Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Combination of trucking firms cleared by Canada Competition Bureau, (Nov 10, 2014)

By John W. Arden, J.D., LL.M.

The Canada Competition Bureau will not challenge trucking company TransForce’s acquisition of competitor Contrans Group Inc. under section 92 of the Canada Competition Act, according to a No Action Letter (NAL) issued by the Bureau on November 5. Due to the presence of effective remaining competitors, the Bureau determined that the proposed transaction was not likely to result in a substantial lessening or prevention of competition in any relevant market for the provision of dry box, flatbed, or tank trailer services, the agency announced on November 7.

Section 92 of the Competition Act provides for a one-year period following completion of the transaction, during which the Competition Commissioner may challenge the transaction before the Competition Tribunal.

In conducting its review, the Bureau interviewed a large number of market participants, including customers and competitors of the two firms, and reviewed documentary evidence and data from the parties. A more in-depth review was conducted with respect to dump trailer services on routes within Quebec, between Quebec and Ontario, and between Quebec and the United States (Quebec Routes), where the parties are the two largest competitors. Ultimately, the Bureau determined that, in the event of a post-transaction material price increase, entry or expansion into the dump trailer business would be timely, likely, and sufficient to prevent the sustained exercise of market power.

Apart from Contrans and TransForce, the dump trailer services business on Quebec Routes is fragmented, consisting of several smaller carriers, the Bureau found. Many of these carriers are sub-contracted by Contrans and/or TransForce to service these routes. In the event of a material price increase or reduction in the quality of services after the combination, a number of dump trailer competitors would be well positioned to expand their services across multiple haul routes. This is particularly true, given that a large portion of dump trailer service customers have the ability to switch carriers relatively quickly, the Bureau noted.

While the transaction will result in the removal of a significant competitor in the dump trailer services business on the Quebec Routes, the agency concluded that the transaction was not likely to result in a substantial lessening or prevention of competition in any relevant market.

News: Antitrust