Nortel auction may face government scrutiny

An auction last week of intellectual property and patents held by bankrupt former Canadian technology company Nortel Networks Corp. netted US$4.5 billion for the company’s creditors, but they shouldn’t pop the champagne just yet.

SLIDESHOW: Canadian technology brands that are no more.

According to a report today by The Canadian Press, the auction may come under government scrutiny. Industry Minister Christian Paradis has reportedly asked his department to examine how the Investment Canada Act could apply to the auction. If the auction us found to be reviewable under the act, Paradis could potentially block the sale if it’s found to not be a “net benefit” to Canada.
It was under this provision that former Industry minister Tony Clement approved the acquisition of certain Nortel assets by Avaya Inc. and Ciena Corp., but blocked a takeover bid by BHP Billiton to buy Saskatchewan’s PotashCorp.
A Canadian company with troubles of its own these days, Research in Motion Ltd., was part of the consortium that won the bidding for the Nortel’s patents. RIM’s share was reported at US$770 million, with other consortium members including Apple Inc., EMC Corp., Ericsson Inc., Sony Corp. and Microsoft Corp.. They won out over a strong bid from Google Inc.
Following the auction, one analyst called the result a positive for Canada.
“It’s almost a silver lining for Canada,” said Ron Gruia, the Toronto-based principal telecommunications analyst for Frost & Sullivan, “because some of the intellectual property will stay home with RIM.”
In the end, though, if the auction is found to be reviewable under the Investment Canada Act it’s the industry minister that will have the final say on any Canadian silver lining.
Follow Jeff Jedras on Twitter: @JeffJedrasCDN.
— With files from Howard Solomon.

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Jeff Jedras
Jeff Jedras
As an assistant editor at IT World Canada, Jeff Jedras contributes primarily to CDN and, covering the reseller channel and the small and medium-sized business space.

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