Canada: SCC Undoes The Competition Tribunal And FCA Decisions In Tervita

Confirms Tribunal Cannot Try to Predict the Future or Weigh Undetermined Effects to Prevent Competition

The highly anticipated judgment of the Supreme Court of Canada (SCC) in Tervita Corporation, et al v Commissioner of Competition is finally here (leave was granted back in July 2013 and argument heard in March 2014; reported on previously here and here).  Many expressed concerns about potential problems arising from the Tribunal and Federal Court of Appeal (FCA) decisions in this case, including greater complications and less predictability in merger assessment and the reach of the Bureau, regardless of the size of the merger.  The SCC decision seems to have brought some clarity and addresses the central problematic aspects of the underlying decisions.

As anticipated, the SCC confirmed the proper analytical framework to apply to the "prevention" branch of s. 92(1); the seven justices were unanimous on this point. A majority of the SCC (six of seven justices) also confirmed the proper approach to the "efficiencies defence" set out in s. 96 (with Karakatsanis J. in dissent).  The SCC did not in any way restrict the scope of the Bureau's power to review and undo mergers of any size, but it did comment briefly that this case (dealing with competition on a local scale) did not appear to reflect the policy considerations Parliament likely had in mind in in creating the efficiencies defence; although the current wording of the statute did support finding the defence was available in this case.

Overall, this decision is important because it: (i) should reduce complications in assessing competitive effects of mergers, since there cannot be any speculation about the future; and (ii) returns an objective standard to the efficiencies defence, making it more predictable. While the SCC did not comment on the remedy of divestiture vs unwinding of transactions, divestiture may remain the more likely order, given the comments of the Tribunal and FCA in that regard.

Brief Background – Decisions of the Tribunal and FCA

Tervita was an appeal from a divestiture order of the Competition Tribunal in regards to the acquisition of a hazardous waste disposal site.  Tervita owned and operated two hazardous waste landfills in Northeastern BC. In 2011, it sought to acquire a third site, which would have given it three of the four permits for the operation of hazardous waste landfills in that area.  Despite the fact the merger price was only about $6 Million (far below the limit for notifiable transactions), the Commissioner of Competition opposed the transaction on the basis that it was likely to substantially prevent competition in secure landfill services in that area.

The Competition Tribunal found the merger was likely to prevent competition substantially in the relevant market. It also concluded that the efficiencies exception in s. 96 of the Act did not apply. The Tribunal ordered Tervita to divest itself of the newly acquired site; the Commissioner's request for unwinding was found to be an intrusive and overbroad remedy when divestiture was available and would be effective.

Tervita's appeal from the Tribunal's order was dismissed by the FCA in 2013. The FCA agreed with the Tribunal's analytical framework and decision on prevention of competition, but found its methodology for the efficiencies defence was overly subjective. In any event, however, the FCA's own application of the efficiencies defence in a more "objective" manner still concluded that it did not succeed on the facts of the case.

SCC: The proper framework for "prevention" merger reviews under s. 92 of the Act

Rothstein J. (writing for the entire Court on this issue) confirmed that a forwarding-looking "but for" market condition analysis should be used to determine if a merger gives rise to a substantial prevention of competition under s. 92(1). This involves a two-stage analysis: (i) identify the potential competitor – the firm(s) the merger would prevent from independently entering the market; and (ii) determine whether, "but for" the merger, the potential competitor (usually one of the merging parties) would have likely entered the market and, if so, whether that entry would have decreased the market power of the acquiring firm, i.e., had a substantial effect on competition.  At the second stage of the analysis, the Tribunal should consider evidence of any factor that could influence entry, including those in s. 93.

Rothstein J. clarified that the timeframe for likely entry must be discernable, so there must be evidence of when the potential competitor is realistically expected to enter the market (in absence of the merger) , assessed on balance of probabilities. It was emphasized that the further into the future the Tribunal looks, the more difficult it will be to meet the test and that there should be no effort to look farther into the future than the evidence supports – speculation is improper and mere possibilities are insufficient to meet the standard – nor should the Tribunal or courts try to make future decisions for companies.

In the present case, it was found that the Tribunal's analytical framework and conclusion that the merger was likely to substantially prevent competition was correct. The Tribunal properly used a forward-looking "but for" analysis, did not speculate and made factual findings based on abundant evidence.

SCC: The proper approach to the s. 96 efficiencies defence

Rothstein J. (writing for the majority of five as well as Abella J.) explained that the s. 96 efficiencies defence is a balancing test, requiring analysis of whether the quantitative and qualitative efficiency gains of the merger outweighs the anti-competitive effects.  The Tribunal has flexibility to choose which methodology should be used in light of the particular circumstances of each merger.  However, the approach should be objectively reasonable, quantifying all effects that are realistically measurable and ensuring that the estimates provided are grounded in the evidence.  This will minimize the degree of subjective judgment necessary in the analysis so the Tribunal can make the most objective assessment possible. In addition, it was held that: (i) not all economic efficiencies should be taken into account, e.g., efficiencies resulting from the regulatory process; (ii) consideration cannot be given to the existence of a monopoly per se as opposed to its effects; (iii) environmental effects that have economic dimensions may be considered; and (iv) more than marginal efficiency gains should not be required for the defence to apply, as that would require an overly subjective analysis.

In this case, the majority found that the Commissioner failed to meet the burden under s. 96 by failing to quantify certain quantifiable anti-competitive effects, resulting in the quantifiable effects being assigned a weight of zero. The FCA improperly allowed subjective judgment to overtake the analysis when it weighed undetermined effects based on a rough estimate. This did not meet the requisite objective standard and also raised concerns of fairness, putting the parties in an impossible position because they would not know the case they have to meet). The FCA also erred in holding that an anti-competitive merger cannot be approved if only marginal or insignificant gains in efficiency result. Here, there were some efficiency gains established and so the efficiencies defence was made out.

Karakatsanis J., in dissent on this issue, did not agree with the majority that "reasonable objectivity" required qualitative effects to be treated as less important than quantitative effects, that failure to quantify quantifiable anti-competitive effects means such undetermined effects become irrelevant or invalid or that a court cannot find efficiency gains are too marginal.  Overall, she could not agree that Tervita was entitled to the benefit of the efficiencies defence in this case.

SCC: The Competition Tribunal must be Correct, not just Reasonable

As a final note, Rothstein J. confirmed (for the majority of five as well as Karakatsanis J.) that the standard of reasonableness, which presumptively applied given the issues were questions of law under the Tribunal's governing statute, did not apply in this case given the statutory language granting the right of appeal in the Act. Rather, the less deferential standard of correctness was required on questions of law. This has been the consistent finding of the FCA in other cases.

Nonetheless, Abella J., in partially concurring reasons, raised concerns about the majority's finding that the correctness standard applied.  In her view, the presumption of reasonableness should apply regardless of the legislative wording since statutory wording alone is not determinative of the applicable standard of review. She described this as "a reversion to the pre-Pezim era", bringing confusion back to the analysis and "chipping away" or eroding the long-standing deference given to specialized tribunals. Nonetheless, she found the Tribunal's interpretation of s. 96 was unreasonable, so concurred in the result.

Case Information

Tervita Corporation, et al v Commissioner of Competition, 2015 SCC 3

SCC Docket: 35314

Date of Decision: January 22, 2015

To view original article, please click here.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.