Competition Bureau submission to the OECD Competition Committee roundtable on Competition Issues in Waste Management

October 28, 2013

1. Introduction

  1. Canada’s Competition Bureau (the "Bureau") is pleased to provide this submission to the OECD Competition Committee Working Party No. 2 October 2013 roundtable on "Competition Issues in Waste Management". The Bureau, headed by the Commissioner of Competition (the "Commissioner"), is an independent law enforcement agency responsible for the administration and enforcement of the Competition Act (the "Act")Footnote 1 and certain other statutes. The Competition Tribunal (the "Tribunal") has jurisdiction to hear and dispose of all applications made by the Commissioner under certain sections of the Act. In carrying out its mandate, the Bureau strives to ensure that Canadian businesses and consumers have the opportunity to prosper in a competitive and innovative marketplace.

1.1 The Importance of Waste Management Services to the Canadian EconomyFootnote 2

  1. Waste management services are widely used by residences and enterprises across Canada. In 2010, approximately 25 million tonnes of non‑hazardous waste, 37% of which came from residential sources, were sent to private and public disposal facilities. Municipal governments expended more than $2.9 billionFootnote 3 on waste management services, an increase of 12% from 2008.
  2. Waste collection and transportation costs represent the largest portion of these expenditures at $1.2 billion, followed by the operation of disposal and processing facilities ($517 million), and tipping fees ($425 million).
  3. The largest increases in local government expenditures between 2008 and 2010 were contributions to landfill post closure and maintenance funds ($93 million; up 60%) and the operation of recycling facilities ($157 million; up 38%).
  4. Revenues of Canadian businesses providing waste management services increased 2% from 2008 to nearly $6 billion in 2010.Footnote 4

1.2 Waste reduction and diversion

  1. Governments in regions across Canada have aimed to increase diversion and waste reduction. The amount of non‑hazardous waste sent to disposal facilities decreased by 4% between 2008 and 2010. The amount of waste diverted to recycling or organic processing facilities decreased from 2008 to 2010 by 3% to 8.1 million tonnes, though this was the first decrease since 2002.Footnote 5

2. Waste Management Services and the Competition Act

  1. Given its economic impact and its importance to the day‑to‑day activities of Canadian consumers and businesses, waste management has been and continues to be an industry of focus for the Bureau. The Bureau has brought forward numerous cases to the Tribunal to mitigate anti‑competitive concerns in this industry and has resolved a number of others on consent. These actions have sought to preserve competition at many levels in the waste management industry and have provided significant jurisprudence.
  2. While any of the enforcement provisions of the Act could potentially apply to a waste management company under the right circumstances, and the Bureau has pursued conspiracy and bid‑rigging cases in the waste industry, the Bureau has traditionally examined the waste industry in the context of its enforcement of the merger and abuse of dominance provisions of the Act. The majority of the Bureau’s non‑merger enforcement cases in the waste industry have concerned contractual practices in the lift‑on‑board market while the merger cases have focused on a range of collection and disposal markets within Canada.
  3. The abuse of dominance, conspiracy and bid‑rigging, and merger provisions of the Act are discussed in more detail in Appendix A. Attached as Appendix B is a list of Bureau cases related to the waste industry.

2.1 The Bureau’s approach to examining waste markets

  1. The Bureau’s analytical frameworks for examining mergers and examining potential cases of abuse of dominance share several conceptual similarities. Accordingly, issues such as appropriate market definition, market power and market structure, barriers to entry, and potential anti‑competitive practices and their impact on waste collection and disposal markets have historically been, and continue to be, an important part of the Bureau’s investigations in this industry. These issues are discussed below.

