Canadian Waste Services Holdings, Inc. v. Canada (Commissioner of Competition)

Canadian Waste Services Holdings, Inc. v. Canada (Commissioner of Competition) Court (s) Database Federal Court of Appeal Decisions Date 2004-08-06 Neutral citation 2004 FCA 273 File numbers A-389-04 Decision Content Date: 20040806 Docket: A-389-04 Citation: 2004 FCA 273 Present: ROTHSTEIN J.A. BETWEEN: CANADIAN WASTE SERVICES HOLDINGS, INC., WASTE MANAGEMENT OF CANADA CORPORATION and WASTE MANAGEMENT, INC. Appellants and COMMISSIONER OF COMPETITION Respondent Heard at Toronto, Ontario, on August 4, 2004. Order delivered at Ottawa, Ontario, on August 6, 2004. REASONS FOR ORDER BY: ROTHSTEIN J.A. Date: 20040806 Docket: A-389-04 Citation: 2004 FCA 273 Present: ROTHSTEIN J.A. BETWEEN: CANADIAN WASTE SERVICES HOLDINGS, INC., WASTE MANAGEMENT OF CANADA CORPORATION and WASTE MANAGEMENT, INC. Appellants and COMMISSIONER OF COMPETITION Respondent REASONS FOR ORDER ROTHSTEIN J.A. FACTS [1] In 1999, the appellants, the largest waste manufacturing company in Canada, proposed to acquire the second largest waste management company. The Commissioner of Competition raised various concerns. The appellants satisfied all but one of the Commissioner's concerns: the Commissioner wanted the appellants to divest themselves of the Ridge Landfill in south-western Ontario, but the appellants opposed that request. [2] The parties agreed that the appellants' acquisition of the Ridge Landfill would be submitted to the Competition Tribunal. The appellants' ownership of the Ridge Landfill is now subject to a consent interim "hold separate" order which requires that the Ridge Landfill be managed and operated by an independent manager, pending resolution of the contested proceedings. [3] In April 2000, the Commissioner filed an application under section 92 of the Competition Act, R.S.C. 1985, c. C-34, seeking an order requiring the appellants to divest themselves of the Ridge Landfill. In its March 28, 2001, decision, the Competition Tribunal concluded that the appellants' acquisition of the Ridge Landfill would be likely to substantially prevent or lessen competition for the disposal of institutional, commercial and industrial waste in both the Greater Toronto Area and the Chatham-Kent area. By its remedy order of October 3, 2001, the Competition Tribunal ordered the divestiture of the Ridge Landfill. [4] The appellants' appeal from that order to this Court was unsuccessful and their application for leave to appeal to the Supreme Court of Canada was denied. [5] On May 29, 2003, the appellants filed with the Competition Tribunal an application to rescind or vary the Tribunal's divestiture order pursuant to section 106 of the Competition Act. The appellants alleged that there had been a change of circumstances that should result in a recission of the divestiture order. [6] After negotiations between the parties, the Commissioner consented to a stay requiring the appellants to divest themselves of the Ridge Landfill within sixty days after any decision of the Tribunal that did not rescind the appellants' obligation to divest themselves of the Ridge Landfill. By its decision of June 28, 2004, the Competition Tribunal dismissed the appellants' reconsideration application. As a result, the appellants are required to divest themselves of the Ridge Landfill on or before August 27, 2004. [7] The appellants have appealed the Competition Tribunal's June 28, 2004, decision to this Court. By the motion now before me, they seek a stay of the order requiring divestiture of the Ridge Landfill pending determination of their appeal. ANALYSIS [8] I deal with the three branches of the test for granting a stay in turn. 1. Serious Issue [9] In RJR-Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, the Supreme Court of Canada has instructed trial and appellate courts on the assessment of a serious question to be tried. The threshold is low. Once satisfied that the application is neither frivolous nor vexatious, the motions judge should proceed to consider irreparable harm and balance of convenience. A prolonged inquiry into the merits is neither necessary nor desirable (page 337). [10] It appears that, in the original section 92 proceedings, a central issue was whether there would be excess landfill capacity in Ontario. The Competition Tribunal determined that under competitive conditions, excess capacity would result in a decrease in tipping fees for the use of landfill capacity. It accepted the Commissioner's evidence that such excess capacity would be available by 2002. [11] In their section 106 application, the appellants argue that such excess capacity will not be available until at least 2006 or 2007 and that this