The Year of the Regulator
by Marzena Czarnecka
Regulatory risk was the big story in 2012, for both the deals that made it and those that did not
It used to be a footnote on a deal lawyer's agenda. No more.
In 2012, regulatory risk took centre stage in Canada in an unprecedented way. In 2010, when Ottawa killed BHP Billiton Ltd.'s $40-billion run at Potash Corporation of Saskatchewan, savvy lawyers did step up their focus on prepping clients for clearing Canadian regulatory hurdles — but they did so proactively
. Regulatory risk was on everyone's lips
, yes, but the inclination was to dismiss BHP as a blip — a one-off incident, a deal so big and unique that it was impossible to argue it set any type of precedent.
That turned out to be a Pollyanna interpretation, as 2012 proved in spades. The deal that dominated the country's business headlines in 2011 – Maple Group Acquisition Corporation's bid for TMX Group Inc. – languished before the regulators until July 2012. Later in the year, the Canadian Radio-Television & Telecommunications Commission killed BCE Inc.'s $3.38-billion bid for Astral Media Inc. Before the markets digested this announcement, Investment Canada declared that the $6-billion purchase of Calgary's Progress Energy Corp. by Malaysian state-owned enterprise PETRONAS was not
of net benefit to Canada (although it was eventually approved) — and made it clear to the China National Offshore Oil Corporation (CNOOC) that the federal government's various trade treaties and professions of love for China notwithstanding, its $15.1-billion bid for Calgary-based Nexen Inc. was not
going to be a regulatory cakewalk either.
“For better or worse, the Canadian government has put itself on the map,” says Torys LLP's Sharon Geraghty. “It was not that long ago that Canadian regulatory risk was a small blip on the horizon.”
In 2012, it defined the year.