CORCORAN
THE ABSURD CANADA DAY WEEKEND OF COMPETITION COMMISSIONER MATTHEW BOSWELL.
It was a hot and stormy Canada Day weekend for Matthew Boswell, Ottawa’s Commissioner of Competition and the nation’s corporate behaviour watchdog. By the end of the weekend, however, Boswell had nothing to celebrate. Instead, he was left holding two harsh legal putdowns from two of the country’s leading judicial bodies.
The story line is hard to believe, from its beginning late in the day June 29, through legal proceedings held on Canada Day, and on to the final blow delivered a little after midnight by Federal Court of Appeal Justice David Stratas, one of the country’s eminent judicial figures in competition law.
In a terse order under court number A-185-21, Stratas dismisses the Bureau’s bizarre 11th-hour attempt to prevent two Calgary oil and gas waste services companies — Secure Energy Services and Tervita Corporation — from completing a $1-billion merger deal.
The opening words of the Stratas order, issued around 1:45 a.m. last Friday, capture the absurdity of the competition commissioner’s actions. Whereas the Commissioner of Competition “moves on an emergency basis for an interim interim order preventing the respondents (Secure and Tervita) from closing a transaction; and whereas the transaction is scheduled to close within minutes, at midnight MDT or 2:00 am EDT …”
Less than 300 words later, Stratas dismissed the commissioner’s motion and skewered its key arguments. Following a 78-minute Zoom hearing that began at 12:27 a.m., the judge delivered his conclusions. He said he was “not persuaded” by claims that the merger of the two Tsx-listed waste-management companies would cause “irreparable harm.” Indeed, he worried about “reputational and market-based” harm to the companies if the merger was halted at the last minute. He also states that Boswell “could have taken steps under the Competition act sooner.” At 1:45 a.m., Stratas directed the Competition Bureau to “file a notice of discontinuance.”
Before the markets opened later that morning, Secure Energy Services announced that its merger with Tervita had been completed, presumably at 2 a.m. within minutes of the court of order.
I asked Cal Goldman, one of Canada’s leading competition lawyers and a former competition commissioner, to review the Canada Day events surrounding Secure-tervita. He described the commissioner’s application as an “extraordinary and unprecedented” bureaucratic reach on a scale “I have never seen in my experience.” Goldman said the commissioner needs to answer key questions about his decisions.
When Secure and Tervita announced their merger plan last March 9, they described the deal as one that would benefit shareholders, improve their joint financial structure, produce sizable cost savings and give the company “greater capabilities to serve customers.” As separate companies, Secure and Tervita provide waste treatment and disposal facilities, operate landfills and water disposal wells and offer other environmental services to the oil and gas industry.
On March 12 the companies submitted a pre-merger notice to the Competition Bureau. One month later the bureau requested more information. On May 28 the commissioner began an inquiry, with a 30-day deadline. On June 28, the companies notified the government agency that they intended to close the deal at 2 a.m. EDT on July 2.
Twenty-four hours later, Boswell sought a Competition Tribunal order to block the merger until the bureau had time to complete its review. In a dramatically worded June 30 press release, the Competition Bureau said the merger “is likely to result in a substantial lessening of competition with respect to services provided at waste disposal facilities” in Western Canada and is “likely to prevent competition for landfill services in Northeastern British Columbia, and to lessen competition for environmental services through Secure’s ability to charge its environmental services competitors higher prices. The higher costs likely to be imposed as a result of the proposed merger, will harm oil and gas producers at a time when this important industry is struggling.”
To back his case, the commissioner filed a 2,795-page application with the Competition Tribunal to halt a deal that was scheduled to close less than 72 hours later. On the next day, June 30, the Competition Tribunal, presided over by competition law veteran and Federal Court Chief Justice Paul Crampton, held Zoom hearings, and on Canada Day Crampton issued his decision.
The Chief Justice said he was sympathetic to Boswell’s situation, but he had trouble with Boswell’s attempted endrun around the fundamentals of the Competition Act.
What Boswell wanted, he said, was a legal avenue that “would seriously curtail” the companies’ rights “to procedural fairness.” He added that while provisions in the act give the tribunal considerable flexibility to deal with urgent matters, they “do not contemplate the type of substantial curtailment of procedural fairness” proposed by the commissioner. It is clear, said Crampton, that Parliament decided not to grant the tribunal the power to do what Boswell wanted it to do.
Crampton’s Canada Day decision, which can be read as a harsh rebuke, was nevertheless instantly appealed by Boswell to the Federal Court of Appeal, where his case met the same dismissal fate.
As of 5 p.m. July 8, the bureau — which promoted deal-blocking action on June 30 — had not revealed its court failure or that the merger had taken place. In answer to an email request for explanation, it strangely claimed the matter is still before the Federal Court of Appeal.
As Cal Goldman suggests, Boswell needs to answer some questions, including this: “Why did he choose to bring an application for injunctive relief on June 29th to be heard June 30th when the closing was two days subsequent?” And why did he wait until the 11th-hour to seek an injunction that was unprecedented and outside the Competition Act?