Canadian Lawyer InHouse

By Nikiforos Iatrou, Partner, and Scott McGrath, Associate, WeirFoulds LLP Navigating Canada���s competition and foreign investment landscape Canada���s competition laws are more relevant to businesses and investors now than they ever have been. Legislative changes in 2009 and an increased willingness by Canadian competition authorities to enforce the law have made it important for investors or businesses considering investments in Canada to take into account the Competition Act and Investment Canada Act when structuring their affairs. In this quiz, imagine you are in-house counsel for Uranimax Co., a mining company whose focus is the uranium market. Although it is sitting on some significant reserves, your company is still a relatively small player in the uranium market, as it has yet to actually start production. Over the years you have had more than your share of regulatory run-ins with the ���folks in Ottawa.��� How do you think the following scenarios impact your obligations under the relevant legislation? Ever since the nuclear meltdown at Fukushima, your stock price has been depressed ��� so much so that the market thinks you are acquirable. Another relatively small player, Uranico Ltd., has shown an interest in merging with you. Given that neither of you has a great deal of revenues, the merger would fall below the mandatory notification thresholds in the Competition Act. The principals at Uranico want you to take their deal, saying that since the deal falls below the thresholds, there is no regulatory risk as far as the Competition Bureau is concerned. Are they right? (a) Yes. The deal falls below the mandatory notification thresholds, so there is no regulatory risk. (b) No. While the deal falls below the mandatory notification thresholds, the Bureau could challenge the deal any time up until closing. (c) No. The Bureau can challenge any merger, no matter its size, for up to one year after closing. (d) Yes. Although the Bureau could still challenge the merger, there is no risk of it doing so because it never has before. 1 A Chinese company, Sinomineral, has also been kicking the tires. The company is among China���s many state-owned mining enterprises. Sinomineral itself has a presence in Canada, but not in the uranium market. Is there any competition-related risk in accepting the deal? (a) Yes. Even though Sinomineral does not have a presence in the uranium market, other companies owned by the Chinese government may have, and because they have common owners the Competition Bureau could get involved. (b) No. There is no horizontal overlap between your services, so the Competition Bureau is unlikely to get involved. (c) No. Although affiliated companies of the buyer are usually investigated by the Competition Bureau, this requirement does not apply to state-owned entities. 2 3 The Competition Bureau cleared the deal with Sinomineral. From a regulatory standpoint, can you close the deal and break out the Champagne? Yes or No Sadly, the Chinese deal fell through. Uranico approaches you to join it in establishing a cartel. Again, Uranico is confident that the Bureau will stay out of your business, as the cartel will only be set up to export uranium, not sell it to Canadian buyers. Can you proceed? (a) No. All cartels are illegal in Canada. (b) Yes, but proceed with caution. (c) Yes. There are no restrictions on export cartels in Canada. 4 ca na dia nl awy e rm a g . c o m / i n h o u s e December 2012/January 2013 ��� 17

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