Archive for the 'Investment Canada' Category
On December 1, 2011, the C.D. Howe Institute issued a report on the Investment Canada Act entitled Reforming the Investment Canada Act: Walk More Softly, Carry a Bigger Stick, authored by Philippe Bergevin and Daniel Schwanen.
On November 24, 2011, the Supreme Court of Canada denied leave in United States Steel Corporation et al. v. Attorney General of Canada (FC) (Civil) (By Leave) (34389). See: Supreme Court of Canada Judgements. See also: National Post – Supreme Court Won’t Hear U.S. Steel Appeal.
To appeal a decision of a court of appeal in a civil case to the Supreme Court, the party wishing to appeal must first obtain leave (i.e., permission) to do so. Under the Supreme Court Act, an application for leave to appeal may be granted if the Supreme Court finds that the case: (i) raises an issue of public importance and (ii) should be decided by the Supreme Court. Any case must raise an issue that goes beyond the immediate interests of the parties.
The Supreme Court does not issue reasons for its decisions to allow or dismiss applications for leave to appeal. Judgments on applications for leave to appeal are also generally final (under the Supreme Court of Canada Rules, an application for leave to appeal will not be reconsidered unless there are exceedingly rare circumstances in the case that warrant consideration).
This U.S. Steel case relates to the federal government’s lawsuit against U.S. Steel in relation to the performance of undertakings U.S. Steel provided in its 2007 acquisition of Hamilton-based Stelco Inc. The Federal Court had previously allowed the government’s lawsuit to proceed.
Where an investor fails to comply with the Investment Canada Act (e.g., fails to file an application for review or notification, fails to comply with undertakings or completes a reviewable investment without the requisite approval) a number of penalties may be imposed. These include divestiture of assets, the revocation (or suspension) of voting rights and financial penalties of up to Cdn. $10,000 per day that an investor is in contravention of the Investment Canada Act (being sought by the government in this case).
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On October 6, 2011 the Competition Bureau issued its updated Merger Enforcement Guidelines.
The Bureau’s new MEGs, which set out its approach to the substantive review of mergers in Canada, are the first update to the MEGs since 2004 and the result of publication consultations across Canada in 2010 and 2011.
The Bureau has also recently issued a number of new (or updated existing) merger related guidelines, policies and reports. These include: Merger Review Performance Report (2010), Competition Bureau Merger Remedies Study Summary, Competition Bureau Fees and Service Standards Handbook for Mergers and Merger-Related Matters, Procedures Guide for Notifiable Transactions and Advance Ruling Certificates Under the Competition Act, Hostile Transactions Interpretation Guidelines, Pre-Merger Notification Interpretation Guidelines and Merger Review Process Guidelines.
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2013
Conference Board of Canada (Michael Grant), “Saskatchewan’s Growth Requires Billions in New Investment Capital”
University of Calgary, School of Public Policy (D. Chen), “China’s State-Owned Enterprises: How Much Do We Know? From CNOOC to its Siblings”
IRPP report, D.H. Assaf & R.A. McGillis, “Foreign Direct Investment and the National Interest: A Way Forward”
Y. Bao & G. Houlden, University of Alberta, China Institute, “The Evolution of China’s Energy Institutions” [includes discussion of Chinese SOEs]
University of Alberta, China Institute, A Look at the Net Benefit Test – Old and New: In Search of an Alberta Perspective with the China Market in Mind (R. MacIntosh)
N. Veldhuis, Fraser Institute, Comprehensive Review of the Investment Canada Act Desperately Needed
2012
Industry Canada, Guideline, Statement Regarding Investment by Foreign State-Owned Enterprises [New Industry Canada Policy Statement]
Industry Canada, Guideline, Guidelines – Investment by State-owned Enterprises – Net Benefit Assessment [New Industry Canada SOE Guidelines]
Dr. D. Ireland, “The CNOOC/Nexen Transaction in Canada: The Very Tip of a Very Large Future Iceberg – The Competition Issues Raised by State-Owned and Other Enterprises and Business Groups”
E. Downs, Brookings Institution, “China, Iran and the Nexen Deal”
CSIS, Public Report 2010-2011 [disusses Investment Canada Act, SOEs, national security]
C.D. Howe Institute report, Speed Dating or Serious Courtship? Canada and Foreign State-owned Enterprises
OECD, Working Paper, Unleashing Business Innovation in Canada
DBRS, Oil & Gas Industry Study: China Increases Investment in Canada: Statistical Review of Credit Metrics, 2007 to 2012 Q2
Canadian Government (Foreign Affairs and International Trade Canada), Canada-China Economic Complementarities Study
Canadian Security Intelligence Service, Public Report 2010-2011
J. Smart, University of Calgary, Dancing With the Dragon: Canadian Investment in China and Chinese Investment in Canada
Canadian Council of Chief Executives (CCCE), A Canadian National Economic Strategy for Asia
Michael Hart, C.D. Howe Institute, Breaking Free: A Post-Mercantilist Trade and Productivity Agenda for Canada
Canadian Council of Chief Executives (CCCE), Canada in the Pacific Century (Canada/Asia trade papers): papers
CBA, Letter to Parliamentary and Senate Standing Committees on Finance/National Finance, Bill C-38, Part 4, Division 28 – Investment Canada Act Amendments
Industry Canada, Annual Report 2009 – 2010
Australia-Canada Trade Investment Study
CCCE / Australia-Canada Investment Study
Saskatchewan Government, Review of the Proposed Glencore Acquisition of Viterra and Related Assets
Government of Canada, Budget 2012
CCCE, Chinese Foreign Direct Investment in Canada: Threat or Opportunity?
