> M&A: Competition Bureau Issues No Action Letter in Glencore/Viterra Merger | COMPETITION LAW

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On May 4, 2012, Reuters, the Globe and Mail, the Wall Street Journal and others reported that Glencore International PLC received a no action letter from the Competition Bureau that the Bureau will not challenge Glencore’s $6 billion bid for Canada’s largest grain handler Viterra Inc.

No action letters are one of two forms of clearance available to merging parties under the Competition Act (along with advance ruling certificates) and state that the Commissioner does not intend when issued to challenge a transaction under the merger review provisions of the Act, although has the power to challenge a merger for up to one year post-completion).

The quick clearance by the Bureau is not very surprising given that, among other things, Glencore’s offer was not conditional on subsequent transactions involving the sale of Viterra port terminal, grain handling and retail assets to Agrium and Richardson and the absence of competitive overlap between Glencore and Viterra (indeed the transaction appears to be structured to achieve this relatively effortless first-stage clearance).

It will be interesting, however, to see how the Bureau will review and assess the subsequent second stage Glencore sales to Agrium and Richardson, particularly given that there appears there will be some Glencore/Agrium and Glencore/Richardson overlaps in the retail (crop protection products, fertilizer, seed, small equipment, etc.) and port terminal grain handling markets.  Having said that, the parties have indicated in public statements that they have chosen to allocate the later sale of assets carefully to tiptoe through potential concentration issues and reduce possible competition concerns.

For more information about Canada’s merger control and Investment Canada rules see:

Merger Control

Investment Canada

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