The Speech from the Throne and Foreign Ownership
Says that “Our government will proceed with legislation to modernize our competition and investment laws, implementing many of the recommendations of the Competition Policy Review Panel.”
The key recommendation of the panel was 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.
The Panel clearly opened 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. They said regulatory regimes should be reviewed every five years, with a clear bias to deregulation.
Immediate changes were 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.