Language selection

Search

Competition Bureau statement regarding the proposed joint venture between Federated Co-operatives Limited and Blair’s Family of Companies

On this page:

Introduction

On July 7, 2021, the Commissioner of Competition entered into a consent agreement with Federated Co-operatives Limited (FCL) and Blair’s Family of Companies (Blair’s) related to their proposed joint venture (the Proposed Transaction). The consent agreement is necessary to remedy the likely substantial lessening of competition that would have resulted from the Proposed Transaction with respect to the retailing of crop inputs (such as fertilizer, crop protection products, and seeds) in the area of Lipton, Saskatchewan.

In carrying out its investigation the Bureau consulted with numerous stakeholders across the industry including growers, grower organizations, competitors and suppliers. It also relied on the analysis of documents and data obtained from the parties. Through these efforts, the Bureau was able to quickly narrow the focus of the investigation to key issues.

The Bureau and the parties maintained clear communication throughout the review, and were able to achieve early resolution prior to a full compliance with the Supplementary Information Request (SIR), given the parties’ cooperation and willingness to resolve the Bureau’s concerns.

The Parties and the Proposed Transaction

Headquartered in Saskatoon, Saskatchewan, FCL operates in the agriculture, food, energy and building sectors.  It is a multibillion-dollar wholesaling, manufacturing, marketing and administrative co-operative owned by more than 160 independent retail co-operatives (local co-ops) across Western Canada. Together, FCL and these local co-ops form the Co-operative Retailing System (CRS). The local co-ops own and operate ag-retailers in communities throughout Western Canada. One of these local co-ops is the Prairie Co-op, which operates ag-retail locations in Cupar and Lipton, Saskatchewan, in direct competition with Blair’s ag-retail location in Lipton, Saskatchewan.

Founded in 1948, Blair’s is a fourth-generation family-owned and operated full service ag-retailer with headquarters in Lanigan, Saskatchewan. Blair’s seven ag-retail locations are located in the communities of Lanigan, Nokomis, Watrous, Liberty, McLean, Lipton and Rosthern, Saskatchewan. These locations supply growers with fertilizer, crop protection products, seeds, animal nutrition products and related services (e.g., agronomy services). In addition to its ag-retail business, Blair’s owns and operates a fertilizer terminal located near Hanley, Saskatchewan, and a livestock genetics business. These latter businesses do not form part of the proposed joint venture with FCL.

On February 3, 2021, FCL and Blair’s announced that they had agreed to enter into a joint venture that will own and operate Blair’s seven ag-retail locations in Saskatchewan. Through the Proposed Transaction, FCL will own majority share of Blair’s ag-retail locations.

Competitive Effects Analysis

The Bureau concluded that the Proposed Transaction is unlikely to result in a substantial lessening of competition with respect to crop input retailing in the local areas of Lanigan, Liberty, McLean, Nokomis, Rosthern and Watrous due to a low degree of competitive rivalry between Blair’s and local co-operatives supplied by FCL and/or because of the presence of effective remaining competition in those areas. The primary focus of the Bureau's review was therefore on determining whether the Proposed Transaction was likely to result in a substantial lessening of competition in the sale of crop inputs in the Lipton area.

The Proposed Transaction is fundamentally vertical in nature—involving the interplay between the wholesale and retail levels of the agricultural input supply chain. At the wholesale level, FCL supplies local co-op ag-retailers with a significant volume of their crop input requirements, earning wholesale profits on these sales. At the retail level, FCL will own majority share of Blair’s Lipton site through the Proposed Transaction. The Bureau therefore examined whether the Proposed Transaction would create incentives for both FCL and Blair’s retail locations to raise prices or lower quality in the supply of crop inputs in the Lipton area, resulting in anti-competitive effects that would ultimately be passed on to growers in the form of higher retail prices or lower service quality.

Based on its analysis, the Bureau concluded that the Proposed Transaction was likely to substantially lessen competition in the retailing of crop inputs in the Lipton area.

In determining the relevant geographic area for evaluating the likely competitive effects of the Proposed Transaction, the Bureau took into account the information received from numerous market participants,  the parties' own strategic documents and the particular mix of products used by growers in and around the Lipton area, including, but not limited to, the use of anhydrous ammonia fertilizer.

Crop inputs purchased by growers are bought and transported to farm either by retailer delivery or by grower pickup. Due to transportation costs, the Bureau determined that growers are unlikely to switch their purchases to alternative suppliers of agricultural inputs located outside the Lipton area. The Bureau also found that the effects of the Proposed Transaction would most likely be concentrated on growers located within the rural municipalities of Cupar, Kellross, Lipton, and North Qu’Appelle, Saskatchewan.

The Bureau’s competitive effects analysis revealed that the few proximate competitors that remain in the Lipton area are unlikely to effectively constrain the competitive effects of the Proposed Transaction since they:

The Bureau found the parties' own documents to be highly probative in understanding the vertical relationship between FCL and the local co-ops, including the relationship between the wholesale and retail levels of the agricultural input supply chain and the likely competitive effects of the Proposed Transaction. Both qualitative and quantitative information analyzed during the review indicated that Prairie Co-op and Blair’s are each other’s closest competitors in the Lipton area.

Remedy

In response to the Commissioner’s finding that the Proposed Transaction would likely result in a substantial lessening of competition in the Lipton area, FCL and Blair’s have agreed to divest Blair’s Lipton retail location, together with its two nearby anhydrous ammonia satellite facilities, to a purchaser acceptable to the Commissioner. This was achieved through the parties’ cooperation and willingness to engage with the Bureau to achieve an expeditious resolution of the Bureau’s concerns.

Due to the particular structure of the Proposed Transaction and circumstances specific to this matter, the Consent Agreement incorporates an expanded preservation order, including an information firewall, in order to protect and preserve the divestiture assets until the completion of the divestiture.Footnote 1

The Commissioner is satisfied that this consent agreement addresses the competitive issues arising from the Proposed Transaction.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.

For media enquiries, please contact:
Media Relations
Telephone: 819‑994‑5945
Email: ic.media‑cb‑bc.ic@canada.ca

For general enquiries, please contact:
Information Centre
Competition Bureau
Telephone: 819‑997‑4282
Toll free: 1‑800‑348‑5358
TTY (hearing impaired): 1‑866‑694‑8389
www.competitionbureau.gc.ca
Enquiries/Complaints
Stay connected

The Competition Bureau, as an independent law enforcement agency, ensures that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

Date modified: