Canada: Vendors Beware: Competition Tribunal Confirms Dissolution As A Potential Remedy To A Completed Merger

In an order dated November 3, 2011, the Competition Tribunal confirmed the availability of dissolution as a potential remedy to address the anti-competitive effects of a completed merger. While it remains to be seen whether there are circumstances in which dissolution of a completed transaction will actually be ordered, confirmation that dissolution is a potential remedy should cause vendors to think carefully about how antitrust risk is allocated, particularly for transactions that are not subject to mandatory pre-closing review under the Competition Act.

Background – The Commissioner's Challenge to the Completed Merger

In January 2011, the Commissioner of Competition filed an application to challenge CCS Corporation's (CCS) completed acquisition of Complete Environmental Inc.1 (Complete). CCS owns two hazardous waste landfills in northeast British Columbia. As a result of the acquisition, CCS acquired Complete's interest in Babkirk Land Services Inc., which owns a proposed secure landfill site in northeast British Columbia. While this $6.1 million transaction was not subject to mandatory notification under the Competition Act, the parties had advised the Bureau on a voluntary basis prior to closing.2

The Commissioner's application alleges that Complete was poised to enter the market served by CCS. Accordingly, the case is focussed on the prevention of competition (rather than the lessening of competition). The Commissioner claims that but for the merger, oil and gas companies in northeast British Columbia who must dispose of certain hazardous waste materials at a secure landfill would have enjoyed the competitive benefits that would have resulted from Complete's entry.

Significantly, the Commissioner is seeking dissolution of the transaction and, only in the alternative, a divestiture. (Note that while CCS did not enter into a hold separate arrangement with the Commissioner, it undertook to preserve the landfill until the Commissioner's application is determined.)

Although explicitly provided for in the merger remedy section of the Competition Act, dissolution is rarely sought. Vendors generally bear little antitrust risk once closing has occurred. In this case, dissolution would result in CCS returning its recently acquired interests in Complete (and indirectly Babkirk) to the vendors and, as noted in the vendors' Tribunal filings, may require the vendors to refund the purchase price to CCS. In this regard, the vendors claimed that dissolution would be punitive. Mr. Watson, one of the vendors, filed an affidavit which stated, in part, that financial hardship would result from dissolution. Mr. Watson further attested that the Commissioner permitted the parties to close the transaction without requiring the vendors to preserve or hold the proceeds of the transaction separate, nor was such a condition requested when the Commissioner filed her application.

The Vendors' Motion for Summary Judgment – There is No Genuine Basis for the Tribunal to Order Dissolution

In late October, the vendors brought a motion to dismiss the Commissioner's application as against them by challenging the Commissioner's right to seek dissolution of the transaction. The vendors (as well as CCS) claimed that should the Commissioner prove her case, the most appropriate and least intrusive remedy would be a divestiture. As the vendors no longer hold an interest in Complete (or Babkirk) and therefore would not be involved in the process should a divestiture be ordered, they claimed they ought to be released from the proceedings.

The vendors argued that dissolution is an over-reaching remedy because it would involve the return of operations that are not part of the allegedly problematic activity. Accordingly, dissolution would go beyond what is necessary to restore competition to a point where there is no substantial prevention of competition. The vendors also argued that if the merger is dissolved they would seek to dispose of the business again, and therefore the more efficient remedy would be to order the divestiture of the Babkirk site. Moreover, since the acquisition, CCS has disposed of certain Complete assets and to order dissolution may result in difficult accounting and reconciliation calculations.

The Commissioner's Response – The Issue of Dissolution Cannot Be Decided Without Hearing Evidence

In response, the Commissioner argued that there are genuine factual issues for trial on the issue of dissolution, specifically:

  • the state of the vendors' financing plans and their ability to make the site operational;
  • the availability of potential purchasers for the site and the likelihood that such purchasers would place a bid; and
  • the reliability of Mr. Watson's claim of financial hardship.

The Commissioner stated that to exclude a potential remedy before hearing and weighing the evidence would be an improper use of the Tribunal's summary disposition power. The Commissioner further claimed that the motion is a waste of resources and significantly prejudicial to the Commissioner given that it was only filed approximately two weeks prior to the scheduled hearing of the substantive application.

The Tribunal's Decision – Dissolution Raises Genuine Issues for Tribunal Hearing

Justice Simpson found that the vendors failed to demonstrate that there is no genuine basis for the Commissioner to seek dissolution. Thus, whether there is no genuine basis for a dissolution remedy will be the test on any such motion in the future.

While a proposed remedy of dissolution raises complex issues, Justice Simpson determined that a summary judgment motion is not the appropriate forum to evaluate these issues. Justice Simpson agreed with the Commissioner that divestiture is only a realistic remedy where the assets to be divested can be sold to a purchaser in a timely manner, and found that, to date, the respondents have not brought forward evidence that such a sale could occur.

Justice Simpson further held that the Commissioner is not required to explicitly allege that dissolution is the only effective remedy. Rather, the Commissioner is entitled to propose alternative remedies and, if the Tribunal finds a transaction is likely to result in a substantial lessening or prevention of competition, it is the Tribunal's decision as to which remedy would be most appropriate.

The Commissioner was also awarded her costs.

Implications for Parties to Transactions

The Tribunal's order, while not surprising, nonetheless confirms that dissolution is an available remedy for completed transactions. Vendors should keep this in mind when negotiating the regulatory risk in their commercial agreements, even where the transaction does not require notification under the Competition Act.


1. Commissioner of Competition v. CCS Corporation, Complete Environmental Inc., Babkirk Land Services Inc., Karen Louise Baker, Ronald John Baker, Kenneth Scott Watson, Randy John Wolsey, and Thomas Craig Wolsey, see Case Details here (CT-2011-02).

2. Completed, non-notifiable mergers are rarely challenged in Canada. The CCS/Complete case is a reminder of the possibility that this can occur.

Michelle Lally's practice has a particular emphasis on mergers & acquisitions and competitor collaborations. Kaeleigh Kuzma's practice involves analyzing the competitive implications of mergers, strategic alliances and joint ventures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions