Last week, Industry Minister Tony Clement sent a demand letter
to United States Steel Corp. ("US Steel") insisting that
it fulfill the undertakings given to the Canadian government in its
2007 takeover of Stelco Inc. ("Stelco"). Given the
combination of the political sensitivity of foreign acquisitions of
Canadian businesses, and an economic climate marked by increasing
governmental involvement in business and concern about maintaining
and supporting business activity in the country, the delivery of
the letter and its consequences are being – and will be
– carefully scrutinized.
The focal point for analysis of governmental involvement in
foreign acquisitions of Canadian businesses is the Investment
Canada Act (the "Act"). Under that Act, if a
proposed acquisition by a non-Canadian of a Canadian business meets
or exceeds certain size thresholds, the transaction is subject to
review by the Industry Minister (and/or, in the case of certain
cultural acquisitions, the
