THURSDAY, AUGUST 1, 2019 | THEGLOBEANDMAILO REPORTONBUSINESS| B5
Canada’s telecom regulator has intro-
duced new rules for internet providers
aimed at making contracts easier to un-
derstand and providing clarity on prices,
but consumer advocates say the measures
don’t go far enough to address aggressive
sales practices.
The Canadian Radio-television and
Telecommunications Commission said
Wednesday that the internet code of con-
duct will come into effect on Jan. 31 next
year, joining existing codes related to the
sale and provision of wireless and televi-
sion services. The decision follows a pub-
lic consultation that sought input from
Canadians via social media this year.
The code will require the 10 largest in-
ternet service providers (ISPs) in the
country to take steps to provide consum-
ers with more up-front information about
the terms and conditions of their home
broadband contracts and more clarity
around the potential for prices to in-
crease, bundling different services and
time-limited discounts. It will also force
the ISPs to send subscribers notifications
when they approach 75 per cent, 90 per
cent and 100 per cent of their monthly
data limits in the case of plans that in-
clude caps on usage.
But consumer advocacy group Open-
Media said the CRTC decision failed to ad-
dress the issue of misleading and aggres-
sive sales practices. In a report this year
that followed a public hearing ordered by
the federalgovernment, the commission
acknowledged that telecom providers do
engage in such tactics and said they harm
vulnerable members of the public.
At the time, the CRTC said it would take
The CRTC declined to mandate written
presales quotes and chairman Ian Scott
said the evidence on the record showed it
would cost too much for the ISPs to com-
ply with such a rule.
“It’s always a question of balancing
what consumers say they want or need
and the cost and burden associated with
ordering carriers to do these things,” he
said in an interview. He said that the new
rules will require ISPs to “clearly commu-
nicate before a contract is signed what
customers are signing up for,” and that
providers must retain records that show
that key contract terms were presented
(though not necessarily in writing) at the
time of the offer.
On the issue of addressing aggressive
and misleading sales tactics, Mr. Scott said
that it was outside of the scope of the in-
ternet code process. “This is an ongoing
thing with other aspects to be pursued,”
he said.
Minister of Innovation Navdeep Bains
called the code a “welcome addition” in a
statement, adding, “It will empower Cana-
dians to demand fair treatment from their
internet service providers.”
For its part, the Competition Bureau
said it was pleased to have taken part in
the process and spokesman Jean-Philippe
Lepage said in an e-mail, “We will contin-
ue to work with the CRTC closely to deter-
mine how best we can assist them.”
BCE Inc. said Wednesday it is reviewing
the decision while Rogers Communica-
tions Inc. said it welcomes the code, as it
“promotes clarity and ensures consumers
are better informed of their rights and re-
sponsibilities.” Telus Corp. called the code
“balanced” and said it “introduces a num-
ber of practices that have long been in
place” at the company.steps to address that problem and said
that one such step would be the process of
developing an internet code of conduct,
which was already under way. Now, Open-
Media executive director Laura Tribe says
the code has not gone far enough.
“With this document, there’s a little bit
of tinkering around the margins ... but it
doesn’t address the systemic problem that
this is a known issue throughout the ma-
jor telecom providers,” she said, adding
that she would have liked to see financial
penalties imposed on violators.
Ms. Tribe said the code puts too much
responsibility on individual customers to
seek redress for problems. She cited a rule
that will allow customers to cancel, with
no penalty, within 45 days of signing up if
the terms in their contract don’t match up
with what they were offered. She said that
this does not actually give consumers
what they were promised and could leave
people frustrated and without internet
service.
“This continues to be a customer-by-
customer complaint system – there is
nothing that says, ‘This is a systemic prob-
lem and here’s what we’ll do about it,’ ”
Ms. Tribe said.
OpenMedia and certain other public-
interest groups and academics did not
participate in the consultation in protest
of a CRTC decision to deny a time exten-
sion earlier in the process.
Consumer groups that took part, as
well as the Competition Bureau, filed sub-
missions with the CRTC arguing it should
require ISPs to provide a written presales
quote that sets out the terms and condi-
tions of an offer. That would allow cus-
tomers to shop around more easily and
also provide a written record of what they
were offered.CRTCintroducesnewcodeof
conductforinternetproviders
CHRISTINE DOBBYTELECOMREPORTER
Kinross’s early study points to a
six-year mine life, with an all-in
sustaining cost of US$550 an
ounce and an initial capital cost
commitment of half a billion dol-
lars.
“We’re really excited about the
potential,” Paul Rollinson, chief
executive officer of Kinross, said
in an interview. The company ex-
pects the deal to close by early
next year.
The Chulbatkan purchase
broadens Kinross’s already con-
siderable footprint in Russia. The
company operates two gold
mines in the country and about
20 per cent of its production
comes from the region.
Thepaceofmergersandacqui-
sitions in the gold sector has
picked up over the past year with
the world’s two biggest gold com-
panies, Barrick Gold Corp. and
Newmont Goldcorp Corp., strik-
ing multibillion-dollar deals
amid improving balance sheets
and rising gold prices.
