IN THE NEWS ~ Opposition issues warning over foreign takeover regulations
September 18th, 2012 - 9:04am
Ottawa faces decision on Chinese bid for Nexen Inc.
Julian Beltrame, The Canadian Press
THE CHRONICLE-HERALD, BUSINESS, Page: C6
OTTAWA - The Harper government is again under pressure to spell out
clear rules on foreign investment following yet another spurned bid and in
advance of the next big ask - the proposed Chinese acquisition of a major
Canadian oil company.
NDP and Liberal critics blasted the government for sitting on the issue
for two years, saying they now are facing a decision this fall whether to
accept China National Offshore Oil Corp.'s $15.1-billion deal to buy
Calgary-based Nexen Inc. without clear guidelines.
Earlier Monday, U.S.-based Lowe's withdrew its bid to acquire the Rona
hardware chain, citing the Quebec company's opposition.
But analysts said another consideration was likely the political
barriers put up from both leading parties in the province, including the Parti
Quebecois minority government, that might have made approval under the
Investment Canada Act problematic.
"We don't know what the Canadian government would have done with
the Rona takeover, although clearly the government of Quebec was against it and
that would have been an important factor in the process," said Oliver
Borgers, a partner in McCarthy Tetrault's competition law group.
The act calls for a demonstration of a "clear benefit" to
Canada, but is unclear what that means beyond that a deal would create or
preserve jobs, and generally benefit the economy.
And that's the problem, say critics - the ambiguity and secrecy of the
process allows for too much discretion, including political pressures.
"Ad hockery is what you get when you get when the government is
negligent in setting the framework," said Liberal deputy leader Ralph
Goodale, a former finance minister.
"What you've got is complete and utter chaos because it will all
boil down to what Stephen Harper had for breakfast this morning and how he's
feeling about it."
The question of political factors coming into play was given more fuel
Monday when Conservative MP Rob Anders said he opposed the Nexen takeover,
referring to China as a "non-benevolent country." He added that other
MPs in the caucus agree.
NDP energy and natural resources critic Peter Julian called on the
government to conduct public hearings on the Nexen bid, accusing the government
of listening mostly to CNOOC lobbyists.
Although he did not answer the question directly, Industry Minister
Christian Paradis said the Nexen deal will be "scrutinized very
closely." He added that what the NDP was proposing would "deter any
form of investment in the country."
Following the 2010 rejection of BHP Billiton's bid to buy Potash Corp.,
Ottawa suggested it would clear the confusion of what constitutes "net
benefit" under the act, but has not issued new guidelines. ILLUS: A man
carries building supplies from a Rona store in Toronto in July. The Lowe's home
improvement chain is retreating from its controversial plan to buy Rona.; Nathan
Denette / CP)