The Canadian government is lifting ownership restrictions for Canadian National Railway Co., the country's largest railway company, and major airlines as part of efforts to bolster competition in the country's transport sector.
The changes, unveiled in a law proposed Tuesday, would lift individual share ownership limit for CN to 25 percent from the current 15 percent. Changes to airline rules also opened the door to joint ventures and codified a previously announced hike in the foreign ownership limit of foreign carriers, to 49 percent from 25 percent.
"It was a reasonable thing to increase that to 25 percent," Transport Minister Marc Garneau said a press conference in Ottawa. "We felt that this wasn't fair to CN."
Canada's transport sector is saddled by legacy issues stemming from the government's heavy involvement in the industry, including ownership of both Canadian National and Air Canada until recently and restrictions to competition.
Air Canada gained as much as 5.5 percent to reach its highest level since 2007 and WestJet Airlines Ltd. rose as much as 3.1 per cent. CN initially gained 1 percent on the news but quickly reversed direction, closing the day down 0.76 per cent.
Bill Gates is among those that could benefit from the changes. Gates is already the railway company's biggest single shareholder through a 13.3 percent stake held by his Cascade Investment LLC fund and a 2.3 percent stake owned by the Bill & Melinda Gates Foundation.
Patrick Waldron, a Canadian National spokesman in Montreal, said the company had no immediate comment on the legislative changes. Michael Larson, Cascade's chief investment officer in Kirkland, Washington, didn't immediately return a message left Tuesday regarding the change in the ownership cap.
Garneau made it clear the changes were aimed in part in boosting domestic railways. "I also want to make sure our railways are in a healthy state," he said.
The transport bill also includes changes to so-called inter-switching rules for railways -- where a shipper, such as a farmer, can use two railways to ship their goods -- a move that will partially open Canada to U.S. competitors. The new "long-haul inter-switching" regime essentially expands the roster of shippers who are eligible to take part, while asking them to apply instead of automatically getting approval.
Other changes announced Tuesday include expanding options for joint ventures between air carriers, and new airline passenger rights that spell out what ticket-holders are entitled to in event of major delays, overbooking or with lost or damaged luggage.
The changes to joint venture rules expand consideration of any effort -- cooperating on scheduling, pricing, marketing and so on -- to be reviewed under both competition laws and with "public interest considerations." Currently, joint ventures are only subject to Competition Act review.