Germany blocks EU caps on emissions to protect car industry

Germany has blocked a European Union agreement on capping car carbon emissions because the deal could have cost jobs and harmed its domestic auto industry, officials said Friday.

The blunt admission that Europe's biggest economy put business interests before environmental standards is at odds with Germany's image as a champion of green issues. The country has invested heavily in renewable energy and Chancellor Angela Merkel has previously advocated a global agreement to curb climate change, which scientists say is largely driven by carbon emissions.

"At a time when we're spending days sitting here talking about employment, we must pay attention not to weaken our own industrial base despite the need to make progress on environmental protection," Merkel said at a meeting in Brussels, where EU leaders were discussing the continent's youth unemployment crisis.

Environmental campaigners had lobbied to limit emissions from passenger cars to an average of 95 grams of CO2 per kilometre within seven years. But Germany wants to allow automakers such as BMW, Daimler and Audi — whose emissions are higher than those of their European competitors — to collect "credits" they can use to offset higher pollution levels beyond 2020.

"A fair solution also has to take account of the particularities of the German auto industry," government spokesman Georg Streiter told reporters in Berlin, explaining why Germany asked for a decision on the issue to be postponed Thursday.

An estimated 700,000 jobs in Germany depend on the auto industry, and the country has enjoyed economic prosperity in recent years, unlike many of its European neighbours.

"We wouldn't be doing so well today if the auto industry were doing badly," Streiter said.

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Big banks ratcheting up mortgage rates again

Some of Canada's biggest banks have been inching up their mortgage rates in recent weeks, with Royal Bank being the latest to announce an increase Friday. The hike is the second in a month and will take effect next week.

The bank said it is boosting some of its special discounted fixed-rate mortgages, effective next Tuesday.

The four-year closed-rate mortgage is moving up 10 basis points to 3.39 per cent, the seven-year is increasing by 20 basis points to 3.99 per cent, the 10-year is moving up by 30 basis points to 4.29. And perhaps most significantly, the five-year closed rate mortgage will increase by 20 basis points to 3.69 per cent.

The vast majority of first-time homeowners go with fixed-rate mortgages, and five years is the most popular term.

The hikes are small in percentage terms, but they add up over time. Under Royal Bank's old five-year rate, a $300,000 25-year mortgage would cost $1,496.23 a month. That same mortgage will cost $32 more per payment to finance starting next week, which will add up to more than $9,500 over the life of the mortgage.

The bank has already moved once this month to raise a few of its fixed-rates mortgages in reaction to suddenly higher borrowing costs on the bond market, which is where the bank finances most of its fixed-rate mortgages.

Scotiabank and TD Bank have also recently increased their special discounted rates.

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BlackBerry shares down 27% on TSX

BlackBerry, based in Waterloo, Ont., reported a first-quarter net loss of $84 million US on Friday, compared to a $518-million net loss a year ago, but short of expectations. (Jonathan Hayward/Canadian Press)

Shares in BlackBerry were down 27 per cent Friday after the company posted a disappointing $84-million net loss in the first quarter.

BlackBerry shares, which closed at $14.48 US on the Nasdaq stock market in New York Thursday, were already down 25 per cent when markets opened Friday and trading at below $11 in New York and Toronto by midday.

By the end of trading Friday, the stock was down almost 28 per cent to $10.46 US in New York and 27 per cent to $11.02 Cdn on the Toronto Stock Exchange.

More than 40 per cent of the Waterloo, Ont., company's shares are held by so-called short sellers, who bet against the company. That's a heavy weight on the stock, and heavily shorted stocks tend to move up and down in much more extreme ways.

Short interest in BlackBerry has almost doubled over the past 12 months.

The quarterly loss came in at 16 cents per share. While the $84-million figure is narrower than the $518 million the company lost in the same period a year ago, it wasn't what analysts had forecast.

The results were the first since BlackBerry unveiled its newest phones, the Z10 and the Q10, which BlackBerry is banking on turning the company around.

The company said it shipped 6.8 million smartphones in the first quarter, an increase of 13 per cent from the previous quarter when sales of the new phones were just getting started.

Chief executive Thorsten Heins said about 40 per cent of those phone shipments were of new models, well short of the ratio that analysts were expecting.

Overall, the company now has 72 million customers worldwide, a figure that fell by four million in the quarter, though the company says it will no longer provide those figures in the future because they don't accurately reflect its reworked business model.

The company has also scrapped plans to offer an operating system update for its PlayBook tablet, signalling that it will eventually clear the sales flop from its line of products entirely.

Sales rose to $3.07 billion from $2.81 billion a year ago.

"During the first quarter, we continued to focus our efforts on the global rollout of the BlackBerry 10 platform," Heins said in a release.

He hinted that the company's numbers aren't showing signs of improving in the near term. He said he expects BlackBerry will book an operating loss in its second-quarter earnings results, due to heightened competition in the smartphone industry.

"The company will also continue to implement the cost savings and process-improving initiatives it started last year," he added.

With files from The Canadian Press

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New rules on wireless spectrum transfers aim to limit 'undue concentration'

The federal government has introduced new rules that will make it harder for wireless companies to sell the spectrum they use to transmit cellphone signals to other players in the market.

Transfers of licences governing wireless spectrum, the radio waves over which cellphone signals are transmitted, that would result in "undue spectrum concentration" and diminish competition in the wireless market will not be permitted, the government said in a press release announcing the new rules Friday.

Any company wanting to sell off all or part of its spectrum will have to apply to have the prospective transfer reviewed by Industry Canada within 15 days of entering into an agreement with another company that already holds a spectrum licence or any affiliate of such a company.

The government will review transfer requests on a case by case basis, evaluating these "prospective transfers" as if they had already taken place. If the transfer is rejected, the applicant will have to cancel the agreement that includes the spectrum transfer within 90 days of the government's decision.

"The Harper government will not hesitate to use any and every tool at its disposal to protect Canadian consumers and to promote competition," the release said.

Licence transfer reviews will be completed within about 12 weeks and the final decisions will be made public.

Under the new rules, Industry Canada reviews will also be required for so-called deemed transfers of a spectrum licence. These are cases where control of a spectrum licence falls into the hands of someone other than the original licence holder, through a change in ownership, for example.

This could result from a transfer or conversion of shares; a joint venture or strategic alliance with another licence holder or its affiliates; an agreement guaranteeing exclusive control of or barring others from using licensed spectrum; an agreement preventing a licnece holder from making a deal with a competitor to transfer a spectrum licence.

Subsidized spectrum can't be transferred too soon

Bands of wireless spectrum are periodically auctioned off in order to enable new companies to enter the wireless market and to allow existing players to expand their spectrum. In Canada, such an auction occurred in 2008 and led to the entry of companies like Wind Mobile, Mobilicity and Public Mobile.

In that auction, the government reserved parts of the spectrum for new entrants specifically and effectively subsidized their licences.

But in recent years, those new entrants have not fared so well and some have tried to sell their businesses to bigger incumbents like Rogers, Bell and Telus. The government blocked one such deal earlier this month when Telus tried to purchase Mobilicity.

Part of its reasoning at the time was that under the rules of the 2008 auction, new entrants could not sell the subsidized spectrum the government sold to them until at least five years after they acquired it, so if the government allowed the sale, it would be breaking their own rules.

Telus had argued that given Mobilicity's dire financial situation, the government should make an exception to the five-year condition.

Rules could affect several deals

Other companies have also expressed interest in selling parts of their spectrum. Shaw and Vidéotron have been looking to sell some of their unused spectrum to Rogers, but those deals are unlikely to be approved under the new rules.

Several other transactions that are currently in the works or rumoured to be in the works could be impacted.

Private-equity firms Thomvest Seed Capital Inc., controlled by Toronto businessman Peter Thomson, and Cartesian Capital are awaiting regulatory approval of their deal to purchase Public Mobile.

U.S. wireless giant Verizon is also reportedly circling Canada's wireless market and is rumoured to be considering a bid to buy Wind Mobile.

In the policy framework released Friday, the government said it will evaluate a broad range of factors when assessing an application to transfer licensed spectrum to another company, including:

• The number of spectrum licences held by the applicant and its affiliates and how they are distributed.
• The amount of spectrum controlled by the applicant in relation to other licence holders.
• How useful the spectrum in question is in the affected area and whether it can be substituted with other available spectrum.
• The degree to which the applicant and its affiliates have deployed mobile networks.
• Whether there is alternate spectrum available with similar properties.
• Characteristics of the region in which the licence operates that affect spectrum capacity and congestion, such as population density and whether the area is urban or rural.

Telecommunications analyst Neeraj Manga, of investment research firm Veritas, said the industry will be reassured to see that the government has not chosen to impose any caps on the amount of spectrum any one provider can control.

"What they have said is we will take how much you own into consideration before we allow additional transfers, but they haven't said there is a limit to how much you can own," he said.

Industry Minister Christian Paradis has committed to creating a federal mobile policy that supports the existence of at least four competing wireless carriers in every regional market in Canada.

He announced several new rules earlier this spring that will govern the next auction of wireless spectrum, which is set to take place Jan. 14, 2014.

The minister restricted the number of spectrum blocks that can be purchased in the auction to four and made it easier for companies to share cellphone towers. He also made it obligatory for carriers with access to two blocks of paired spectrum to deploy services to rural areas.

The auction will be for the 700 MHz band, which was used to transmit analog television signals but has been freed up since broadcasters moved to digital transmission. The deadline for submitting bids is Sept. 17, 2013.

