"We are always open to global investment in a way that
respects and defends Canadian interests, and that is the approach
we will take on foreign trade and foreign
— Prime Minister-designate Justin Trudeau, 2015
After an unprecedented 78-day election campaign, the Canadian
federal election results were announced late in the night of
October 19. Canadians awoke to a new prime minister-designate and a
Liberal majority government, ending nearly a decade of Conservative
rule by Prime Minister Stephen Harper.
While the dust settles on the election, attention will now be
focused on the priorities of the Liberal government under Prime
Minister-designate Justin Trudeau.
While it is still early days, below we provide our initial
reactions as to the implications for competition policy under the
Competition Act and foreign investment review under the
Investment Canada Act.
These two areas of law are critically important for mergers and
acquisitions, joint ventures, and other business arrangements by
both domestic and non-Canadian companies doing business or seeking
to invest in Canada.
COMPETITION POLICY: BUSINESS (MAINLY) AS USUAL
The Competition Bureau is a law enforcement agency and, as such,
neither its mandate nor its leadership are directly affected by
changes in government. This means that the election and change of
government will not result in a change in leadership or a pause in
enforcement at the Competition Bureau. Commissioner John Pecman was
appointed by the governor-in-council in 2013, and as such his
current five-year term continues to 2018.
At the same time, however, the new government's economic
policies and perspectives can be expected to have an impact on
amendments to the law and competition policy in Canada. Moreover,
other sector-specific laws may change or be updated over time and
those changes could have an impact on the enforcement of the
In the near term, we can expect that the Competition
Bureau's current priorities will continue to govern its
approach to competition matters. Canada is likely to continue to
see robust competition enforcement, particularly in high-profile
and consumer-facing cases. Similarly, impacts on consumers will
remain of paramount importance in the context of merger control,
though opportunities will remain for strategic mergers that result
in significant efficiencies.
The change in government does mean that proposed legislation
amending the Competition Act, namely proposed changes to the
complex affiliation rules used to analyze merger thresholds, and
proposed legislation aimed at addressing the price gap between
items sold in Canada and the United States, will have to be
reintroduced in the new Parliament, should the Liberal government
see those as priorities.
FOREIGN INVESTMENT REVIEW: TRANSPARENCY AND MERIT-BASED
With respect to the Investment Canada Act, a key
immediate issue for the new government will be appointing a
successor to former Minister of Industry James Moore (who announced
his decision not to run for re-election in June). The Minister of
Industry's office is responsible for the review and approval of
foreign direct investments in Canada that trigger review
thresholds. Thus, the choice of minister will be of key interest to
foreign investors, as will the role of the new prime minister in
the review of high-profile cases. Prime Minister Harper was closely
involved in a number of high-profile foreign direct investment
matters during the course of his tenure, despite the portfolio
resting primarily with the Minister of Industry; while under the
Liberal government prior to Prime Minister Harper, the Minister of
Industry traditionally played a greater role. At this time, no
names have been put forward as candidates for the post, but once
the new cabinet has been formed, we will update our readers
The Investment Canada Act is a political statute and
foreign investment policy will likely be impacted by the change in
leadership. The Liberal government has (both historically and in
the context of the election) voiced strong support for free trade
and is generally outwardly focused and open to foreign investment,
where benefits in terms of jobs and innovation are clear.
While the new federal government will continue to closely review
investments in Canada, the Liberal government has committed to
evaluate foreign investment on the basis of economic merit.
On the campaign trail, Prime Minister-designate Trudeau stated
that the Liberal government is "always open to global
investment in a way that respects and defends Canadian interests,
and that is the approach we will take on foreign trade and foreign
This likely means a greater focus on employment and innovation
in Canadian businesses when assessing the merits of investments and
whether they are of net benefit to Canada. The Liberal government
has also committed to improve transparency surrounding foreign
investment process and their decisions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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