Competition Bureau clears Reliance’s acquisition of National

November 17, 2014 — OTTAWA, ON — Competition Bureau

The Competition Bureau announced today that it has issued a No Action Letter (NAL) with respect to Reliance Comfort Limited Partnership’s (Reliance) acquisition of National Energy Corporation (National). Both companies sell or rent water heaters as well as other home ventilation and air conditioning products in Ontario.

The Bureau concluded that this transaction is unlikely to result in a substantial lessening or prevention of competition due to, among other things, a recent consent agreement the Bureau reached with Reliance aimed at strengthening competition and consumer choice in Ontario’s residential water heater industry. The agreement addresses significant barriers to entry and expansion that existed in the markets for the supply of water heaters in Reliance’s core territory in Ontario.

Through the course of the merger review, the Bureau found that National was Reliance’s most significant competitor in many parts of Ontario. The merger review confirmed that Reliance continued to have anti‑competitive water heater return policies and procedures aimed at preventing customers from switching to other water heater providers and preventing expansion by these providers, including National. However, the consent agreement registered with the Competition Tribunal on November 5, 2014 requires Reliance to put an end to these practices, and make it easier for Reliance’s customers to switch to other rental providers or purchase a water heater.

A NAL confirms that the Bureau has reviewed a specific proposed transaction and concluded that it will not, at this time, challenge that proposed transaction before the Tribunal under the merger provisions of the Competition Act.

Quick facts

  • In Ontario, unlike other parts of Canada, most homeowners rent their water heater even though purchasing a water heater can result in substantial savings over time.
  • As part of our normal approach in examining a merger, the Bureau consults with a wide range of industry participants, such as suppliers, competitors, industry associations, customers and industry experts.
  • The Bureau filed an application with the Tribunal against Reliance in 2012 alleging that it had implemented anti‑competitive water heater return policies and procedures that were aimed at preventing consumers from switching to competitors. The consent agreement registered with the Tribunal on November 5, 2014 resolves that matter before the Tribunal.
  • Under the terms of the consent agreement, Reliance must pay an administrative monetary penalty (AMP) of $5 million and contribute $500,000 to the Bureau’s investigative costs.
  • The Bureau’s investigation into alleged deceptive marketing practices, with respect to door-to-door water heater sales in Ontario and Quebec, is ongoing.

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