Canada Passes Law Hiking Airline, CN Rail Ownership Limits

(Bloomberg) -- Ownership limits in Canadian airlines and the country’s biggest railway will rise this week after the wrangling over a controversial transport law finally came to an end.

Transport Minister Marc Garneau’s sprawling reform of transport laws, known as Bill C-49, passed final votes Tuesday by both elected lawmakers and the country’s unelected Senate. The bill had ricocheted between the two legislatures, but the Senate eventually abandoned its opposition to avoid what one Senator called a potential constitutional crisis.

It means the bill, first proposed a year ago, will become law as soon as it receives royal assent, likely on Wednesday. Key portions would kick in immediately, Garneau’s spokesman Marc Roy said. These include raising the foreign ownership limit in airlines like Air Canada and WestJet Airlines Ltd. to 49 percent, from 25 percent now.

Another would be raising the individual ownership limit in Canadian National Railway Co. to 25 percent, from 15 percent. The only person near that limit is Bill Gates, who owns a combined stake in the railway of about 15.9 percent between his investment company, Cascade Investment LLC, and his family’s charitable trust.

Farms, Mines

In addition to the ownership changes, there are also substantial new rules governing rail shipment, including the creation of a “long-haul intershipping” system aimed at helping rail customers served by only one line. The Senate originally sought changes to beef up powers of users, such as farms and mines. It’s these shipping rules that had delayed the bill, as critics had wanted stronger powers for shipping customers in fights with railways.

“I say to shippers: take heart,” Conservative Senator David Tkachuk said in the Senate before the vote passed. Prime Minister Justin Trudeau’s Liberals will lose in next year’s election “and these measures will be reintroduced,” he pledged, referring to changes rejected by elected lawmakers.

The wrangling had been unusually fraught, stoked by changes Trudeau has made to the Senate, once a sleepy rubber-stamp institution that now more often spars with its elected counterpart. The Senate had twice changed the transport bill, which would have become law earlier this month if not for procedural wrangling.

Click here to read why rail bottlenecks are choking off Canada’s economy

The final version of the law included some changes first passed by the Senate. Grant Mitchell, the senator who sponsored the bill in that chamber, said the amendments will be important for farmers as they enter a new crop year. “The Senate is under transformation and I think Canadians can be confident that ongoing modernization will continue to work in their favor,” he said in a written statement after the vote passed on Tuesday.

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