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Air Canada offers more compensation for bumped passengers

Air Canada says it's willing to pay compensation of up to $800 to passengers who are bumped from overbooked domestic flights.

In documents filed Friday to the Canadian Transportation Agency, the airline proposed that passengers who are delayed from domestic flights for six hours or more be eligible for 200 per cent of the one-way airfare — up to a maximum of $800.

It also proposed that those delayed between one to six hours be eligible for 100 per cent of the one-way airfare — up to a maximum of $400 — while it would pay between $100 to $150 to those delayed for less than an hour.

The compensation could either be in cash or travel vouchers.

The proposals were submitted in response to a federal ruling last month that said Air Canada's existing practice of giving $100 cash or a $200 travel voucher to bumped passengers is unreasonable.

The agency will consider the airline's proposals and decide if they are satisfactory.

Last month, the agency had ruled that the airline should explain why it shouldn't be forced to adopt a compensation model from the U.S.

American airlines pay passengers twice the airfare up to a maximum of $650 US for delays of one to two hours and four times the fare to a maximum of $1,300 US are paid for delays exceeding two hours.

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Germany blocks EU caps on emissions to protect car industry

Germany has blocked a European Union agreement on capping car carbon emissions because the deal could have cost jobs and harmed its domestic auto industry, officials said Friday.

The blunt admission that Europe's biggest economy put business interests before environmental standards is at odds with Germany's image as a champion of green issues. The country has invested heavily in renewable energy and Chancellor Angela Merkel has previously advocated a global agreement to curb climate change, which scientists say is largely driven by carbon emissions.

"At a time when we're spending days sitting here talking about employment, we must pay attention not to weaken our own industrial base despite the need to make progress on environmental protection," Merkel said at a meeting in Brussels, where EU leaders were discussing the continent's youth unemployment crisis.

Environmental campaigners had lobbied to limit emissions from passenger cars to an average of 95 grams of CO2 per kilometre within seven years. But Germany wants to allow automakers such as BMW, Daimler and Audi — whose emissions are higher than those of their European competitors — to collect "credits" they can use to offset higher pollution levels beyond 2020.

"A fair solution also has to take account of the particularities of the German auto industry," government spokesman Georg Streiter told reporters in Berlin, explaining why Germany asked for a decision on the issue to be postponed Thursday.

An estimated 700,000 jobs in Germany depend on the auto industry, and the country has enjoyed economic prosperity in recent years, unlike many of its European neighbours.

"We wouldn't be doing so well today if the auto industry were doing badly," Streiter said.

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Big banks ratcheting up mortgage rates again

Some of Canada's biggest banks have been inching up their mortgage rates in recent weeks, with Royal Bank being the latest to announce an increase Friday. The hike is the second in a month and will take effect next week.

The bank said it is boosting some of its special discounted fixed-rate mortgages, effective next Tuesday.

The four-year closed-rate mortgage is moving up 10 basis points to 3.39 per cent, the seven-year is increasing by 20 basis points to 3.99 per cent, the 10-year is moving up by 30 basis points to 4.29. And perhaps most significantly, the five-year closed rate mortgage will increase by 20 basis points to 3.69 per cent.

The vast majority of first-time homeowners go with fixed-rate mortgages, and five years is the most popular term.

The hikes are small in percentage terms, but they add up over time. Under Royal Bank's old five-year rate, a $300,000 25-year mortgage would cost $1,496.23 a month. That same mortgage will cost $32 more per payment to finance starting next week, which will add up to more than $9,500 over the life of the mortgage.

The bank has already moved once this month to raise a few of its fixed-rates mortgages in reaction to suddenly higher borrowing costs on the bond market, which is where the bank finances most of its fixed-rate mortgages.

Scotiabank and TD Bank have also recently increased their special discounted rates.

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BlackBerry shares down 27% on TSX

BlackBerry, based in Waterloo, Ont., reported a first-quarter net loss of $84 million US on Friday, compared to a $518-million net loss a year ago, but short of expectations. (Jonathan Hayward/Canadian Press)

Shares in BlackBerry were down 27 per cent Friday after the company posted a disappointing $84-million net loss in the first quarter.

BlackBerry shares, which closed at $14.48 US on the Nasdaq stock market in New York Thursday, were already down 25 per cent when markets opened Friday and trading at below $11 in New York and Toronto by midday.

By the end of trading Friday, the stock was down almost 28 per cent to $10.46 US in New York and 27 per cent to $11.02 Cdn on the Toronto Stock Exchange.

More than 40 per cent of the Waterloo, Ont., company's shares are held by so-called short sellers, who bet against the company. That's a heavy weight on the stock, and heavily shorted stocks tend to move up and down in much more extreme ways.

Short interest in BlackBerry has almost doubled over the past 12 months.

The quarterly loss came in at 16 cents per share. While the $84-million figure is narrower than the $518 million the company lost in the same period a year ago, it wasn't what analysts had forecast.

The results were the first since BlackBerry unveiled its newest phones, the Z10 and the Q10, which BlackBerry is banking on turning the company around.

The company said it shipped 6.8 million smartphones in the first quarter, an increase of 13 per cent from the previous quarter when sales of the new phones were just getting started.

Chief executive Thorsten Heins said about 40 per cent of those phone shipments were of new models, well short of the ratio that analysts were expecting.

Overall, the company now has 72 million customers worldwide, a figure that fell by four million in the quarter, though the company says it will no longer provide those figures in the future because they don't accurately reflect its reworked business model.

The company has also scrapped plans to offer an operating system update for its PlayBook tablet, signalling that it will eventually clear the sales flop from its line of products entirely.

Sales rose to $3.07 billion from $2.81 billion a year ago.

"During the first quarter, we continued to focus our efforts on the global rollout of the BlackBerry 10 platform," Heins said in a release.

He hinted that the company's numbers aren't showing signs of improving in the near term. He said he expects BlackBerry will book an operating loss in its second-quarter earnings results, due to heightened competition in the smartphone industry.

"The company will also continue to implement the cost savings and process-improving initiatives it started last year," he added.

With files from The Canadian Press

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New rules on wireless spectrum transfers aim to limit 'undue concentration'

The federal government has introduced new rules that will make it harder for wireless companies to sell the spectrum they use to transmit cellphone signals to other players in the market.

Transfers of licences governing wireless spectrum, the radio waves over which cellphone signals are transmitted, that would result in "undue spectrum concentration" and diminish competition in the wireless market will not be permitted, the government said in a press release announcing the new rules Friday.

Any company wanting to sell off all or part of its spectrum will have to apply to have the prospective transfer reviewed by Industry Canada within 15 days of entering into an agreement with another company that already holds a spectrum licence or any affiliate of such a company.

The government will review transfer requests on a case by case basis, evaluating these "prospective transfers" as if they had already taken place. If the transfer is rejected, the applicant will have to cancel the agreement that includes the spectrum transfer within 90 days of the government's decision.

"The Harper government will not hesitate to use any and every tool at its disposal to protect Canadian consumers and to promote competition," the release said.

Licence transfer reviews will be completed within about 12 weeks and the final decisions will be made public.

Under the new rules, Industry Canada reviews will also be required for so-called deemed transfers of a spectrum licence. These are cases where control of a spectrum licence falls into the hands of someone other than the original licence holder, through a change in ownership, for example.

This could result from a transfer or conversion of shares; a joint venture or strategic alliance with another licence holder or its affiliates; an agreement guaranteeing exclusive control of or barring others from using licensed spectrum; an agreement preventing a licnece holder from making a deal with a competitor to transfer a spectrum licence.

Subsidized spectrum can't be transferred too soon

Bands of wireless spectrum are periodically auctioned off in order to enable new companies to enter the wireless market and to allow existing players to expand their spectrum. In Canada, such an auction occurred in 2008 and led to the entry of companies like Wind Mobile, Mobilicity and Public Mobile.

In that auction, the government reserved parts of the spectrum for new entrants specifically and effectively subsidized their licences.

But in recent years, those new entrants have not fared so well and some have tried to sell their businesses to bigger incumbents like Rogers, Bell and Telus. The government blocked one such deal earlier this month when Telus tried to purchase Mobilicity.

Part of its reasoning at the time was that under the rules of the 2008 auction, new entrants could not sell the subsidized spectrum the government sold to them until at least five years after they acquired it, so if the government allowed the sale, it would be breaking their own rules.

Telus had argued that given Mobilicity's dire financial situation, the government should make an exception to the five-year condition.

Rules could affect several deals

Other companies have also expressed interest in selling parts of their spectrum. Shaw and Vidéotron have been looking to sell some of their unused spectrum to Rogers, but those deals are unlikely to be approved under the new rules.

Several other transactions that are currently in the works or rumoured to be in the works could be impacted.

Private-equity firms Thomvest Seed Capital Inc., controlled by Toronto businessman Peter Thomson, and Cartesian Capital are awaiting regulatory approval of their deal to purchase Public Mobile.

U.S. wireless giant Verizon is also reportedly circling Canada's wireless market and is rumoured to be considering a bid to buy Wind Mobile.

In the policy framework released Friday, the government said it will evaluate a broad range of factors when assessing an application to transfer licensed spectrum to another company, including:

• The number of spectrum licences held by the applicant and its affiliates and how they are distributed.
• The amount of spectrum controlled by the applicant in relation to other licence holders.
• How useful the spectrum in question is in the affected area and whether it can be substituted with other available spectrum.
• The degree to which the applicant and its affiliates have deployed mobile networks.
• Whether there is alternate spectrum available with similar properties.
• Characteristics of the region in which the licence operates that affect spectrum capacity and congestion, such as population density and whether the area is urban or rural.

