Canadian COMPETITION LAW

On September 11, 2012, the Competition Bureau announced that it had laid charges against Progressive Waste Solutions Ltd. and its subsidiary, BFI Canada Inc. for allegations of breaches of a consent agreement following the merger in 2012 of IESI-BFC Ltd. and Waste Services Inc.

In making the announcement, the Bureau said:

“’Today’s announcement sends a strong signal to businesses that breaching a Consent Agreement with the Competition Bureau is an extremely serious matter and will not be tolerated’, said Melanie Aitken, Commissioner of Competition. ‘Consent Agreements are an essential tool to preserve competition and protect consumers from potential anti-competitive harm. Companies who violate the terms of such agreements must be held to account.’”

This announcement is another indication both of the Bureau’s more aggressive enforcement of the Competition Act generally and signals the Bureau’s ongoing appetite to take steps to ensure that settlement agreements under the Act are complied with.  In this regard, this case is the third recently announced case in which the Bureau has commenced enforcement steps, including criminal enforcement, relating to alleged breaches of consent agreements (see also: Bureau Seeks Criminal Penalties in Alleged Misleading Advertising and Breach of Consent Agreement Case and Commissioner of Competition Speech Highlights Enhanced Competition Bureau Enforcement).

This case also appears to indicate that the Bureau is making good on its commitments to both monitor the marketplace generally for conduct that potentially violates the Competition Act and for potential violations of consent agreements negotiated with parties in misleading advertising, merger and other cases.

For example in one recent speech, the Commissioner said that the Bureau will “continue to be vigilant in monitoring consent agreements” and would not “hesitate to take further enforcement action as warranted”.  Bureau personnel have also indicated in other recent public remarks that they continue to periodically monitor online advertising and marketing for Competition Act compliance and business media for mergers that, while not notifiable, may raise competition concerns.

For example, in the Bureau’s recently issued Merger Review Performance Report in April, the Bureau said:

“The Mergers Branch recently implemented a new initiative to actively monitor transactions in the Canadian marketplace.  This initiative was largely driven by the direct and indirect impacts of the [amendments to the Competition Act], including the reduced timeframe (from three years to one year) for the Bureau to review or challenge a merger following substantial completion under section 97 of the Act, and the indexation of the transaction size threshold pursuant to section 110 of the Act.

Regarding the reduced timeframe to review consummated mergers, the objective of the new monitoring process is to identify completed transactions that may raise serious competition issues before the one-year period expires and take appropriate action, where necessary.

The transaction size threshold for Notification has increased significantly in Canada in the past few years. The threshold increased from $50 million to $70 million in 2009 following implementation of the Amendments. In the period since the Amendments, the threshold has further increased to $77 million pursuant to an annual indexing formula set out in the Act. The immediate effect of the increasing threshold is that fewer transactions are subject to mandatory Notification, which could potentially increase the likelihood of non-notifiable mergers raising substantive competition issues. The increased transaction size threshold has also had a direct impact on the operating costs of the Mergers Branch through decreased revenues (i.e., fewer notifiable transactions) and increased costs associated with reviewing more non-notifiable transactions, as well as complaints related to such transactions.

The monitoring process involves regular scanning of various media sources and mergers and acquisition databases, as well as the review of relevant marketplace complaints received by the Bureau. Where issues are identified, the Bureau will take appropriate action in a timely and responsive manner.”

Based on the Bureau’s increased rigour in enforcing negotiated consent agreements, it is incumbent on settling parties and their counsel to take steps to ensure that the terms of settlement agreements are both understood by business personnel and complied with.  It is also prudent to review proposed transactions that fall below the pre-merger notification thresholds under the Act for potential competition issues.

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