3. Market definition

  1. The seminal decision in Canadian jurisprudence with respect to the waste industry, Laidlaw in 1991, noted that:
    • "Solid waste collection and disposal services can be classified into three categories: the collection and disposal of garbage which has been placed in bags or cans, usually at curbside; the collection and disposal of garbage which has been placed in bins which remain on the customer’s premise at all times; the collection and disposal of garbage which has been placed in very large containers which are transported to the dump site to be emptied."Footnote 6
  2. Market definition, as set out in Laidlaw has remained similar in succeeding waste cases. Subject to a distinction being made between collection and disposal services and some further refinement, the solid non‑hazardous waste management collection business is consistently divided into four relevant product markets: residential, commercial, industrial, and recycling. The collected waste may be diverted to a recycling or recovery facility, but otherwise proceeds to a transfer station or a permanent disposal facility such as a landfill.
  3. The residential market involves collecting small quantities of waste from individual residences and apartments, generally using rear‑load or side‑load trucks. This service may be performed by municipal crews or private collection companies, usually pursuant to contracts awarded by municipalities on the basis of tenders.
  4. The commercial market is also known as front‑end or lift‑on‑board market due to the types of trucks used by collectors. This involves the regular pick‑up of waste in on‑premise bins from customers such as restaurants, offices, and other small commercial establishments. Customers are generally under contract with private companies who perform this service.
  5. The industrial market, also known as roll‑off service, involves the collection of large quantities of waste from industrial customers. This waste may not be compactable and, as such, is generally collected in large containers that are loaded onto flat‑bed trucks. Industrial customers may require this service on an as needed basis, known as temporary roll‑off collection, or enter into contracts for scheduled pick‑ups, known as permanent roll‑off collection.
  6. Finally, recycling involves the collection of recyclable material from individual residences or apartments, and commercial establishments. The former tends to be provided under contract with municipalities on the basis of tenders while the latter may be through contracts with industrial, commercial, and institutional customers.
  7. Transfer stations act as temporary depositories that allow waste to be aggregated before being transported to a permanent disposal facility. Waste collection vehicles are weighed and unloaded at transfer stations, freeing them up to return to their collection routes. Waste from multiple collection vehicles is then consolidated and loaded onto large trailers for more economic transportation to a landfill.
  8. Permanent disposal facilities tend to take the form of landfills or incinerators, with the former being much more prevalent in Canada. Tipping at a landfill involves the permanent disposal of waste by placing it in cells and covering it with soil or other material on a daily basis. These facilities are owned by public or private entities, the latter of which may also be involved in the waste collection business. Certain municipal landfills have allowed private companies to purchase the right to operate their landfills or even own the remaining airspace. Incinerators burn combustible items but may be limited in the types of waste they can receive. Municipalities often use tenders to seek a permanent disposal option for their residential waste or use their own facilities while other collectors pay gate ratesFootnote 7 or negotiate contracts with municipal or third party facilities.
  9. Solid non‑hazardous waste collection and disposal services are local or regional in nature. The geographic limits of the market are affected by factors such as permissible over the road payloads or other transportation capacity limits and regulatory requirements, the type and density of customers along a collection route, the time and cost of transporting waste, as well as the cost of disposal. In practice, the heuristic used to determine the relevant geographic area is often the distance from local landfills or the companies’ operating hubs (where the collection trucks are parked). For example, one case focusing on collection and disposal in the Edmonton, Alberta area noted that the extent of the geographic market for the collection business is demarcated by a distance of 50 km from a relevant hub while the primary determinants of the geographic bounds of the disposal business are environmental controls and the distance between the customers and the disposal site.Footnote 8 More distant landfills could be indirectly included in the relevant market if sufficient volumes could be consolidated at a transfer station and subsequently transported.
  10. Hazardous waste collection and disposal are separate markets, due to the additional safety and environmental regulations involved, and the specialized equipment and sites needed for safe disposal. This will be further discussed below in "Other Waste".

4. Waste collection

4.1 Residential collection

  1. Municipalities may choose to use their own resources to collect residential waste or may put out tenders for private companies. Those who choose to do the latter must proceed with their tender processes in accordance with provincial laws. For example, the province of Quebec dictates that the winning tender must be the lowest bid (assuming all qualifications have been met).
  2. Municipalities will structure tenders to suit their needs. Often this takes the form of various qualifications; from the number of trucks to insurance requirements. Certain municipalities choose to include recycling, organics collection, or even disposal within one contract, though the latter is less likely as it tends to restrict the number of available bidders. Tenders for disposal are often held separately to ensure that non‑vertically integrated companies may be competitive in collection without being responsible for the permanent disposal cost. Larger municipalities may also choose to sub‑divide their area into numerous geographic zones and offer multiple tenders, thus encouraging smaller collection businesses to bid. Conversely, small municipalities may join together to develop a collective tender to attract additional bidders by offering more substantial and dense collection routes.
  3. The use of tenders lowers barriers to entry and expansion in the residential market relative to the commercial market by regularly allowing competitors to bid for business and by removing contractual barriers. As described above, municipalities may also structure the tenders to encourage more bidders or new entrants. They also generally give an entrant time to set up a collection operation, acquire machinery, and hire staff such that these are not sunk costs during the bidding process. Despite these mitigations, the Bureau has sought to remediate anti‑competitive conduct in a residential market (as well as other collection markets). For example, in 1997, in The Director of Investigation and Research v. Canadian Waste Services Inc., the Director (now known as the Commissioner of Competition) sought the divestiture of commercial, industrial, residential, and recycling businesses (as well as a disposal agreement) in a number of cities in the province of Ontario.Footnote 9
  4. The tender process often used in the residential market may also provide important documentation to assess the closeness of competition between two merging parties, especially in determining if they are often the first and second choice for municipalities. Bid histories, if available, can also give a truer sense of the area over which firms compete and the overlap between competitors, as opposed to the contracts they currently service.