Telecommunications analyst Neeraj Manga, of investment research firm Veritas, said the industry will be reassured to see that the government has not chosen to impose any caps on the amount of spectrum any one provider can control.

"What they have said is we will take how much you own into consideration before we allow additional transfers, but they haven't said there is a limit to how much you can own," he said.

Industry Minister Christian Paradis has committed to creating a federal mobile policy that supports the existence of at least four competing wireless carriers in every regional market in Canada.

He announced several new rules earlier this spring that will govern the next auction of wireless spectrum, which is set to take place Jan. 14, 2014.

The minister restricted the number of spectrum blocks that can be purchased in the auction to four and made it easier for companies to share cellphone towers. He also made it obligatory for carriers with access to two blocks of paired spectrum to deploy services to rural areas.

The auction will be for the 700 MHz band, which was used to transmit analog television signals but has been freed up since broadcasters moved to digital transmission. The deadline for submitting bids is Sept. 17, 2013.

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Air Canada offers more compensation for bumped passengers

Air Canada says it's willing to pay compensation of up to $800 to passengers who are bumped from overbooked domestic flights.

In documents filed Friday to the Canadian Transportation Agency, the airline proposed that passengers who are delayed from domestic flights for six hours or more be eligible for 200 per cent of the one-way airfare — up to a maximum of $800.

It also proposed that those delayed between one to six hours be eligible for 100 per cent of the one-way airfare — up to a maximum of $400 — while it would pay between $100 to $150 to those delayed for less than an hour.

The compensation could either be in cash or travel vouchers.

The proposals were submitted in response to a federal ruling last month that said Air Canada's existing practice of giving $100 cash or a $200 travel voucher to bumped passengers is unreasonable.

The agency will consider the airline's proposals and decide if they are satisfactory.

Last month, the agency had ruled that the airline should explain why it shouldn't be forced to adopt a compensation model from the U.S.

American airlines pay passengers twice the airfare up to a maximum of $650 US for delays of one to two hours and four times the fare to a maximum of $1,300 US are paid for delays exceeding two hours.

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CRTC approves Bell-Astral merger

Canada's telecommunications regulator has approved BCE Inc.'s $3.4-billion takeover of Montreal-based media giant Astral Media Inc., but with several conditions that the Canadian Radio-television and Telecommunications Commission says will protect the public interest.

"To ensure the public interest is served, we are requiring BCE to invest in new Canadian programming and sell more than a dozen services, and we are putting in place a number of competitive safeguards," CRTC chairman Jean-Pierre Blais said in a news release.

"This will maintain a healthy and competitive broadcasting system that offers more programming choices to Canadian consumers and citizens and more opportunities for Canadian creators."

Astral Media Inc. owns more than 80 radio stations across the country, numerous French- and English-language specialty television channels, including the Movie Network — which includes HBO Canada — and Super Écran, and a number of billboard advertising assets.

The CRTC approved the sale of Astral to BCE on condition that BCE, whose media division is known as Bell Media, sells off 10 of the radio stations it acquired in the deal as well as 11 specialty TV channels, including Teletoon, the Family Channel, the Cartoon Network, Disney XD and MusiquePlus.

Bell already has a tentative $400.6-million offer from Corus Entertainment to buy several of the specialty channels, including Teletoon, Cartoon Network and Historia, and two radio stations.

Even with those divestitures, the deal gives BCE unprecedented access to specialty and pay TV programming, including movies and sports, and to the French-language broadcast market, where it has not had a significant presence to date.

The new deal gives BCE control of 22.6 per cent of the French-language television market and 35.8 per cent of the English-language market, about two per cent more than it has now.

Will dominate pay TV

The merger will give BCE a big leg up over its competitors, including Quebecor, its biggest rival in Quebec, said John Lawford, executive director and general counsel for the Vancouver-based Public Interest Advocacy Centre, which lobbies on behalf of consumer rights. Even though Quebecor controls about 31 per cent of the French-language market, it doesn't have many specialty channels like those BCE has just acquired, Lawford said.

'Basically, if you want to get TV packages in Quebec or otherwise, you're dealing with Bell Media.'— John Lawford, Public Interest Advocacy Centre

"In French pay and specialty [television], Quebecor doesn't have very much; now, Bell has a lot," Lawford said. "Basically, if you want to get TV packages in Quebec or otherwise, you're dealing with Bell Media and … Bell Media feeds into Bell TV. So, the deals that get passed toward Rogers or Telus or anybody else who tries to do TV aren't going to be that exciting."

The CRTC tried to curb BCE's reach into specialty programming by requiring the media conglomerate to allow other providers access to the new channels at a reasonable price. The deal prohibits BCE from imposing "restrictive bundling requirements" on providers seeking to carry the Movie Network, for example, or Super Écran.

BCE will also have to invest $246.9 million into creating original Canadian TV and radio programming, $72 million more than it had proposed. Of that, $175.4 million will have to be spent in the television sector and the rest on radio.

As part of the radio investment, the merged company will have to provide funding to non-profit organizations that support the development of the Canadian music industry.

Local TV stations must be kept open

The CRTC also imposed a condition that will require BCE to keep open all of its existing local television stations plus the two it acquired from Astral until at least 2017. It must maintain its current level of local news and other programming in the 29 markets served by those stations for that time, the regulator said.

It also imposed a condition on the acquisition of Montreal's CKGM radio station.

"Given the strong support expressed by Montreal's English-language minority community for this station, BCE will have to maintain its current sports format for at least seven years," the CRTC said.

BCE acquired four Montreal English-language radio stations in the merger, including the popular CJAD.

One of the conditions the CRTC imposed on BCE's new radio acquisitions is that it provide "reasonable access" to radio advertising opportunities to all competitors.

1st merger proposal failed

The $3.38-billion deal approved Thursday was BCE's second attempt to buy Astral's assets.

The CRTC rejected the first merger proposal last fall, saying it would restrict consumer choice and raise prices. The original deal would have given BCE control of almost 45 per cent of Canada's English TV viewership, and almost 35 per cent of the French-language audience.

The new plan has already been approved by the Competition Bureau of Canada, which made it harder for the CRTC to reject the deal, said Lawford

Even with the obligatory divestitures and imposed conditions, the deal represents an unprecedented level of vertical integration and media concentration, Lawford said. And even though the CRTC has obliged BCE to follow its code of conduct on vertical integration and not abuse its dominant position to influence the negotiations of its smaller competitors, it's unlikely the regulator will be able to ensure the media behemoth follows through, he said.

"They'll have to be extremely vigilant given the size that Bell's at now to actually be able to police it," he said. "Last time around, they said it would be too much of a regulatory burden to do that, and now, they've set themselves up to take on the regulatory burden."

Ensuring BCE adheres to the regulator's conditions and doesn't engage in anti-competitive practices will take not just vigilance but a willingness to spend a lot of time and energy arguing the issue before the CRTC.

"The independent broadcasters that are left are so small now, they can't exert any influence whatsoever, even with the commission standing in their corner and handing them the gloves and wiping them off in every round. It's not going to be good enough," Lawford said.

Bell Media's rivals have criticized the proposed merger from the start, fearing it would give BCE too much control of the broadcast market. In its submission before the CRTC, Quebecor told the regulator that "a monster would be created" if the merger went ahead.

"A company with such control should not exist," Quebecor CEO Robert Dépatie said at a CRTC hearing in May.

BCE shares were trading at $41.96 by the end of trading on the Toronto Stock Exchange on Thursday, a slight increase of 0.94 per cent over the previous day. Trading ended before the CRTC decision was announced. Astral Media shares closed at $48.24, up 0.27 per cent.

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BlackBerry shares open 25% lower on TSX

BlackBerry, based in Waterloo, Ont., reported a first-quarter net loss of $84 million US on Friday, compared to a $518-million net loss a year ago, but short of expectations. (Jonathan Hayward/Canadian Press)

Shares in BlackBerry were down by as much as 25 per cent when stock markets opened Friday, after the company posted a disappointing $84 million net loss in the first quarter.

BlackBerry shares, which closed at $14.48 US on the Nasdaq stock market in New York Thursday, were trading at below $11 in what's known as premarket trading on the Nasdaq this morning.

Those losses held when the broader markets opened at 9:30 a.m. ET.

More than 40 per cent of BlackBerry shares are held by so-called short sellers, who bet against the company. That's a heavy weight on the stock, and heavily shorted stocks tend to move up and down in much more extreme ways.

Short interest in BlackBerry has almost doubled over the past 12 months.

The quarterly loss came in at 16 cents per share. While the $84 million figure is narrower than the $518 million the company lost in the same period a year ago, it wasn't what analysts had forecast.

The results were the first since BlackBerry unveiled its newest phones, the Z10 and the Q10, which BlackBerry is banking on turning the company around.

Cost-saving plans will continue

The company said it shipped 6.8 million smartphones in the first quarter, an increase of 13 per cent from the previous quarter when sales of the new phones were just getting started.

Chief executive Thorsten Heins said about 40 per cent of those phone shipments were of new models, well short of the ratio that analysts were expecting.

Sales rose to $3.07 billion from $2.81 billion a year ago.

"During the first quarter, we continued to focus our efforts on the global rollout of the BlackBerry 10 platform," chief executive Thorsten Heins said in a release.

