“I'm in grave danger of agreeing with the NDP,'“ said Joseph d'Cruz of the University of Toronto's Rotman School of Management, who said he is not normally sympathetic to NDP policies. “But on this one, I think they're on the right track. I think having public hearings is pretty healthy,”
“I've always been a bit concerned that the commitments that the foreign companies make to Investment Canada are confidential and the public doesn't know what they are. On an important public policy issue, I think confidentiality is not healthy.”
Prof. d’Cruz said the existing rules leave the bureaucrats virtually no room to determine that a deal is not to Canada’s benefit, something he said needs to be changed.
Former Industry Minister John Manley, who now heads the Canadian Council for Chief Executives, has argued the rules do allow bids to be rejected if they are not in Canada's national interest. However, in the case of Potash, he expressed regret earlier this week that it had become so “overtly politicized.”
The federal government has only once before used the Investment Canada Act to block a foreign takeover. In 2008, the Harper government turned down a proposed acquisition of aerospace company MacDonald Dettwiler and Associates Ltd. by U.S.-based Alliant Technology. It was followed in 2009 with new legislated amendments to the act that allow national security concerns to factor in to decisions on foreign takeovers.
The Harper government has been sending mixed signals about foreign investment in recent years. In 2008, the Tories appeared open to easing foreign ownership rules in telecommunications and airlines. “We are a party of free enterprise, free markets and free trade,” Mr. Harper said at the time.
In 2009, the government took a different approach when bankrupt Nortel Networks Corp. sold a collection of patents for new wireless technology to Sweden’s Ericsson for $1.1-billion. The Ontario government urged the Prime Minister to block the sale arguing that taxpayers had funded development of the patents. Mr. Clement refused, saying the deal was “very beneficial to Canada.”
A few months later the feds took the extraordinary step of overruling a decision by the Canadian Radio-television and Telecommunications Commission. The CRTC had refused to grant a cellphone licence to Globalive Wireless Management Corp., ruling the company fell outside Canadian ownership rules because it was backed by an Egyptian company. The government reversed the decision, arguing the CRTC had interpreted the laws incorrectly.
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IN QUOTES
If you have a marriage and you don't argue, then you are not normal. If Canada welcomes all foreign investment and never closes the door on any, then it would not be normal.
Richard Kohler, a former Canadian consul general in Sydney and director of the Canadian Australian Chamber of Commerce
It's not like a technology you can move away and produce somewhere else.
Frank Stronach, chairman of Magna International Inc.
Not only is the BHP bid sidelined by this decision, but any other potential foreign bid in the shadows, is sidelined ... Shareholders of PotashCorp are the main losers in this decision, at least in the short term.
Chris Damas, analyst with BCMI Research, Barrie, Ont.
Although Potash's share price may decline in the very short term due to selling pressure from hedge funds, we would expect the price to rapidly recover to current levels ... Potash could even trade 10- to 15-per-cent higher.
Stephane Mardel, CEO of United First Partners, London
It is a setback, but we will just have to wait and see whether the impasse can be breached in the next 30 days ... It is difficult to ascertain what BHP is prepared to offer and what the Canadian government is prepared to accept.
Tim Schroeders, portfolio manager, Pengana Capital, Melbourne
