Industry Committee on Aug. 7th, 2009

[Marie-Josée Thivierge, Assistant Deputy Minister, Small Business and Marketplace Services, Department of Industry]

Allow me to add that, under the Investment Canada Act, a transaction may be subject to review if it is above a certain threshold. In that case, the net benefit review threshold under the act is based on the book value of the assets concerned by the transaction in question. The regulations under the act clearly state that value is determined on the basis of the book value of the assets.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

In this case, does the book value exempt this transaction from the regulations?

[Marie-Josée Thivierge]

We can't discuss a transaction subject to the Investment Canada Act. I can talk to you in a general way about the terms and conditions that apply under the act and regulations, but I cannot talk about specific cases.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

The regulations are no doubt public. What do they say?

[Marie-Josée Thivierge]

The regulations clearly state that it is indeed the book value of the assets concerned that applies and that that value is taken from the financial statements of the Canadian business for the most recent fiscal year, prepared in accordance with generally accepted accounting practices.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

That would mean that, if for example the book value is less than the threshold for application of the Investment Canada Act, the minister would not have to make a decision. Does the minister have a certain amount of discretion?

[Marie-Josée Thivierge]

As regards the net benefit criterion under the act, the act prescribes a very clear threshold. If a transaction is above that threshold, it is subject to review.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

I see.

If the Investment Canada Act applied because the amount of the transaction was higher than the threshold, could the minister set conditions? Does he have that discretion? No, it's not a discretionary authority because the regulations stipulate it, but could the minister allow a transaction while setting two or three conditions? Does he have authority to set conditions?

[Richard Dicerni]

Hypothetically. The act provides that the investor makes undertakings and it contains specific criteria on the basis of which the department and the minister examine those undertakings to determine whether the country will be deriving a net benefit.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Could someone give me those investment thresholds, after the meeting or later?

[Richard Dicerni]

Yes.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Are those conditions made public, or do they remain confidential? What remains public and what becomes confidential in a transaction such as the one we're currently discussing?

[Richard Dicerni]

Hypothetically, the commitments remain confidential. That has applied since the act was passed in 1985. Since this involves business, business commitments and people who are investing in order to make businesses profitable, the confidentiality principle applies.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

So the Access to Information Act does not apply. If I sought under that act to obtain information on what was confidentially agreed upon, I wouldn't get it.

[Richard Dicerni]

That's correct.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

That means that what would be public would be what the business decided to make public on certain conditions.

[Richard Dicerni]

Those are the commitments the investor makes.

[The Chair, Conservative, Michael Chong]

Thank you. Merci.

Madame Thivierge.

[Marie-Josée Thivierge]

To clarify matters, all information communicated by an investor under the act is subject to the confidentiality clauses of the act. However, it does occur that, in the case of certain transactions, the investor chooses to make public certain commitments that it has made to the government. In some cases, it is left entirely to the investor's discretion whether or not to make public commitments that it might have made to the government.

[The Chair, Conservative, Michael Chong]

Thank you.

There are two paragraphs in the letter sent to Mr. Prentice last year—

I just want to quote for the record, so everybody is aware. It says:

Subject to subsections (3) and (4), all information obtained with respect to a Canadian, a non-Canadian, or a business by the minister or an officer or employee of Her Majesty in the course of the administration or enforcement of this Act

—the act being the Investment Canada Act—

is privileged and no one shall knowingly communicate or allow to be communicated any such information or allow anyone to inspect or have access to such information.

The penalties, if I can just quote for the record, are:

Every one who contravenes section 36 or who knowingly provides false or misleading information under this Act or the regulations is guilty of an offence punishable on summary conviction.

So the civil servants in front of us today are statutorily restricted from making comments specific to this case. I just wanted to make sure that members of the committee are aware.

We are now going to go to Mr. Lake.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

I want to talk a little bit about process, because there are lots of different processes involved and initials that have been used. Talking about CCAA first of all, could you explain the general context of CCAA proceedings and maybe specifically talk about what options the government would have to intervene in such proceedings?

[Richard Dicerni]

Once a company decides to seek protection, the government's responsibilities or capacity to intervene become quite limited, because there is a court of law that operates under established legislation. So once the board and management of Nortel, for example, decided to file, the government's ability to intervene became quite small.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

In terms of the Nortel-RIM agreement or non-agreement, whatever the RIM folks were talking about today in terms of handshake agreements that might or might not have taken place, does the government have any reason to believe that Nortel broke any laws when selling Nortel assets? I guess secondly to that, if laws were hypothetically broken, what legal remedies would RIM have?

[Richard Dicerni]

I am not competent to discuss if Nortel unfairly restricted RIM from bidding. As the Department of Industry, we have no independent views on that. The appropriate authority, I think, would be the monitor, who was appointed by the court, from Ernst & Young. I think that question could be best put to the monitor, who has the legal responsibility to oversee the process and maximize the proceeds from whatever course is taken.

I would note—and I said this to the RIM executives with whom we have met a few times—that there were a couple of windows where RIM had the opportunity, if they were not satisfied, to challenge the process. I believe for their own business reasons--because at the end of the day these are business decisions made by business executives--they chose not to.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Can you speak more specifically about those windows?