October 30, 2007 – L. R. Wilson, Chair of Canada's Competition Policy Review Panel (the "Panel"), today formally launched the Panel's consultation process with the release of a discussion paper entitled Sharpening Canada's Competitive Edge.

The Panel's discussion paper and related materials are available at http://www.competitionreview.ca.

The Panel was established by the Canadian Government on July 12, 2007.  Its mandate is to consider how Canada's competition and foreign investment laws impact the country's domestic and international competitiveness.  The Panel is scheduled to deliver its report by June 30, 2008.

The Panel proposes to explore two broad themes: how best to encourage international investment by Canadians; and how best to position Canada to be a world-leading location for talent, capital and innovation.

Within these two broad themes, the Panel intends to focus on four areas of inquiry: (i) investment polices; (ii) competition policies; (iii) promoting Canadian direct investment abroad; and (iv) promoting Canada as a destination for talent, capital and innovation. 
The discussion paper sets out a series of questions for each of the Panel's four focus areas.  The responses to these questions will form the backbone of the Panel's recommendations.  Written submissions (of no longer than 20 pages) can be provided to the Panel up until January 11, 2008.

Some of the key questions that the Panel will address are:

• How important is domestic control and ownership of Canadian business activities to Canada's economic prospects and ability to create jobs and opportunity for Canadians?
  
• How important are company headquarters to Canada's economic prospects and ability to create jobs and opportunity for Canadians?  How important are global divisional head offices?  What factors influence their location?
  
• What, if any, changes to the investment review process would enhance Canada's competitiveness and improve Canadians' understanding of the benefits of foreign direct investment?  Should the "net benefit" test under the Investment Canada Act be adapted to reflect the new competitive environment? If so, how?
  
• What changes, if any, are required to Canada's sectoral investment regimes to minimize or eliminate negative effects on Canada's competitiveness?
  
• What changes to Canada's competition regime would enhance the competitiveness of Canadian firms in the global economy?  What international best practices, if any, would strengthen Canadian competitiveness as a destination for foreign investment if Canada were to adopt them?
  
• Does Canada's approach to mergers strike the right balance between consumers' interest in vigorous competition and the creation of an environment from which Canadian firms can grow to become global competitors?
  
• How should the government adapt its policies to promote increased Canadian direct investment and acquisitions abroad?  What measures have been adopted by other countries that are relevant to Canada?
  
• What impact does a higher-value Canadian dollar have on Canadian direct investment abroad?
  
• What mix of policy changes would be required to make Canada the preferred point of entry to, and location in, the North American market for the high-value activities of non-North American business entities?

Today's discussion paper signals the Panel's intent to deal with these and other sensitive issues, including fears surrounding the "hollowing out" of corporate Canada, on a factual basis rather than through unsubstantiated rhetoric.

The foregoing is a summary of a recent development in Canada's foreign investment review law.  If you would like additional information about this topic, please see the following items on our website: 

• Flash: Minister of Industry Outlines Government's Position on Foreign Investment in Canada (October 10, 2007)
  
• Perspective: Canada's Competition and Foreign Investment Rules Under Review (July 13, 2007)
  
• Flash: Canada Announces Upcoming Review of Investment Canada Act (November 24, 2006)

Please also feel free to contact George Addy, John Bodrug, Mark Katz, Richard Elliott, Anita Banicevic, Christopher Margison, Elisa Kearney or Srijan Agrawal in the Toronto office at (416) 863-0900 or Hillel Rosen in the Montréal office at (514) 841-6443.

Davies Ward Phillips & Vineberg LLP, with over 235 lawyers, practises nationally and internationally from offices in Toronto, Montréal, New York and an affiliate in Paris and is consistently at the heart of the largest and most complex commercial and financial matters on behalf of its North American and overseas clients.

The information and comments contained herein are for the general information of the reader and are not intended as advice or opinions to be relied upon in relation to any particular circumstances.  For particular applications of the law to specific situations, the reader should seek professional advice.