Parkland case shows mediation can be useful tool in mergers
Competition Bureau’s flexibility displayed in swift handling of deal
The Competition Bureau has set yet another precedent in its handling of a challenge to Parkland Fuel Corp.’s acquisition of assets from Pioneer Energy.
As reported last week, Canada’s Commissioner of Competition and Parkland resolved their dispute before the Competition Tribunal.
What’s most interesting is how the regulator and the company got to that resolution. According to law firm Davies Ward Phillips & Vineberg, this is the first time a Competition Tribunal case was resolved through a consent agree- ment that was negotiated through mediation.
Going forward, lawyers say mediation could be a useful tool that quickly resolves disputes that threaten to delay merger closings.
“The Parkland consent agreement signals the Commissioner’s flexibility and willingness, at least in some circumstances, to negotiate terms in the course of a mediation process to foster timely and efficient resolutions,” lawyers from Davies Ward write in a note on the case. “It remains to be seen how widely, and how early in a proceeding, the Commissioner will be prepared to participate in a mediation process to resolve future merger challenges.”
The Parkland case caught the attention of competition lawyers across the country last June in a ruling called Commissioner of Competition v. Parkland Industries Ltd.
Canada’s Competition Tribunal, a regulatory body that hears matters involving the federal Competition Act, in June ordered that Red Deer, Alta.-based Parkland Fuel Corp. “hold separate” a handful of the 181 gas stations and 212 fuel supply agreements it was set to buy from Burlington, Ont.-based Pioneer Energy. The decision set a precedent that could in the future make it easier for the commissioner to temporarily block certain assets from being included in an M&A deal.
Since then, the parties went through a mediation lead by Paul Crampton, chief justice of the Federal Court of Canada.
The result is a consent agreement that resolves the dispute entirely. Parkland will divest properties in six markets.
A provision of note in the agreement allows Parkland to divest the properties to one or more purchasers, Davies Ward observes.
“Competition authorities usually require assets to be divested to a single purchaser to ensure sufficient competition in the relevant market.”
In two other markets, Parkland can’t increase its profit margin on fuel supply agreements for six years.