Margaret Cornish, Behaviour of Chinese SOEs: Implications for Investment and Cooperation in Canada
Federal Government trade delegation to China, documents
Canadian Chamber of Commerce, Advancing Our Economic Ties With China: Three Priorities for Canadian Business
ForestEthics, Who Benefits? An Investigation of Foreign Investment in the Tar Sands
2011
P. Bergevin and D. Schwanen, C.D. Howe Institute, Reforming the Investment Canada Act: Walk More Softly, Carry a Bigger Stick
Conference Board of Canada, Inward FDI Attraction: Is Canada Attracting Its “Fair” Share of Inward FDI?
Canadian Chamber of Commerce, Submission to the House of Commons Standing Committee on Industry, Science and Technology on its Study of the Investment Canada Act
Julie Jiang and Jonathan Sinton, International Energy Agency, “Overseas Investments by Chinese National Oil Companies”
Pascale Massot, Chinese State Investments in Canada: Lessons from the Potash Saga, Asia Pacific Foundation of Canada
Parliament of Canada, Foreign Investment in Canada: The Net Benefit Test
2010
Michael Holden, International Affairs, Trade and Finance Division, Canadian Trade and Investment Activity: Canada-China
Marc LeBlanc, Industry, Infrastructure and Resources Division, Parliament of Canada, “Sovereign Wealth Funds: International and Canadian Policy Responses”
Walid Hejazi, Dispelling Canadian Myths about Foreign Direct Investment
William K. Carroll, Jerome Klassen, Hollowing Out Corporate Canada? Changes In The Corporate Network Since the 1990s
Canadian Heritage, Report on the Administration of the Investment Canada Act (Canadian Heritage)
Saskatchewan Chamber of Commerce, Investment Canada Act and “Net Benefit”
2007 – 2009
CBA, National Competition Law Section, Investment Canada Regulation Amendments and National Security Review of Investments Regulations (2009)
Canadian Chamber of Commerce, Submission on the Regulations Amending the Investment Canada Regulations and National Security Review Regulations (2009)
Competition Policy Review Panel, Compete to Win: Final Report (2008)
Andrew Sharpe and Meghna Banerjee, Assessing Canada’s Ability to Compete for Foreign Direct Investment (2008)
Institute for Competitiveness & Prosperity, Assessing the Economic Impact of Head Offices in City Regions (2008)
Roger Martin and James Milway, Assessing the Potential Impact of a National Champions Policy on Canada’s Competitiveness (2008)
Keith Acheson, Canadian Foreign Direct Investment Policy and the Cultural Industries (2008)
Robert Crandall, Eliminating Foreign Investment Restrictions in Canada’s Telecommunications/Broadcast Sector (2008)
Steven Globerman, An Evaluation of the Investment Canada Act and its Operations (2008)
Dr. Dane Rowlands, Formal and Informal Barriers to Canadian FDI (2008)
Walid Hejazi, Inward Foreign Direct Investment and the Canadian Economy (2008)
Andrea Mandel-Campbell, Conference Board of Canada, “Foreign Investment Review Regimes: How Canada Stacks Up” (2008)
Keith Head and John Ries, Head Office Location: Implications for Canada (2008)
Derek Ireland, Implications of the BRIC Economies for Canadian Trade and Invesment (2008)
American Bar Association, Sections of Antitrust and International Law, Joint Submission in Response to the Request for Comments by the Canadian Competition Policy Review Panel (2008)
Don McFetridge, The Role of Sectoral Ownership Restrictions (2008)
Government of Alberta, Submission, Sharpening Canada’s Competitive Edge: A Consultation Paper Issued by the Competition Policy Review Panel, October 30, 2007 (2008)
L.R. Wilson, et al., Competition Policy Review Panel, Sharpening Canada’s Competitive Edge (2007)
Michael Holden, Economics Division, Parliament of Canada, The Foreign Direct Investment Review Process in Canada and Other Countries (2007)
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On May 23, 2011, the U.S. Department of Justice announced that it had filed a lawsuit to block H&R Block Inc. from acquiring TaxAct based on concerns that the proposed transaction would further consolidate the “growing U.S. digital do-it-yourself tax preparation software market” from 3 to 2 and eliminate a maverick (TaxAct).