Heins hinted that the company's numbers aren't showing signs of improving in the near term. He said he expects BlackBerry will book an operating loss in its second-quarter earnings results, due to heightened competition in the smartphone industry.

"The company will also continue to implement the cost savings and process-improving initiatives it started last year," he added.

With files from The Canadian Press

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Canada ekes out 0.1% GDP gain in April

Canada's GDP eked out a gain of 0.1 per cent in April, extending a growth streak that's continued since the start of the year and in line with what experts were expecting.

Statistics Canada said the service sector expanded by 0.3 per cent, while the goods-producing sector shrank by the same amount. But the service sector was twice as large as the goods sector, so the overall figure was higher.

Spread over 12 months, Canada's economy expanded at an annual pace of 1.4 per cent in April.

Mining, oil and gas extraction, construction and the energy sector all shrank significantly, while almost every other sector of the economy expanded.

"Continued growth in April GDP is encouraging, though it does represent a slowing relative to gains over the previous two months," Royal Bank economist Paul Ferley said.

It could be setting up a weak quarterly figure, because when April's data is added to June's (which is bound to be lower because of the Alberta floods), the result could be the quarterly contraction that many economists are already expecting.

Two quarterly contractions in a row are held to be the technical definition of a recession.

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Calgary floods spotlight cities' costly failure to plan for climate change

Many Canadian cities and towns are ill-prepared for the rising frequency of catastrophic weather events like the southern Alberta floods, and it's a problem that taxpayers will ultimately end up paying for, climate change experts say.

"There are other disasters waiting to happen in other parts of Canada, but Calgary is a good poster child for inaction on warnings they received not too long ago," said James P. Bruce, former Environment Canada assistant deputy minister.

Many have heaped praise on southern Alberta's emergency response after extremely heavy rain pummelled communities, with several months' worth of rain falling in the span of hours for some areas.

"From a disaster response point of view, the Calgary mayor did a fantastic job in running the whole show," said Kaz Higuchi, a York University professor in environmental studies and former Environment Canada scientist.

But a community's ability to react during a disaster is one thing. Minimizing the impact of a flood is another. Now, the province faces a potentially decade-long cleanup effort that could cost $5 billion by BMO Nesbitt Burns estimates.

Disaster risk management experts say the Alberta situation should serve as a wake-up call to municipalities across the country of the need to spend money and time mitigating the risks before disaster strikes, especially as climate change is predicted to bring bigger and more frequent severe weather events.

"We go from disaster to disaster … being sure that we protect a life so people are protected and then finding the best way how we pay for that," said Slobodan Simonovic, author of Floods in a Changing Climate: Risk Management. "But what we are doing is we are simply reacting to that, paying for that. We are not investing in the reduction or minimization of the future."

'Tremendous increase'

On average, Canada gets 20 more days of rain now than it did in the 1950s. While flooding – the costliest natural disaster for Canadians – was once mainly a spring event due to the combination of frozen ground and rainfall, it's now increasingly happening in the summer.

'The climate change community is predicting that we will be seeing a tremendous increase in these heavy and extreme rainfall events.'—Slobodan Simonovic, risk management report author

"The climate change community is predicting that we will be seeing a tremendous increase in these heavy and extreme rainfall events," said Simonovic. "They're going to be much more frequent."

Since the 1950s, the cost of natural disasters has also risen 14-fold, according to the Centre for Research in the Epidemiology of Disasters.

Before 1990, only three Canadian disasters exceeded $500 million in damages. In the past decade alone, nine surpassed that amount.

Simonovic notes that it's not only in the federal government's interest to help communities minimize the risks of disasters because of the amount of money it forks over for relief, but also because there are economic benefits to prevention.

Studies around the world show that the economic benefits of disaster mitigation can range from $3 to $10 dollars for each dollar spent on prevention.

Feds active in past

Bruce says decades ago the Canadian government took a more active role in trying to reduce the risks to life and property from floods, ensuring municipalities weren't building on vulnerable flood plains.

The Flood Damage Reduction Program, which ran from 1975 until 1990, saw the federal and provincial governments share costs of mapping all the floodplains and creating standard flood risk evaluations.

The federally initiated program also got provinces and territories, with the exception of the Yukon, to agree to inhibit development in the floodplain areas. Alberta didn't join until 1989, a year before the program began to disintegrate.

"I think they were worried about what that would mean, designating all of downtown as floodplain," said Bruce.

But the federal government hasn't sought a similar approach to helping communities prepare for the increased risk of disasters expected from climate change.

Bruce helped write a 2010 guide for municipalities that helps them figure out specifically how climate change could affect them and then design a way to minimize the risks of future damages. The voluntary guide saw uptake in several provinces across the country and aims to help municipalities wade through an area where there's dire need for long-term planning but currently little financial impetus.

"Many municipalities have risk management framework, applied to investments and structural problems. None of them had a risk management frameworks that they applied to climate change," said Bruce.

U.S. helping municipalities

In the United States, the federal government has clearly signaled that it will help the local governments mitigate the risks that come with climate change.

On Tuesday, U.S. President Barack Obama outlined a sweeping climate change plan. Part of the plan includes new standards for roads to ensure they are built above flood levels. It also states that local governments will get assistance to help them plan for extreme weather.

'We all agree that there is a new reality now, which is climate change. Unfortunately, those that have to pay the bills are taxpayers or property owners.'—Claude Dauphin, Canadian Federation of Municipalities president

A new Climate Data Initiative will also provide climate preparedness tools and information for state and local governments, plus the private sector.

The news came after a study by the Federal Emergency Management Agency that predicted the risk of flooding in the U.S. would increase by 45 per cent by 2100, largely due to climate change. Ultimately, it's in the government's interest to reduce risk since it funds a flood insurance program that's already draining its budget with payouts.

Canada is currently the only G8 country where people cannot buy insurance for overland flooding. Private insurers cover sewage backup, but won't offer flood protection because the small population base of Canada means it's difficult for the companies to cover the cost of their risk. As a result, provincial and federal governments foot the bill for large-scale floods, meaning all taxpayers are on the hook.

"We all agree that there is a new reality now, which is climate change," said Canadian Federation of Municipalities president Claude Dauphin. "Unfortunately, those that have to pay the bills are taxpayers or property owners."

A 2010 report by the insurance industry's Institute for Catastrophic Loss Reduction recommended that Canada adopt the United Kingdom model — where the private sector offers flood insurance on the condition that the federal government take steps to mitigate disaster.

As an example, insurers offer coverage to residents in flood plains if the government builds a dyke to try to prevent flooding.

Simonovic, who is director of engineering for the Institute for Catastrophic Loss Reduction, says the federal government never responded to the report. "We didn't succeed at all," he lamented.

As climate change brings increased frequency of flooding events, the likelihood that Canada's insurance companies would want to partake in a joint federal government initiative looks dismal.

"With more frequent floods and with more higher damage, I think we're getting further and further from the involvement of the private sector," said Simonovic.

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New rules on wireless spectrum transfers unveiled

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The Conservative government has unveiled new guidelines for companies that want to sell their wireless spectrum licences.

Any company that wants to transfer its wireless spectrum licence will now have to ask Industry Canada to do a review within 15 days of signing an agreement that could lead to a prospective change.

The department will then give the proposed deal a thumbs up or down.

The new policy framework comes after the federal government blocked a plan by Telus to buy struggling wireless upstart Mobilicity in a deal worth $380 million. The government said at the time that the deal would violate a condition imposed at the time spectrum was auctioned off that prohibited new entrants from selling their licences to incumbents for five years.

The government says it will prohibit spectrum transfers that would limit competition in the Canadian wireless market.

Industry Minister Christian Paradis says the government will use all tools at its disposal to ensure there are at least four wireless competitors in every region of Canada.

The government has long sought to increase competition in the wireless sector that has been dominated by Bell, Rogers and Telus.

During a 2008 sale of wireless spectrum, Ottawa set aside a portion for new entrants in an effort to create a new national carrier and strong regional providers.

While the policy attracted several new players, most of the independent carriers — operating the Wind, Mobilicity and Public Mobile networks — have struggled to make money.

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Aeroplan points set to switch to TD from CIBC

The company that runs the Aeroplan loyalty points plan says it's prepared to accept an offer from Toronto-Dominion Bank to move its business over from rival Canadian Imperial Bank of Commerce.

Aeroplan began as Air Canada's frequent flyer program but the company that runs the program changed its name to Aimia several years ago, to reflect the fact that the program has grown and diversified into a comprehensive customer loyalty program with hundreds of participating retailers.

Aimia has had a longstanding relationship with CIBC, where the bank is able to offer its credit card customers Aeroplan points every time they make purchases on their CIBC credit card. CIBC gets the benefit of offering the popular program as a feature on its cards, and Aimia gets a steady source of revenue from the bank for all those points.

Several weeks ago, CIBC CEO Gerry McCaughey revealed the bank was hinting at starting its own loyalty program, a sign the bank is dissatisfied with the financial arrangement. Then on Thursday, Aimia revealed it has an offer on the table from CIBC rival TD to become the program's official banking partner.

According to Aimia, TD would make a $100-million upfront payment in 2014 to help fund program enhancements as part of a 10-year deal that would start Jan. 1, 2014.

Under the terms of its current deal with Aimia, CIBC has the right to match any offer up until Aug. 9, 2013.

"While this is a possibility, we do not believe that it is probable as the relationship between the two organizations has likely become tarnished through these developments," Barclays analyst John Aiken said in a research note. Aiken covers both TD and CIBC.

