On November 15, 2013, Reynolds Consumer Products, Inc.
(Reynolds) agreed to acquire the North American
division of Novelis Foil Products for $35 million. Six months
later, on May 26, 2014, the Competition Bureau
(Bureau) allowed the acquisition by issuing a No
Action Letter to Reynolds and announcing that the merger would be
unlikely to cause a substantial lessening or prevention of
Both parties manufacture and supply aluminum foil wrap and
semi-rigid aluminum containers. Novelis operates two manufacturing
plants and three distribution facilities in Canada, while Reynolds
manufactures in the U.S. and distributes to Canada through its two
Canadian distribution facilities.
The Bureau's Analysis
The Bureau conducted separate analysis for aluminum foil wrap
and semi-rigid aluminum containers.
The Bureau held that the merger would not affect the level of
competition in the aluminum foil wrap market sufficiently to
warrant an application under section 92 of the Competition
Act (Canada). Using information submitted by the parties
as well as from third parties, like major grocery stores, the
Bureau examined whether branded aluminum foil and private label
aluminum foil are in the same product market, and suggested that
they may not be. However, the Bureau determined that
Reynolds' presence in Canada did not have a noticeable impact
on the price at which Novelis supplied aluminum foil wrap to
Canadian retailers. As a result of that conclusion, the
Bureau determined that it did not need to reach a definitive
conclusion on the question of whether branded and private label
aluminum foil are in the same product market. This approach
highlights the highly evidence-based approach being adopted by the
Bureau as traditionally branded and private label goods were
routinely considered to be part of the same market.
When assessing the level of competition in the semi-rigid
aluminum containers market, the Bureau looked at the number of
existing competitors and their respective market share. The Bureau
concluded that there are enough players remaining in the market to
reduce the potential market harm the merger may cause.
Additionally, the Bureau determined that there were low barriers to
entry for U.S. based competitors aiming to enter the Canadian
product market. Therefore, given the strong presence of the
remaining competitors and low barriers to entry, it was determined
that the merger would not have likely resulted in a substantial
lessening of competition in the semi-rigid aluminum containers
The author wishes to thank Lucy Liu, summer student,
for her assistance in preparing this legal update.
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