The federal government’s recent decision to block the takeover of Potash Corp. by Australian mining company BHP Billiton has sparked much debate about which types of Canadian industries should be protected from foreign buyers. Canadian CEOs agree that natural resource companies should stay in Canadian hands, although they don’t feel the same way about companies in other industries.
In a recent COMPAS Inc. poll of Canadian CEOs, the most popular viewpoint was that companies involved in mining, oil and gas, and other natural resource extraction should have restrictions on foreign ownership tightened. One CEO put it simply: “Let’s keep what’s left of our natural resource base intact for the benefit of Canada.”
When asked about farmland and steel, the most popular response was to leave current foreign-ownership regulations unchanged. However, a sizable minority disagreed, saying that foreign-ownership regulations for those sectors should be tightened.
In terms of the banking and financial sector, CEOs felt that the current foreign-ownership restrictions should be maintained. This was a notable change from the panel’s views in 2006 — before the financial crisis and recession — when more execs were in favour of loosening restrictions in the sector.
When it comes to airline and telecommunications companies, the majority want to loosen up foreign-ownership rules. “Some of the restrictions have been placed to protect inefficient operations,” says one exec. “Phone services are better and cheaper in the U.S., and airline prices are also lower. Protectionism in this area did not stop Air Canada filing for CCAA.” In terms of the radio and television industries, the number of execs who thought there should be fewer restrictions edged out those in favour of the status quo.
Regardless of their viewpoints, many felt that the government should clarify its position on foreign buyouts for the good of corporations and shareholders. “Canada needs to decide what’s strategic to the national interest and security of supply,” says one exec.