With a new Commissioner at the helm, enforcement activities and policy developments by the Competition Bureau have continued at a steady pace in the first part of 2013. This bulletin provides an update on a number of such recent developments.
FEDERAL COURT OF APPEAL UPHOLDS DIVESTITURE OF B.C. WASTE DISPOSAL SITE
On February 11, 2013, the Federal Court of Appeal upheld an order by the Competition Tribunal requiring Tervita (formerly CCS Corporation) to divest a hazardous waste landfill site in Northeastern British Columbia in connection with its acquisition of Complete Environmental Inc.
In the Competition Bureau's first merger challenge since 2005, the Commissioner of Competition filed an application with the Competition Tribunal on January 26, 2011 contesting CCS Corporation's acquisition of Complete Environmental Inc. even though the transaction did not meet the formal pre-merger notification requirements under the Competition Act (the Act). On May 29, 2012, the Competition Tribunal accepted the Commissioner's argument that the merger would lead to a substantial prevention of competition for the disposal of hazardous waste in Northeastern B.C. The Tribunal ordered CCS Corporation to divest a waste landfill site (see our June 2012 Blakes Bulletin: Competition Bureau Successful in B.C. Landfill Merger). The Federal Court of Appeal dismissed Tervita's appeal and upheld the order of the Competition Tribunal.
The decision by the Federal Court of Appeal serves as a reminder that any transaction may be investigated by the Bureau and challenged at the Competition Tribunal on competition grounds, even ones that do not require pre-merger notification.
REMEDY REQUIRED FOR QUEBEC WASTE DISPOSAL TRANSACTION
On February 6, 2013, a Consent Agreement was registered with the Competition Tribunal in respect of the acquisition of assets by WM Quebec Inc. (WMQ), a subsidiary of Waste Management, Inc. from RCI Environnement Inc.
Following the Bureau's review of the asset acquisition, it concluded that the transaction would result in a substantial lessening or prevention of competition for waste disposal services in certain parts of Western Quebec.
The Bureau's competition concerns were resolved through a remedy negotiated between the Bureau and WMQ. Under the terms of the Consent Agreement, WMQ is required to sell the right to dispose up to 1.875 million tonnes of waste for 20 years at the landfill in Lachute, Quebec. The remedy is intended to ensure that competitors will have access to sufficient landfill capacity to allow them to continue to compete effectively against WMQ for waste disposal services.
While the Bureau typically prefers outright asset divestitures or other "structural" remedies to resolve competition concerns arising from a transaction, in this case, the Bureau was satisfied by a remedy that allowed WMQ to retain ownership of the acquired assets while imposing conditions that will have long-term competitive implications for the marketplace. The Bureau will appoint an independent monitor to ensure that WMQ complies with the terms of the Consent Agreement.
INTERIM COMMISSIONER REVEALS NEW POLICIES AND PRIORITIES
Recently appointed Interim Commissioner of Competition, John Pecman, has shed some additional light on the direction that the Bureau will take under his leadership (see Remarks by John Pecman, Interim Commissioner of Competition, February 7, 2013).
Strategic Regulatory Interventions
In addition to traditional enforcement activities under the Act, sections 125 and 126 allow the Commissioner to make representations regarding competition before federal regulatory boards, commissions or other bodies, including provincial boards and tribunals. While regulatory interventions have been made in the past, the Commissioner intends to use these powers more frequently in order to make recommendations regarding the impact of proposed policies and regulations on competition, provide advice to government on matters related to competition, and conduct sectoral market studies of regulated industries.
The Bureau recently made its first such intervention under the leadership of the new Commissioner (see Bureau Press Release, " Competition Bureau Provides Comments on Wireless Code of Conduct", February 6, 2013) by releasing a statement on the Canadian Radio-television and Telecommunications Commission's proceeding to establish a mandatory code of conduct for mobile wireless service providers.
The Commissioner has indicated that in future regulatory interventions, the Bureau could be active in regulatory environments involving the digital economy, the retail sector and the health sector.
Increased Use of Section 11 Orders
Under section 11 of the Act, the Bureau may apply for a judicial order requiring the target of a formal Bureau inquiry to produce information to the Bureau. Notwithstanding its statutory right to seek section 11 orders, the Bureau has, in practice, often relied on voluntary information requests.
The Commissioner recently announced that the Bureau will no longer rely on voluntary information disclosures as a matter of course. According to the Commissioner, in order to conduct investigations in the "most rigorous and efficient way possible", the Bureau's first course of action in obtaining information from the target of a formal inquiry in non-merger cases will be, for all but exceptional cases, to seek a legally binding section 11 order from the court.
REMINDER: MERGER NOTIFICATION THRESHOLD REVISED UPWARD FOR 2013
On January 8, 2013, the Bureau announced an increase in the transaction-size threshold to C$80-million from C$77-million to reflect the increase in Canada's gross domestic product in 2012. This new threshold for 2013 came into effect immediately following publication in the Canada Gazette on January 12, 2013. The "transaction size" threshold is one of two main financial thresholds required for pre-merger notification. The "size of parties" threshold (C$400-million) remains unchanged.
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