Date:
20120822
Docket: A-302-12
Citation: 2012 FCA 223
Present: MAINVILLE
J.A.
BETWEEN:
TERVITA CORPORATION, COMPLETE
ENVIRONMENTAL INC. and
BABKIRK LAND SERVICES
INC.
Appellants
and
COMMISSIONER OF COMPETITION,
KAREN LOUISE BAKER, RONALD
JOHN BAKER, KENNETH SCOTT WATSON,
RANDY JOHN WOLSEY and
THOMAS CRAIG WOLSEY
Respondents
REASONS FOR ORDER
MAINVILLE J.A.
[1]
I
have before me a motion brought by the appellants for (a) a stay of the orders
of the Competition Tribunal pending the disposition of this appeal; and (b)
expediting the appeal.
[2]
Tervita
Corporation, which was formally CCS Corporation, and which shall be referred to
in these reasons as “CCS”, is a large private energy and environmental waste
management company notably involved in the treatment, recovery, and disposal of
waste generated by oil and gas production. It owns the only two operating
secure landfills in northeastern British Columbia. One is the Silverberry
secure landfill opened in 2002 and located approximately 50 km northwest of Fort St. John, and the other is the Northern Rockies secure landfill opened in 2009 and located
approximately 20 km south of Fort Nelson. It also operates a variety of
different types of secure landfills in Alberta and Saskatchewan.
[3]
Babkirk
Land Services Inc. (“Babkirk”) operated a facility which was not a secure
landfill known as the Babkirk site, located approximately 81 km from the
Silverberry secure landfill. Babkirk is the wholly-owned subsidiary of Complete
Environmental Inc. (“Complete”). On February 26, 2010, Babkirk received a provincial
government permit authorizing the construction of a secure landfill at the
Babkirk site.
[4]
On
January 7, 2011, CCS acquired the shares of Complete and ownership of its
wholly-owned subsidiary Babkirk.
[5]
The
Commissioner of Competition (“Commissioner”) applied to the Competition
Tribunal for an order dissolving this transaction under section 92 of the Competition
Act, R.S.C. 1985, c. C-34. The Commissioner alleged that Complete was ready
to enter the market for secure landfill services in northeastern British
Columbia, and that it was likely that competition between Complete and CCS
would have caused a decline of at least 10% in the average prices (known as
“tipping fees”) for the disposal in a secure site of hazardous waste material
in north-eastern British Columbia.
[6]
On
May 29, 2012, in a decision cited as 2012 Comp. Trib. 14 (“the “May 29, 2012
Order”), the Competition Tribunal found, inter alia, that (a) CCS’s
acquisition of Complete and Babkirk is likely to prevent competition
substantially in the market for the supply of solid landfill services for solid
hazardous waste from oil and gas producers in a geographic market, (b) that CCS
is a monopolist in the geographic market and that it exercises significant
market power which is being maintained by this acquisition; and (c) a decrease
in “tipping fees” of at least 10% was prevented in the geographic area by the
acquisition.
[7]
Consequently,
the Competition Tribunal ordered CCS to divest the shares or assets of Babkirk
on or before December 28, 2012, failing which a trustee is to effect a sale on
or before March 31, 2013. Subsequently, on July 17, 2012 the Competition
Tribunal issued a related Divestiture Procedure Order (2012 Comp. Trib. 18)
setting out the terms of the divestiture process (the “Divestiture Procedure
Order”).
[8]
The
appellants have appealed to this Court the Competition Tribunal’s May 29, 2012
Order pursuant to subsection 13(1) of the Competition Tribunal Act,
R.S.C. 1985 (2nd Supp.), c. 19. They are also seeking leave from
this Court to appeal the May 29, 2012 Order on questions of fact pursuant to
subsection 13(2) of the Competition Tribunal Act. Referring to
subsection 50(1) of the Federal Courts Act, R.S.C. 1985, c. F-7, and to
Rule 398 of the Federal Courts Rules, SOR/98-106, they now seek a stay
of both the May 29, 2012 Order, and of the Divestiture Procedure Order, pending
the decision of this Court in this appeal.
[9]
The
test to apply when considering an application for a stay of an order which is
being appealed to this Court is well-known (see RJR – MacDonald Inc. v.
