In a landmark decision, the Competition Tribunal has ordered Calgary-based CCS Corp. to divest a hazardous waste site it acquired in northeastern B.C., siding with Canada’s competition watchdog.
The ruling hands the Competition Bureau a win in its first court challenge of a corporate merger since 2005.
In a case that has been closely watched by competition lawyers, the regulator moved last year to undo CCS’s acquisition of rival Complete Environmental Inc., which had obtained environmental approvals to open a hazardous-waste landfill for the oil-and-gas industry not far from one of CCS’s facilities in northeastern B.C.
The case, seen as a precedent setter for future mergers the regulator seeks to block, went before the Competition Tribunal last year. The Competition Bureau announced the result on Tuesday, hailing it as a victory that blocks a multi-billion-dollar company from “entrenching its monopoly” in the local hazardous waste disposal market.
Melanie Aitken, the commissioner of competition, said the tribunal’s decision sends a clear message.
“Companies who are looking to eliminate their competitive threats simply by buying up their competitors better think twice about it,” Ms. Aitken said in an interview Tuesday.
She also said the deal, which fell below the bureau’s normal financial thresholds for scrutinizing mergers, is a reminder that the regulator reserves the right to challenge any merger that threatens competition.
When it challenged the deal, which the bureau says closed despite its objections, the regulator warned that it would result in a “substantial prevention of competition” in the region’s hazardous waste business.
It is a hard market for new competitors to enter, because of the lengthy and expensive environmental approvals required.
A lawyer for CCS – which has 3,000 employees and offers waste disposal and other services to oil and gas companies in Canada and the U.S. – said the company is still looking over the decision.
“While our client is disappointed with the decision reached by the tribunal, it is a lengthy decision that addresses several novel legal issues,” Linda Plumpton of Torys LLP said in an e-mail. “Our client is reviewing the decision carefully and considering its next steps.”
In documents filed with the federal Competition Tribunal, the bureau said CCS operates the only two secure landfills in northeastern B.C. designed to handle the discarded drill mud and contaminated soil produced by the region’s oil and gas industry.
The bureau accused CCS of trying to stamp out a potential competitor, Complete Environmental, by acquiring the company and its Babkirk site in northeastern B.C. The bureau cited internal CCS documents that showed CCS was worried about a possible “price war.”
Adam Fanaki, a competition lawyer with Davies Ward Phillips & Vineberg and a former senior official with the bureau, said the decision was an important one, despite the small size of the original deal.
“While the challenged transaction was small, the tribunal’s decision represents an important victory for the commissioner of competition and a potentially significant development in Canadian competition law.”