4.2 Commercial collection

  1. Commercial collection markets may have many different waste service providers, so long as each has a sufficient number of customers to support its operations through economies of scale. Some markets are effectively monopolies, while others may have eight or more providers. Commercial waste service providers are frequently involved in other businesses, especially municipal waste collection and roll‑off waste services.
  2. Barriers to entry for lift‑on‑board services are relatively low. New firms face initial sunk costs from the purchase of one or two front‑load trucks and an inventory of waste bins, although these items may occasionally be purchased used. The most significant barrier to entry is acquiring a sufficient customer base, with sufficient route density, within a reasonable period of time. The sooner new entrants can reach the required amount of business, the sooner they can reach a minimum efficient scale.
  3. However, incumbent waste management companies may raise significant barriers to entry by using contractual terms that prevent new entrants from securing this vital customer base. Such contractual terms encountered by the Bureau in past cases include:
    • Contracts with terms between 3 to 5 years, which lock in customers and make them unavailable to new entrants;
    • Automatic renewal clauses, often with substantial and unwieldy notice requirements for termination;
    • Rights of first refusal, which afford the incumbent opportunities to retain its customer base even in the face of better offers from new entrants; and
    • Large liquidated damages for early termination.Footnote 10
  4. These contractual provisions may create significant barriers to entry and expansion. In order to achieve the required number and density of accounts, new entrants must have an available pool of customers from which to draw. These provisions make it difficult and costly for customers to cancel their long‑term contracts, ensuring they infrequently become available to new entrants.
  5. Anti‑competitive contracts may be accompanied by other potentially harmful conduct, which often serve to support and strengthen the impact of these contracts. These may include:
    • Acquisitions of local competitors, especially new entrants;
    • Questionable sales tactics to convince customers to sign contracts, such as sending a customer only the first page of a two‑page contract for signature, and ensuring that the customer remains unaware of the more onerous clauses;
    • Aggressive threats of litigation against competitors and customers;
    • Predatory pricing intended to induce customers to return to the incumbent, so that they may be locked into another long‑term contract. Contracts often permit unilateral price increases during the contract term, allowing the company to swiftly recoup the costs associated with the predation; and
    • Staggering of contract terms, such that only a small number of customers become available to competitors at any point in time.
  6. These contractual clauses may form part of a standard contract used throughout a region or the country as a whole, with the result that although individual waste markets are local in nature, anti‑competitive practices can have an impact throughout Canada.

4.3 Industrial collection

  1. Due to the large size of roll‑off bins, a collection truck can only transport one bin at a time. As such, route density and economies of scale are significantly less important in industrial collection, as compared to other types of collection.
  2. Short term roll‑off collection customers are more accessible since they require services on an "as‑needed" basis and are not tied into contracts. Even permanent roll‑off collection contracts do not tend to exhibit the same level of anti‑competitive clauses that are often seen in commercial collection.
  3. The primary cost of entering the roll‑off market is the collection truck, followed by bins and perhaps compactors. The decreased contractual barriers and ability to build a business on a smaller scale lowers the barriers to entry. However, access to a disposal site remains important and can significantly increase costs for a non‑vertically integrated competitor. As such, limited access to these facilities or their closure can serve to increase barriers.

4.4 Recycling

  1. Recycling has not yet been a large focus in Canada with respect to competitive issues. However, municipalities have become increasingly interested in waste diversion, including recycling and other programs such as organics collection. These initiatives may increase the barriers to entry or expansion for disposal sites if cities wish to reduce their reliance on landfills or other permanent disposal options.

