Law Times

Law Times • sepTember 17, 2012 Continued from page 8 Gov't makes some progress on transparency for acquisitions FOCUS Milner Casgrain LLP in To- ronto, says the promises of greater transparency didn't lead to much change. "There is only a very modest increase in transparency. The minister can release a public notice outlining his reasons if he is not satisfied on a provisional basis." Tony Baldanza, chairman of the antitrust and competi- tion group at Fasken Martineau DuMoulin LLP, points out that while that gives the minister an enhanced ability to release the reasons, the provision is per- missive and not obligatory. "It remains to be seen if the min- ister will use it," he says, noting he expects no further action on the issue. "If there is a public uproar VanderBurgh of Aird & Ber- lis LLP is of the opinion that even if there was a political will to be more forthcoming, the current structure of the act makes it impossible. "The problem is that the its decision on. There may well be a political element that they don't want to issue reasons on, so you would not get full disclosure in any event." Corporate lawyer Bill there's no body of decisions building up and therefore no certainty. "Of course, people prefer a rule-based approach because there is more cer- tainty and predictability, says Walker. "Investors like to know what they need to do. Baldanza thinks there are " things the government could do to make about an approval or a disap- proval, it might be revisited, but essentially the government has spoken on the transparency is- sue." support from Prime Minister Stephen Harper' on the CNOOC acquisition on Sept. 6 that referred to the careful attention that a large purchase by a state-owned en- terprise requires. His only com- ment in relation to the net-ben- efit test was that the definition would be broad. Baldanza says that, to be fair, This hypothesis gets further s comments existing Investment Canada Act sets up a statutory duty and a statutory review pro- cess that requires the indus- try minister and the staff at the investment review sec- tors to do everything behind closed doors because of con- fidentiality concerns. It' offence to disclose very much at all except in very narrow circumstances. Even if Mr. Harper and his ministers were so inclined to agree, their hands s an easier. "They could issue de- cisions or technical opinions, whether in generic form or otherwise, lawyers' 'There is only a very modest increase in transpar- ency,' says Sandy Walker. are tied by the legislation." Yet many investment practi- tioners feel that as things stand, with Industry Canada." The proposals include to obtain consent. They are obviously very mindful of the sort of things that resonate guidance, Baldanza points to the CNOOC-Nexen deal as illustrative of a sensible ap- proach in dealing with the statute. "The parties gave a press release outlining the steps they are going to take In the absence of further " he says. jobs " preserving employment, ex- panding output, retaining the TSX listing, keeping senior ex- ecutives, maintaining Calgary as the regional headquarters, increasing investment capital, and continuing community development efforts taken by Nexen. "Essentially, they are ticking the boxes of the net- benefit criteria," says Baldanza. "But the overall issue is the government's attitude to Chi- nese investment of this magni- tude. It highlights that despite the fact that we like to think that it' process, there is a strong politi- cal component." At the end of the day, Bal- s a legal and bureaucratic danza expects the deal to se- cure consent by virtue of care- fully constructed undertakings. Walker is hopeful the case could provide further insights into the government' they handle this review could be elucidating, " she says. s approach. "How LT PAGE 9 the issue is a difficult one. "We have six net-benefit factors, some of which include a bas- ket of other factors which are not weighted in the statute. So it is difficult to say which factor pushes the transaction across the line. Really, it is a collection of factors that influence the de- cision." He also points out that the material that goes towards discharging the factors contains a lot of commercially sensitive information. "That' ernments are so cautious in dis- closure of the rationale, ing the reasons can be prob- lematic. "Unlike in court, where you get a reasoned decision in a legal framework, the con- siderations the minister must take into account are broad and vague, encompassing national considerations as well as pro- vincial ones. There is also more unpredictability for politically sensitive deals." Walker feels that before the Walker agrees that publish- rejection of the BHP Billiton Ltd. acquisition of Potash Corp. of Saskatchewan, practitioners would have said they could as- sess to a large degree what the government was going to look for. She believes most practi- tioners would have predicted BHP' forward. "But these high-profile cases s deal would have gone that attract a lot of political and media attention are more of a wild card because of the politi- cal element. You are in a differ- ent realm where it is unclear what the government is basing Untitled-4 1 s why gov- " he says. 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