January 22, 2015 / 11:31 PM / 3 years ago

Canada Supreme Court ruling sets high bar for Competition Bureau

3 Min Read

TORONTO (Reuters) - A Canadian Supreme Court ruling on Thursday about a tiny landfill deal in British Columbia is set to make it a lot harder for Canada's competition watchdog to challenge potentially anti-competitive deals between companies, lawyers said.

The ruling by Canada's top court foiled the Competition Bureau's bid to unwind privately-held Tervita's acquisition of a hazardous waste disposal services company, that at the time of the deal had just secured regulatory approval to open a waste disposal facility in Northeastern British Columbia.

Back in 2011, Tervita, then named CCS Corp, acquired rival Complete Environmental for some C$6 million ($4.84 million). Following a review, the bureau challenged the takeover, saying it would lead to a substantial prevention of competition for the disposal of solid hazardous waste in the area.

In 2012, the competition tribunal ordered Tervita to sell the site it had bought, a decision that was upheld by the Federal Court of Appeal in 2013.

But the Supreme Court ruled in favor of Tervita on Thursday on the basis of the 'efficiencies' defense. If the Competition Bureau challenges a deal, the Competition Act allows companies to argue that a deal results in savings that would reduce costs and offset any anti-competitive issues stemming from the deal.

Lawyers say the ruling means that the Bureau will have to present a more solid case in the future in order to challenge the efficiencies defense.

"The Supreme Court has really breathed new life into the efficiencies defense," said Brian Facey, head of the competition and antitrust group at law firm Blakes in Toronto. "Anyone doing a deal with a competitor now has a way better chance of getting that transaction approved for the Competition Bureau."

Facey said the ruling is also likely to limit the Bureau's abilities to seek remedies on major deals. The Bureau often lets major deals go through, only if the parties agree to divest some assets as remedies to offset any anti-competitive threats.

The Competition Bureau in a statement said the court's ruling provides it with clarity on important issues related to the merger review process, including a framework for prevention of competition cases and the efficiencies defense.

The Bureau said it will consider the guidance provided on efficiencies and accordingly make any changes required to its analysis and information gathering during the merger review process.

Editing by Grant McCool

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