CIBC isn't saying whether it will match the offer, but stressed Thursday that, for credit card users, it will be business as usual in the meantime.

Customers won't lose points

Should the deal go through, anyone who's been accruing points on their CIBC Aerogold card for years would maintain those points, a spokesman with Aimia confirmed to CBC News in an interview.

So an existing CIBC Aerogold customer wouldn't lose their points, they just wouldn't be earning any new ones, unless they switch to a credit card that offers Aeroplan points as a feature. But their existing points would still be there, in their Aeroplan account, available to use.

"No matter what the outcome, this is good news for Aeroplan members," the spokesperson said.

Aimia also announced it's preparing to make "groundbreaking" changes to the Aeroplan program, starting in 2014, including the launch of new co-branded financial credit cards with new features.

"The enhancements we're announcing today are the most significant changes we've made in the Aeroplan program's history," said Vince Timpano, Aimia's president and chief executive officer for Canada.

Among other things, Aimia is launching Distinction — a new recognition program that rewards top-accumulating members with exclusive privileges and cancellation of a policy that sees Aeroplan miles expire after seven years.

"Air Canada welcomes the significant program improvements Aeroplan is announcing today," said Craig Landry, the airline's vice-president of marketing.

"Enjoying travel is the most popular use for Aeroplan miles, and these enhancements will benefit all members by making redemptions more attractive while recognizing our shared best customers."

With files from The Canadian Press

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Rona to shut 11 stores, cut 925 staff

Rona Inc. will close 11 unprofitable stores in two provinces and lay off almost 1,000 sales and administrative staff as part of its ongoing cost-cutting and restructuring efforts, the Quebec-based home improvement retailer announced Thursday.

Eight of the stores are in Ontario and three are in British Columbia.

The three B.C. stores — in Duncan, Kamloops and Abbotsford — will close in October. Six Ontario stores in Mississauga, Windsor, Woodbridge, London, Huntsville, and Collingwood, Ont., will also close in October and two Ontario stores in Toronto and Aurora will close in December.

Around 800 mostly part-time staff at those stores will lose their jobs the company said.

More administrative cuts

Rona will also cut 125 jobs in four administration centres across Canada. About 30 per cent of those cuts will be in Boucherville, Que. Those job losses are in addition to the 200 administrative layoffs that were announced in February.

"With the measures announced today, Rona will become more agile and efficient, with a simplified business structure and an even stronger balance sheet," said Robert Sawyer, Rona's president and CEO.

"By focusing on our strategic operations, we will unlock the full potential of our network and reinvest a significant share of the savings in initiatives that will allow us to offer even more to our customers and to our affiliated and franchised dealers."

Last week, Rona announced plans to sell its commercial and professional market division for about $215 million.

The company is aiming to reduce annual operating expenses by $110 million, but it will record up-front costs and accounting measures in its second quarter.

Rona says it will record $220 million of adjustments related to the restructuring during the quarter, of which $195 million will be non-cash items.

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Sobeys to sell 24 theatres in Atlantic Canada

Sobeys is getting out of the movie business.

The company announced on Thursday that it will sell 24 of its Atlantic Canadian Empire Theatres to Cineplex Incorporated, including the historic Oxford theatre in Halifax.

Sobeys said it is keeping control of the drive-in in Westville, but the company said they expect to sell the property.

"It's really in keeping with our strategic direction that Empire has to focus resources on our food retail business, through Sobeys and our related real estate investment," said vice-president Andrew Walker.

Nationally, Sobeys will also sell almost all of its theatres in Ontario and the western provinces.

The Cineplex deal is worth $200 million. Walker expects it to close in August.

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SNC-Lavalin's UAE project was cover for suspect payments

SNC-Lavalin says a gas project in the United Arab Emirates was used as a cover to transfer $13.5 million to unknown agents, a portion of the $56 million in questionable payments identified by the company in an internal investigation last year.

The Montreal-based based company said the amount was falsely attributed to the project even though the money went elsewhere. Another $20 million was also wrongly attributed to another project which SNC-Lavalin is refusing to identify.

"The payment in the UAE never actually happened," said spokeswoman Leslie Quinton.

The identity of the gas complex in Abu Dhabi surfaced after a French newspaper, L'Union de Reims, this week disclosed that French authorities were investigating the payment.

A French prosecutor launched an investigation last summer after an external auditor found "anomalies" in the accounting books of SNC-Lavalin Europe.

Last November, police raided the SNC-Lavalin Europe headquarters, then in Reims, believing the $13.5 million was a commission paid to the project in Abu Dhabi.

But the money never went there, even though the accounting code for the Abu Dhabi project suggested it had, Quinton said. SNC-Lavalin later reimbursed the amount to correct the error.

She said nobody in that European office knew anything about the payment which was approved by former executive Riadh Ben Aissa.

SNC-Lavalin has said its internal investigation found that $56 million was distributed to what it described as projects A and B. Project A totalled $33.5 million. Project B, which received $22.5 million in payments, was later identified as Montreal's new super hospital being built by the company.

"It had nothing to do with them, it was related to the ill-begotten gains of Project A," she said, referring to the mystery project.

The document led to the departure of several senior executives and a string of events that left the company's reputation in tatters.

Former CEO Pierre Duhaime and Ben Aissa have been charged with fraud over allegations that $22.5 million was used to win the Montreal super-hospital contract. Ben Aissa has been jailed for more than a year in Switzerland on alleged corruption, fraud and money-laundering in North Africa.

Former hospital director Arthur Porter also faces several charges related to alleged scams in awarding a $1.3-billion Montreal hospital contract, one of Canada's largest public works projects. He remains in a Panamanian prison and is fighting his extradition to Canada on the grounds his arrest was illegal because he has diplomatic immunity.

Porter was never formally employed as a diplomat for his native Sierra Leone, but held the role of a volunteer goodwill ambassador.

Others charged in the superhospital case are McGill University Health Centre executive Yanai Elbaz and his brother Yohann; and Jeremy Morris, the administrator of a Bahamas-based investment company.

SNC-Lavalin's offices in Algeria were also raided last month. Algerian media said police are investigating an $825-million contract SNC-Lavalin won in 2005 to build the Hadjret Ennous power plant near Algiers.

The RCMP previously raided company offices in Oakville, Ont., related to alleged bribes in Bangladesh, and its headquarters in Montreal at the request of Swiss authorities.

The World Bank barred an SNC-Lavalin subsidiary and its affiliates from bidding on its projects for 10 years as a result of allegations stemming from the Bangladesh bridge project.

The embattled Montreal-based company has said it expected police investigations and searches would come after it handed information to the RCMP in March 2012.

Industry observers believe SNC-Lavalin try to grow by pursuing large acquisitions over the longer term, but only after it is able to put global investigations behind it and pay any fines and settlements.

Sara O'Brien of RBC Capital Markets said the company would be forced to pay a premium for any sizable deal now because of the "investigation overhang" involving the company.

She wrote in a report that she expects any large-sized acquisition will be deferred until settlements are behind the company and its stock price appreciates above its current level of around $43.

"We note over the longer term, we expect acquisitions will be an integral driver of SNC's earnings growth. We also expect such acquisition plans were likely part of what attracted new executive management to SNC as an opportunity to drive shareholder value over time."

O'Brien named five firms or divisions of those companies that could be a strategic fit for SNC. They include CEO Robert Card's former employer CH2M, along with AMERC, Tetra Tech, MWH Global, and S&B Engineers and Constructors.

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Toronto propane firm guilty in fatal 2008 blast

The owner of Sunrise Propane has been found guilty of environmental and workplace safety violations following an explosion in 2008 in northwest Toronto that killed a worker and forced thousands from their homes.

The company and its directors, Shay Ben-Moshe and Valery Belshov, have been convicted of nine of the 10 charges they faced, including two violations of Ontario's Health and Safety Act and seven violations of the Environmental Protection Act.

The company was cleared of one count under Ontario's Environmental Protection Act.

Sunrise employee Parminder Saini died in the Aug. 10, 2008, explosion, and firefighter Bob Leek suffered a fatal heart attack while battling the massive fire that followed. The blast at the fuel depot at 62 Murray Rd. in the Keele Street and Wilson Avenue area created a massive fireball that could be seen across the city and forced the evacuation of 12,000 people from their Downsview neighbourhood homes.

An Ontario Fire Marshal's report into the explosion found that an illegal tank-to-tank transfer was underway at the time of the explosion and that a propane leak resulted from a hose failure. The ignition source of the blast has not been identified.

The report noted that tank-to-tank and truck-to-truck transfers are both dangerous and illegal in Ontario. Sunrise had been warned about the practice prior to the explosion.

The class-action trial against Sunrise, Ben-Moshe and Belahov started in February 2012. Both directors and the company could face millions of dollars in fines at sentencing.

With files from CBC Michelle Cheung, The Canadian Press

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Settlement ends bitter Porter Airlines strike

A Porter Airlines subsidiary has reached a first agreement with refuellers and customer service employees, ending a more than five-month strike.

A tentative deal was approved Monday evening by 85 per cent of the 22 members of the Canadian Office and Professional Employees union (COPE).

Union Local 343 and Porter FBO Ltd. also agreed to withdraw all litigation between them.

Mary Stalteri, union staff representative, said the deal contained a series of monetary and non-monetary gains, including lump sum payments, scheduling changes and grandfathering clauses for employees. Wages will also be reopened for discussion next year.

"There were lots of improvements in different areas," she said, declining to indicate the annual wage increase.

