Thank you, Mr. Chairman and honourable members.
You introduced me at the beginning. My name is Brian Facey, and I'm the chair of the Canadian Bar Association's national competition law section and co-chair of Blake, Cassels & Graydon's competition and foreign investment group. I speak to you from a lawyer's perspective as to how the legislation will work, having done this in these kinds of transactions over a 20-year period.
I'm also the co-author of Investment Canada Act: Commentary and Annotation 2014, and I appear before you today with my co-author, Joshua Krane.
I'll make two very brief points, and I'll be followed by Mr. Krane, who will make two additional points. So we'll present together, if that suits you, and may save a bit of time.
You should have my letter from the Canadian Bar Association dated May 17. I'm not going to summarize it or go into it in detail, in light of the time, but I will leave it with you.
The two main points I want to make are the following. The first point is that the amendments create some additional uncertainty, not just for business investors but also for Canadian businesses and their advisers who may be seeking financing and looking to partner with foreign enterprises, some of which clearly may be state-owned enterprises, some of which may not be so clearly state-owned enterprises under the new rules.
My second point will be to emphasize the need for transparency, predictability, and timely review of these kinds of investments.
Let me unpack those two points very quickly. On the first point about uncertainty, there are a number of phrases in the legislation: control, control in fact, influence, direction. These are undefined concepts as yet, and in our submission remove a little of the bright line tests about Investment Canada and foreign investments in place of more discretionary tests. What's important in framework legislation like this is that sort of movement can be helpful to have additional guidance in the form of guidelines and other instruments. I'll return to that in a moment.
Secondly, this legislation now puts minority investments and joint ventures with respect to state-owned enterprises into a field of discretion. Without getting too technical, subsection 28(6.1) does confer broad discretion on the minister to deem an investment to be a state-owned enterprise investment and a controlling fact. In my experience, the issue there is that businesses and our clients like to have.... They're not worried about tough news, but they don't like to have a lot of surprises.
That comes to my second point: predictability, transparency, and timely review. In this regard, I thought it would be helpful to briefly review two passages from the Compete to Win report of June 2008, two passages that I think are even more important today. The first passage, and it's on page 33, is as follows. It says that:
As such, we believe that a key objective of the changes to the ICA should be to improve the transparency, predictability and timeliness of decision making in the review process.
Further down on the same page it says:
The research finding that it generally takes longer to obtain a binding ministerial opinion than to conduct a complete review of a foreign investment proposal is perverse. Therefore, the procedures and timelines for issuing compliance instruments under the ICA need to be streamlined.
Then the recommendations are the exact recommendations that we've made in our letter today. Remember, this report was issued in 2008 before the global financial crisis. In our submission, it's even more important today to have clarity on these issues.
The recommendation is the following, which is:
In administering the ICA, the ministers of Industry and Canadian Heritage should act expeditiously and give appropriate weight to the realities of the global marketplace and, in appropriate cases, the ministers should provide binding opinions and other less formal advice to parties concerning prospective transactions on a timely basis to ensure compliance with the ICA.
I emphasize “binding opinions and other less formal advice”. I raise that for two reasons.
If one looks at the legislation that's before you, clause 145 of the bill, which is subsection 37(2) of the legislation, provides that the minister “may provide” an applicant with guidance if they ask for it. In our submission, it would be more helpful to business if the minister “shall provide” that information. People would be more comfortable knowing that if they go for an opinion they're going to get one.
If that route is not available, or not chosen, a second route is this—and it echos what Ailish had to say in her submission. It's something the Competition Bureau does, which is the ability to offer non-binding advice in the form of a comfort letter or “no action” letter. These kinds of letters can be issued in a non-binding way, which gives the minister comfort that it's not going to be something that's binding forever, but it gives the parties the comfort that they can proceed with their transaction knowing that at least they share the same view as the minister at the time of issuing it. Many multibillion-dollar transactions close in the competition world based on that kind of non-binding advice.
Those are my submissions.
Mr. Krane has one or two points to make, subject to any questions you may have, sir.