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Nikiforos Iatrou, Bronwyn Roe, Mar 26, 2014
For the first time in nearly 20 years, a contested merger case is before the Supreme Court of Canada.The SCC is scheduled to hear an appeal from the Federal Court of Appeal’s decision in Tervita on March 27, 2014 which will address the framework to be applied in a challenge of a merger on the basis that it is likely to prevent competition substantially in the relevant market.
As the Competition Tribunal and FCA both noted in their decisions, prevention of competition cases have been rare. The “prevention” branch of s. 92 of the Competition Act was raised in only three previous Tribunal cases, and since each of those cases was primarily concerned with allegations involving a substantial lessening of competition, the Tribunal did not address in any detail the analytical framework applicable to the assessment of an alleged substantial prevention of competition. Tervita is the first case in which the Commissioner has challenged a merger based solely on a theory of prevention of competition, and the SCC’s decision will mark the first time the SCC has weighed in on the appropriate framework for a “prevention” case under s. 92.
The SCC will consider two main issues on the appeal: (1) the proper legal test to determine when a merger gives rise to a substantial prevention of competition under s. 92 of the Act, and (2) the proper approach to the efficiencies defense under s. 96 of the Act.