"When you add it all up it's good for both parties and the members were pleased as you can tell from the ratification process."

Stalteri said the negotiations and strike were learning processes for everyone.

"First contracts are hard and I think everybody learned from this particular experience. The gains that they made, I think they felt it was worth it."

Porter spokesman Brad Cicero wouldn't provide contract details but said the agreement was in line with another contract settled earlier this year without a strike for 44 Porter cleaners and facilities team members represented by another union.

The airline said it maintained operations throughout the strike with no disruption to flights.

Porter FBO Limited is a subsidiary of Porter Aviation Holdings Inc., which operates the airline. It provides fuel services for aircraft at Billy Bishop Toronto City Airport and other services for private pilots and aviation businesses.

Porter Airlines filed a lawsuit in April seeking $3 million for general and special damages for defamation and $1 million in punitive, aggravated and exemplary damages over comments made by the union on Twitter.

The union called the lawsuit an abuse of process designed to silence members from protesting the way the airline treats its employees.

Porter flies to about a dozen cities in Eastern Canada and the United States and carried 2.45 million passengers last year.

The airline is seeking permission to fly jets out its main base on Toronto's waterfront after placing a conditional order for 12 Bombardier CS100 aircraft, with options for 18 more.

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Keystone XL must not lead to increase in emissions: Obama

Authorities should only approve TransCanada's Keystone XL pipeline if they're certain it won't "significantly exacerbate" greenhouse gas emissions, U.S. President Barack Obama said Tuesday as he unveiled a national plan to combat climate change.

In a highly anticipated speech on his second-term climate objectives, Obama weighed in on Keystone despite suggestions he would steer clear of the controversial project because it's in the midst of a State Department review.

A determination that building the northern portion of Keystone XL will not result in greater greenhouse gas emissions "is absolutely critical in determining whether this project will be allowed to go forward," Obama said to cheers from the crowd gathered on a steamy day at D.C.'s Georgetown University.

The pipeline must be found to "be in our nation's interest," he added.

Keystone XL has become a flashpoint for U.S. environmentalists, who have branded it a symbol of "dirty oil" and have spent the past two years mounting a fierce public relations battle against the project. The pipeline would transport millions of barrels of oilsands bitumen a week from Alberta to Texas refineries.

Canada's Natural Resources Minister Joe Oliver said Tuesday that the Keystone project is "unlikely to have a significant impact on the rate of development in the oilsands, or on the amount of heavy crude oil refined in the Gulf Coast area."

Oliver, who called Keystone the most "studied pipeline in the history of the world," told reporters that the project will create jobs and economic growth on both sides of the border and increase North American energy security.

"This project is in the … national interest of both our countries," Oliver said.

Minister of Natural Resources Joe Oliver says the Keystone XL project will create jobs and economic growth in Canada and the U.S. (Richard Carson/Reuters)

TransCanada has been pouring money into lobbying efforts in the U.S. capital in recent months. The company's CEO, Russ Girling, said recently that he's confident Keystone XL will ultimately win approval.

The Calgary-based company said in a statement Tuesday it was pleased with Obama's comments setting out criteria for pipeline approval.

"If Keystone XL is not built, it's clear that the oil will move to market by truck, rail and tanker, which will significantly add to global greenhouse gas emissions to move the product," the company's statement said. The company also said the pipeline will "operate with virtually no emissions" and will have a "limited impact" on resources along the proposed route.

Further, TransCanada said, the oil from Canada and some U.S. states that will be moved through the proposed pipeline will "displace heavier crudes from the Middle East, Mexico and Venezuela — and will move in a pipeline that is far safer than any other option that exists today."

On Tuesday, some interpreted the president's remarks differently.

"The reference to the Keystone XL pipeline doesn't bode well for pipeline proponents," John Bennett, executive director of Sierra Club Canada said in a statement.

"Stating approval could only happen if it didn't lead to an increase in greenhouse gas emissions is clearly a death sentence for Keystone — it's an impossible task," Bennett said.

The draft environmental report on the pipeline by State Department officials, released in March, suggested Keystone XL's impact on greenhouse gas emissions would be minimal. The powerful Environmental Protection Agency later questioned that finding.

TransCanada officials have said that even if Alberta oilsands production doubled, the carbon emissions would be "immaterial" to global greenhouse gas levels. They say Canada accounts for only two per cent of global greenhouse gas emissions, and the oilsands make up only five per cent of that total.

Obama rejected the pipeline in early 2012, but invited TransCanada to file a new application with an altered route that would skirt Nebraska's ecologically sensitive Sand Hills region. TransCanada did so, earning the thumb's up from the state of Nebraska.

A final State Department decision on the $7.6-billion project is expected this fall. After that, it will be up to Obama to bless or block Keystone XL.

New climate change regulations

The president's comments came as he provided details of new U.S. climate change regulations that will cut carbon emissions at power plants and require federal projects to better prepare for the sort of extreme weather that has left much of Calgary underwater.

He'll use his executive authority to implement most of the proposals, bypassing congressional lawmakers reluctant to move on climate change.

Obama is directing the EPA, for example, to initiate regulations on carbon emissions from existing coal and gas-fired utilities by next June, and to kickstart similar rules on new power plants. And he'll ask the Interior Department to issue permits for new wind, solar, and other renewable energy projects on public lands in efforts that could fuel more than six million American homes within seven years.

New energy-efficiency projects are also a big part of the plan — proposals that could present major opportunities for Canadian biofuel companies. The plan also calls for more forceful action in boosting efficiency for appliances such as refrigerators and lamps.

He's also instructing federal agencies to help state and local governments with existing problems caused by climate change, including improved flood protection for roads and other infrastructure, better hospitals to respond to deadly storms, and drought relief.

Focus on coal

Obama's new plan, with its major focus on reducing carbon emissions at coal plants, caused coal stocks in the U.S. to drop shortly after the market opened. Coal producers and some electric utilities have warned that Obama's proposals will mean higher energy costs for consumers.

Mitch McConnell, the Senate minority leader, said Obama's plan is a "war on coal" that means a "war on jobs."

"It's tantamount to kicking the ladder out from beneath the feet of many Americans struggling in today's economy," McConnell said in a statement.

Sections of pipe ready to become part of the Keystone pipeline are stacked in a field near Ripley, Okla. The U.S. State Department is evaluating the project. (Sue Ogrocki/Associated Press)

Environmentalists on both sides of the border, meantime, cheered Obama's words, especially on Keystone XL.

"We applaud the president for also firmly stating that the Keystone XL pipeline should not be built if it means more pollution and more damage to our shared climate," Hannah McKinnon of the Toronto-based Environmental Defence organization said in a statement.

"The Keystone XL tarsands pipeline is a gateway to tarsands expansion and the scientific community agrees that, if built, tarsands pollution will soar."

Keystone proponents, on the other hand, urged the president to "look at the facts."

"In fact, if Keystone XL isn't built, global greenhouse gas emissions are likely to increase because more oilsands crude would be refined in countries like China, where current emissions standards allow three times more sulphur dioxide than in the United States," said a statement from a group known as Oil Sands Fact Check, whose website says it is supported by a broad coalition of organizations and interests.

"Canada accounts for only two per cent of global greenhouse gas emissions and emissions from oilsands are a small fraction of that."

New Democrat MP Megan Leslie said that while Obama's position on Keystone is now a lot more clear, the question remains as to who will determine whether it actually increases emissions.

"On the one hand, that was a really clear statement about Keystone," Leslie said. "But on the other hand, it's not so clear, because how will that be determined? Who will be determining it? I think we're still in a little bit of a wait-and-see."

Environment Minister Peter Kent was not immediately available to comment on Obama's speech.

Corrections and Clarifications

• An earlier version of this story said Joe Oliver is environment minister. In fact, Oliver is minister of natural resources. June 25, 2013 | 4:12 p.m. ET

With files from CBC News

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Calgary floods to cost economy billions

Economists say flooding in Alberta will cost Calgary's economy billions of dollars and affect the Canadian economy as a whole.

Although the precise economic damage caused by the flooding is hard to measure, economists say it will be widespread and long-lasting.

One estimate from BMO Capital Markets is that Canada's GDP will be reduced by $2 billion as a direct result of the floods.

Tom MacKinnon, an analyst with BMO Capital Markets, estimates that direct losses from the flooding will be between $3 billion and $5 billion. That is at least 10 times higher than the losses incurred during the floods of 2005.

In Calgary, the floods will cut into retail sales, tourism and industries that service the energy industry.

Todd Hirsch, chief economist at Alberta Treasury Branch, says the large oil and gas companies headquartered in Calgary are coping.

"Production itself is not being disrupted. No oil and gas comes through downtown Calgary. It would be far more disruptive for these companies financially if it was a refinery or maybe one of their mining operations went down in the flood," said Hirsch.

However, three pipelines in the province have been damaged and rail shipments were disrupted for several days.

Hirsch says that he expects economic activity in Calgary to slow in the short term, but that will be somewhat offset by a boost in spending to rebuild the city's infrastructure.

On Monday, Alberta Premier Alison Redford said it would take 10 years to rebuild the flood-damaged areas of the city and the province. She pledged an immediate $1 billion in aid toward emergency relief and reconstruction.

Small businesses hit hard

Smaller firms that lack the resources of the big players are expected to have a tougher time.

Chris Tulloch, a Calgary business consultant, says small and medium-size businesses will need help to survive.

"Ninety per cent of companies that have a major disaster that don't have a contingency plan in place fail within three years," says Tulloch.

