Yesterday, the Supreme Court of Canada released its long awaited
decision in Tervita Corporation et al v. Commissioner of
Competition.1 In a 6-1 decision, the SCC allowed
Tervita's appeal and set aside the divestiture order made by
the Competition Tribunal and upheld by the Federal Court of Appeal
(FCA). The SCC agreed with the FCA's conclusion that the merger
would likely result in a substantial prevention of competition, but
overruled the conclusions of the Tribunal and the FCA that the
merger was not saved by the efficiencies defence.
This case stems from Tervita's acquisition of Complete
Environmental Inc. which held a permit to develop a landfill for
the disposal of hazardous waste in northeastern British Columbia.
Tervita already owned and operated two hazardous waste landfills.
Although the transaction was below the merger notification
threshold, the Commissioner of Competition brought an application
after the transaction had closed on the ground that it
substantially prevented competition by eliminating the only
potential competitor for secure landfill services. The FCA had
upheld the Tribunal's ruling ordering Tervita to divest
Complete on the basis that its acquisition was likely to prevent
competition substantially. The FCA also upheld the Tribunal's
decision that the efficiencies defence in section 96 of the
Competition Act was not available to Tervita because the
efficiencies of the transaction did not offset its anti-competitive
effects. For more details, please see our previous article,
This is the first SCC decision on the "prevention" of
competition test. The SCC held that the timeframe to determine
whether one of the merging parties would, "but for" the
merger, be likely to enter the market must be discernible. The
Court warned against looking too far in the future, but recognized
that the inherent time delay to enter an industry because of
barriers to entry is an important consideration. The SCC agreed
with the Tribunal's controversial conclusion that there was
sufficient evidence to support a finding of a substantial
prevention of competition as a result of the merger.
However, in regard to the efficiencies defence, SCC concluded
that the Commissioner did not meet her burden of quantifying the
quantifiable anti-competitive effects of the merger and did not
prove any qualitative anti-competitive effects of the merger. As
such, the anti-competitive effects raised by the Commissioner were
assigned no weight by the SCC and, by default, were offset by the
modest overhead efficiency gains proven by Tervita.
While the facts of the case are unique, the SCC's decision
is a significant loss for the Commissioner. Going forward, the SCC
has provided guidance on the proper application of the efficiencies
defence. Most notably, the SCC has made it very clear that in
contested merger litigation the burden of proving anti-competitive
effects rests with the Commissioner.
1 2015 SCC 3, 2013 FCA 28 and 2012 Comp. Trib. 14.
Tervita was formerly known as CCS Corporation.
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.
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).