Pumping the brakes: Court of Appeal confirms the Competition Tribunal can temporarily halt mergers

The Federal Court of Appeal has reversed a decision of the Competition Tribunal, concluding that the Tribunal does have jurisdiction to order “interim interim” relief to prevent mergers from closing until an application for interlocutory relief under section 104 of the Competition Act can be heard and decided.

What you need to know

• The Court did not determine the precise limits on the Tribunal’s powers under section 104 but commented it includes “at least” the well-known RJR MacDonald test for injunctive relief.
• The Tribunal’s decision in the summer of 2021 that it could not issue such relief prompted the Commissioner to call for legislative changes to clarify the Tribunal’s powers in this area. That call has likely now become moot.

The details

The background

This case arises from a proposed (and now concluded) merger between Secure Energy Services Inc. and Tervita Corporation, which both provide waste and landfill services in western Canada. The parties submitted the required filings under the Competition Act to the Competition Bureau in early 2021 and each responded to supplementary information requests from the Bureau. The parties certified their responses to their respective SIRs on May 31, and were therefore in a position to close the transaction 30 days later.

On June 28, the parties provided the Commissioner with 72 hours’ notice of their intention to close. The Commissioner responded on June 29 by filing an application with the Tribunal seeking to block the transaction under section 92 of the Act, as well as an application under section 104 seeking an interim order directing the parties not to close the merger until the section 92 application was decided. Section 104 provides that where a party has sought an order from the Tribunal under certain parts of the Act, the Tribunal has the power to “issue any interim order that it considers appropriate” upon application by that party.

When the Commissioner found out that the parties would not delay closing pending the section 104 application, he sought what he termed an “interim interim” order preventing the merger from closing pending the hearing of the section 104 application.

The Tribunal declined to grant the requested “interim interim” order finding that it did not have jurisdiction to do so under the Act. The Commissioner immediately appealed and sought the same relief from the Court of Appeal. In an initial emergency hearing hours before the merger was scheduled to close, the Court of Appeal dismissed the Commissioner’s request for relief, and the parties closed the transaction. Even though the issue was moot, the Commissioner continued the appeal to obtain a determination from the Court of Appeal about whether the Tribunal did have power to order “interim interim” relief.

In the months since the Tribunal’s decision the Commissioner has referred to it in several different contexts to support his call for reform of the legislative regime governing competition law in Canada. The day before the Court of Appeal released its decision, the Bureau published its submission to a consultation on modernizing Canada’s competition policy. One of the Bureau’s recommendations related to merger review was to ensure there was a “workable avenue to protect competition on an interim basis.”

The Federal Court of Appeal decision

The Court of Appeal found the Tribunal had jurisdiction to issue “interim interim” orders.¹ The Court found that it was appropriate to determine this issue despite the appeal being moot, in part, because the fleeting nature of this relief meant that the issue was “evasive of review”.

Using principles of statutory interpretation, the Court found the text of section 104 to be broad based on the wording of “any interim order”. The Court explained that it was well-understood that superior courts may grant “interlocutory” relief pending a decision on the merits of a dispute, and that courts could also grant “interim” relief pending a decision on a request for interlocutory relief. This type of interim order was really what the Commissioner was seeking from the Tribunal.²

The Court of Appeal decided that the availability of other tools which the Commissioner could use to delay a merger did not narrow the scope of section 104. The purpose of section 104 was to allow the Commissioner to stop transactions before they closed and interpreting section 104 to allow interim orders aligned with this purpose. The Court did not find it necessary to determine precisely what the limitations of the Tribunal’s powers are under section 104, but stated it includes “at least” the test for granting interlocutory or injunctive relief under the well-known RJR-MacDonald test.³

Implications

The Court’s decision has clarified the Tribunal’s ability to prevent transactions from closing when the Bureau is conducting merger reviews. The Bureau issued a press release following the decision welcoming the ruling and stating the Bureau would “continue to use all of the tools at its disposal in keeping with its mandate to protect competition and the public interest”. Parties should keep this decision in mind when considering their strategy in dealing with the Bureau and determining the timing of closing a reviewable transaction.