Canadian COMPETITION LAW

On May 29, 2012, the Competition Bureau announced that the Competition Tribunal has ruled in the contested BC waste merger case in favour of the Bureau, ordering the acquirer CCS Corporation to divest the hazardous waste landfill site it acquired in 2011.

In this widely watched case, the Bureau challenged the non-notifiable transaction post-closing taking the position that the transaction would substantially prevent competition in the secure landfill hazardous waste disposal market in North-Eastern British Columbia.

The Bureau argued that the transaction would eliminate a potentially vigorous new entrant in a market characterized by significant barriers and where timely entry was unlikely.  The Bureau also argued that there were no alternative substitutes, foreign competition was unlikely and there was an absence of any effective remaining competition.

The decision is noteworthy for being the first contested merger case in Canada in six years (since 2005), a rather rare example of a “prevent” case (a merger may be challenged under the Competition Act where it prevents or lessens competition substantially) and a completed non-notifiable transaction.

Where the Bureau takes the position that a proposed merger is likely to prevent or lessen competition substantially, the Commissioner may seek remedial orders from the Tribunal including an order to block a transaction (in the case of a proposed merger) or an order for the dissolution of assets of shares (in the case of a completed merger).

This case is also an example of the Bureau’s increased willingness to challenge certain transactions post-closing, regardless of size, that may raise competition concerns.  (Following 2009 Competition Act amendments, the Bureau may generally challenge mergers for up to one year post-closing, reduced from the former three years.)

In this regard, in announcing the Tribunal’s decision the Commissioner said:

“This case demonstrates that the Bureau will take on cases of all sizes and in all sectors. … Volume of commerce is not the only factor we consider when reviewing mergers — we are willing to take on a case where competition is being denied, regardless of size.”

The Bureau has also said in recent public statements that it would devote more resources to monitor publicly available sources for transactions that may pose competition concerns, making it incumbent on counsel to both review whether a transaction is notifiable and whether a transaction, if below the pre-notification thresholds under the Act, may nevertheless potentially raise competition concerns.

For the Bureau’s news release see:

Competition Bureau Successful in Precedent-Setting Merger Challenge

For the Tribunal’s decision (once available) see:

Competition Tribunal

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