Canada’s Industry Minister, Christian Paradis, is poised to look into how the Investment Canada Act could play into the recent Nortel patent auction.
If it is discovered that the auction is “subject to review” under the act, the Industry Minister will need to determine that the patent sale was of “net benefit” to Canadians. Then, and only then, will he approve the deal. The review really is standard process in auctions of this sort, so Nortel fans probably shouldn’t put too much meaning into it.
The Investment Canada Act says that deals involving foreign investors buying Canadian businesses with assets totalling more than $312 million are subject to a review.
As many know, the last of Nortel’s patents were sold off recently. A consortium that included RIM, Apple, Ericsson, and more companies bought more than 6,000 patents for a total of $4.5 billion. RIM’s share in the purchase amounted to around $770 million.
There will be a joint hearing regarding the Nortel sale on July 11. Courts in Canada and the United States will oversee the finer points.
The Nortel sale, which has gone through the process of several auctions, has run into the Investment Canada Act before. Various divisions and assets have been subject to the Act, including the sale of Nortel’s enterprise business to Avaya and the sale of the Metro Ethernet Networks division to Ciena Corp. Both of these sales were approved by then-Industry Minister Tony Clement without incident, so there’s no reason to think the same won’t happen here.
Now it’s not much of a leap here to point out the obvious irony of determining that the finer points of this deal offer any sort of net benefit to Canadians. Losing a mammoth innovator is never a net benefit, especially when Canada’s telecommunications sector is comprised of a series of sell-outs.
Ronald Gruia, a telecom analyst with Frost & Sullivan, pointed out that the Industry Minister is going through the motions. The results could be good news for pensioners, however, as they stand to gain from the net proceeds of the auction.
Others, however, believe that the move is almost insult added on to injury on behalf of Paradis, who finally believes that he should raise at least an eyebrow after one of Canada’s biggest and brightest is squandered, split up and sold to the highest bidders.