In downtown Calgary, where the power has been out since Friday, small business owners are losing thousands of dollars, and their employees are losing their jobs.

Chinatown is one of the most flood-affected areas of the city. Local business owner Sang Yun told CBC he lost $20,000 worth of food and has had to lay off five employees.

The federal government is promising help. Calgary Southeast MP Jason Kenney, also the federal minister of citizenship and immigration, says the government will speed up the process of getting unemployment insurance benefits to people who lose their jobs because of the flooding.

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Possible Verizon bid for Wind Mobile slams Canadian telecoms

Shares in Canadian telecom giants Rogers, Telus and Bell fell sharply after a report in the Globe and Mail that the largest U.S. cellular company is ready to dip its toe into the Canadian market by buying Wind Mobile.

Citing two unnamed sources familiar with the negotiations, the Globe and Mail reported Wednesday that U.S. wireless giant Verizon has offered to buy Canadian cellular upstart Wind Mobile with an initial bid of $700 million, after weeks of advanced talks.

If market reaction is any indication, investors are concerned by the prospect of a monied U.S. player. Rogers shares dropped almost eight per cent, Telus was off more than five per cent, and BCE shed more than four per cent in early trading on the TSX.

When approached for the story by CBC News, Verizon declined comment on the report.

At a wireless industry conference last week, Verizon's chief financial officer Fran Shammo confirmed that the company is looking into "dipping its toe" into the Canadian wireless marketplace.

The deal would mark a major shift in the wireless industry in Canada, which has long been characterized as a three-headed oligopoly between Bell, Rogers and Telus. The entrance, however small for now, of a monied U.S. player with an extensive network and an international presence could change all that.

Changed telecom rules

Ottawa has a stated goal of wanting to see four viable competing wireless companies in every market across Canada. To that end, the government relaxed stringent rules over foreign ownership last year to allow foreign takeovers of telecom companies with less than 10 per cent of the market.

At just over 600,000 customers, Wind is well within that range.

Veritas Investment Research telecom analyst Neeraj Monga says the timing could be right for Verizon. The company had a minority stake in Telus more than a decade ago, but has only been interested in a Canadian foothold if it could own 100 per cent of the asset.

"If it's true, I think there's more than a high probability this can work for them," Monga said.

There are many synergies that make the tie-up sensible. Monga notes that Canadians spent $1.5 billion on cross-border roaming fees last year, so Verizon's plan could be to market to heavy smartphone users — not currently Wind's customer base.

"They can market to people interested in a North America wide voice and data plan, and make real gains on power users with the incumbents there," Monga said.

Verizon is also the largest smartphone buyer in North America, so it wouldn't be difficult to take what they're already doing with handsets and offer a new selection to Canadians at an incremental cost to them, he says.

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Pope Francis forms commission to investigate Vatican bank

Pope Francis took a key step Wednesday toward reforming the troubled Vatican bank, naming a commission of inquiry to look into its activities amid a new money-laundering probe and continued questions about the very nature of the secretive financial institution.

It was the second time in as many weeks that Francis has intervened to get information out of the Institute for Religious Works, or IOR. On June 15, he filled a key vacancy in the bank's governing structure, tapping a trusted prelate to be his eyes inside the bank.

On Wednesday, he named a commission to investigate the bank's legal structure and activities "to allow for a better harmonization with the universal mission of the Apostolic See," according to the legal document that created it.

Francis named five people to the commission, including two Americans: Monsignor Peter Wells, a top official in the Vatican secretariat of state, and Mary Ann Glendon, a Harvard law professor, former U.S. ambassador to the Holy See and current president of a pontifical academy.

American cardinals were among the most vocal in demanding a wholesale reform of the Vatican bureaucracy — and the Vatican bank — in the meetings running up to the March conclave that elected Francis pope. The demands were raised following revelations in leaked documents last year that told of dysfunction, petty turf wars and allegations of corruption in the Holy See's governance.

Francis favours a 'poor' church

Francis, who has made clear he has no patience for corruption and wants a "poor" church, has already named a separate commission of cardinals to advise him on the broader question of reforming the Vatican bureaucracy as a whole.

The bank commission's members have the authority to gather documents, data and information about the bank's legal status and activities, even overriding normal secrecy rules to do so. Members can receive information from anyone in the Vatican bureaucracy as well as people who spontaneously volunteer information, and the commission can refer to outside advisers if necessary, according to the terms.

The bank's administration continues to function as normal, as does the Vatican's new financial watchdog agency which has supervisory control over it.

The commission will report back to Francis — presumably with both information and recommendations — and then will be dissolved, the document states. No timeframe was given, but the commission is to start working soon.

Founded in 1942

The Vatican bank was founded in 1942 by Pope Pius XII to manage assets destined for religious or charitable works. Located in a tower just inside the gates of Vatican City, it also manages the pension system for the Vatican's thousands of employees.

The announcement of the committee came amid a new embarrassment for the Vatican in which prosecutors in the southern city of Salerno have placed a senior Vatican official under investigation for alleged money-laundering.

The Vatican spokesman, Rev. Federico Lombardi, confirmed Wednesday that Monsignor Nunzio Scarano had been suspended temporarily from his position in one of the Vatican's key finance offices, the Administration for the Patrimony of the Apostolic See. Scarano has said he did nothing wrong, though in an interview with the local daily, La Citta di Salerno, he acknowledged he received bad advice from his accountant.

Italian daily Corriere della Sera reported over the weekend that Italy's central bank had asked the Vatican's financial watchdog agency for information about Scarano's Vatican bank account as part of the probe. Lombardi said he didn't know if the Vatican had responded to the request.

But is it a bank?

Such exchanges of financial information are the hallmark of the financial transparency that the Vatican has committed itself to as part of its efforts to join the "white list" of countries in the fight against money-laundering and terrorist financing.

The Vatican in November must submit a progress report to the Council of Europe's Moneyval committee on the steps it has taken to comply with such international financial transparency norms. The Vatican passed Moneyval's key test on its first try last summer but received poor or failing grades for its bank and its financial oversight agency.

There have long been questions about just what the IOR actually is and does — questions which the commission presumably will try to iron out for Francis. Vatican officials have long insisted it's not even a bank, since it doesn't perform key banking activities like making loans.

It does however take deposits, transfer money and invest for its clients, performing asset management services that in 2012 helped earn it 86.6 million euros ($118 million) in profit on 7.1 billion euros ($9.7 billion) in total assets under management.

Some cardinals have questioned if the Vatican needs such a financial institution and whether its activities are even in keeping with church teaching.

In 2010, Italian financial police seized 23 million euros from an IOR account, and Rome prosecutors placed the IOR's then-president and general director under investigation for alleged violations of Italy's anti-money laundering norms after they conducted a transaction from an IOR account at an Italian bank. The money was eventually unfrozen. The men technically remain under investigation but nearly three years on, haven't been charged.

The Vatican bank's workings have long been shrouded in secrecy. Most famously, it was implicated in a scandal over the collapse of Italy's Banco Ambrosiano in the 1980s in one of Italy's largest fraud cases. Roberto Calvi, the head of Banco Ambrosiano, was found hanging from Blackfriars Bridge in London in 1982 in circumstances that remain mysterious.

Banco Ambrosiano collapsed following the disappearance of $1.3 billion in loans the bank had made to several dummy companies in Latin America. The Vatican had provided letters of credit for the loans.

While denying any wrongdoing, the Vatican bank agreed to pay $250 million to Ambrosiano's creditors.

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Hershey Canada fined $4M for chocolate price fixing

Confectionery giant Hershey Canada Inc. pleaded guilty and was fined $4 million for its role in a chocolate price-fixing cartel.

The company has plead guilty before the Superior Court of Justice in Toronto in relation to the 2007 scheme, the Competition Bureau announced Friday.

Under the Competition Act, price fixing carries a maximum penalty of $25 million and/or 14 years in prison. However, the chocolate confection cartel case fell under the former conspiracy provision, which can lead to a fine of up to $10 million and/or imprisonment for a term of up to five years.

"Price fixing is a serious criminal offence, regardless of whether it is in the chocolate confectionary market or any other industry," said John Pecman, the Competition Bureau's commissioner of competition.

"The collaboration of organizations or individuals is one of our best weapons to bring to light illegal agreements between competitors, which are secretive in nature and very difficult to detect."

Hershey also admitted that senior employees, under the auspices of Hershey, in 2007 communicated with the other members of the alleged cartel to exchange sensitive chocolate pricing information in Canada.

According to the bureau, Hershey has co-operated with the investigation and has agreed to co-operate with subsequent prosecution in return for lenient treatment.

The bureau laid charges against three other companies and three individuals — Nestlé, Mars and ITWAL Ltd., a national network of independent wholesale distributors.

The high-ranking executives charged by the bureau were:

• Former Nestlé Canada president Robert Leonidas.
• Sandra Martinez, former president of confectionery for Nestlé Canada.
• David Glenn Stevens, president and chief executive of ITWAL.

The bureau learned of the scheme through immunity and leniency programs, which lessen the criminal liability of those who reveal information about wrongdoing and co-operate with the bureau's investigation.

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BP calls for probe of Gulf oil spill claims lawyer

BP is calling for an independent investigation into a lawyer working for the administrator reviewing claims arising from the Gulf oil spill who has been accused of collecting portions of settlement payments from a New Orleans law firm to which he had once referred claims.

The London-based oil giant issued a statement Friday that said only a "comprehensive and independent investigation will ensure the integrity of the claims process."