Therehavealsobeenanumber
of smaller deals over the past few
months, with Australia’s St. Bar-
bara Ltd. buying Vancouver-
based Atlantic Gold Corp. in May
for $722-million and Newcrest
Mining Corp. paying US$806-mil-
lion for a majority stake in one of
Imperial Metals Corp.’s mines.
Many of the deals have been dri-
ven by the need to replace dwin-
dling gold reserves among many
of the world’s miners. Kinross’s
most recent gold acquisition was
its US$610-million purchase of
the Bald Mountain mine in Neva-
da from Barrick in 2015.Separately on Wednesday, Kin-
ross reported a net profit of $71.5-
million for the quarter ending
June 30, or 6 cents a share. The
company beat the Street’s expec-
tations on profit, costs and pro-
duction.
Kinross also said it plans to up-
date the market in September
with a new expansion plan for its
Tasiast mine in Mauritania in
West Africa. Kinross acquired Ta-
siastthroughitsUS$7.1-billionac-
quisition of Red Back Mining Inc.
in 2010 and hopes a second ex-
pansion of the mine will signifi-
cantly cut its costs and bump up
its production profile.
The expansion of Tasiast has
been partly bogged down by pro-
tracted talks with Mauritania
over the past year and a half.
Sticking points have included the
need to reach an agreement on
value-added tax refunds, fuel tax-
es and procurement agreements.
“We have some issues, we do
want to resolve them,” Mr. Rollin-
son said.
Complicating matters is the
fact that Mauritania is undergo-
ing a change of government and
Kinross will need to build rela-
tions with a new administration.
A new president will be inaugu-
rated on Thursday. Mr. Rollinson
said the company hopes to meet
with the newgovernment later
this summer.
Kinross is Canada’s fourth-big-
gest gold company with a market
value of $7-billion. Its shares are
up 27 per cent this year.KINROSS GOLD (K)
CLOSE: $5.34, DOWN 28¢Kinross:
Companyis
alsoeyeing
expansion
ofTasiastmine
inMauritania
FROM B1Kinross reported a net
profit of $71.5-million
for the quarter ending
June 30.ThecompanysaidCEOPeterAcetowasdis-
missed “with cause” and chairman Eric
Paul was forced to resign.
CannTrust shares jumped 8.8 per cent
on Wednesday. The company’s stock price
has declined 52.2 per cent since July 8,
whenCannTrustsaidithadreceivedanon-
compliance order from Health Canada.
In an interview on Tuesday, before the
Greenhill announcement, interim Cann-
TrustCEORobertMarcovitchsaidthecom-
pany was “absolutely exploring all options
for every aspect of the business, whether
it’s function, financial, operational.” When
asked whether it would consider takeover
bids, he said, “it’s premature to even have
that conversation. At this point in time, we
are aggressively getting our house in
order.”
Any potential acquirer of CannTrust
wouldfaceuncertaintyaboutlegalliability
and the actual worth of the company’s as-
sets. Health Canada can suspend or revoke
CannTrust’s licences, issue fines and order
the company to destroy thousands of kilo-
grams of inventory worth tens of millions
of dollars.
Law firms are seeking plaintiffs for at-
tempts to bring class-action lawsuits
against CannTrust on behalf of sharehol-
ders. The company could also face sanc-
tions from securities regulators on both
sides of the border, after CannTrust and
several insiders sold US$195.5-million
worth of shares using a prospectus that in-
cluded production numbers from the
illegal, unlicensed areas.
On Monday, The Globe and Mail report-
ed that a holding company controlled by
Mr. Paul sold millions of dollars worth of
CannTrustsharesintheweeksafterhewas
informed about the unlicensed growing
activity at CannTrust's facility in Southern
Ontario.
“Given the ongoing potential legal lia-
bilities, it is unclear if the strategic review
will result in a sale of the company,” Bank
ofMontrealanalystTamyChensaidinare-
search note on Wednesday. CannTrust has
several high-value assets, including a
greenhouseinPelham,Ont.,andaprocess-
ing facility in Vaughan.
“We believe the Niagara greenhouse
would provide value to [licensed pro-
ducers] that are relatively behind on their
[increases in cannabis] production. ... The
Vaughan facility would provide processing
capacitythatincludesextractionandpack-
aging.However,ifHealthCanadaultimate-
ly revokes the licences at these facilities,
the sale of these assets would likely be ex-
pedited at a deep discount,” Ms. Chen
wrote.
That latter situation is what happened
when the licence of Ascent Industries
Corp., a British Columbia-based cannabis
company, was suspended last September
after federal inspectors caught it diverting
product into the black market.
Ascent’s top managers were forced out
after the licence suspension; the interim
CEO hired investment bank Clarus Securi-
ties Inc. to shop around Ascent’s assets to
other licensed producers and companies
outside the cannabis space. After multiple
bidding rounds, Ascent’s B.C. cultivation
and extraction assets were sold without a
licence for $41.5-million to BZAM Manage-
ment Inc., a private company with no ex-
perienceintheindustry.Ascentwasforced
to destroy its inventory.