Canada (A.G.), [1994] 1 S.C.R. 311) (“RJR – MacDonald”):
(1) First,
a preliminary assessment must be made of the merits of the appeal to ensure
that there is a serious issue to be determined. The threshold here is a low one.
It suffices that the appeal is not frivolous or vexatious. Consequently, a
prolonged examination of the merits of the appeal are neither necessary nor
desirable, save in exceptional circumstances – such as where the stay would, in
effect, amount to the final determination of the appeal, or would impose such
hardship on a party as to remove any benefit from proceeding with the appeal –
which do not apply in this case.
(2) Second, it must be
determined whether the party seeking the stay will suffer irreparable harm if
it were refused. The only issue to be decided at this stage is whether the
refusal to grant the stay could so adversely affect the appellants’ interests
that the harm could not be remedied in the event the appeal is successful.
Irreparable harm refers to the nature of the harm suffered rather than its
magnitude. It is harm which cannot be quantified in monetary terms or which
cannot be cured, usually because one party cannot collect damages from the
other.
(3) Third, an assessment
must be made as to which of the parties would suffer greater harm from the
granting or refusal of the stay pending the decision on the merits of the
appeal. The factors which may be considered in the assessment of this “balance
of convenience” test are numerous and vary with each case. Public interest
considerations may be considered within this balancing exercise.
Serious Issue
[10]
The
appellants raise numerous issues in their notice of appeal. I need not carry
out an extensive review of each of these issues. For the purposes of this stay,
I am satisfied that at least one serious issue is raised by the appellants in
their appeal.
[11]
Indeed,
the appellants claim that the Competition Tribunal failed to apply or
misapplied the correct test for a substantial prevention of competition,
consequently leading it to engage in impermissible and unsupportable
speculation.
[12]
There
is little jurisprudence in Canada addressing the issue of the proper legal
framework which applies in a prevention of competition case. The Competition
Tribunal recognized this in its May 29, 2012 Order, stating at paragraph 121
that its prior rulings “were primarily concerned with allegations involving
substantial lessening of competition [and] did not address in any detail the
analytical framework applicable to the assessment of an alleged substantial
prevention of competition.” This lead the Competition Tribunal to briefly
define such a framework. However, the panel members held diverse views on the
framework, leading one of the judicial members to write long concurring reasons
on the analytical framework which applies to a prevention of competition case
under the Competition Act: paras. 365 to 386 of the May 29, 2012 Order.
[13]
In
these circumstances, determining whether the Competition Tribunal applied the
proper analytical framework or test, and whether it engaged in impermissible
and unsupportable speculation in applying that test, are not frivolous or
vexatious issues. These are rather serious and important issues which meet the
low threshold under the first part of the RJR – MacDonald test.
[14]
That
being said, I express no opinion on the resolution of these issues. Nor should
these reasons be seen as expressing a favourable or unfavourable opinion on the
other issues raised by the appellants in their notice of appeal. I only find
that the appellants have raised at least one issue in appeal which is not
frivolous or vexatious, and that, on this basis, the appellants have satisfied
the serious issue test for the purposes of their motion for a stay.
Irreparable Harm
[15]
The
Commissioner concedes that CCS will suffer irreparable harm if it is compelled
to dispose of its interests in the assets of Babkirk and subsequently succeeds
in its appeal. Indeed, if CCS must divest itself of these assets, it will not,
for all practical purposes, be able to re-acquire them. If CCS is forced to
dispose of these economically attractive assets and has no practical way of
re-acquiring them, this, in the context of these proceedings, constitutes
irreparable harm, since there is no right in law to claim damages from the
Commissioner in the event of a successful appeal: Canadian Waste Services
Holdings, Inc. v. Canada (Commissioner of Competition), 2004 FCA 273, 325
N.R. 168, at para. 18.
[16]
However,
the Commissioner submits that the allegation of irreparable harm is premature.
Pursuant to the orders issued by the Competition Tribunal, CCS has until
December 28, 2012 to divest itself of its interests, and it is only after this
date that a trustee will proceed to a sale. Consequently, the Commissioner is
of the view that the appellants will suffer no irremediable harm until December
28, 2012. The Commissioner consequently asks that the appellants’ stay motion
be dismissed, but without prejudice to the appellants submitting a new motion
next December, should the appeal not be decided by that time. The benefit of
this approach, according to the Commissioner, would be to ensure that CCS still
makes an effort to be ready to divest itself of Babkirk in the event it loses
its appeal. I do not agree with the Commissioner on this point.
