www.lexpert.ca 9
HEADING
INTO M&A'S
REGULATORY
WINDS
AS CANADA'S TRADE WAR WITH THE US HEATS UP,
QUESTIONS ABOUND ON HOW IT COULD TRIGGER
'NATIONAL' AND 'ECONOMIC' SECURITY CONCERNS
IN MERGERS AND ACQUISITIONS
IF THERE was hope that the trade war
erupting between the United States and
Canada would remain in the realm of tariffs,
that thinking would likely be shattered now
that it has spread into the regulatory world of
mergers and acquisitions.
In early March, the federal government
released updated guidelines for the national
security review of foreign investments under
the Investment Canada Act and the policies
and criteria for administering the security
review process.
Most significantly, it formally introduces
"economic security" as a factor that the
minister of innovation, science and industry
can use if there is a belief that a particular
foreign investment could threaten Canada's
national security. e federal government
also incorporates a list of "sensitive tech-
nolog y" in its review criteria, first published
in early February as the trade war heated up.
ese changes come during a tariff dispute
currently being waged and could impact
merger activity in Canada. e federal
government believes protection is needed
from the economic instability and lower
loonie that such a trade war brings. Ottawa
says it creates the environment for "preda-
tory" acquisitions of Canadian assets, espe-
cially those that could be tied to the country's
economic and national security.
"As a result of a rapidly shi ing trade envi-
ronment, some Canadian businesses could
see their valuations decline, making them
susceptible to opportunistic or predatory
investment behaviour by non-Canadians,"
then Industry Minister François-Philippe
Champagne (now finance minister) said in a
statement announcing the changes.
While all the changes announced in March
may not necessarily be a specific response to
the US imposition of tariffs, they come on
the heels of other amendments to the regu-
latory environment for mergers and acquisi-
tions implemented in the last year.
"In a nutshell, last year was a signifi-
cant year for legislative change in the
competition space in Canada, and the
foreign investment review space," says
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