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February 27, 2013

Earlier this week, the Federal Court of Appeal released the public version of its reasons in a decision upholding the Competition Tribunal’s decision ordering divestiture in the contested BC Tervita hazardous landfill merger.

The decision is noteworthy on a number of counts, including for being the first fully contested merger proceeding in over ten years, being a relatively rare example of a “prevent” merger case (the Commissioner may challenge mergers in Canada under the Competition Act where they may either prevent or substantially lessen competition in a relevant market) and for the Federal Court’s views on the application of the Competition Act’s efficiencies defence.

In the midst of sledding through this rather blanching FCA judgment – some 60 plus pages (see: here) – I somewhat fortunately received this quite good, short Davies note on the case and its implications in my inbox.  So, I’m cheating slightly here (albeit with permission).  Overview:

“On February 25, 2013, the Federal Court of Appeal (“FCA”) released the public version of its decision upholding the Competition Tribunal’s order requiring Tervita (formerly known as CCS Corporation) to divest the Babkirk hazardous waste landfill site following its acquisition of Complete Environmental Inc. The case is the first fully contested proceeding under the merger provisions of the Competition Act in over a decade.

The FCA considered whether the Tribunal was justified in finding that the merger resulted in a substantial prevention of competition and that the efficiencies claimed by Tervita were not greater than and would not offset the anticompetitive effects of the transaction.

Among other things, the decision: endorses the Tribunal’s approach to determining whether the merger resulted in a substantial prevention of competition; states that the proper timeframe to consider in determining whether a merger results in a substantial prevention of competition will generally be assessed in relation to the period of time required for a new entrant to enter into the market; and clarifies that the proper methodology for applying the Act’s efficiencies defense involves as objective an analysis as is reasonably possible, although this approach may still consider qualitative factors that cannot be quantified.”

For a copy of this note see: Canadian Federal Court of Appeal Provides Guidance on Merger Challenges.

For a copy of the Federal Court of Appeal decision see: Tervita Corporation v. Commissioner of Competition.

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