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Summary

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Competition - Mergers - Substantial prevention of competition - Exception where gains in efficiencies - What is the proper legal test for determining when a merger gives rise to a substantial prevention of competition under s. 92 of the Competition Act? - Under a s. 92 analysis, to what extent may the Competition Tribunal consider possible future events when it finds there is no present competitive constraint being removed from the market? - What is the proper approach to the efficiencies defence under s. 96 of the Competition Act? - In a s. 96 analysis, on what basis can real, quantified efficiencies be rejected, and what is the proper approach to the offset analysis? - Competition Act, R.S.C. 1985, c. C-34, ss. 92 and 96.

Four permits for the operation of secure landfills for the disposal of hazardous waste generated by oil and gas operations have been issued in Northeastern British Columbia. Two of the permits are held by the appellant Tervita who owns and operates two hazardous waste landfills in the area. One permit is held by the appellant Babkirk Land Services (“Babkirk”), a wholly owned subsidiary of the appellant Complete Environmental (“Complete”). The fourth permit was issued for a site developed by an aboriginal community, but the landfill has not yet been constructed. In 2011, Tervita bought Complete, which included Babkirk. However, prior to closing, the Commissioner of Competition opposed the transaction on the ground that it was likely to substantially prevent competition in secure landfill services in Northeastern B.C. After closing, the Commissioner asked the Competition Tribunal to order pursuant to s. 92 of the Competition Act that the transaction be dissolved, or in the alternative, that Tervita divest itself of Complete or Babkirk. The Tribunal found that the merger likely prevented real and substantial competition in the marketplace. It also found that Tervita had not proved that the efficiencies gained by the merger were sufficient to outweigh and offset the merger’s anti-competitive harm. It ordered Tervita to divest itself of the shares or assets of Babkirk. The Federal Court of Appeal upheld that decision.

Lower Court Rulings