OTTAWA (Reuters) - The Canadian Chamber of Commerce took issue on Wednesday with Prime Minister Stephen Harper’s singling out foreign hostile takeovers of Canadian companies as something the government might consider blocking.
Harper said in an interview with Reuters on Friday that takeovers involving critical technology that the government has invested in, and hostile takeovers of key Canadian businesses, would not be in the country’s interest.
Chamber President Perrin Beatty, issuing a study on barriers to Canadian competitiveness, said the government should help Canada attract needed international investment.
“I don’t know why we would necessarily make a distinction between a hostile takeover and a purchase that’s friendly, an investment that’s friendly,” Beatty, a former Conservative cabinet member, told a news conference.
Often the result of buying other companies is a stronger and better business, he added.
“The real issue for us in Canada is not how we block investment or how we block one company from taking over another, but rather what can we do to ensure that head offices are located in Canada more often, that we can grow Canadian businesses and that Canada is a magnet for investment,” he said.
It is all right to carve out some exceptions for takeovers that could be blocked because they are deemed to involve strategic companies, Beatty said, “but those exceptions that we make should be few and far between...They should be clearly spelled out in advance.”
Harper, a Conservative, said in the interview on Friday that he would like BlackBerry maker Research In Motion “continue to grow as a Canadian company” but said he would not comment on any hypothetical takeover bid that might be made for RIM.
Under the Investment Canada Act, the government must give its approval to major foreign takeovers, using a test of whether the investment would be of “net benefit” to Canada.
“What we have today is terminology that’s quite vague. It’s very much open to interpretation,” Beatty said, adding that this could deter foreign investors.
“An investor doesn’t want to be embarrassed by making a bid that ends up being turned down,” he said. “If there’s too much uncertainty, they’ll take...their investment elsewhere.”
The vast majority of foreign takeovers of Canadian companies are approved, but Harper’s government stunned investors in 2010 when it rejected a $39 billion offer for fertilizer producer Potash Corp from Anglo-Australian mining giant BHP Billiton.
Top of the list of barriers to Canadian competitiveness, in the chamber's view, is a shortage of skilled labor, despite unemployment of 7.6 percent. The chamber's full report can be found here: chambertop10.ca/.
The skills shortage is acute in Alberta and Saskatchewan, two provinces rich in oil and other commodities, and the challenge is to attract workers in less prosperous provinces or in foreign countries, Beatty said.
He also said the employment insurance system needs reforming, since workers in depressed areas get richer benefits and therefore have a disincentive to move to where there are jobs.
Reporting by Randall Palmer; Editing by Peter Galloway