Industry Committee on Feb. 17th, 2011

[Richard Saillant]

You have to notify under the act, but if the book value of your assets exceeds the threshold, which is $312 million--

[Mike Wallace, Conservative, Burlington, ON]

Okay. I appreciate that.

[Marie-Josée Thivierge]

I was wondering if I could just add that the obligation under the Investment Canada Act is for the investor who wishes to acquire a Canadian business to inform the minister of this potential transaction.

[Mike Wallace, Conservative, Burlington, ON]

Thank you for that.

I appreciate your setting up the six net benefit criteria. With my neighbour here, I get calls. We've had Dofasco and Stelco purchased over the last little while, and people don't think there's such a thing as a net benefit in some instances. In other instances, they think things are great.

Of the six, are they weighted? Are they all the same in weighting criteria? Is there an evaluation criterion of those criteria? For example, on “significant to competition”, meaning there's only one in Canada or there are a thousand in Canada, how is that determined?

[Marie-Josée Thivierge]

There is no weighting. There are no weights attributed to any of the factors.

It is in the minister's discretion to review the specifics of a given transaction, to establish which of these factors apply to the given transaction. Ultimately, it is based on the information provided to him by the director, which, as I said earlier, means the plans, the undertakings, the representations, and the outcome of consultations with the province and other federal department, to establish whether or not the transaction is to be of net benefit to Canada.

[Mike Wallace, Conservative, Burlington, ON]

Here is my final question. I want to respond to a question from my colleague across the way. He said that this is almost arbitrary in terms of the minister's ability. They must forget that they were—I've forgotten about it already—in power for 13 years and before that, when this act was in place, and I don't think they turned down any of the reviews.

Would you consider the advice and the position of the cabinet minister, whether it's a man or a woman, an arbitrary decision-making process? Or is there a process for them that's followed in a plan, in a regular way, so that we have consistent decisions made over time?

[Marie-Josée Thivierge]

I'm not sure I fully get your question. I'm sorry.

[Mike Wallace, Conservative, Burlington, ON]

I was just trying to get it on the record. That is really what I was doing.

Thank you, Mr. Chair.

[The Chair, Conservative, David Sweet]

We only have about seven minutes left.

Did you have a brief question, Mr. Van Kesteren?

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Yes. It is just a brief question.

I don't think I heard this, but in regard to other jurisdictions, are we targeting a specific jurisdiction when we look at a possible review that, first of all, would mirror what we have here in Canada, and possibly our philosophy of doing business? Is there another country out there that has a piece of legislation we're looking to possibly emulate?

[Marie-Josée Thivierge]

Do you want to speak to the benchmarking?

[Richard Saillant]

As I discussed previously, I think that there are about two countries that have a regime similar to ours. It is different, but it's similar to ours. They are Australia and New Zealand. This is something you will probably encounter in the next sessions you have.

Canada is limited in amending the act in terms of not making it more restrictive than currently, and these are commitments that are taken under international trade obligations. This is something you will find along the study: that there are limitations surrounding that.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

There is a last question I want to ask. When we talk about net benefit, how much of that net benefit is taken into consideration as investment into Canada?

Mr. Stoffer pointed out the importance of looking after our workers, and somebody else has mentioned looking after our resources, but how much of this legislation centres around the need for capital coming into the country and its being a net benefit?

[Marie-Josée Thivierge]

I think it's fair to say, when you look at the factors in the act, that clearly some factors are tied to things like the level and nature of economic activity in Canada. This is tied to the extent that there will be more or less economic activity as a result of a potential transaction.

The purpose statement, which is section 2 of the act, clearly lays out that it recognizes that increased capital and technology benefit Canada. To your point about capital coming into Canada, it is certainly referenced in section 2 of the act.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

[The Chair, Conservative, David Sweet]

Thank you very much.

Before we finish, I have two follow-up questions based on some of the questions that were asked.

In regard to the six factors that are enshrined in legislation, that make up the framework of what the minister has to have as far as the decisions are concerned, to add to or change them, there would have to be an amendment to the legislation. Is that correct?

[Marie-Josée Thivierge]

To the extent that one of the factors would be changed, they are in statute, so it would require a legislative change.

[The Chair, Conservative, David Sweet]

All right. Then I'll go back again to Mr. Stoffer's question. He mentioned three pillars, but would it create problems internationally if we added another one, like an environmental one, or labour relations, or anything like that? Is this the kind of thing that you were saying might create complications internationally?

[Richard Saillant]

I wouldn't necessarily say that automatically. The only thing under the act is that Canada internationally has taken what we call “reservations” under trade agreements. Essentially these reservations work to reflect the act as it existed when they negotiated the trade agreements. The issue becomes whether in doing so you would be making the application of the act more restrictive, from a trade standpoint, than it was before.

[The Chair, Conservative, David Sweet]

Finally, I think you mentioned section 12.5, but I may not have recorded it quickly enough.... Mr. Wallace asked a question in that regard as well: what triggers an Investment Canada Act investigation for compliance?

You mentioned that it was the foreign investor's obligation to report a purchase, but there was also some talk about purchases that were lower than the $300-million threshold, where the minister had some discretion. Is every foreign investor obliged to report to the minister on a potential purchase? This also goes to the core of Mr. McTeague's question as far as creep is concerned.

[Marie-Josée Thivierge]

The section that actually talks about the duties and powers of the minister is section 5. To the extent that there's an acquisition of control by a non-Canadian of a Canadian company, the minister, under the act, has to be informed.

Now, there are two parts to the act: notifications versus reviews. If it is below a certain threshold, then it's a notification. The minister is notified that a transaction is about to take place. Where transactions are above a certain threshold, then it becomes reviewable under the act.

[The Chair, Conservative, David Sweet]

So literally any foreign purchase of control in any Canadian corporation has to be reported?

[Marie-Josée Thivierge]

An acquisition of control.

[The Chair, Conservative, David Sweet]

An acquisition of control. Less than that, it does not have to be reported. Is that correct?

[Richard Saillant]

Yes, this is accurate, but I would add that if you have additional increments.... Let's suppose you do it in a stepped manner. If the additional increment leads you to have an acquisition of control, after that, you will need to apply.