delay constitutes a change of circumstances which, if known at the time of the section 92 hearing, would have caused the Competition Tribunal not to require divestiture of the Ridge Landfill. [12] One alleged reason that the creation of excess capacity will be delayed is the quashing by the Ontario Divisional Court of the Terms of Reference for an environmental assessment of a proposed expansion of the appellants' Richmond Landfill and the resulting refusal of the Ontario Minister of the Environment to approve the Terms of Reference for an environmental assessment of a proposed expansion of the appellants' Warwick Landfill. [13] The Tribunal found that the appellants had known of the judicial review application seeking to quash the Terms of Reference at the time of the original section 92 application but did not disclose it to the Tribunal. Further, the Tribunal held that, as the judicial review was awaiting disposition by the Ontario Court of Appeal, the litigation uncertainty that had existed at the time of the original section 92 application continued. It therefore held that the appellants could not rely on the granting of the judicial review to establish a change in circumstances. [14] The appellants argue that the Tribunal erred in making this finding. They say that at the time of the section 92 application, they had no obligation to inform the Tribunal of a freshly commenced judicial review application which they wrongly considered to have little chance of success. The appellants also say that the level of litigation uncertainty has changed because there is a significant and substantial difference between the commencement of proceedings challenging a Ministerial decision and a ruling of the Court quashing that decision, even though the ruling may be subject to appeal. [15] The Commissioner, however, says that the appellants are merely trying to re-litigate issues that have already been decided as they have not presented any new facts that were not known at the time of the original hearing. Furthermore, she says that even if evidence of a lack of excess capacity is admitted, the failure of the Tribunal's prediction that there would be such excess capacity cannot constitute changed circumstances for the purposes of section 106. The Commissioner argues that predictions are inherently uncertain and that if section 106 can be invoked whenever a prediction made by the Tribunal does not occur exactly as predicted, Tribunal decisions will never be final. [16] I am careful to express no opinion on the resolution of these issues. Nor have I dealt with all the arguments raised by the appellants. I only say that the arguments to which I have referred are not frivolous or vexatious. On that basis, the appellants have satisfied me that there is a serious issue for appeal. 2. Irreparable Harm [17] The Ridge Landfill is an asset that is profitable to the appellants and that the appellants wish to retain. If no stay is granted, they will have to divest themselves of it by August 27, 2004. Once that occurs, if the appeal is successful, the appellants will not, for all practical purposes, be able to re-acquire it. The appellants further say that the profits lost as a result of divestiture are not recoverable in any way in the event their appeal is successful. [18] If a party is forced to dispose of an economically attractive asset and has no practical way of re-acquiring it, I think that falls into the category of irreparable harm. It is not compensable in damages because there is no right at law to claim damages from the Commissioner in the event the appellants succeed in their appeal. I am satisfied the appellants have met the irreparable harm branch of the test for granting a stay. 3. Balance of Convenience [19] The Commissioner says the balance of convenience favours her position. She says there is a public interest in competition. She argues that divestiture of the Ridge Landfill is consistent with that public interest as the market power resulting from the appellants' ownership of the Ridge Landfill would enable it to increase tipping fees for the disposal of waste from the Greater Toronto Area and Chatham-Kent area. She also says that there is a public interest in quick determination of competition cases. In her view, granting the stay would harm this interest as it would open the door to an endless loop of appeals and section 106 applications which could indefinitely delay any remedy granted by the Tribunal. [20] Counsel for the appellants cross-examined a Competition Officer of the Commissioner on her affidavits in this and prior proceedings. Under cross-examination, the Competition Officer stated that price would not be immediately impacted if a stay