FMC Commissioners Call for Scrutiny of Canadians Buying Ports America

Federal Maritime Commissioners Bentzel and Sola are raising concerns over the proposed acquisition of North America’s largest terminal operator, Ports America, by the Canada Pension Plan Investment Board. Citing issues about port competitiveness and the potential sale of a strategic United States enterprise, the FMC commissioners wrote to Secretary Janet Yellen of the Department of the Treasury, copied to Attorney General Merrick Garland, requesting a review of the proposed acquisition.

Canada’s largest private pension fund investment manager announced at the end of September that it was acquiring Ports America in a private transaction from U.S. investment manager Oaktree Capital Management. The Canadians, who have been a minority investor in Ports America since 2014, said the transaction would provide for continuity in the operations while underscoring its confidence in the strong business outlook for the operation.

“This proposed acquisition is an all too familiar repetition of a U.S. transportation and supply chain asset being acquired by foreign investors,” the commissioners wrote. “Our supply chain assets directly impact our domestic economy and our national security. They should not be treated as an ordinary resource to be sold to whomever can pay the highest price.”

Calling Port America a critical piece of U.S. infrastructure, the commissioners said the transaction should be carefully scrutinized. They highlighted that a “foreign enterprise with a vested interest in the welfare of foreign nationals” would control the company’s operations that include 70 locations in 33 ports on each of the U.S. coasts. They also sought to link the sale of the terminal operator to a second proposed acquisition by the Canadians of a vital U.S. railroad line. The Canadian Pacific Railroad is currently attempting to acquire the Kansas City Southern railroad in a deal that is under review by the Surface Transportation Board.

While they recognized that the acquisition of Ports America “comes from our trusted northern neighbor and close trading partner,” Bentzel and Sola also highlighted the Canadian government’s policies and substantial investments to stimulate utilization of Canada’s major Atlantic and Pacific ports. They say they have seen “substantial deviation of cargo bound for the U.S. markets being transported through Canadian ports.”

Citing the 2006 proposed acquisition of P&O Ports by DP World, which was ultimately blocked by the U.S. Congress, the commissioners say there is precedence for the Committee on Foreign Investments in the United States (CFIUS) to undertake a review of the proposed acquisition of Ports America.

“After an examination it may be determined that the reported acquisition is appropriate, however, to allow acquisition of such a significant portion of our national supply chain without review would be a dereliction of duty,” writes Bentzel and Sola.

The Canadian Pension Plan Investment Board said that it expects to complete the acquisition before the end of 2021.