Investment Canada Act. Proposed amendments to that statute include (i) raising, over a period of four years, the threshold for requiring Ministerial approval of foreign investments to C$1 billion from C$295 million, (ii) improving the transparency of the review process by requiring that the responsible Minister provide explanations for investment rejections while permitting the Minister to provide reasons for approvals if the Minister wishes to do so, and (iii) adding a national security review mechanism that would allow the Minister to block investments on the grounds of national security. (The announcement with respect to the national security review mechanism is effectively a reaffirmation of an earlier promise by the Government to establish such a mechanism and his proposal to increase the review threshold did not indicate if the method for determining asset value would change in the manner proposed in the Wilson Report.)
In addition to changes to the Investment Canada Act, a re-elected Conservative government would increase the limit for foreign investments in Canadian airlines to 49 percent from 25 percent through bilateral negotiations with Canada's trading partners. Also, with respect to uranium mines, the government would change the current foreign ownership rules that, with minor exceptions, require a minimum level of 51 percent Canadian ownership, to a higher but as yet unannounced level of foreign ownership provided that such ownership meets a tobe- developed “national security” test and that the investor’s home country provides reciprocal benefits to Canada.
The Prime Minister did not address other changes to the Investment Canada Act recommended by the Wilson Report (see our July bulletin). Also left untouched are Canada’s current policies regarding domestic bank mergers and existing limits on foreign ownership in the Canadian telecom industry.
The Conservative Party, in a “Backgrounder” issued in connection with the Prime Minister’s speech, stated that a new Conservative Government would “also ensure that Canadian consumers are protected from cartels or unfair competition”. This hints at a proposal to amend Canada’s current cartel laws in accordance with the Wilson Report (see our July bulletin) to more closely resemble the cartel laws in the United States (i.e. per se illegality for behaviour such as price fixing that is unambiguously harmful to competition and consumers, and a civil review approach for behaviour, such as joint ventures between competitors, that may be pro-competitive).
It remains to be seen whether the Prime Minister will make a further announcement on this topic.
The proposed changes to the Investment Canada Act are likely to be controversial and may not become law if the Conservatives do not win a majority government.