5. Disposal

5.1 Transfer stations

  1. Since transfer stations act to consolidate waste, they are especially useful in areas where the permanent disposal facility is some distance from the collection area as it allows collection vehicles to spend more time collecting waste. In this case, they usually provide a lower transportation cost by weight than if the waste is sent directly to a permanent disposal facility. This may result in an expansion of the geographic markets for disposal as compared to the collection markets where the waste is generated.
  2. Fees are typically charged to collectors on a per tonne basis for waste that has been unloaded. The price will incorporate the cost of handling the material and transporting it to a permanent disposal facility. It will often depend on factors such as waste type, volume, and whether a tolling arrangement exists between the collector and transfer station owner/operator. Certain private firms own both transfer stations and landfills, guaranteeing higher tonnages for their landfills while allowing them to internalize costs and benefit from a lower price that may not be available to all competitors. Other transfer stations are owned by public entities and, as such, may view the efficient disposal of their city’s waste as a primary incentive, as opposed to commercial profit, which could affect the prices they set.
  3. Ultimately, access to a permanent disposal facility is vital to profitably operate a transfer station. This is often reflected in municipal tender requirements for the disposal of residential waste to ensure consistent pricing and access throughout the lifetime of the contract.

5.2 Landfills

  1. Tipping fees are generally charged on a per tonne basis, and, like transfer stations, vary depending on waste type, volume, or pre‑existing arrangements between parties. Certain provinces such as Quebec also mandate an additional tariff per tonne which may be re‑distributed across municipalities to fund diversion programs. This fee has increased over time as a method to discourage landfill use.
  2. Publicly and privately owned landfills may exhibit differing primary incentives. Private companies often strive to extract maximum profit, while municipally owned landfills may seek to serve the needs of their community or maximize the life of their facilities. As such, private companies may increase yearly tonnage by entering into put or pay agreements (where a customer agrees to tip a certain number of tonnes into the landfill at a given price) or swap agreements (where vertically integrated companies agree to tip waste collected near the other party’s landfill at that landfill). Conversely, municipal landfills often restrict their geographic service area by either not accepting, or offering a significantly higher price for, waste originating from outside their surrounding area.
  3. Vertically integrated disposal facility owners can leverage this advantage into the downstream collection market by internalizing their costs and achieving lower prices or by increasing the cost of disposal access to their competitors. As a result, a substantial lessening of competition ("SLC") in the disposal market can further reinforce a SLC in the collection market due to the rolled‑in price of collection and disposal services to final customers.Footnote 11 In this situation, a municipally owned landfill or some other sort of equal access may put waste collectors on a more "level playing field".Footnote 12 The importance of access to permanent disposal facilities is reflected in a number of Tribunal cases and consent orders or agreements, which require incumbents to provide landfill airspace at reasonable prices as part of a remedy.Footnote 13

5.3 Incineration

  1. While incineration has not been a focus in Canada with respect to competitive issues, the Tribunal has recognized it as a permanent disposal option that may need further review in the future.
    • "The Tribunal agrees with the approach to market definition… that the principal alternatives to landfill disposal are incineration and recycling — It appears to the Tribunal that, because incineration capacity is so low and cannot handle non‑combustible waste, a hypothetical landfill monopolist could impose a significant and non‑transitory price increase without losing so much business that the increase would not be profitable. This reasoning would suggest that there might be at least two markets for the purpose of merger review: landfill services, and disposal services (i.e., both landfill and incineration); the "smallest market principle" would lead the Tribunal to adopt the former as the relevant one — However, as neither side disputes this aspect of product market definition and because there is not sufficient evidence for the Tribunal to decide otherwise, the Tribunal accepts that the product market is disposal services." Footnote 14

5.4 Barriers to entry

  1. The barriers to entry for transfer stations and landfills depend on the regulatory processes set out by the responsible provincial ministries, and may also include municipal regulatory approval and significant capital costs.
  2. Most provincial ministries require disposal operators to apply for a certificate of approval which sets out the types of acceptable waste, maximum volume (daily, yearly, or both), lifetime capacity in the case of landfills, and applicable service area. These characteristics can vary widely between facilities; for example, certain disposal facilities can accept waste from an entire province while others are restricted to a set of municipalities. It is important to note that these service areas may be broader than the area over which the disposal facility is actually a viable competitor, depending on the distance to customers and the presence of other facilities.
  3. These certificates often require a multi‑step application, thorough environmental assessments and testing, public consultation, and a decision from the responsible ministry. Each step may be time consuming and costly, especially if any issues arise as a result of the environmental assessment or opposition from residents. Though certain jurisdictions have attempted to streamline their procedures, this is generally still a multi‑year process. However, obtaining a certificate may be less onerous for transfer stations, given that they do not permanently dispose of waste and, as such, their requirements may be less onerous.
  4. Municipal approvals may also be required to re‑zone the site of a waste disposal facility or for compliance with by‑laws such as maintenance and operation of waste management systems, and additional licensing or fee requirements. The time and cost to comply can vary widely depending on the city. Resistance from residents and municipal waste reduction plans are factors that may raise the barriers.
  5. Finally, there are a number of capital costs involved, which vary based on the type and size of waste disposal facility but may include the cost to lease or purchase land; the cost to develop capacity including environmental monitoring, cell excavation, cell lining, leacheate management, and gas collection; the cost to purchase equipment; and the cost to construct access roads, offices, etc.
  6. Barriers to expansion often involve going through the entire process again, including obtaining another certificate of approval. Barriers may be slightly lower if any documentation for the regulatory process can be re‑used, new municipal zoning is not required, or capital costs are smaller.
  7. In a matter before the Tribunal in 2000, these facts led the Tribunal to conclude that "the time and cost associated with the regulatory approval process, and the capital costs and time to develop new capacity represent significant barriers to entry into the disposal market to the extent that they represent sunk costs — additional significant investment is required to develop or expand capacity at the site. The majority of this investment constitutes a sunk cost that cannot be recovered in the event of exit".Footnote 15
  8. As noted above, access to a permanent disposal facility (even indirectly, though a transfer station) is necessary to compete successfully in collection markets. As such, limited access to these facilities or their closure can serve to increase barriers in the downstream market.

