Ruling gives Competition Commissioner additional tool to delay closing of contested mergers: lawyer

The Competition Tribunal has jurisdiction to grant Canada’s Commissioner of Competition injunctive relief to prevent the imminent closing of a contested merger, the Federal Court of Appeal has recently found.

The Commissioner had filed an application to block a merger between two companies in the oil and gas sector. The Commissioner believed their consolidation would lessen competition for services at oil-and-gas-waste-disposal facilities in Western Canada. To prevent the deal going through before the application could be heard, the Commissioner also filed for interim – or interlocutory – relief to postpone the transaction.

But the merging parties refused to delay the merger to allow time for a hearing on the interim relief, so the Commissioner applied for what the court termed “interim interim relief,” which would delay the merger until the interim relief application could be heard. But the merger went through, as the Competition Tribunal found it did not have jurisdiction to grant the interim interim relief.

Based on a reading of s. 104 of the Competition Act, the appellate court ruled that it did.

The ruling effectively means the Competition Tribunal has jurisdiction to award injunctive relief, which is a common order for Canada’s Superior Courts, says Antonio Di Domenico, co-leader of the Competition, Marketing and Foreign Investment Group at Fasken.

“That does give the Commissioner of Competition an additional tool to obtain interim relief to prevent transactions from closing, so long as the Commissioner can satisfy the legal and evidentiary threshold necessary,” he says. Di Domenico is also a former counsel to the Competition Commissioner.

Secure Energy Services and Tervita Corporation were set to execute a merger at 11:15 pm on July 1, 2021. The companies had submitted to the Commissioner a pre-merger notification on March 12 and produced 396,000 documents in response to the Commissioner’s supplementary information request, on May 31. They then gave 72 hours’ notice of the merger’s imminent closing on June 28.

The next day, the Commissioner filed with the Competition Tribunal two applications: first, under s. 92, and then under s. 104. The former sought an injunction to prevent the merger for its competitive impact, and the latter sought an interim order preventing the merger until a decision was reached on the s. 92 application.

But given the merger’s imminent closing – Secure Energy and Tervita had refused to delay it – the Commissioner also sought interim interim relief, to hold up the transaction pending the s. 104 application hearing. The Commissioner requested an emergency case-management conference to discuss the application for interim interim relief, which the Tribunal heard June 30. On July 1, having found it lacked the jurisdiction to grant the requested relief, the Tribunal dismissed the Commissioner’s application. Minutes after the Tribunal’s decision, the merger closed.

The Commissioner appealed. With the merger already executed, the substantive issue before the Federal Court of Appeal was whether the Competition Tribunal had the jurisdiction to grant interim interim relief by delaying a proposed merger until a court decided on the application for interim relief under s. 104.

Federal Court of Appeal Justices George Locke, Denis Pelletier and René Leblanc found the Tribunal indeed had jurisdiction, “in the proper circumstances,” to order the interim interim relief sought by the Commissioner. The Court considered s. 104’s text, context and purpose and set aside the Tribunal’s order.

“The FCA's decision confirms that the Tribunal can temporarily block mergers in urgent situations, such as when closing is imminent, in an appropriate case,” says Jayme Albert, senior communications advisor at the Competition Bureau. Albert adds, the decision “affirms that seeking injunctive relief remains a viable alternative to the Commissioner of Competition and allows the Competition Tribunal to hear those few cases where an injunction would be necessary.”