In making the announcement, the U.S. DoJ said:
“’The combination of H&R Block and TaxACT would likely lead to millions of American taxpayers paying higher prices for digital do-it-yourself tax preparation products,’ said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. ‘In addition, TaxACT has aggressively competed in the digital do-it-yourself tax preparation market with innovations such as free federal filing. If this merger is allowed to proceed, that type of innovation will be lost.’
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According to the department’s complaint, H&R Block’s acquisition of 2SS Holdings would eliminate a company that has aggressively competed with H&R Block and disrupted the U.S. digital do-it-yourself tax preparation market through low pricing and product innovation. By ending the head-to-head competition between TaxACT and H&R Block, American taxpayers would be left with only two major digital do-it-yourself tax preparation providers. This would lead to higher prices, lower quality, and reduced innovation. In addition, by taking control of the TaxACT business, which has been a maverick in the market, it would be easier for H&R Block to coordinate on prices, quality, and other business decisions with the other remaining industry leader – Mountain View, Calif.-based Intuit, which makes personal finance programs such as Quicken and TurboTax – the department said.”
This case is interesting in that in addition to considering market shares and existing remaining competition (according to the DoJ, the top three players including H&R Block and TaxAct account for about 90% of the relevant market), the DoJ is basing its challenge on the fact that in its view TaxAct is also a maverick. Like the U.S., in Canada whether a merging party is a maverick can also be a relevant factor for considering whether competition will be substantially lessened post-merger (though, not surprisingly, whether a party is a maverick can be the subject of considerable debate and maverick cases are relatively rare). In this regard, the Competition Bureau states in its Merger Enforcement Guidelines:
“Pre-merger, effective coordination may be constrained by the activities of a particularly vigorous and effective competitor (a ‘maverick’). An acquisition of a maverick may remove this constraint on coordination by reducing incentives to behave in an aggressive manner. Such an acquisition increases the likelihood that coordinated behaviour will be effective.”
This case is also interesting, if only for being a cautionary tale, in that the DoJ is basing its challenge of the proposed transaction in part on the merging parties’ own internal documents. According to the DoJ, these include statements from H&R Block’s internal emails and presentations that a primary benefit of acquiring TaxAct is “elimination of a competitor” and the “strategic opportunities” include to “eliminate the brand to regain control of industry pricing and further price erosion”.
Given that “4c documents” are a routine and required part of merger notification in the U.S., and that strategic planning documents are also now required for merger notification filings in Canada regardless of complexity (see Notifiable Transactions Regulations, 16(1)(d)),[1] merging parties are well advised to seek competition/antitrust counsel early in the planning stages of a proposed transaction to avoid similar potential issues from arising.
For the complete DoJ news release see: Justice Department Files Antitrust Lawsuit to Stop H&R Block Inc. From Buying TaxAct.
For Canada’s merger control rules see: Competition Act, Part IX – Notifiable Transactions and Notifiable Transactions Regulations.
For an overview of merger control in Canada see: Merger Control and Investment Canada.
[1] Subparagraph 16(1)(d) of the Notifiable Transactions Regulations requires that parties to a transaction, and their affiliates, file “all studies, surveys, analyses and reports that were prepared or received by an officer or director of the corporation … for the purpose of evaluating or analysing the proposed transaction with respect to market shares, competition, competitors, markets, potential for sales growth or expansion into new products or geographic regions …” This requirement to file strategic planning documents as part of a pre-merger notification filing was recently added to the Canadian Notifiable Transactions Regulations as part of amendments to the Competition Act in 2009, and further aligns Canadian merger control rules with that in the U.S. under the HSR Act (the existing 4c documents requirement).
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January 10, 2011
Industry Canada has announced that the monetary threshold for review for WTO investors or vendors, other than Canadians, is expected to be $312 million for 2011 and that the official threshold would be published in the Canada Gazette in early 2011.
December 14, 2010
The Competition Bureau has announced that it has approved remaining divestitures in relation to the July, 2010 Waste Services Inc. (WSI)/IESI-BFC Ltd. merger.
October 22, 2010
Marius Kloppers
“My reputation is not important here … ego does not come into this, and all that matters is whether this is value-creating for our shareholders” See: The Australian.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
