Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Competition Bureau allows chemical manufacturing acquisition despite likely anticompetitive results, (Jun 28, 2016)
Organizations Mentioned:Canexus Corporation | Superior Plus Corp.
By Michael Menzhuber, J.D., LL.M.
Although the Canada Competition Bureau has determined that the proposed acquisition of Canexus Corporation by Superior Plus Corp. will likely result in a substantial lessening of competition for the supply of various industrial chemicals in Canada, the Competition Bureau will not oppose the acquisition due to the efficiency exception in Canada’s Competition Act, the agency has announced.
The Competition Bureau had concluded that the proposed acquisition would result in a substantial lessening of competition for the supply of sodium chlorate, chlorine, caustic soda, and hydrochloric acid. This conclusion was supported by the lack of effective remaining competition, as well as the delay of entry of new competitors or the expansion of existing competitors and their likely ineffectiveness in constraining the exercise of market power by Superior Plus.
However, the efficiency exception in the Competition Act involves a trade-off between anticompetitive effects and efficiencies. After considering factors such as the elimination of overhead costs, freight optimization, and the elimination of duplicative corporate services, the Competition Bureau concluded that the anticompetitive effects of the merger would be clearly outweighed by the efficiency gains from the proposed acquisition.
Superior Plus and Canexus, as well as being producers of construction materials, are both global suppliers of chemical products that are used by firms in the pulp and paper, oil and gas, chemical, food, and steel industries. In October of 2015, Superior Plus announced that it had reached an agreement to acquire Canexus in order to expand its specialty chemicals platform.
The Competition Bureau and the FTC cooperated closely in reviewing the proposed acquisition. Although the Competition Bureau chose not to challenge the proposed transaction, the FTC, on June 27, filed an administrative complaint in an attempt to block the proposed $982 million merger.
Companies: Canexus Corporation; Superior Plus Corp.
News: AcquisitionsMergers Antitrust