Competition Bureau reaches agreement with Domtar Corporation to preserve competition in Canada’s pulp and paper industry
December 29, 2022 – GATINEAU, QC – Competition Bureau
The Competition Bureau has entered into a consent agreement with Domtar Corporation to address competition concerns with its acquisition of Resolute Forest Products Inc.
A Bureau review concluded that the proposed transaction would likely lessen competition substantially in the supply of northern bleached softwood kraft (NBSK) pulp in Eastern and Central Canada and in the purchase of wood fibre from private lands in northwestern Ontario.
The Bureau determined that Domtar and Resolute account for a significant portion of the supply of NBSK in Eastern and Central Canada. The proposed transaction would result in market shares well above the 35% threshold established in the Bureau’s Merger Enforcement Guidelines. The Bureau established that substantial obstacles exist to new entry in the market, or expansion of an existing mill. As well, the Bureau determined that the proposed transaction would likely provide Domtar with monopsony power in northwestern Ontario and enable Domtar to pay lower than competitive prices to suppliers of wood fibre.
To resolve the Bureau’s concerns, Domtar Corporation has agreed, post-transaction, to sell its Dryden pulp mill and Thunder Bay pulp and paper mill to two independent purchasers approved by the Commissioner of Competition.
The Commissioner is satisfied that the sale of the Dryden pulp mill and Thunder Bay pulp and paper mill will resolve the competitive issues arising from the proposed transaction.
The complete consent agreement is available on the website of the Competition Tribunal.
Monopsony power is essentially a ‘mirror image’ of monopoly power. Where a monopolist leverages market power to maintain prices of a product it sells above competitive levels, a monopsonist leverages market power to maintain prices of a product it purchases below competitive levels – resulting in reduced output.
Consent agreements generally contain remedial measures that the Commissioner has determined are appropriate to address likely anti-competitive effects of a proposed transaction.
A consent agreement has the force and effect of a court order once it is registered with the Competition Tribunal.
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The Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. Competition drives lower prices and innovation while fueling economic growth.
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