6. Other waste

  1. In 2011, the Bureau applied to the Tribunal to dissolve CCS Corporation's ("CCS") acquisition of Complete Environmental Inc., owner of a proposed Babkirk Secure Landfill in Northeastern British Columbia. The Bureau challenged this closed, non‑notifiable merger on the basis that it would substantially prevent competition for secure hazardous waste disposal.Footnote 16 Complete Environmental had obtained regulatory approval to convert Babkirk into a secure landfill in February 2010. At that time, CCS operated the only two operational secure landfills in British Columbia. Had the Babkirk Secure Landfill opened, it would have been CCS's competitor.
  2. The solid hazardous waste in question is generated by oil and gas companies as a by‑product of drilling and contains contaminants which make it unsuitable for disposal in landfills which accept residential and industrial waste. As such, it must be disposed in a secure landfill which meets more stringent regulatory conditions to prevent pollution outside the facility.
  3. The Tribunal determined the relevant product market to be "solid hazardous waste generated by oil and gas producers and tipped into secure landfills in NEBC [North‑Eastern British Columbia]",Footnote 17 thus concluding that neither bioremediation (soil treatment using micro‑organisms to reduce contamination), nor storage or risk management of waste at the drilling site were acceptable substitutes. Though the relevant geographic market was not precisely defined, it was identified to be at least a subsection of NEBC around the proposed secure landfill.
  4. Certain characteristics of this market differ from the landfills described above. It is the norm in the industry to have private, third party ownership of secure landfills, though oil and gas operators (ultimately, customers) may also own facilities. In NEBC, CCS acted as a monopolist and owned the only two operational secure landfills. Solid hazardous waste may be generated at multiple drill sites in different locations and must then be transported by the generator (or a hired transporter) to a secure landfill where a tipping fee will be paid. Waste generators may enter into agreements with secure landfill operators to dispose of their waste at one or multiple disposal facilities for a given price. However, due to CCS’s significant market power, generators in this area had limited, if any, market power despite these negotiated agreements.
  5. The barriers to entry in this market are also significant, as is the uncertainty and risk associated with entry. A potential secure landfill owner must first find an appropriate site, which likely includes drilling and environmental testing to ensure it is adequate. They must obtain the appropriate governmental authorizations which include both an environmental assessment certificate and a secure landfill permit as well as approval for their construction and operation plans. These processes generally include further environmental testing, the submission of reports, and extensive public consultations. The Tribunal determined that it would take a new entrant at least 30 months to undergo this process.Footnote 18 Furthermore, a number of proposed secure landfills in this area had difficulty overcoming all the barriers and had not become operational.
  6. This was a significant case for the Bureau for a number of reasons including the fact that the transaction had already closed, the merger was not subject to mandatory pre‑merger notification under the Act, and it was the first challenged merger case based solely on a theory of prevention of competition. Ultimately, the Tribunal agreed that the purchase constituted a substantial prevention of competition and ordered a divestiture of the facility and its associated permits. This finding was upheld at the Federal Court of Appeal; however, the matter has been appealed to the Supreme Court of Canada and is expected to be heard in the spring of 2014.

7. Conclusion

  1. Over the last two decades, the Bureau has sought to preserve competition through enforcement action such as the cases brought before the Tribunal and the consent orders and agreements outlined above. A more detailed list of Bureau cases in the waste industry is included in Appendix B. The Bureau will continue to investigate anti‑competitive conduct and vigorously enforce the Act in the waste industry.

