There has been increasing interest in the broad issue of foreign business activity in Canada. This heightened interest has been facilitated by the purchase of foreign companies of several large Canadian firms including Falconbridge, INCO, Molson, Stelco, and Hudson's Bay Company. To address concerns regarding foreign business activity in Canada, the federal government recently announced the creation of a Competition Policy Review Panel to evaluate domestic laws governing foreign investment and competition.

This Alert explores the research on foreign business activity to enable readers to better understand the costs of restricting such activity. The Alert is divided into three sections. The first briefly discusses Canada's regulatory framework regarding foreign business activity. It also identifies the key industries affected by these policies. The second reviews research on the economic impact of foreign business activity. The final offers some conclusions and recommendations.