The Canadian landfill company that lost a merger challenge at
the Competition Tribunal in Canada's first pure prevention of
competition case has appealed to the Federal Court of Appeal.
On January 4, 2011, the Commissioner of Competition applied to
the Tribunal for an order to dissolve a merger between CCS
Corporation and Complete Environmental Inc. In the alternative, the
Commissioner sought an order for CCS to divest itself of Complete
or Complete's wholly–owned subsidiary, Babkirk Land
Services. Babkirk had obtained approval to operate a secure
landfill site in northeastern British Columbia. As such, Babkirk
had been poised to compete directly with CCS. The Commissioner
alleged that the merger between CCS and Complete would result in a
substantial prevention of competition in the market for hazardous
waste disposal in northeastern British Columbia.
On May 29, 2012, the Tribunal ruled in favour of the Commissioner,
finding that CCS's acquisition of Complete would likely prevent
competition substantially in the market for the supply of landfill
services for solid hazardous oil and gas waste. The Tribunal
ordered that CCS
divest its shares or assets of Babkirk by December 28, 2012. On
July 17, 2012, the Tribunal further issued a divestiture procedure
CCS (now renamed Tervita Corporation), Complete, and Babkirk
filed a notice of appeal at the Federal Court of Appeal on June 26,
2012. They have appealed the May 29, 2012 order, and are seeking to
stay that order and the divestiture procedure order pending the
In a decision dated August 22, 2012, the Federal
Court of Appeal granted the stay of those orders, subject to the
condition that the appellants preserve the assets pending the
outcome of the appeal. The Court applied the test in RJR
– MacDonald Inc v Canada (AG):
First, there was at least one serious issue raised by the
appellants: the question of the proper legal framework that applies
in a prevention of competition case. The appellants allege that the
Tribunal failed to apply or misapplied the test for a substantial
prevention of competition and engaged in impermissible and
unsupportable speculation. The Court found these to be serious and
Second, the Court found that the divestiture procedure order
would irreparably harm CCS while the appeal was ongoing, since the
order mandated that CCS divest itself of Babkirk at the earliest
Third, the Court balanced the public interest in having
competition in the market against the public interest in ensuring
due process. The Court ruled that the balance of convenience
favoured the appellants.
The outcome of this case is significant in several respects.
First, the Tribunal's decision addressed the test for
substantial prevention of competition, an area where the Canadian
jurisprudence is very sparse. Second, the case is also notable
because the value of the CCS-Complete merger was only about Cdn$6
million, far below the merger notification threshold of Cdn$78
million, yet it was still reviewed and challenged by the
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The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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