Final Exam: Question 2 In February 2010, Tervita Corp. ('Tervita'), acquired Babkirk Land Services Inc.
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Final Exam: Question 2

In February 2010, Tervita Corp. ("Tervita"), acquired Babkirk Land

Services Inc. (Babkirk), a company holding one of four issued permits for the disposal of hazardous waste generated by oil and gas operations in northeastern British Columbia. At the time of the acquisition, Tervita itself held two permits and was operating two hazardous waste landfills pursuant to them: Silverberry (capacity for 6,000,000 tonnes of waste) and Northern Rockies (3,344,000 tonnes) landfills.

Prior to the sale, the owners of Babkirk intended to use the site mainly as a bioremediation facility which would treat contaminated soil using micro-organisms, and to complement the bioremediation site with a secure landfill facility to store hazardous waste not amenable to bioremediation. Bioremediation is a method of treating soil by using micro-organisms to reduce contamination. In February 2010, the Babkirk received a permit for this secure landfill with a capacity of 750,000 tonnes.

Integrated Resources Technologies Ltd. ("IRTL") offered to purchase Babkirk. Babkirk then explored the possibility of selling to other third parties for a better return. Secure Energy Services ("SES") showed some interest, but at a lower price. Babkirk decided to accept IRTL's offer, but it was withdrawn in June 2010 due to lack of financing. In one last attempt to sell, Babkirk pursued various discussions with SES and Tervita Corp. In July 2010, Babkirk reached an understanding with Tervita Corp. and a letter of intent was signed.

Prior to closing, the Commissioner of Competition informed the parties that she opposed the transaction on the ground that it was likely to substantially prevent competition in secure landfill services in Northeastern British Columbia. It expressed concern about qualitative anti-competitive effects — namely environmental effects related to price reduction on-site clean-up and value propositions or offers Tervita would have made in a competitive environment to certain customers resulting in lower total cost for overall waste services used by such customers.

Tervita claimed the merger would achieve efficiencies gains in transportation and market expansion leveraging economies of scale. The Commission refuted Tervita's position asserting that quantitative and qualitative efficiency gains were not likely to be greater than the combined quantitative and qualitative anti-competitive effects. Nonetheless, the parties proceeded to close the transaction on January 7, 2011.

In response, the Commissioner brought an order seeking to dissolve the transaction or that Tervita divest itself of the acquisition. The Commissioner argued that the merger was likely to substantially prevent market competition. It further found that the efficiencies gained by the merger were not greater than and would not offset the anti-competitive effects of the merger. 

What is the ratio diciendi in this case? What is the Obitir dicta in this case?

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