A BP PLC official who has reviewed a report outlining the allegations, said claims administrator Patrick Juneau delivered a copy of the report to U.S. District Judge Carl Barbier during a meeting in his chambers Thursday. Lawyers for BP and the team of private attorneys who brokered the multibillion-dollar settlement also attended the meeting. The BP official spoke on condition of anonymity because the report hasn't been made public.

The staff lawyer, Lionel H. Sutton III, acknowledged in an email late Thursday that he has been told he was suspended "pending an investigation of an anonymous allegation against me."

"I have not been made aware of the substance of the allegation or the status of the investigation," Sutton wrote. "Once this is resolved, I would be happy to discuss it all with you."

The BP official said the report indicates that Juneau's security head, David Welker, also notified the FBI's New Orleans division about the lawyer's alleged misconduct. Welker until recently was the special agent in charge of the FBI office in New Orleans.

An FBI spokeswoman in New Orleans declined to comment Thursday.

According to the BP official, Juneau told the judge that he had suspended the lawyer and was weighing further disciplinary action. Neither Juneau nor his spokesman responded to calls and emails on Thursday night.

The report says Welker received a complaint that the staff attorney had referred claims to a New Orleans law firm in exchange for portions of subsequent settlement payments, the BP official said. The lawyer allegedly filed those claims before he went to work for Juneau.

The claims at issue were filed on behalf of a single party and involve hundreds of thousands of dollars, the BP official said.

BP PLC has sued to block what could be billions of dollars in settlement payouts to businesses over the spill. The company has accused Juneau of trying to rewrite the terms of the deal and asserts that he has made decisions that expose the company to fictitious losses that were never contemplated in the settlement.

Judge Barbier, who is overseeing the massive settlement, appointed Juneau last year and has upheld his decisions for calculating payments. BP has appealed, and the 5th U.S. Circuit Court of Appeals is scheduled to hear the case in July.

The spill began in April 2010 after the BP-leased drilling rig Deepwater Horizon exploded off the Louisiana coast, killing 11 workers. Roughly 200 million gallons of crude oil were released from the Macondo well a mile under the Gulf surface. Marshes, fisheries and beaches from Louisiana to Florida were fouled by the oil until a cap was placed over the blown-out well in July 2010.

BP set up a compensation fund for individuals and businesses affected by the spill and committed $20 billion. The claims fund initially was handled by lawyer Kenneth Feinberg but Juneau took over the processing of claims after the settlement was reached last year.

It wasn't immediately known how many lawyers work for Juneau, but his office announced in May that it has determined more than $3 billion in claims are eligible for payment through the settlement agreement. More than 162,000 claims were filed and more than $2 billion had been paid to claimants as of May 6.

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Canada's inflation rate heats up but remains low

Canada's inflation rate rose to 0.7 per cent in May, but remains well below the level that the Bank of Canada and other policymakers like to see in a healthy economy.

Statistics Canada reported Friday the consumer price index came in at 0.7 per cent in the 12 months up to May. That was up from 0.4 per cent the month before. A consensus of economists was expecting May's rate to be 0.9 per cent, a bit above where it turned out to be.

The so-called core inflation rate came in at 1.1 per cent. That's the rate after volatile items are stripped out, and it's the one the Bank of Canada focuses on in making its interest rate decisions. The central bank likes to see the core rate stay between one and three per cent.

Natural gas prices up 15%

Higher shelter costs were the main cause of the uptick, including rising prices for natural gas, commonly used to heat homes.

Natural gas prices have increased 15.4 per cent in the past year, the highest annual gain since December 2008. Natural gas prices have inched higher in each of the past three months, but before that, they had been declining for 25 months in a row.

Natural gas prices increased in every province, but Alberta led the way with the highest jump.

Overall, shelter costs increased by 1.3 per cent, matching April's increase. In addition to natural gas, rent and property taxes rose on a year-over-year basis, the data agency said.

"Overall, today's inflation report showed that consumer prices continue to face little upward pressure," TD Bank economist Diana Petramala said in a report following the release of the data.

Petramala said she doesn't expect the inflation rate to hit 2.0 per cent until 2015. IShe also said the Bank of Canada will likely keep its key lending rates unchanged until the end of next year.

"Looking forward, a weaker Canadian dollar and improving economic momentum will likely lead to a slight pick-up in inflation in the months ahead. Still, a moderate growth environment, in combination with cooling home prices and a constrained consumer will likely continue to keep a lid on inflation," she said.

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Alberta flood victims mostly out of luck with insurance

Alberta homeowners who hope to make claims with insurers for flood damage will be out of luck in most cases.

That's because not all flooding is covered under most insurance policies.

The Insurance Bureau of Canada says water that comes in through doors and windows — called "overland flooding" — is not covered.

Vehicles covered by comprehensive insurance

"First and foremost we encourage all individuals in danger of flooding to take the proper measures to protect themselves and their loved ones," said Bill Adams, vice-president of the Western and Pacific region for the bureau.

According to a statement issued by the bureau, the purpose of insurance is to spread risk among many policy-holders, but overland flooding is a risk for only a small percentage of the population — those that live on a flood plain or close to bodies of water. Also, most homeowners are not willing to pay the costs to be protected against the risk, rendering flood insurance unaffordable to those who need it.

Flooding related to sewage backups, which could happen outside of flood zones, is covered under most policies.

The insurance bureau says those whose vehicles have been flooded and have comprehensive coverage will have the damage covered.

Alberta Municipal Affairs Minister Doug Griffiths noted there will be uninsurable losses and warned that property owners aren't intended to profit from the flooding.

"The fact that a person didn't bother to buy insurance doesn't mean the government will pay for it," Griffiths said at a news conference in Calgary.

Province pledges to provide relief

Property will be restored "back to what it was as best we can," he said.

Griffiths also said there is no insurance for homeowners hit by "overland" flooding.

Prime Minister Stephen Harper said the federal government has offered "any and all possible assistance to the Province of Alberta in response to the situation."

BMO Capital Markets economist Robert Kavcic said about a third of Alberta's economy would be stalled due to the floods, including tourism, retail and construction.

The immediate economic hit from the flooding would be in the hundreds of millions of dollars, Kavcic estimated.

"You're going to have a hit to retail sales in the very near term," he said.

"But when the water recedes and people go back out to the stores, you're going to get some replacement spending there, too."

The floods also could have a small fiscal impact on the Alberta government because this year's budget for emergency assistance spending is $200 million," Kavcic said.

"It's clearly going to be a lot bigger than that."

According to Alberta Municipal Affairs, claims filed for provincial coverage do not include damage that was covered by insurance. Government programs are in place to cover damage for which insurance is not readily available, such as overland flooding.

Alberta faced a similar situation in 2005 and Calgary residents and business owners received more than $14 million in compensation.

Property owners can call 1-800-377-6378 to reach the Insurance Bureau of Canada with questions. The bureau is a national industry association representing Canada's private home, care and business insurers.

With files from CBC News

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U.S. couple order tie, sent social security numbers instead

With a little more than two weeks to go before their wedding, Emily Dreyfuss's fiancé ordered a tie and pocket square from Gap chain Banana Republic's website to go with his navy blue suit.

What the couple got in the mail instead on Thursday would make an identity thief giddy: the confidential files of about 20 former employees, including Social Security numbers and W4 tax forms.

"We totally laughed," Dreyfuss, 29, said on Friday from her home in Cambridge, Mass.

'We totally laughed.'—Emily Dreyfuss, order recipient

She had misgivings about the package as soon as it arrived. It was really heavy and didn't say Banana Republic, but Gap Inc.

She and her fiancé have been buying each other presents, and she thought it may have been a really heavy piece of clothing with catalogs, said Dreyfuss, the daughter of actor Richard Dreyfuss.

When he opened the package, inside were three folders sealed with tape and labelled "HR Administration." They contained tax and Social Security information as well as handwritten resignation letters, doctors' notes and salary information — seemingly the employees' entire record at the company. The employees were sales support associates and at least one made $9 an hour, Dreyfuss said.

The resignation letters were mostly from March and addressed formally to "Ms." and then the person's first name. They were polite and positive, expressing thanks for the chance to work for the company and learning so much. Some ended by saying, "God Bless."

'God bless'

Dreyfuss, who runs the home page and also writes for technology website, CNET, said she didn't look through everything.

"I got a queasy feeling and felt like I should stop looking at this," she said.

San Francisco-based Gap Inc. blamed the mix-up on a human mistake.

"We're taking immediate action to evaluate and strengthen our processes to prevent mis-mailings in the future and apologize for the error," spokeswoman Edie Kissko said in a statement.

Dreyfuss said a Banana Republic representative has since responded to a tweet about the mix-up and apologized for what he called a "horrible mistake."

'Horrible mistake'

He said clothing and employee information is sent out in the same type of grey plastic bag. The employee information appears to have been mislabelled in this case. The representative said the store would look into what went wrong and informing the former employees, Dreyfuss said. They will send her a self-addressed, stamped envelope to return the information in.

Ironically, Dreyfuss said her fiancé recently received someone else's welcome packet from his new employer, with that employee's salary and Social Security number.

Dreyfuss said the episode with Banana Republic raises concerns about how well the company is safeguarding customer information if even its employees' information can be compromised.

"People should know about this because it's crazy and scary," she said.

In her statement, Kissko said the company takes the confidentiality of personal information very seriously.

Dreyfuss was offered a free tie and pocket handkerchief — a $61 value, but said she declined.

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