The Asia-Pacific Antitrust Review 2013

Canada: Foreign Investment Review

Canada’s foreign investment review regime has been the subject of considerable attention over the past three years. Much of this attention was in connection with BHP Billiton’s abandoned bid for Potash Corporation of Saskatchewan and the failed effort by the London Stock Exchange to merge with the TMX. However, interest surged in 2012 in the context of the application by CNOOC, a Chinese state-owned enterprise (SOE), to acquire Nexen, a large second-tier Canadian oil and gas producer with an interest in Canada’s oil sands, and the almost contemporaneous application by Petronas, a Malaysian SOE, to acquire Progress Energy, a Canadian natural gas producer. While both transactions were ultimately approved, new and more onerous policy guidance was issued by the Canadian government with respect to proposed acquisitions by foreign SOEs. Hence, while Canada very much remains open for business (in the 27-year history of the legislation, to our knowledge, outside the cultural business arena there has been only one formal rejection of a transaction and only four withdrawals attributable to the legislation), prospective investors, especially foreign SOEs, would be well advised to take the review process under the legislation seriously and, in that regard, to engage capable counsel early in the deal process.