Mr. Chair and honourable members, good afternoon.
My name is Oliver Borgers. I am a partner in the competition law group of McCarthy Tétrault in Toronto. I am here today as the chair of the foreign investment review committee, also known as FIRC. The committee focuses on the Investment Canada Act, which is part of the national competition law section of the Canadian Bar Association.
I am appearing with my vice-chair and friend, Tony Baldanza. Tony is chair of the antitrust, competition, and marketing law group of Fasken Martineau DuMoulin LLP. Both Tony and I are regularly involved in providing legal advice in relation to major transactions that are subject to the Investment Canada Act.
The CBA, as you probably know, is a national association that represents some 37,000 lawyers, judges, notaries, law professors, and law students from across Canada. The CBA’s primary objectives include improvement in the law and in the administration of justice.
We thank the committee for inviting the CBA to appear before you and hope that we can be of assistance. We understand that you are undertaking a study of the Investment Canada Act to determine potential approaches to three issues.
In this opening statement we will briefly address each of those three points. Then we would welcome any questions that you might have.
Your first question is whether restrictions on the public disclosure of the rationale behind decisions to approve or reject an application under the act serve Canada’s interest, and what form that disclosure might take.
We are of the view that transparency and predictability are very important elements in the proper and fair administration of the Investment Canada Act. It is therefore in the interest of Canada and future potential investors to learn of the rationale behind a minister’s decision to approve, and particularly reject, an investment.
The goal of transparency and predictability should not, however, result in any disclosure of an investor’s or a target’s confidential or competitively sensitive information--unless, of course, they consent. The minister should also not be required to reveal reasons that might be based on national security concerns.
We believe that public disclosure of a minister’s rationale on a general level would suffice to build an inventory of decisions that would give future investors and their advisers direction and guidance. As an additional note, we submit that the minister should have an obligation to disclose his or her rationale if a decision is made in the first instance, even if the investor subsequently withdraws the application.
You have also asked whether the act provides for effective enforcement mechanisms and how they could be improved.
The enforcement mechanisms in part VII of the Investment Canada Act are robust and do not, in our view, need improvement at this time. To date we do not have many examples of the government’s enforcement activity in relation to the Investment Canada Act. There is therefore no basis to conclude that the current mechanisms are insufficient. The discretion of the enforcement officials determines how often the provisions are utilized, of which there have only been a few to date. In our respectful view, only once there is a body of decisions under part VII of the Investment Canada Act would we be able to assess whether they are sufficient.
We would remind the committee that the current provisions provide for the court to make any order as, in its opinion, the circumstances require under subsection 40(2), including divestment, injunctions, directing an investor to comply with an undertaking, and penalties of $10,000 for each day of contravention. These enforcement mechanisms are, as we said, robust and are likely adequate to ensure adherence to the act.
You have also asked whether consultation with provinces affected by a decision would serve Canada’s interest and what form those consultations might take.
It is our understanding that the government divisions that administer the review of investments--the investment review division of Industry Canada and the cultural sector investment review division of Canadian Heritage--do currently consult with all affected provinces in respect to any investment that is subject to review under the Investment Canada Act, consistent with the investment review factors set out in paragraph 20(e) of the act.
We are of the view that the confidential consultation process currently in place is appropriate. The competition law section would not advocate public consultations. We would suggest, however, that the feedback received by the government in the consultations be communicated to the investor, which is currently not the practice.
We hope that our brief opening statement was helpful. As indicated, we would be pleased to respond to any questions you might have.
Thank you.