Appendix A

1. Abuse of dominance

  1. On application by the Commissioner, section 79 of the Act permits the Tribunal to issue a remedial order in respect of an abuse of a dominant market position. Under the Act, abuse of dominance occurs when:
    1. a dominant firm or a dominant group of firms in a market;
    2. engages in a practice of anti‑competitive acts;
    3. with the result that competition has been, is being or is likely to be prevented or lessened substantially. Where the Bureau establishes each of these three elements, the Tribunal may issue an order:
      1. prohibiting the practice of anti‑competitive acts;
      2. directing the respondent(s) to take actions that are reasonable and necessary to overcome the anti‑competitive effects of the practice, including the divestiture of assets or shares; and/or
      3. requiring the respondent(s) to pay an administrative monetary penalty of up to $10 million on a first order, and up to $15 million for each subsequent order.
  2. Subsection 78(1) of the Act sets out a non‑exhaustive list of nine types of conduct that are deemed to be "anti‑competitive acts" for purposes of section 79, including predatory pricing. Because the list is non‑exhaustive, other practices aimed at excluding or disciplining competitors, such as exclusive dealing or tied selling, could also be examined as an anti‑competitive act under section 79. Historically, the Bureau has treated most waste management‑related cases that did not involve mergers as abuses of dominance pursuant to section 79. These cases have generally involved anti‑competitive contractual clauses used in commercial markets for solid waste collection and disposal, and will be examined in greater detail below in the section on commercial collection.

2. Conspiracy and bid‑rigging

  1. Section 45 is the cornerstone cartel provision of the Competition Act. It makes it a criminal offence when two or more competitors or potential competitors conspire, agree or arrange to fix prices, allocate customers or markets, or restrict output of a product. This offence is known as a conspiracy, and is punishable by a fine of up to $25Ámillion, or imprisonment for a term of up to 14 years, or both.
  2. The Bureau recognizes that some desirable business transactions require explicit restraints on competition to make them efficient or even possible. As a result, the Competition Act provides an "ancillary restraints defence" to ensure that strategic alliances or other types of legitimate collaborations between competitors are not treated as criminal offences.
  3. To qualify for this defence, the agreement must be:
    • "ancillary" to a broader or separate agreement that includes the same parties;
    • directly related to and reasonably necessary for giving effect to the objective of the broader or separate agreement; and
    • the broader agreement must itself be legal.
  4. When the ancillary restraints defence applies, the Commissioner can still challenge the agreement before the Competition Tribunal as a civil matter, if there are substantial anti‑competitive concerns.
  5. Under section 47, it is a criminal offence for two or more bidders, in response to a call or request for bids or tenders, to agree on the bids submitted, to agree that one party will refrain from bidding or to agree that one party will withdraw a submitted bid, in each case without informing the person calling for the bids of this agreement. Penalties for bid‑rigging include a fine in the discretion of the court and/or a prison sentence of up to 14 years.

3. Mergers

  1. On application by the Commissioner, section 92 of the Act allows the Tribunal to issue a remedial order in respect of a merger or proposed merger which prevents or lessens, or is likely to prevent or lessen, competition substantially. The Tribunal may not make this finding solely based on concentration or market share; instead it may consider a range of factors laid out in section 93 of the Act including acceptable product substitutes, barriers to entry, effective remaining competition, or any other factor which is relevant to competition in a market. If the Tribunal chooses to issue an order, the remedy may include dissolution of the merger, disposition of certain assets or shares, or it may order the merger, or part of it, not to proceed. Section 105 of the Act allows the Commissioner and respondent(s) to come to a consent agreement, which will be registered with the Tribunal and be enforced in the same way as an order.

Appendix B

1. Concluded cases

1.1 The Director of Investigation and ResearchFootnote 19 v. Laidlaw Waste Systems ("Laidlaw"), 1991Footnote 20

  1. On March 25, 1991, the Director of Investigation and Research alleged that Laidlaw was in breach of section 79 of the Act, and applied to the Tribunal for a number of orders aimed at putting a stop to Laidlaw's anti‑competitive acts related to commercial waste collection and disposal in certain local communities on Vancouver Island. At issue were anti‑competitive contracting practices and creeping acquisitions of competitors, securing Laidlaw’s dominance in the markets. The Tribunal Order dated January 20, 1992 required a number of amendments and deletions to Laidlaw’s contracts and barred future acquisitions in the three affected local markets for three years. Further, Laidlaw was required to explain to its customers any amendments of contracts, and to provide copies of existing and future contracts to the Bureau.

