It's a long way from the Competition Bureau's office in Gatineau, Que., to a hazardous waste landfill near Fort St. John in northern B.C., where heavy trucks laden with the muddy, hazardous byproducts from nearby oil fields dump their loads.
But the bureau, recently armed with new powers to scrutinize mergers that could create unfair monopolies, has trained its sights on this remote area.
Late last month, the federal watchdog announced it was taking landfill owner CCS Corp. before the Competition Tribunal, alleging the Calgary-based company's merger with the owner of a potential waste-disposal site in northern B.C., where the CCS already owns two such landfills, was aimed at unfairly squashing competition.
Veteran competition lawyers say the challenge is a sign that even small mergers can expect attention from the newly strengthened Competition Bureau. A challenge of this type is rare: It is the first time the bureau has taken an already completed merger before the tribunal since 2005. (Under federal law, the bureau has a year after a deal closes to do so.)
The case will be watched closely because most disputes with the regulator are settled long before getting to this stage. It is also rare, observes say, for the bureau to go before the quasi-judicial Competition Tribunal and demand the complete cancellation of a deal, as it has in this case. (Other possible sanctions in such cases include restrictions on a company's operations or sell-offs of other key assets in order to preserve competition.)
The landfill saga began last February, when a Fort St. John-based company called Complete Environmental Inc. obtained environmental approval to open what is known as a "secure landfill" at its Babkirk site, about 80 kilometres north of one of CCS's two landfills in the region.
Last fall, CCS - which has 3,000 employees and offers waste disposal and other services to oil and gas companies in Canada and the U.S.- moved to merge with its potential rival, which had not yet opened its facility. The bureau then launched an investigation of the proposed deal.
In documents filed with the federal Competition Tribunal, the bureau says CCS operates the only two "secure landfills" in northeastern B.C. equipped to take the discarded "drill mud" and contaminated soil produced by the region's oil and gas industry. The bureau accuses CCS of acting solely to snuff out a competitor, and says internal CCS documents show the company was worried about lower revenues and a possible "price war."
Competition lawyers say that business executives are often caught in e-mails suggesting that one way to crush a competitor is to simply buy them, and this is exactly the kind of evidence a Competition Bureau investigation is after.
"Certainly saying, 'We'd better buy these guys because they will lower the price to competitive levels' is probably not what you want to put in an e-mail," said Susan Hutton, a competition lawyer with Stikeman Elliott LLP in Ottawa who is not involved in the case.
Many observers say the Competition Bureau under its new commissioner, former Toronto lawyer Melanie Aitken, has emerged as a more potent force, redeeming itself after its botched challenge of Labatt Brewing Co.'s 2007 acquisition of discount competitor Lakeport Brewing Co.
George Addy, a former commissioner of competition and now a senior partner at Davies Ward Phillips & Vineberg LLP in Toronto, said the landfill case is an illustration of the bureau's increased attention to smaller deals in recent years, and confirms that Ms. Aitken is not shy about using her powers.
"I think what it does show, is she doesn't hesitate to act if she thinks there's an issue that needs to be brought before the tribunal or the courts," said Mr. Addy, who is not involved with the case. "And frankly I think that's a good thing."
He pointed out that the bureau has intervened in waste industry mergers before. Last June, for example, it forced Waste Services Inc. to agree to major divestitures of garbage trucks and collection contracts in several Canadian cities before its marriage with IESI-BFC Ltd.
The waste business is by its very nature tough for new entrants, Mr. Addy said, as they must go through lengthy environmental reviews before opening landfill sites. And it is also usually limited by geography, as trucking waste can be costly.
In its filing with the tribunal, the Competition Bureau says the cost of studies, environmental assessments and consultations with aboriginal groups for secure landfill sites can take two years and cost more than $1-million. (Complete Environmental took three years to secure the approvals it needed for its Babkirk site, the bureau noted.)
Acting for CCS in the case is Toronto lawyer Linda Plumpton of Torys LLP, a veteran competition litigator who said she could not comment directly on the case against her client. By law, CCS has until mid-March to file its defence with the tribunal.
Ms. Plumpton said CCS and the bureau had been in talks over the merger last fall. The company co-operated with the investigation, she said, and delayed the closing of the deal during the probe. The two sides could not agree on a settlement. CCS agreed to preserve the Babkirk site and its permits until the matter is resolved.
"My client intends to respond to [the allegations]and regrets that the bureau decided to proceed in this way," she said.
(This is not the first time that CCS has drawn the attention of Competition Bureau investigators. According to Federal Court documents, the bureau looked into the company last year for alleged "predatory pricing" after it opened a waste-disposal site next to a competitor south of Grande Prairie, Alta. Neither Ms. Plumpton nor a spokesman for the bureau would discuss the earlier investigation, although the bureau said it is "ongoing.")
Stikeman Elliott's Ms. Hutton said the fact the bureau's case alleges the northern B.C. deal was meant to prevent future competition, rather than to crush a current competitor, also makes it novel.
"We don't have a lot of case law on prevention of competition in Canada, so this is a good case for them to bring," Ms. Hutton said. "We'll be watching with great interest."