On May 25, 2012, the Federal Minister of Industry Christian Paradis announced that the Government had issued a Mediation Guideline to introduce formal mediation procedures under the Investment Canada Act (ICA). The Industry Minister also announced that the ICA Regulations would be amended to: (i) gradually increase the threshold for review of investments involving WTO investors to C $1 billion (increased from the current C $330 million) and (ii) introduce (or more accurately reintroduce) a new enterprise value test for the valuation of Canadian companies being acquired, both to implement amendments to the ICA passed on March 12, 2009 (see our earlier posts here and here).
Draft Regulations were first published for public comment in July, 2009 (see: Canada Gazette (July 11, 2009)).
Revised draft Regulations have now been published in the Canada Gazette for public comment (see: Regulations Amending the Investment Canada Regulations).
According to the Government, the proposed changes would “improve Canada’s foreign investment review framework, while maintaining the Government of Canada’s commitment to examine significant foreign investment transactions to determine whether they are likely to be of net benefit to Canada.” The shift to an enterprise test from the current book value of assets test is meant to better reflect the value of businesses as going concerns and importance of intangible assets in service and knowledge-based industries.
In general, the proposed new Regulations would: (i) gradually raise the review threshold for investments involving WTO entities to C $1 billion based on enterprise value over four years (to $600 million for two years, $800 million for the next two years, $1 billion after four years, and then indexed annually based on Canadian GDP), (ii) establish the methodology to calculate the enterprise value of a Canadian business, (iii) make conforming changes to remove references to transportation, financial services and uranium production sectors (lower thresholds for which sectors have been eliminated) and (iv) formalize the process for collecting information relevant to the net benefit and national security foreign investment review processes.
The Canadian Council of Chief Executives (CCCE) recently launched a new initiative entitled “Canada in the Pacific Century” which will include the publication of papers and a conference in Ottawa from September 24-25, 2012.
According to the CCCE, this Canada/Asia initiative is intended to: identify and promote key policy solutions that would enhance Canada’s ability to succeed in a transforming global economy; raise awareness among Canadians of the significance of Asia’s growing economic power and influence; and improve Canadians’ understanding of the resulting challenges and opportunities for Canadians.
On May 30, 2012, CRTC officials (Senior General Counsel, John Keogh and General Counsel, Telecommunications, Christianne Laizner) appeared before the Senate Standing Committee on Transport and Communications commenting on CRTC aspects of Bill C-38.
Bill C-38, omnibus legislation that has completed second reading and been referred to Committee would, if passed, amend the Telecommunications Act to eliminate Canadian ownership requirements for small telecommunications companies (carriers with less than 10% market share) and allow the CRTC to recover Do Not Call List (DNCL) administration and enforcement costs from the telemarketing industry through new fees.
These proposed changes were first announced by the Government earlier this year (see our earlier posts here and here).
On May 29, 2012, the CRTC issued an updated Do Not Call List (DNCL) Status Report current to April 30, 2012. According to the CRTC, about 10,700,000 telephone and fax numbers are currently registered on the DNCL, it has received a total of 542,991 telemarketing complaints and has 156 active investigations. The CRTC’s Status Report also states that 131 citations, 54 notices of violation and 42 administrative monetary penalties have been issued under the DNCL rules to date.
Under Canada’s DNCL, consumers may register their residential, wireless, fax or VoIP numbers to reduce unwanted telemarketing calls. Registrations are valid for five years and the DNCL rules impose a number of obligations on telemarketers including registering as subscribers of the DNCL, maintaining internal do not call lists, record-keeping and disclosure requirements and restrictions on calling times.
In addition to the DNCL rules, telemarketing in Canada is also governed by the Federal Competition Act, which imposes disclosure and other obligations on telemarketers, and provincial regulations – for example, provincial licensing requirements in British Columbia.
For the CRTC’s Report see: Status Report.
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On May 29, 2012, the Competition Bureau announced that the Competition Tribunal has ruled in the contested BC waste merger case in favour of the Bureau, ordering the acquirer CCS Corporation to divest the hazardous waste landfill site it acquired in 2011.
In this widely watched case, the Bureau challenged the non-notifiable transaction post-closing taking the position that the transaction would substantially prevent competition in the secure landfill hazardous waste disposal market in North-Eastern British Columbia.
The Bureau argued that the transaction would eliminate a potentially vigorous new entrant in a market characterized by significant barriers and where timely entry was unlikely. The Bureau also argued that there were no alternative substitutes, foreign competition was unlikely and there was an absence of any effective remaining competition.
The decision is noteworthy for being the first contested merger case in Canada in six years (since 2005), a rather rare example of a “prevent” case (a merger may be challenged under the Competition Act where it prevents or lessens competition substantially) and a completed non-notifiable transaction.
Where the Bureau takes the position that a proposed merger is likely to prevent or lessen competition substantially, the Commissioner may seek remedial orders from the Tribunal including an order to block a transaction (in the case of a proposed merger) or an order for the dissolution of assets of shares (in the case of a completed merger).
This case is also an example of the Bureau’s increased willingness to challenge certain transactions post-closing, regardless of size, that may raise competition concerns. (Following 2009 Competition Act amendments, the Bureau may generally challenge mergers for up to one year post-closing, reduced from the former three years.)