1.2 Gestion des Rebuts DMP Inc., 1996

  1. In April 1996, Gestion des Rebuts DMP Inc. pleaded guilty under the conspiracy provisions of the Act and was fined $1,950,000. The offence involved an agreement between competitors to share the market for the hauling and disposal of commercial waste in the Mauricie region of Quebec between 1989 and 1992. The victims of this conspiracy were businesses such as restaurants, corner stores, garages and shopping centres, which lease commercial waste containers.
  2. Following that guilty plea, on January 29, 1997, a former senior official with Gestion des rebuts DMP Inc. in Quebec’s Mauricie Region, pleaded guilty to one count of conspiracy to unduly lessen competition and was fined $550,000. The Court also imposed a one‑year jail sentence to be served in the community on two former employees of Gestion des Rebuts DMP Inc. In addition, a prohibition order was imposed on the three individuals that required them to comply with the Act for a period of 10 years.

1.3 The Director of Investigation and Research v. Canadian Waste Services Inc. ("CWS"), 1997Footnote 21

  1. In January 1997, CWS entered into an agreement to acquire Laidlaw Waste Systems Ltd. ("Laidlaw") including collection and disposal assets such as trucks, containers, maintenance garages, transfer stations, and landfill sites throughout Canada. On March 5, 1997, the Director of Investigation and Research applied to the Tribunal pursuant to sections 92 and 105 of the Act for a Consent Order to remedy a likely substantial lessening of competition in commercial collection in certain Ontario cities due to the proposed acquisition by CWS of Laidlaw, as well as a substantial lessening of competition in commercial collection in Ottawa and the Outaouais arising from a previous purchase by CWS of certain Waste Management Inc. assets. The Tribunal Consent Order dated April 16, 1997, required the divestiture of all of CWS’ non‑hazardous solid waste businesses in Ontario (including municipal and roll‑off contracts and equipment), as well as a contractual license for access to disposal facilities controlled or operated by CWS in affected markets.

1.4 The Director of Investigation and Research v. Canadian Waste Services Inc. ("CWS") / Capital Environmental Resource ("CER"), 1998Footnote 22

  1. In April 1997, CWS proposed to purchase a number of non‑hazardous waste management assets from Waste Management Canada Inc. in cities across Canada. On March 6, 1998, the Director of Investigation and Research applied to the Tribunal pursuant to sections 92 and 105 of the Act for a Consent Order to remedy the likely substantial lessening of competition in commercial collection and disposal services for residential waste in Edmonton, Alberta arising as a result of the acquisition. The Tribunal Consent Order dated April 23, 1998, required the divestiture of certain commercial routes and equipment, a transfer station, and a landfill tipping agreement directly to an identified purchaser. The Consent Order Impact Statement notes that the transfer station was a necessary element of the divestiture package because it provided an area where collected waste could be consolidated before subsequent shipment to the landfill. In combination with the landfill tipping agreement, the Consent Order replicated the effects of a complete divestiture of one of the landfill sites by maintaining two arms length operators able to effectively compete in the downstream commercial collection sector.

1.5 Commissioner of Competition v. Canadian Waste Services Holdings Inc. ("CWS"), 2000Footnote 23

  1. On March 31, 2000, CWS acquired the assets of Browning‑Ferris Industries Ltd. ("BFIL") including commercial waste, roll‑off, and recycling businesses as well as a landfill and interest in a disposal business in cities across Canada. CWS agreed not to acquire the commercial collection assets in sixteen markets, residential collection operations in the province of Ontario, the entire collection business in Montreal, as well as the landfills and transfer stations in Montreal, Winnipeg, and Calgary to remedy the Commissioner’s concerns. CWS also acquired a landfill in Ontario (the "Ridge Landfill"), which the Commissioner determined would likely result in a substantial lessening of competition with respect to the disposal of commercial waste in certain cities in Ontario.
  2. On April 26, 2000, the Commissioner applied to the Tribunal pursuant to section 92 of the Act requesting that CWS divest the Ridge Landfill. CWS already owned or operated a number of landfills around Ontario and there were few remaining disposal options in certain cities. The Tribunal found that the acquisition led to a substantial prevention and lessening of competition in certain cities and, in an Order dated March 28, 2001, ordered the divestiture of the Ridge Landfill. On May 29, 2003, CWS subsequently applied to the Tribunal pursuant to section 106 of the ActFootnote 24 requesting that the divestiture be rescinded on the basis that the circumstances that led to the making of the order had changed. Essentially, CWS no longer intended to undertake expansion activities at two of its landfills due to regulatory denials and lack of municipal support; it argued that the development of excess capacity was a significant basis for the Tribunal’s conclusion of the likelihood of a substantial lessening of competition. The Tribunal denied the motion, noting that CWS did not inform the Tribunal about the true state of affairs during the initial trial.

