OTTAWA - Prime Minister Stephen Harper may have been talking specifically about the oilsands when he shut the door to foreign state-controlled takeovers, but his intentions extend beyond Canada's energy sector.
By raising the threshold of review for all foreign takeovers except those spearheaded by government-run companies, Harper is in effect telling every area of the economy that corporate control by state-owned firms is not welcome in Canada.
"They've sent a signal," said Paul Boothe, a former deputy minister of industry who is now a professor at the Richard Ivey School of Business at Western University in London, Ont.
"He's pretty clear he doesn't like state-owned enterprises."
Under the new rules announced Friday in conjunction with Ottawa's approval of the CNOOC takeover of Calgary-based Nexen Inc., the federal government said it would gradually raise the threshold for scrutinizing takeovers to $1 billion.
But that extra leeway does not apply to state-owned enterprises. Instead, Ottawa will review any SOE transaction over $330 million. And it broadened the definition of what constitutes a state-owned firm.
"What they're doing is they're raising the threshold for all but state-owned enterprises," Boothe said. "That's a pretty strong message. They're discouraging acquisitions for control by state-owned enterprises."
Indeed, Harper has already suggested that his "No" to more state-owned control of the oilsands could also be applied to other sectors of the Canadian economy.
In extensive comments last Friday, he said he only dealt with the oilsands because the CNOOC-Nexen transaction put that sector into play.
Harper made it clear he won't stop there.
"What I would say is ... we will watch carefully other sectors of the economy to ensure that this situation does not develop in those sectors as well."
It remains unclear, however, what the threshold would be to trigger a similar ban on SOE investment in other sectors.
The other deal that's been in play, the $6 billion takeover of Progress Energy by Malaysian company Petronas, also got a green light Friday. The pair is working on plans for a liquid natural gas (LNG) terminal on the B.C. coast.
The LNG market has attracted significant state-owned enterprise investment in recent years, noted an analysis of the new rules by business law firm Osler. So why not explicitly limit SOEs in that sector, as well?
"The LNG industry is at a much earlier phase of its development than the oilsands and Canada is competing against other LNG producers, such as Australia, to build an Asian export market," the report said.
"Further, while the supply of new oilsands properties is fairly limited, there is a view that there continues to be abundant opportunity for further exploration and development in the Canadian non-conventional gas sector."
The gas industry could in fact benefit from the new rules, suggested Hal Kvisle, the chief executive of oil and gas company Talisman Energy and former CEO of TransCanada.
"There's all sorts of good stuff going on in the oilsands. The gas industry in Canada is one that's really suffering right now and is very much harmed by having access to only the lowest price market in the world, which is the U.S. market," Kvisle said.
"I think that if this could provide some clarity that would allow Asian LNG buyers to move ahead with more joint venture deals — and there's lots of them out there already."
The new rules were aimed at giving clarity to investors and providing discretion to the government, Harper said during a rare Monday appearance in question period in the House of Commons.
"We need discretion to make sure that when we are dealing with foreign governments this government has the capacity to protect the best interests of this country and its citizens," he said.
But discretion just leads to confusion and secrecy, the opposition charged.
They called for the terms of the deals signed by both Petronas and CNOOC to be revealed so Canadians can better examine them and decide for themselves why they deemed to be of net benefit of the country.
Earlier Monday, Natural Resources Minister Joe Oliver said that under the new rules, the CNOOC-Nexen deal may not have been approved.
Such approval "would have been difficult because it would had to have been an exceptional situation," Oliver said following a speech to the Canadian Association of Petroleum Producers.
While Ottawa didn't feel that the Nexen acquisition "was excessive," new rules are "now in place," he added.
That makes no sense, complained NDP Leader Tom Mulcair.
"How are foreign companies supposed to know what those rules are?" Mulcair said. "If it was not fair on Friday, how is it fair today?
"How do you keep making up those rules as you go along?"
— With files from Lauren Krugel in Calgary
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