were granted: Q ...are you now saying that if the stay is granted there will be an immediate impact in pricing in the marketplace? A There may not be an immediate impact in pricing, but there might be other impacts that are not related to immediately to the - a direct price because Canadian - today Canadian waste does not have control of the price at the Ridge, so clearly price immediately is not impacted if a stay is granted. [21] Nonetheless, the Competition Officer said that there were important service compontents to consider: Q ...would you agree that pricing is probably the most important competitive dimension when it comes to waste disposal? A Certainly it is probably the most important. Although equally - not equally but certainly high up there is the service components and access to landfill and the hours that are required. There are definitely some service components, they are very very important - Q Right, but we are not talking about Swiss watches where brand has much to do with it? A Correct. It is the service elements with price. Q Right. It is disposing - it is getting rid of that truckload of waste at a competitive price? A Correct. Q And the tribunal's finding in terms of substantial prevention of competition, substantial limitation of competition, presumably involve an impact on pricing? A Yes. [22] From my reading of these questions and answers and the Tribunal's section 92 decision, it appears to me that pricing is by far the most important competitive consideration that led to the Tribunal's finding that there will be a substantial prevention or lessening of competition if the appellants are allowed to retain the Ridge Landfill. [23] The appeal is scheduled to be heard on November 4, 2004, less than three months from now. Even if the decision is reserved, a stay would be in place for only a few more months. In view of the admission of the Competition Officer, I am unable to give much weight to the argument that the public interest in competition will be harmed if a stay is granted for a relatively short period of time. According to the evidence, the granting of the stay will not have any immediate impact on pricing. Indeed, when the possibility of imposing a condition on the stay that the appellants agree not to increase prices during the period of the stay was raised, counsel for the Commissioner rejected such a possibility indicating that if a stay were to be granted, the best solution would be to get on with a hearing of the appeal as soon as possible. [24] I agree with the Commissioner that there is a public interest in the expeditious determination of competition cases. However, expeditiousness must be consistent with due process. The appellants are entitled to appeal. The requirement for expedition is best met by an early hearing of the appeal and the parties have agreed that the earliest date suitable to them and to the Court is the week of November 1. Finally, with respect to the prospect of damaging the merger review process by allowing stays of the Tribunal's orders, each case must be decided on its own facts. I do not think a general rule should be established that would fetter the discretion of the Court in considering stay applications. [25] For these reasons, I have concluded that the balance of convenience favours the appellants. CONCLUSION [26] I would grant the stay of the Competition Tribunal's divestiture order dated October 3, 2001 (save and except for the provisions of paragraph 30 thereof) until the hearing and determination of this appeal. As a term of such stay, I would order that the 180-day time period referred to in paragraphs 7, 8, 14(a) and 15 of the divestiture order expire 60 days after any disposition of this appeal that does not rescind the appellants' obligation to divest themselves of the Ridge Landfill or remit the matter to the Tribunal for further determination. Costs should be in the cause. "Marshall Rothstein" J.A. FEDERAL COURT OF APPEAL Names of Counsel and Solicitors of Record DOCKET: A-389-04 STYLE OF CAUSE: CANADIAN WASTE SERVICES HOLDINGS, INC., WASTE MANAGEMENT OF CANADA CORPORATION and WASTE MANAGEMENT, INC. Appellants - and - COMMISSIONER OF COMPETITION Respondent PLACE OF HEARING: TORONTO, ONTARIO DATE OF HEARING: AUGUST 4, 2004 REASONS FOR ORDER BY: ROTHSTEIN J.A. DATED: AUGUST 6, 2004 APPEARANCES BY: Mr. Shawn C. D. Neylan Mr. Nicholas McHaffie For the Appellants Mr. Donald B. Houston Ms. Michele Siu FRASER MILNER CASGRAIN LLP Mr. W. Michael G. Osborne AFFLECK GREENE ORR LLP Mr. André Brantz DEPARTMENT OF JUSTICE For the Respondent SOLICITORS OF RECORD: STIKEMAN ELLIOTT LLP Toronto, Ontario For the Appellants Morris Rosenberg Deputy Attorney General of Canada For the Respondent