The Competition Bureau announced, on September 12,
2012,1 that criminal charges had been laid against two
waste management companies for alleged breaches of the terms of a
merger Consent Agreement. As a consequence of the Bureau's
continued willingness to flex its enforcement muscles, it is now
even more important that parties to a merger fully understand and
believe they will be able to comply with the terms of a Consent
Agreement negotiated with the Bureau, lest they find themselves the
subject of criminal charges. It is also important that firms devote
adequate resources to ensuring that they comply with any Consent
Agreement they have entered into.
The Nature Of The Charges
The charges were laid under section 66 of the Competition
Act2 against Progressive Waste Solutions Ltd.
(Progressive) and its subsidiary, BFI Canada Inc. (BFI). The
allegations are that, between October 2010 and February 2011,
Progressive and BFI breached the terms of a June 2010 Consent
Agreement entered into with the Bureau and registered as a Consent
Order with the Competition Tribunal.3
The Consent Agreement was signed in June 2010, after the Bureau
raised concerns about the merger of IESI-BFC Ltd. and Waste
Services Inc. (operating after the merger as Progressive),
particularly in relation to the effect on competition that would
result in the supply of commercial waste collection services in
Calgary, Edmonton, Hamilton, Ottawa and Simcoe County.
Under the terms of the Consent Agreement, the parties were
required to divest commercial waste collection assets, including
customer contracts, vehicles, bins and other equipment in these
markets. In addition to the divestitures, they were prohibited from
soliciting or reacquiring divested customers for a period of one
year. The Agreement also required the parties to provide a
certificate of compliance with the terms of the Consent Agreement
every six months for five years. In the event of a breach of the
terms of the Consent Agreement, the parties were obligated to
advise the Commissioner of Competition immediately. The effect of
the dual compliance/reporting obligations was that, for the same
(unreported) breach, BFI and Progressive may be alleged to have
breached the Consent Agreement in a number of ways.
In the event, that is what occurred. In announcing the charges,
the Bureau accused Progressive and BFI of the following violations
of the Consent Agreement:
soliciting and reacquiring a customer whose contract had been
divested under the agreement within the restricted one year
providing a false declaration of compliance; and
failing to promptly notify the Bureau that the agreement had
Whether one alleged breach, together with alleged failure to
report that breach, will ultimately support three charges will no
doubt be an issue in the case.
What The Charges Mean For Future Mergers
Because merger reviews proceed as civil matters it is very
unusual for a merger to result in criminal charges. The charges
against Progressive and BFI are criminal ones because the Consent
Agreement is registered as a Consent Order of the Competition
Tribunal. While section 66 of the Competition Act does allow
criminal prosecution for breach of a Tribunal Order, a much more
common approach when there has been a dispute as to compliance with
a Tribunal Order has been to move before the Tribunal for a
Merging entities should always take seriously the terms of any
Consent Agreement negotiated with the Competition Bureau. The new
willingness of the Bureau to invoke s. 66 of the Competition Act if
it believes an Agreement is not being respected means that parties
need to make absolutely sure they can live with their terms before
signing on to them, and that the terms are sufficiently clear that
there will not be an inadvertent breach of the terms.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
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