Ottawa needs smart rules on state-owned companies – Toronto Star Editorial (October 29, 2012)

Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

The Harper government has been ragging the puck for more than two years on a crucial issue — how it decides whether a major takeover of a Canadian company by a foreign one should be given the green light. Now time is running out, and Canadians will be looking for reassurance that we won’t be played for fools in these transactions, especially when giant state-owned companies come shopping for our resources.

That issue is pressing because the biggest deal Ottawa must rule on involves a giant Chinese company, the China National Offshore Oil Corp., or CNOOC, which is fully owned and controlled by Beijing and its ruling party. CNOOC has bid $15.1 billion for Calgary-based Nexen Inc. That would be China’s biggest ever move into the oilsands, and indeed the biggest ever foreign acquisition by a Chinese company. The implications are enormous.

Ever since Ottawa nixed the takeover of Potash Corp. by an Australian company in 2010, it has been promising to clarify the rules on whether such a deal provides a “net benefit” to Canada. The new wrinkle is that companies on the hunt for our oil and other resources aren’t just free-market players; increasingly they are instruments of foreign governments.

That, apparently, is why Ottawa 10 days ago vetoed a bid by a Malaysian state-owned company, Petronas, for Calgary’s Progress Energy Resources Corp. We say “apparently” because the industry minister issued his decision late on a Friday night, with no explanation. Oil patch shares dropped because business hates uncertainty above all.

For the rest of this editorial, please go to the Toronto Star website: http://www.thestar.com/opinion/editorials/article/1278313–ottawa-needs-smart-rules-on-state-owned-companies

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