On October 31, 2022, the Competition Tribunal issued its long-awaited - and indeed nearly forgotten - decision in Canada (Commissioner of Competition) v Parrish & Heimbecker, Limited.
In 2019, Parrish & Heimbecker acquired 10 primary grain elevators in Western Canada from Louis Dreyfus Company. The Competition Bureau challenged the acquisition of one of these elevators, in Virden, Manitoba, in December, 2019 shortly following the closing of the transaction.
Until this week, the Parrish & Heimbecker case has been largely known for the extraordinary length of time it took the Tribunal to decide the fate of a solitary grain elevator on the Great Plains. The case commenced in December 2019, and the trial concluded in February 2021, after considerable procedural wrangling on the part of the company. Silence ensued, like a cold, Saskatchewan wind blowing over a vast prairie expanse through an interminable winter. The Tribunal's decision was released roughly 21 months later, on Halloween 2022, nearly three years after the case began.
The Tribunal found that Parrish & Heimbecker can continue to own the elevator.
Highlights of the Tribunal's Reasons
While the legacy of the Parrish & Heimbecker case has until now been the length of time it took to settle the ownership of the Virden grain elevator, which is surely a gift for any and all seeking to critique merger control law in Canada, its legacy from this point onwards is likely to be that the efficiencies defence did not prevail in this case. While the Tribunal concluded that the Bureau had not established that the acquisition lessened competition substantially in any relevant market, or was likely to do so in the future, principally because it rejected the Bureau's product market and geographic market definitions, it also rejected Parrish & Heimbecker's efficiencies claims.
Notably, the Tribunal did not actually have to address the question of efficiencies, as they were made moot by the conclusion that the acquisition did not lessen competition substantially, but chose to do so. Given the intense media and policy focus on the efficiencies defence in recent times, the Tribunal's conclusion that the efficiencies claimed were not proven and therefore could not have offset any anti-competitive effects of the acquisition (had there been any) is particularly relevant.
The full reasons for the decision will be released in the coming weeks.
Merger Control in Canada
The Parrish & Heimbecker decision allows us to reflect on certain elements of merger control in Canada since the Competition Act was modernized in 2009, at which time a powerful US-style merger review process was introduced in Canada to considerable fanfare (with the exception of the uniquely Canadian efficiencies defense, which already existed and remained in place).
- Transactions Reviewed by Competition Bureau: Roughly 3,000
- Remedies / Divestitures / Settlements: Roughly 60, not including transactions abandoned entirely due to competition issues
- Competition Tribunal Decisions on the Merits (section 92): Two1
- Times the Efficiencies Defence Impacted the Ultimate Outcome (section 92): One of Two2
- Pending Competition Tribunal Decisions on the Merits (section 92): Two3
- Times the Competition Bureau chose not to challenge a merger because of the efficiencies defence: Unknown, but roughly four based on publicly-disclosed information.4 Bureau may have better data.
Further commentary regarding these and other decisions are provided in our earlier article: Competition Act Amendments: A Data-Driven Perspective
1 Tervita, Parrish & Heimbecker
2 Tervita - yes, Parrish & Heimbecker - no
3 Secure, Rogers
4 Chemtrade, Canexus (abandoned), Gibson Energy, CN. Secure was of course also impacted by the efficiencies defence in the injunction hearing, but with the section 92 decision pending.
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