On July 11, 2013, the Supreme Court of Canada granted leave to appeal in Tervita Corporation v. Commissioner of Competition. Five months earlier, the Federal Court of Appeal (the “FCA”) upheld the order of the Competition Tribunal (the “Tribunal”) requiring Tervita (formerly known as CCS Corporation) to divest the Babkirk hazardous waste landfill site that it obtained through its acquisition of Complete Environmental Inc. The Commissioner of Competition had applied to the Tribunal pursuant to section 92 of the Act, which grants jurisdiction to the Tribunal to intervene where "a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially".
At issue in the FCA was, among other things, the proper time frame in determining whether a merger results in a substantial prevention of competition and the proper methodology for applying the efficiency defence under the Act. In its reasons, the FCA endorsed a forward-looking approach to merger review. It also clarified the proper methodology for applying the "efficiencies defence" under the Act. For more information, please see our previous bulletin analyzing the Federal Court of Appeal’s decision.
Issues before the Supreme Court of Canada
The matters for which leave to appeal was sought, and granted, is the proper legal test to determine when a merger gives rise to a substantial prevention of competition under section 92 of the Act and the proper approach to the efficiencies defence under section 96 of the Act. The Supreme Court of Canada is expected to provide guidance regarding the following specific issues raised by the applicants:
- the proper legal test to determine when a merger gives rise to a substantial prevention of competition under section 92 of the Act, and to what extent, if any, the Tribunal is permitted to consider possible future events when it finds that there is no present competitive constraint being removed from the market; and
- the proper approach to the efficiencies defence under section 96 of the Act and, and in that regard, on what basis can real, quantified efficiencies (such as the Order Implementation Efficiencies) be rejected, as well as the proper approach to the offset analysis.1
A date for the hearing of the appeal has not been announced.