Acquisition of Canexus by Chemtrade will not be challenged
March 8, 2017 – OTTAWA, ON – Competition Bureau
The Competition Bureau confirms that it has issued a No Action Letter saying that it will not challenge the proposed acquisition of Canexus Corporation (Canexus) by Chemtrade Logistics Income Fund (Chemtrade) before the Competition Tribunal under the merger provisions of the Competition Act.
The Bureau investigation determined that the potential effects of the transaction on competition in the market for sodium chlorate in Western Canada would be significantly offset by efficiencies resulting from the transaction.
Sodium chlorate is a chemical primarily used to produce chlorine dioxide, a bleaching agent used by pulp and paper manufacturers.
The Bureau determined that the proposed transaction would likely result in anti-competitive effects because, among other things, it would eliminate a competitor in a market with limited remaining competition. However, following a thorough assessment of the expected efficiencies gained from the transaction including savings related to transportation costs, the Bureau found that they would significantly outweigh the likely anti-competitive effects of the transaction.
Under the Competition Act, the Bureau has a mandate to review mergers to determine whether they are likely to result in a substantial lessening or prevention of competition.
There is an efficiency exception in the Competition Act that involves an assessment of the trade-off between anti-competitive effects and efficiencies. In particular, where the efficiencies outweigh the anti-competitive effects, the Act provides that the merger cannot be blocked.
In the case at hand, it was determined that the efficiencies that would likely be lost from blocking the merger or imposing remedies would significantly outweigh the likely anti-competitive effects of the merger.
As part of its normal approach in examining a merger, the Bureau consulted with a wide range of industry participants, such as suppliers, competitors, and customers.
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