WE ARE ALL CHAMPIONS

At least, we may as well be, because declaring national champions is just political posturing

by Terence Corcoran The search for corporate national champions is more about political posturing than anything concrete.

The all-new Financial Post 500 list of Canada’s largest corporations is here, and I’m scanning it for National Champions. You know what National Champions are, don’t you? They are, by definition, the biggest and most important corporations that must remain under Canadian control because they are vital to the national interest in terms of jobs, technology, profitability, revenues, market value, worker skill and executive talent. Or not. In reality, none of the above accurately defines the essence of corporate championship as practiced in Canada or, for that matter, around the world.

Not too long ago a Quebec politician described Rona Inc., the Canadian home and garden hardware chain, as a “major strategic asset for Canada.” It was part of his argument against the sale of Rona to Loews Cos. Inc., even though Rona has none of what one might think of as solid championship qualifications. Rona ranks No. 102 on the FP500, down from No. 85 last year, and by all measures — jobs, technology, revenues, profits, executive talent, future prospects — it’s at best a mediocre enterprise supplying mundane products through a network of stores that have not seen same-store sales gains in eight years.

If nothing else, Rona proves that declaring National Champions is an arbitrary business. It’s a political thing. Canadians are famous for building walls around allegedly essential enterprises that must be fenced off as untouchable: banks, airlines, telecoms, potash companies, dairy industries, some energy firms, a host of Crown corporations. Of the FP500’ s top 100, 25 are already foreign owned, presumably lost champions. Of the remaining 75, a dozen or so are Crown corporations and another 10 are untouchable banks, airlines and telecoms. That leaves 50 of the top 100 firms potentially in need of protection.

Anything is possible. Nobody can rule out a rush to defend Onex Corp., Brookfield Asset Management Inc., Metro Inc., Resolute Forest Products Inc., McCain Foods Ltd., Barrick

In the gameof international corporate takeovers, every politician, executive, shareholder activist, media personality and nationalist demagogue has prompted inventive claims to justify protecting different companies

GoldCorp. or AtcoLtd. as National Champions, regardless of what the shareholders of those companies might want in the inevitable event of a change of control in future.

There are no principles or standards. In the new game of international corporate takeovers, every politician, executive, shareholder activist, media personality and nationalist demagogue seems able to come up with a claim that whatever enterprise they have an interest in could and should be hailed as a National Champion. In France, Germany and the U.K., the new round of global takeovers has prompted inventive claims of cultural and economic uniqueness to justify protecting different companies — pharmaceuticals, energy firms, telecoms — from the clutches of evil foreign predators.

Nationalist sentiments are easily roused. In the U.K., an uproar of home feeling developed when AstraZeneca PLC, the British pharmaceutical giant, was targeted by Pfizer Inc., the American giant, the thunder coming from many quarters, including Financial Times columnist Martin Wolf. He said AstraZeneca is “one of the UK’s most important companies” and pharmaceuticals is “one of the few activities in which the UKis a world leader.” To protect such National Champions from foreign corporate Philistines, Wolf called for a complete overhaul of shareholder-driven capitalism to be replaced by a regime that somehow protects jobs, local production, management and native control — as if takeovers were not part of the competitive environment.

Even when countries seem willing to give up on the idea of maintaining national control, the old concepts don’t quite disappear. Angela Merkel, the German chancellor, last month said it may be time to allow consolidation and cross-border mergers in telecommunications. “A balance needs to be achieved between market power and competition,” she said, “so that we can score internationally.”

National Champions may come and go, but it looks like they will always be with us.