Canada: foreign investment reviews and national security

Originally published in the 9 August 2005 issue of Competition Law Insight

Proposed new rules expand the existing assessment criteria In addition to making any obligatory notifications under Canada’s Competition Act, foreign companies acquiring businesses in Canada must also consider whether their proposed transactions are subject to the provisions of the federal Investment Canada Act (the Act), Canada’s foreign investment legislation.

The Act applies, among other things, to any acquisition by a non-Canadian of control of a business carried on in Canada. Depending upon whether the statutory thresholds are met, any such transaction may be subject to review by Canada’s minister of industry to determine if it is of "net benefit" to Canada (the minister of Canadian heritage is responsible for this review if the transaction involves the acquisition of a cultural business).