1.6 Johnson Waste Management Ltd. ("Johnson"), 2002Footnote 25

  1. In 2002, the Bureau investigated a complaint regarding Canadian Waste Services Inc. and BFI Canada Inc., which together dominated the Winnipeg waste disposal market. Their contracting practices at the time were allegedly making it difficult for Johnson, a potential new entrant, to establish a foothold in the market. The matter was resolved through an informal agreement between the three companies and the Bureau, which limited the use of the objectionable contractual clauses; the Bureau did not apply for a Consent Order from the Tribunal.

1.7 The Commissioner of Competition and Waste Services (CA) Inc. and Waste Management of Canada Corporation, 2009Footnote 26

  1. On June 16 2009, the Commissioner filed and registered a Consent AgreementFootnote 27 with the Tribunal pursuant to section 105 of the act to remedy allegedly anti‑competitive acts related to waste disposal in certain markets on Vancouver Island. Under the terms of the agreement, the companies agreed to stop using long‑term contracts that locked customers into agreements with highly restrictive terms (similar to those in Laidlaw), which the Bureau alleged were foreclosing competitors from the market. The Bureau alleged that these contracts resulted in substantially less competition for commercial waste collection services, illustrated by higher prices and reduced choice for businesses.

1.8 The Commissioner of Competition and IESI‑BFC Ltd. ("BFI"), BFI Canada Inc., Waste Services Inc. ("WSI"), and Waste Services (CA) Inc., 2010Footnote 28

  1. In November 2009, BFI announced its intention to purchase WSI including its commercial, municipal, and roll‑off collection assets, recycling assets and facilities, transfer stations, and landfills located across the provinces of Ontario, Alberta, Saskatchewan, and British Columbia.Footnote 29 On June 30, 2010, the Commissioner filed and registered a Consent Agreement with the Tribunal pursuant to section 105 of the Act to remedy a likely substantial lessening of competition in the commercial collection services in certain cities in Alberta and Ontario as a result of the proposed acquisition. The Consent Agreement required the divestiture of contracts and assets related to commercial waste collection in the affected cities, as well as WSI’s interest in an Ontario‑based transfer station. It also included an agreement to supply transitional services at the option of the purchaser(s) including waste disposal in nearby BFI or WSI landfills, and transfer stations on the same terms as those previously agreed to between BFI and WSI or commercially reasonable terms; and short‑term access to vehicles, bins, and parking spaces.

1.9 The Commissioner of Competition and WM Québec Inc. ("WMQ"), 2013Footnote 30

  1. In July 2012, WMQ proposed to purchase RCI Environnement Inc., Location P.S.M. Inc., and Gestion Environnementale Nord‑Sud Inc., the assets of which included residential, commercial, and roll‑off collection businesses, transfer stations, and the right to operate a landfill within certain cities in the province of Quebec. On February 6, 2013, the Commissioner filed and registered a Consent Agreement with the Tribunal pursuant to section 105 of the Act to remedy a likely substantial lessening of competition in the supply of disposal services as a result of the proposed acquisition. The Consent Agreement required WMQ to enter into an agreement that would allow a purchaser to dispose a certain yearly waste tonnage at one of the landfills WMQ would operate post‑transaction. The agreement requires that the waste be generated from the municipalities that would experience the substantial lessening of competition and included a provision to modify the allowable tonnage if one of the municipalities chose to pursue a diversion option thereby requiring fewer landfill disposal services, as it had indicated it may do.

2. Ongoing cases

2.1 Canada (The Commissioner of Competition) v. CCS Corporation ("CCS") et. al., 2011Footnote 31

  1. In January, 2011, CCS acquired Complete Environmental Services ("Complete"), and the permit they had obtained to operate a secure landfill facility in North‑Eastern British Columbia. On January 24, 2011, the Commissioner applied to the Tribunal pursuant to section 92 of the Act requesting dissolution of the merger. CCS already owned the only other two operational secure landfills in the province. The Tribunal found that the acquisition led to a substantial prevention of competition and, in an Order dated May 29, 2012, ordered the divestiture of the land and permits associated with the proposed landfill. This finding was upheld at the Federal Court of Appeal; however, the matter has been appealed to the Supreme Court of Canada and is expected to be heard in the spring of 2014.
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