On March 1, 2006, following the filing of a consent agreement with the Competition Tribunal, PaperlinX Canada (formerly Coast Paper Ltd.) completed its acquisition of Cascades Fine Paper Group Inc.’s fine paper merchant business known as Cascades Resources. The closing followed PaperlinX Limited’s November 17, 2005 announcement from its headquarters in Melbourne, Australia of its intention to acquire the Cascades Resources paper merchant business.
Both Cascades Resources and PaperlinX sell fine paper products in many parts of Canada. Fine paper is used to print a wide variety of products including brochures and books.
Over the course of its lengthy review, the Competition Bureau analysed the transaction’s impact on competition in the fine paper industry and consulted with printers, distributors, and office paper users such as businesses, governments and institutions. After the Bureau completed its review, the Commissioner concluded that the transaction would likely result in a substantial lessening and/or prevention of competition in the fine paper industry in British Columbia, Alberta and Saskatchewan.
PaperlinX did not admit to any impact on competition, but chose not to contest the Commissioner’s conclusions. In order to address the Commissioner’s concerns regarding the impact of the transaction on the fine paper market in Western Canada, PaperlinX agreed to divest the Cascades fine paper merchant business in Alberta (Calgary and Edmonton) and British Columbia (Vancouver) (the "Cascades Resources West business"), while retaining all other locations. The Commissioner is satisfied that this divestiture is sufficient to ensure that no substantial lessening or prevention of competition will result from the transaction. The consent agreement provides that PaperlinX will retain the parts of the Cascades Resources West business that are not involved in fine paper sales such as the graphic arts supply business.
The consent agreement includes standard provisions such as terms requiring that the Cascades Resources West business will be held separate from the other PaperlinX and Cascades Resources businesses, that an independent manager and a monitor will be appointed with respect to the business to be divested, that PaperlinX will have conduct of sale during the initial sale period and that the sale of the business is subject to the approval of the Commissioner. The consent agreement also provides that PaperlinX will continue to arrange for the supply of fine paper to the Cascades Resources West business until divestiture and may provide other managerial, administrative and operational resources. Also, the consent agreement provides that PaperlinX shall not, as a condition of selling graphic arts supplies to customers of the Cascades Resources West business, also require such customers to buy fine paper from PaperlinX or object to or obstruct the supply of fine paper by any fine paper mill to the purchaser of the Cascades Resources West business in BC, Alberta or Saskatchewan.
Stikeman Elliott provided corporate and competition advice to PaperlinX on this matter.
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