On September 5, 2013, Canada's Competition Bureau announced
that a Consent Agreement had been negotiated
requiring a number of divestitures by Agrium Inc. in relation to
its acquisition of the majority of Viterra Inc.'s retail
agri-products businesses from Glencore International plc. A position statement accompanied the Bureau
Under the terms of the Consent Agreement, Agrium will divest
seven retail stores and nine anhydrous ammonia businesses.
By way of background, Viterra – successor to the former
Saskatchewan, Alberta and Manitoba Wheat Pool co-operatives, as
well as the largest grain handler in South Australia and a
significant food processor in Canada, Australia, New Zealand and
the United States - was initially sold to Glencore, but Glencore
simultaneously announced side agreements to divest some Viterra
assets to Agrium and Richardson International Ltd., and (later) to
CF Industries. The Bureau cleared the acquisition of Viterra by
Glencore in May 2012, and Richardon's acquisition of some of
Viterra's Canadian grain handling assets in December 2012
(Stikeman Elliott LLP acted as counsel to Richardson).
The Bureau conducted a separate review of the sale by Glencore
of the majority of Viterra's retail fertilizer and crop input
network in Western Canada to Agrium, including:
approximately 210 of 253 retail stores;
three dry fertilizer storage facilities;
a seed research and development unit;
an interest in a crop protection manufacturing business;
a farm fuel business.
The Bureau viewed the relevant product markets as the retail
supply of urea and the retail supply of anhydrous ammonia –
both nitrogen fertilizers but with different methods of application
and significant costs to switching between them. The geographic
scope of the market was identified as local, within a 35km radius
of each retail store. The Bureau considered various factors
identified in the Merger Enforcement Guidelines:
On effective remaining competition, the Bureau viewed the
parties as particularly close rivals and Viterra as an effective
and vigorous competitor;
On barriers to entry, the Bureau noted certain barriers,
including the opening of a retail store, significant capital
expenditures, the requirement to have specialized equipment and
certain difficulties sourcing products from suppliers;
On market maturity, the Bureau deemed the industry to be mature
and noted that a new entrant would have to gain market share at the
expense of incumbents.
Despite the above factors, the Bureau considered a number of
national, regional and local competitors to be effective remaining
competitors in the vast majority of local markets.
The Consent Agreement also resolves vertical issues identified
by the Bureau, such that Agrium – itself the largest
manufacturer of urea and anhydrous ammonia in Western Canada - will
have to supply anhydrous ammonia to any purchaser of the divested
assets for up to four years, with price caps in place.
The review undertaken by the Bureau demonstrates the
Bureau's willingness to work with parties to come to a
resolution. However, the lengthy review also highlights the
potential delay that parties may face during the course of a merger
that raises complex issues (in this case, more than a year). For
more information concerning mergers, and the special considerations
that should be taken into account, please get in touch with a
member of the Competition and Foreign Investment Group at Stikeman
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.
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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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