Last week the CRTC announced that it was denying BCE’s proposed acquisition of Astral, late Friday night the Federal Government announced that it was opposing Petronas’ proposed acquisition of Progress Energy, then late this afternoon, as anticipated, BCE announced it was asking the Federal Cabinet to issue a policy direction under the Broadcasting Act directing the CRTC to follow its policies for change of control broadcasting transactions. In making its announcement BCE said:
“In rejecting the Astral transaction the CRTC rejected its own established policies, creating serious regulatory uncertainty in Canada’s vital broadcasting sector … We’re requesting that Cabinet provide the required guidance to the CRTC to follow its own rules in place, with which the Astral-Bell transaction fully complied.”
Canadian and international firms, it seems, are growing restless with the Federal Government and regulatory agencies determining which deals clear and which are blocked, and related tests (in one instance net benefit to Canada the other a public interest test).
On the other hand, these recent transactions raise important questions about the appropriate factors that should underlie acquisitions of major broadcasting undertakings by market leaders and significant investments in Canada by foreign governments. These include market and consumer effects, choice, security issues and the level of real reciprocal investment. Canadian shareholders and funds want payouts and the free movement of capital and confidence in Canadian capital markets are all highly legitimate concerns, but these decisions have shown (through public opinion and, in the case of the BCE/Astral transaction, through extensive public hearings) that the ability to move capital is not the only concern to Canadians.
In the case of the BCE/Astral deal, one of BCE’s primary arguments has been that it needs scale and size to better compete with global rivals. But what of Canadian consumers facing less competition yet in one of the most concentrated media markets in the world? The CRTC’s Chairman stated during the public hearings that he had spent his summer holiday reading negative comments about the proposed BCE/Astral transaction. Should negative (and allegedly biased and partisan) comments trump CRTC policy?
Of course, more oversight could cure market power concerns (like the OSC’s promised regulation of Canada’s leading securities exchange).
These are not easy or simple questions and Canadian policy, it seems, will need to balance both the presumed national interest in encouraging the growth of domestic companies, free movement of capital and pro-Canadian foreign investment with the elected Government’s (and independent regulators’) abilities to block deals that are genuinely not in the Canadian (or consumer) interest.
____________________
For more information about our regulatory law services contact us: contact
For more regulatory law updates follow us on Twitter: @CanadaAttorney
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