[17]
The
Divestiture Procedure Order, at paragraph 11, requires CCS to “use commercially
reasonable efforts commensurate with a transaction of the size and nature of
that contemplated by this Divestiture Procedure Order to complete the
Divestiture during the Initial Sale Period”, i.e. the period commencing
on May 29, 2012 and ending on December 28, 2012. Consequently, under that
order, CCS must make active efforts to sell its interests in Babkirk while its
appeal to this Court is pending. The effect of the order is not to have CCS
prepare itself for a divestiture, but rather to actually divest its interests
at the earliest opportunity. As noted above, such a divestiture, in the context
of these proceedings, constitutes irreparable harm.
Balance of Convenience
[18]
The
Commissioner submits that the balance of convenience does not favour the
appellants in that there is a public interest in the expeditious determination
of competition cases. In the Commissioner’s view, the longer the divestiture
takes, the less effective will be the remedy ordered by the Competition
Tribunal, causing more prejudice to the public by extending the time CCS acts
as a monopolist.
[19]
Though
there may be a public interest in the expeditious determination of competition
cases, there is also a public interest in ensuring due process. The appellants
have the right to appeal to this Court, and that right must be taken into
account in assessing the balance of convenience. No general rule based on
expeditious determinations of competition cases should be established that
would fetter the discretion of this Court to issue stays in appeals from the
Competition Tribunal: Canadian Waste Services Holdings, Inc. v. Canada (Commissioner of Competition), above, at para. 24. In the circumstances of this
case, the requirement for expeditiousness is best served by expediting this
appeal.
[20]
Moreover,
the allegations at the heart of this case are that CCS prevented a new entrant
from participating in an existing market. This is not a case where an existing
prior competitor exits the market resulting in a new monopoly; rather, it
concerns a pre-existing but allegedly non-competitive market in which a new
entrant is allegedly prevented from opening up new competition. The market’s status
quo ante would not be disturbed by the stay. Though this does not
necessarily lead to the conclusion that the stay should be granted, it is
nevertheless a factor that must be considered in assessing the balance of
convenience.
[21]
In
addition, in this case, the Competition Tribunal found that the competition
which would have been offered by Babkirk before the spring of 2013 would likely
have had no material impact on pricing by CCS at its Silverberry facility: May
29, 2012 Order at paras. 197 to 215 and subparagraph 229(i). Consequently,
since this appeal is likely to be heard before the spring of 2013, granting the
stay would not place the public in a less disadvantageous competitive market
environment than had CCS not acquired Complete and Babkirk.
[22]
For
these reasons, I conclude that the balance of convenience favours the
appellants.
Conditions
[23]
Should
the stay be granted, the Commissioner suggests that conditions be attached,
notably conditions which (a) would preserve the concerned assets, and (b) that
would avoid further delay in the divestiture in the event the appeal is
dismissed.
[24]
I
agree that the stay should be made conditional on the preservation of the
assets. Conditions to this effect will thus be attached to the stay order.
[25]
As
for the delay in the divestiture in the event this Court upholds the May 29,
2012 Order, these are matters which should be dealt with by the Competition
Tribunal after the results of this appeal have been determined. The Competition
Tribunal intended to provide CCS with a reasonable timeframe in which to divest
its interests, and it will be incumbent upon the Tribunal to review again the
timeframe for the divestiture in the event its decision is upheld in appeal.
The Competition Tribunal will then consider the factors it deems appropriate,
including any delay resulting from this appeal, in determining a new timeframe.
Conclusions
[26]
I
would grant a stay of the Competition Tribunal’s May 29, 2012 order that CCS
Corporation divest itself of the shares or assets of Babkirk Services Inc. on
or before December 28, 2012, failing which a trustee is to effect a sale on or
before March 31, 2013. The stay shall extend to the related Divestiture
Procedure Order. The stay shall apply until the final determination of this
appeal. It will be subject to conditions providing for the preservation of the
assets. I will also issue a separate order expediting this appeal. The costs of
this motion shall follow the appeal.
"Robert
M. Mainville"
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