Canadian Merger Policy and Its International Implications

The implications of Canadian merger policy are of deep concern to U.S. and other foreign investors who have invested or are considering investing in Canada. U.S. interests own 60 percent of Canada’s manufacturing industry. In 1978, approximately 250 mergers in Canada involved a foreign-owned or foreign-controlled buyer (usually U.S.). Therefore, it is not surprising that Canada’s merger policy is no less important to the decisions of foreign investors in Canada than the Justice Department’s policies are to domestic investors in the United States. At the same time, the Canadian government and public are concerned with their merger policy as a means of regulating foreign acquisitions that affect the economic well-being of Canada. Canadian merger policy is also important to explain the past and future trends of U.S. investment in Canadian industries, the effects of foreign investment in Canada, and the response of Canadian authorities to transnational corporate concentration within their economy. This article is divided into four sections: (1) the pre-1970 history of Canadian merger policy, (2) the development of Canadian merger policy during the 1970s, (3) the international ramifications of early and recent Canadian merger policy, and (4) the future changes in Canadian merger policy and their probable effects.