NDP and Liberal critics blasted the government for sitting on the issue for two years, saying they now are facing a decision this fall whether to accept China National Offshore Oil Corp.'s (CNOOC) $15.1-billion deal to buy Calgary-based Nexen Inc. without clear guidelines.
Earlier Monday, U.S.-based Lowe's withdrew its bid to acquire the Rona hardware chain, citing the Quebec company's opposition.
But analysts said another consideration was likely the political barriers put up from both leading parties in the province, including the Parti Quebecois minority government, that might have made approval under the Investment Canada Act problematic.
"We don't know what the Canadian government would have done with the Rona takeover, although clearly the government of Quebec was against it and that would have been an important factor in the process," said Oliver Borgers, a partner in McCarthy Tetrault's competition law group.
The act calls for a demonstration of a "clear benefit" to Canada, but is unclear what that means beyond that a deal would create or preserve jobs, and generally benefit the economy.
And that's the problem, say critics — the ambiguity and secrecy of the process allows for too much discretion, including political pressures.
"Ad hockery is what you get when you get when the government is negligent in setting the framework," said Liberal deputy leader Ralph Goodale, a former finance minister.
"What you've got is complete and utter chaos because it will all boil down to what Stephen Harper had for breakfast this morning and how he's feeling about it."
The question of political factors coming into play was given more fuel Monday when Conservative MP Rob Anders said he opposed the Nexen takeover, referring to China as a "non-benevolent country." He added that other MPs in the caucus agree.
NDP energy and natural resources critic Peter Julian called on the government to conduct public hearings on the Nexen bid, accusing the government of listening mostly to CNOOC lobbyists.
Although he did not answer the question directly, Industry Minister Christian Paradis said the Nexen deal will be "scrutinized very closely." He added that what the NDP was proposing would "deter any form of investment in the country."
Following the 2010 rejection of BHP Billiton's bid to buy Potash Corp. (TSX:POT), Ottawa suggested it would clear the confusion of what constitutes "net benefit" under the act, but has not issued new guidelines.
Instead during the spring, Paradis tripled the threshold of purchases that would need to be reviewed to firms with $1 billion in asset value, and said Ottawa would be more open with the reasons behind its decisions.
Opposition parties say the government is inviting trouble because more bids to buy into Canada's rich resources sectors are almost certainly to occur.
"This is a watershed. The size and scope of this takeover brings us into a whole new range in terms of potential acquisitions of Canadian energy companies," said Julian. "So the whole issue around net benefit and how the government treats these applications has to be set down."
Julian said the current approach is not fair to Canadians, who have no faith in the process, or investors, who fear a strong public reaction will scuttle their bid.
But despite some high-profile rejections in the last few years, there seems to be no loss of appetite from foreign investors for Canadian properties. One reason is that Canada's relatively healthy economy and sound fiscal position has made it a safe heaven for investors.
Borgers said to some extent investors expect some push-back when they seek to purchase assets in foreign countries.
"I don't think a couple of rejections is going to taint our reputation," he said. "If you look to many of the large, important economies around the world, there have been many deals rejected and Canada would not be perceived to be far outside that pattern."