Report of the Competition Policy Review Panel
The report has been released:
This corporate dominated panel has put forward a set of highly pro business recommendations. Given the circumstances in which it was set up – major concerns over foreign takeovers of Canadian resource giants like Inco and Falconbridge – this is actually slightly surprising.
The key recommendation is that only very large foreign takeovers worth more than $1 Billion (vs $300 Million today) should be reviewed at all, and that the onus should not be on the foreign investors to show net benefits to Canada, but on the Canadian government to show that a deal is clearly not in the national interest. So a foreign investment review regime that has, to date, resulted in only one denial ever of a takeover bid will be rendered even more toothless in the somewhat unlikely event that a future government actually wanted to intervene.
They Panel are clearly opening the door wide to foreign takeovers in sectors where some regulatory hurdles and degree of Canadian ownership and control still exist – communications companies, the banks, airlines and the media/cultural sector industries. Here virtually all takeovers now have to be approved. Regulatory regimes are to be reviewed every five years, with a clear bias to deregulation.
Immediate changes are recommended, including allowing 49% foreign ownership of Canadian airlines on a reciprocal basis, and liberalization of foreign ownership limits in telecom and broadcasting. They contemplate more or less immediate approval of all new investments in the cultural sector, and higher thresholds for review of takeovers in the cultural sector. They want to strip the Minister of Canadian Heritage of any role in the process. (The Minister can now ask for a review.)
An end to a de facto ban on bank mergers is proposed – which would likely lead to further liberalization of entry to Canadian financial services in order to maintain competition.
My bet is that telecom, airline, media and bank shares will all jump sharply today on the news that the door will soon be open to foreign takeovers in these hitherto modestly protected sectors. Farewell to the last vestiges of indigenous Canadian capitalism.
The panel goes on to echo all of the tried and true verities of the neo liberal rights. Deep corporate tax cuts, deregulation and an end to internal trade “barriers” are the path to national competiveness. Taxes shoudl be shifted from income taxes to consumption taxes. (Flaherty won’t like that one, come to think of it.)
It is recommended that post secondary education should be opened up much more to corporate pressures for relevance through commercial partnerships. There should be regular PSE institution reporting on “improvements in business- academic collaboration.”
The immigration system should be reformed to fast track business sponsored temporary foreign workers into permanent immigration status.
“All” internal trade barriers must be “eliminated” by 2011, and we should begin an “ambitious” timetable for new international trade and investment agreements.
To drive all of this change, a Canadian Competitiveness Council should be established to provide an ongoing source of business friendly advice to the federal government, funded of course by the federal government.
Nothing much new here – but yet another agenda-setting exercise that tells us loud and clear where
corproate Canada want to take us.
Andrew, I hope that you did not stake too much money on that bet because the big bank, telecom, and airline stocks all dropped by 2%-4% today. An interesting Globe article argues that, even if the Panel recommendations were implemented, they would not lead to many takeovers, at least not of the major telecoms.
That will teach me not to make predictions, especially about the immediate future. I suspect the markets are less positive about Harper’s re-election chances than about gains from foreign investment liberalization.