Background

Earlier this year we discussed proceedings commenced by the Commissioner of Competition for an order dissolving (unwinding) the purchase by CCS Corporation (“CCS“) of the shares of Complete Environmental Inc. (“Complete“), the sole shareholder of Babkirk Land Services Inc. A copy of our prior article can be found here.

In brief, CCS’s acquisition of Complete resulted in CCS controlling all of the secure landfills for hazardous waste located in north-eastern British Columbia’s oil and gas patch.

Of particular interest is the fact that the share purchase transaction fell well below financial thresholds that would have required the parties to file a notification with the Competition Bureau. It seems the transaction was brought to the attention of the Competition Bureau by a competitor of CCS or a customer of hazardous landfill services in the area. After investigating the transaction, the Commissioner alleged that the acquisition prevented or was likely to prevent competition. Rather than seeking an order for divestiture (the usual remedy in these types of cases), the Commissioner sought to have the transaction unwound.

Decision

The Competition Tribunal sided with the Commissioner in finding that the merger was likely to prevent competition substantially in the market for secured landfill services for solid waste from oil and gas producers in north-eastern British Columbia. However, the Tribunal rejected the Commissioner’s preferred remedy of dissolution and instead ordered divestiture as an appropriate and effective remedy.

The Competition Tribunal’s full decision can be found here.

Lessons

It is open to the Competition Bureau to review and challenge any acquisition transaction, including those which do not meet the financial threshold requirements for notification. Accordingly, purchasers should consider the anti-competitive effects of all proposed transactions, including those which are not subject to notification under the Competition Act.

The Competition Tribunal views dissolution as an intrusive, overbroad remedy and accordingly is more likely to order divestiture in these types of cases.

Purchasers should carefully consider what they put in writing regarding their motivations for a transaction. The Tribunal relied on the internal documents of the purchaser in determining its intent in pursuing the acquisition of Complete.