IN THE NEWS / Canada Regulator To Fight Superior Propane/Petro-Canada Deal
Canada's Competition Bureau said on Tuesday it will fight the sale of Petro-Canada's ICG Propane Inc. unit to Superior Propane Inc. because the deal would hurt competition in local and national markets.
"The bureau has completed its investigation and concluded that the merged entity will likely casue a substantial lessening or prevention of competition in local and national markets," the Competition Bureau said in a statement.
The proposed C$175 million sale, announced by the Calgary-based companies in July, would give Superior -- already Canada's largest retail and wholesale propane distributor -- a national market share of 70 percent.
The regulator said it has filed an interim injunction with the Competition Tribunal to prevent the parties "from merging in any form."
Superior and ICG have said they want to proceed with the deal's scheduled December 7 closing despite knowing since November 30 that the Competition Bureau opposes the merger.
With 257 outlets from coast to coast, the combined entity would sell about 2.5 billion cubic liters of propane to more than 300,000 customers, making it the third-largest such company in North America.
The Competition Bureau said the merged company would attain a monopoly or near-monopoly in 26 local markets and grab a market share exceeding 65 percent in 21 others.
Post-merger, Superior would also be the only propane firm able to provide nationwide service to major and national accounts, the regulator said.
"The Bureau must step in to prevent the creation of local and national monopolies in this mature industry," said Konrad von Finckenstein, research director at the bureau.
The watchdog agency said it received about 600 complaints about the proposed merger from customers, competitors, suppliers and governments.
"In reaching its conclusion, the bureau considered the extremely high post-merger market shares, the significant barriers to entry including the mature nature of the industry and a customer base under restrictive, long-term contracts," the agency said.
"The Bureau has not accepted the parties' arguement that alternative fuels such as fuel oil, natural gas, electricity and wood could offset the loss of competition resulting from the merger."
Superior is investor-owned through the Superior Propane Income Fund .
Amid jittery stock markets, Petro-Canada in late June scrapped plans to spin ICG off into a publicly traded income trust, saying potential buyers for the unit surfaced. |
