Canadian Watchdog Reaches Agreement To Preserve Competition In Paper Industry

The Competition Bureau announced that it has reached an agreement to address competition concerns with the merger of two of Canada’s largest pulp and paper manufacturers – Karta Halten B.V. and Domtar.

A Bureau review concluded that the proposed transaction would likely lessen competition substantially for the purchase of wood fibre – a key input in the manufacture of pulp – from the Thompson/Okanagan region of British Columbia.

The Bureau determined that the proposed transaction is anti-competitive because it would provide Paper Excellence with monopsony power in a large part of southern British Columbia. This would enable Paper Excellence to pay lower than competitive prices to sawmills and other suppliers of wood fibre in a region of British Columbia where Paper Excellence already has a high concentration of pulp mills.

To resolve the Bureau’s concerns, Paper Excellence has agreed to sell Domtar’s pulp mill in Kamloops, BC, following its acquisition. The sale will be made to an independent purchaser to be approved by the Commissioner of Competition.

The Commissioner is satisfied that the sale of the Kamloops mill will resolve the competitive issues arising from the proposed transaction. The complete agreement is available on the website of the Competition Tribunal.

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