In the recent Speech from the Throne on November 19, 2008, entitled Protecting Canada’s Future, the Canadian government outlined its plans to amend Canada’s competition and investment laws. The Government stated that, in the interest of expanding investment and trade, it will proceed with legislation to modernize the competition and investment laws by implementing many of the recommendations of the Competition Policy Review Panel. While the Government has yet to announce which of the Panel’s recommendations will be followed, the boldly titled Panel report Compete to Win (June 2008) provides no shortage of options among its 65 recommendations for reforms aimed at increasing Canada’s ability to attract foreign investment and boost productivity growth.
The Panel recommended numerous substantial amendments to the Investment Canada Act, including:
- Raising the minimum threshold for reviewable transactions so that only foreign investments in Canada of a very significant size are subject to review and Ministerial approval.
- Eliminating special thresholds for certain segments such as financial services, transportation services (including pipelines) and uranium mining which result in all but the smallest foreign investments being subject to review and Ministerial approval.
- Changing the base assumption to favour allowing the investment unless the Minister is satisfied that a proposed transaction would be “contrary to Canada’s national interest”, compared to the current test which requires foreign investors to show that the proposed transaction would be of “net benefit” to Canada.
The Panel recommendations regarding the Competition Act were more in the nature of fine-tuning but included a number of significant amendments:
- Making hard-core cartel conduct (e.g., price-fixing, market and customer sharing, output restrictions among competitors) a per se criminal offence as in the United States, with other anticompetitive agreements being subject to civil liability.
- Repealing criminal provisions dealing with price discrimination, promotional allowances and predatory pricing, and decriminalizing resale price maintenance.
- Providing the Competition Tribunal with a new power to impose administrative monetary penalties for violations of the civil “abuse of dominance” provisions.
- Harmonizing the merger notification process with the United States.
- Increasing the financial thresholds which trigger a pre-merger notification requirement.
Although the Government has yet to indicate which reforms it will pursue over the coming year, certain amendments are less contentious than others. One thing is clear: the business and legal communities have a keen interest in the outcome and should be watching closely.