Law Times

Page 8 September 16, 2013 Law Times • Focus On Competition Law Competition lawyers eager for SCC guidance Bar 'delighted' if court strays into broader analysis in Tervita BY MICHAEL McKIERNAN For Law Times T here's nothing some lawyers dread more than a novellength judgment shooting off at tangents far from the nub of the matter at hand. But competition lawyers will buck the trend next spring as they hope for a Supreme Court tome as they seek value from a rare trip to the nation's top court. In July, the Supreme Court of Canada granted leave to appeal in Tervita Corp. v. Commissioner of Competition with a hearing scheduled for April 2014. The Competition Tribunal originally ordered Tervita to divest itself of a hazardous waste landfill in 2012 after finding a merger was likely to substantially prevent competition in the northeastern B.C. market. In February, the Federal Court of Appeal upheld the tribunal's decision. "The Competition Tribunal decisions tend to be very long because the decisions are very fact sensitive. The Supreme Court should be much more focused, but I think those in the competition bar will be delighted if they stray into a broader analysis because it's not an area that gets treated very often," says Tony Baldanza, chairman of the antitrust, competition, and marketing law group at Fasken Martineau DuMoulin LLP in Toronto. "Contested mergers themselves are unusual, so to see one going all the way to the Supreme Court is extremely unusual. This is something folks in the business are watching very carefully, both in private practice and at the Competition Bureau." According to Baldanza, Tervita was already a bit of a gold mine for lawyers in the competition field before the tribunal even 'More guidance from the Supreme Court in the efficiencies area will be very welcome,' says Tony Baldanza. heard arguments over the merger. CCS Corp. closed a deal for Complete Environmental Inc. in January 2011 that would add a single hazardous waste landfill to its two existing sites. Together, the three were the only working landfills in northeastern British Columbia. Although the commissioner of competition warned the parties she had trouble with the proposed deal, the odds seemed against an intervention given the relatively small size of the transaction. The $6-million value fell well below the notification threshold that currently stands at around $80 million. But soon after the closing, the bureau went ahead with its application to the Competition Tribunal. "It was a useful reminder that even if you have a small deal, there can be no assurance that you will avoid a challenge if it presents what the bureau considers an issue," says Baldanza. "The structure of the challenge was also notable because it was based primarily on a theory of prevention of competition, as opposed to a lessening of competition, which accounts for the vast majority of challenges." The commissioner's requested remedy, dissolution of the merger, also raised a few eyebrows. "Ordinarily, the remedy tends to be the buyer's problem. The perceived wisdom is that sellers can sleep easy post-closure. The tribunal decision offered some comfort Bureau launches whistleblowing program BY MICHAEL McKIERNAN For Law Times T he Competition Bureau dug deep into its past when it unveiled one of its newest enforcement programs on criminal cartel whistleblowing. "We believe that this initiative will support increased reporting of anticompetitive behaviour while ensuring the protection of individuals who come forward with such information," said commissioner John Pecman as he launched the program in May shortly before his official appointment as Melanie Aitken's permanent successor. But the bureau has actually had whistleblowing protections on its books since 1999 when the government amended the Competition Act to include them. "It's more of a relaunch than something really new," says Neil Campbell, co-chairman of the competition and international trade group at McMillan LLP in Toronto. "I think it's really that the Competition Bureau is looking for ways to increase the flow of cases that they get and they're finding that they weren't getting much flow from the whistleblowing process. Basically, I think that is because nobody knew about it. It looks now as though they are trying to build a real level of awareness around it." According to Mark Katz, a competition partner at Davies Ward Phillips & Vineberg LLP in Toronto, the whistleblowing element slipped through the net in 1999 in part because it emerged late in the parliamentary process during committee study. "It wasn't something the bureau asked for itself. I think they liked the idea, but it wasn't their agenda back then," says Katz. A decade and a half later, he says the idea's time has come. Criminal cartel prosecutions have ballooned in the same period while regulators in various fields have embraced whistleblowing protections internationally. "We're in a different era of enforcement. It's now a lot more important than it was in 1999. This is just another channel for people to come forward, another way to kind of stir the pot and disrupt criminal conduct," says Katz. According to Campbell, public attitudes toward whistleblowers have also changed in recent times and helped make people more open to speaking up. He says there's now less stigma attached to what people once may have called "rats" or "snitches." "It wasn't antitrust, but the Enron case was an important example where the whistleblower was seen to have been doing something that had a public interest," he says. Imran Ahmad, who practises competition law at Cassels See New, page 9 www.lawtimesnews.com because they went for divestiture, but the very fact that the commissioner sought dissolution was somewhat unsettling for sellers," says Baldanza. Kevin Wright, chairman of the competition and antitrust law practice group at Davis LLP in Vancouver, acted for the vendors in the deal. He says they were "surprised and disappointed" when they first heard the Competition Bureau's position. "To see them pursuing dissolution as the preferred remedy, not just an alternative, was surprising," says Wright. "The bureau had indicated its trouble before the parties closed and they may have felt that if you're going to go ahead in spite of our view, we'll seek to unwind the whole thing because in our view, you shouldn't have done it." The court awarded the vendors costs after the tribunal decided divestiture was a more appropriate remedy. At the Federal Court of Appeal, the arguments focused on the tribunal's consideration of future events in its determination that the merger would prevent competition as well as Tervita's efficiencies defence to the application. Although the vendors weren't operating their site as a landfill at the time of the merger, the tribunal decision found that without the deal, their planned bioremediation business would have failed within a year and changed to a landfill by the spring of 2013. That in turn would have provided a direct competitor to Tervita. In its decision, the unanimous threejudge panel of the Federal Court of Appeal found the tribunal was within its rights to make the finding. "The analysis may require that the tribunal look into the future to ascertain whether the entry into the market would have occurred within a reasonable period of time, given the dynamics of the firm at issue and the characteristics of the market in question," wrote Federal Court of Appeal Justice Robert Mainville on behalf of the panel. Tervita also argued in the appeal that the tribunal should have rejected the commissioner's application because the efficiencies achieved as a result of the merger outweighed its anticompetitive effects. The company took issue with the tribunal's subjective approach to balancing the effects on either side despite the bureau's inability to quantify any anticompetitive effects. "I agree with the appellants that the offset analysis must not be based on subjective judgment. The overall offset analysis under section 96 must be as objective as is reasonably possible, and where an objective determination cannot be made, it must be reasonable," Mainville wrote. However, in this case, he decided Tervita's quantified efficiencies were so negligible that the defence was unavailable to it. "More guidance from the Supreme Court in the efficiencies area will be very welcome," says Baldanza. "Virtually all transactions offer some level of efficiency, so it's important to better understand how they will be calculated."LT

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