Kibben Jackson, a partner with the law
firm Fasken LLP who acted as counsel for
BZAM in the Ascent acquisition, said po-
tentialacquirersforCannTrustwouldhave
three options if the company loses its li-cence.
“They could buy just the assets, and
that’s going to drive the value down signif-
icantly. They could enter into an agree-
ment which has a condition that the li-
cence be reinstated and the suspension be
lifted, in which case there’s probably a
good premium value for it, but there’s not
certaintyforCannTrustthatthey’lleverget
the deal done.
“The third option is they do their own
due diligence and figure out what the like-
lihood is that the licence suspension will
be lifted, and buy the licence and be pre-
paredtotakeitonwithHealthCanada,the
risk being that you’ve overpaid for assets if
you don’t get that licence fixed,” Mr. Jack-
son said.
The shape of any deal would depend on
how quickly CannTrust would want a
transaction to happen, Mr. Jackson said.
“If there’s no urgency, you can sign up a
deal that says, ‘as long as we are satisfied
that this licence is in good standing and
will remain so, we’ll do the deal.’ In which
case, what kind of discount do you have to
give? But if there’s some pressure on get-
ting a deal done, you’re not going to find a
buyerwillingtopayaproperpriceorapre-
mium for your licence or assets,” Mr. Jack-
son said.CannTrust:Companycouldfaceclass-actionlawsuits,sanctions
FROM B1BMO analyst Tamy Chen writes that if Health Canada revokes licences at CannTrust’s
facilities – such as its Niagara greenhouse, where cannabis is seen growing above – those
assets ‘would likely be expedited at a deep discount.’TIJANA MARTIN/THE CANADIAN PRESSNo, this rate cut is chiefly about
playing defence against the
mounting fears that Mr. Trump’s
self-inflicted trade war with Chi-
na could blow up in his face, tak-
ing the U.S. economy down with
it. Given the damage to global
growth already inflicted by the
U.S.-China dispute, the Trump
administration’s protectionist
policies and the lack of visibility
on any resolution, the Fed decid-
ed to take out some “insurance,”
as many Fed watchers have de-
scribed this, against the risk that
the trade dispute could go spin-
ning seriously off the rails. (Mr.
Powell adopted the word himself
Wednesday, acknowledging that,
“there is an insurance aspect” to
the rate cut.)
When you’re dealing with one
of the most unpredictable, im-
pulsive presidents in history,
“better safe than sorry” seems
like a reasonable way to go.
But the danger in turning pre-
emptive on trade-policy risks is
the message it sends to that same
mercurial President. The Fed has
handed Mr. Trump a licence to
walk his trade-policy tightrope
even more recklessly – assured,
now, the Fed is there with the
safety net.
“It might introduce a bigger
moral-hazard problem, if it
emboldens the Trump adminis-
tration to pursue a little more
unstable trade and other poli-
cies,” Bank of Nova Scotia econo-
mist Derek Holt said in a recent
interview. “He feels like he has a
security blanket over him provid-ed by the Fed.”
With the precedent now set,
The Trump administration, as
well as the financial markets,
might expect the Fed to meet any
escalation of the trade war with
further rate cuts.
“Are we going down a danger-
ous spiral of easing, emboldening
trade policy, further easing?
[There’s] a risk of being quite
destabilizing to the outlook if we
keep going down that path.”
One important consideration
in interpreting the Fed cut is
whether this is a small dose of
preventive medicine or the start
of a much deeper easing phase.
The latter would suggest the Fed
had bigger fish to fry than hedg-
ing the economy against rogue
trade policies – that it felt a reces-
sion coming on.But Mr. Powell was crystal
clear this isn’t what the Fed has
on its mind. He described the cut
as a “mid-cycle adjustment,”
stressing “it’s not the beginning
of a long series of rate cuts.” He
left little doubt this is just a brief
rewind in an otherwise upward-
moving rate trend – not an all-
out reversal of course.
It’s notable the Fed itself is
split on how to deal with Mr.
Trump’s policies. (Join the club.)
Two of the 10 voting members on
its rate-setting committee (Kan-
sas City Fed president Esther Ge-
orge and Boston Fed president
Eric Rosengren) voted against
cutting.
The lack of unanimity suggests
there may not be enough support
within the Fed to cut much deep-
er.That doesn’t mean the Fed will
stop at a single rate cut. But the
last time the members of the
committee were asked, in mid-
June, their rate outlook suggest-
ed one or two quarter-point cuts
would be the extent of it. And
nothing the Fed said Wednesday
suggested it believes the down-
side risks to its outlook have in-
creased since then. Perhaps,
then, one more cut – likely in the
fall – should give the Fed all the
insurance it needs.
Until, that is, Mr. Trump turns
up the heat on China or whomev-
er else gets in his protectionist
sights – and moves the yardsticks
again for the Fed. It has shown it
is willing to change its stand in
the face of policy risk. The danger
now is how often it will be forced
to do so.Parkinson:TheFeditselfissplitonhowtodealwithTrump’spolicies
FROM B1