Superior Propane Merger Upheld

The Federal Court of Appeal dismissed, on January 31, 2003, the Commissioner of Competition’s appeal of the Competition Tribunal’s decision to permit the Superior Propane Inc. and ICG Propane Inc. merger.

The case has involved an ongoing legal battle between the commissioner and Superior Propane since it first announced its takeover of ICG Propane in December 1998. This case has been closely watched to determine what impact, if any, the existence of efficiencies has on the legality of mergers, which lead to significant concentration in the industry.

The Tribunal first allowed the merger to proceed on August 30, 2000. In this initial ruling, the Tribunal found that the merger should be allowed to proceed on the basis that the efficiencies resulting from the merger of $29 million would substantially exceed the merger’s anti-competitive effects of $6 million. The Tribunal limited its consideration of the “effects” of the merger to purely economic effects, and excluded any redistributive and economic effects that might result from the merger. On appeal of the initial ruling, the court, in its April 4, 2001 decision, remanded the case to the Tribunal and directed it to reconsider the efficiency defence with regard to a broader range of anti-competitive effects.

In October 2001, the Tribunal decided that the merger should be allowed to proceed. The April 4, 2002 redetermination decision held that the efficiencies of $29 million resulting from the merger would still substantially exceed its anti-competitive effects (which now totalled $8.6 million, including an additional $2.6 million representing the socially adverse effects of the transfer of income from consumers to suppliers and their shareholders).

The commissioner appealed the Tribunal’s redetermination decision, arguing that the Tribunal had failed to follow the directions given to it by the court. In its second appeal decision, the court held that the Tribunal’s redetermination was reasonable and correct, and that the Tribunal had indeed followed the court’s directions provided in the first appeal decision.

Superior Propane was represented by Neil Finkelstein, Jeff Galway, Charlotte Kanya-Forstner and Martha Cook of Blake, Cassels & Graydon LLP, and by Brian Facey (competition) of Ogilvy Renault. Competition advice was provided by Cal Goldman of Blakes. The commissioner was represented by John Rook, Jo’Anne Strekaf and Steven Robertson of Bennett Jones LLP; by William Miller of the Department of Justice; and by Christopher Naudie of Osler, Hoskin & Harcourt LLP.