In this regard, in announcing the Tribunal’s decision the Commissioner said:
“This case demonstrates that the Bureau will take on cases of all sizes and in all sectors. … Volume of commerce is not the only factor we consider when reviewing mergers — we are willing to take on a case where competition is being denied, regardless of size.”
The Bureau has also said in recent public statements that it would devote more resources to monitor publicly available sources for transactions that may pose competition concerns, making it incumbent on counsel to both review whether a transaction is notifiable and whether a transaction, if below the pre-notification thresholds under the Act, may nevertheless potentially raise competition concerns.
For the Bureau’s news release see:
Competition Bureau Successful in Precedent-Setting Merger Challenge
For the Tribunal’s decision (once available) see:
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On May 25th Industry Canada announced it was introducing a new Investment Canada Act (ICA) mediation guideline and would be finalizing Regulations introduced in 2009 to incrementally increase Canada’s ICA review threshold to C $1 billion over four years (see our earlier post).
Industry Canada also issued an annual report discussing the administration of the ICA in 2009 and 2010, recent policy changes and summarizing recent investment activity, the first such report in about twenty years. The following are a few interesting aspects of the Report:
High level trends. The Report states that some of the recent policy changes are intended to address the rise of sovereign investors, need to safeguard Canada’s national security and the market for foreign investment (the “growing global competition for foreign investment”).
Filings. Between April 1, 2009 and March 31, 2010, 437 ICA filings were received (23 applications for review were approved, with a total asset value of $30.8 billion; and 414 notifications were received: 109 for the establishment of new Canadian businesses and 305 relating to acquisitions of control, with a combined asset value of $30.1 billion).
Withdrawn filings. Between June 30, 1985 and March 31, 2010, 172 applications for review and 637 notifications were withdrawn. Two applications (of a total of twelve) were withdrawn following notice to the investors that the Minister was not satisfied that the proposed investments were likely to be of net benefit to Canada. The Report also discusses the blocked Alliant-MacDonald Dettwiler transaction.
Approved applications. In the 2009-10 fiscal year, 23 applications for review were approved, with an average review time of 69 days.
Net benefit to Canada methodology. The Report provides some insight into the Investment Review Division’s methodology for determining whether an investment will be approved (i.e., be found to be of net benefit to Canada, the relevant test), including considering the business’ “likely prospects” of success on a stand-alone basis, what the investor brings to the investment (e.g., capital or expertise not otherwise accessible by the Canadian business being acquired) and potential undertakings. The Report also describes how relevant factors are weighed during a review and states that reviews do not compare competing proposed investments. This discussion is consistent with recent statements by the Government that it would take steps to add increased transparency to Canada’s foreign investment review process. The new report does not, unfortunately, shed much light on the content of the existing net benefit to Canada factors set out in the ICA or how, for example, considerations with no apparent statutory basis (e.g., whether businesses are “strategic assets”, a much used phrase in the BHP/Potash transaction) squares with Investment Canada’s foreign investment review process.
Increased investment activity. In 2009-10, investment activity rose considerably with the total asset value of ICA transactions (applications for review and notifications) almost doubling to $61 billion (increased from $33 billion in 2008-09). The average asset value for reviewable investments increased from $766 million in 2008-09 to $1.34 billion in 2009-10 and the average asset value of notifiable investments increasing from $30 million to $73 million.
Source of investment. U.S. investors represented the largest number of ICA investors over the past five years, followed by EU investors (with U.K. investors representing a large percentage by asset value).
UBC Faculty of Law will be hosting Ljiljana Biukovic, UBC law professor and Co-Director of the National Centre for Business Law at an event on June 21, 2012, from 5:30-7:00 at UBC Robson Square, where she will be speaking on “Legal Geography of Trade and Investment Agreements – New Practices”:
“The July 2011 World Trade Report published by the World Trade Organization (WTO) reveals two important trends in the development of the landscape of international trade negotiations: the first is the continuing increase in the number of signed preferential trade agreements (PTAs), and the second is that these PTAs are becoming broader in scope and deeper in regulatory detail. The Report finds that there are about 300 currently active PTAs and that Canada has a modest contribution to these trends on trade negotiations. This research maps the impact of bilateral and regional trade and investment arrangements on the multilateral world trading system, analyzes the legal and practical differences between and among different models of economic integration, and attempts to define Canada’s position in this new geography of international law.”
The CBA’s National Privacy Law Section will be hosting an upcoming online seminar entitled “Privacy Breach Notifications: Existing and Emerging Requirements and Practices” on June 12, 2012 from 12:00 – 1:30 p.m. EST.
From the CBA Privacy Law Section:
“Our expert panel will provide an overview of Canadian breach notification laws, including proposed amendments to the Personal Information Protection and Electronic Documents Act (PIPEDA), and practical policies, procedures and strategies for responding to breaches. Breach notification rules in other jurisdictions will also be highlighted.
Our panelists offer legal, business and information security experience in relation to privacy breaches. Join us for this informative session to learn more about the existing and emerging requirements in Canada and how they will affect your clients and your practice.”
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
