Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Competition Bureau explains decisions over Vicwest deals, (Jun 16, 2015)

By Greg Hammond, J.D.

The Canada Competition Bureau has released a statement outlining its approach in reviewing the proposed acquisition of Vicwest Inc.’s Building Products Division and Westeel Operating Division by Kingspan Group plc and Ag Growth International Inc., respectively. On May 19, the Competition Bureau reached a consent agreement with Kingspan, requiring Kingspan to sell Vicwest’s manufacturing facility in Hamilton, Ontario.

Kingspan is a global manufacturer and seller of building products, including insulated metal panels and other building envelope products, insulation boards, and raised access floors. Vicwest is a supplier of exterior building products for all segments of the construction industry across North America. The Competition Bureau determined that Kingspan’s acquisition of Vicwest would likely result in a substantial lessening of competition for the supply of insulated metal panels in Ontario by eliminating the competition between Kingspan and Vicwest. With regard to the Westeel portion of the acquisition, the Competition Bureau determined that AGI’s acquisition of Westeel would not result in a substantial lessening or prevention of competition with regard to the supply of grain storage bins in Canada.

With regard to the Kingspan transaction, the Competition Bureau focused on whether the proposed transaction would substantially lessen competition for the sale of insulated metal panels. Similarly, the review of the AGI transaction focused on determining the competitive impact of AGI’s acquisition of Westeel on the supply of on-farm, corrugated steel wall grain storage bins.

The Competition Bureau noted that Westeel is the dominant supplier of on-farm grain storage bins in Canada, while AGI, and others, are much smaller suppliers in comparison. Focusing on barriers to entry and expansion, the Competition Bureau concluded that, in the event of a material price increase, entry and expansion would be likely and that an exercise of market power would not be sustainable.

Kingspan and Vicwest, however, were determined to be direct competitors for the sale of insulated metal panels in Ontario. The Competition Bureau ultimately concluded that it was unlikely that another insulated metal panel manufacturer would expand activities into Ontario post-transaction in the event of a material price increase.

“Our review concluded that Kingspan’s acquisition of Vicwest would substantially lessen competition in the supply of insulated metal panels in Ontario,” stated Senior Deputy Commissioner Jeanne Pratt. “Kingspan worked cooperatively and quickly with the Bureau to find a solution to the concerns expressed. With the sale of the Hamilton operations, insulated metal panels customers such as installers, general contractors, and commercial and industrial building owners will benefit from competition when buying insulated metal panels.”

Companies: Vicwest Inc.; Kingspan Group plc; Ag Growth International Inc.

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