Jeanne Pratt, acting Competition Commissioner, at the Competition Bureau in Gatineau, Que., in January.Justin Tang/The Canadian Press
In international business circles, Canada has earned a reputation as a place where it takes forever to get stuff done.
Prime Minister Mark Carney and his team pledged to change that unfortunate and all-too-true perception, particularly when it comes to speeding up resource projects.
Canada’s Competition Bureau seems to have missed the memo from the Prime Minister’s Office.
In the midst of a leadership transition, the Bureau is taking an increasingly aggressive approach to reviewing domestic acquisitions, according to numerous advisers who deal with the independent agency.
The antagonistic attitude is delaying a deal that lands in the sweet spot of the government’s “Canada Strong” energy agenda: Keyera Corp.’s transformative $5.15-billion purchase of Plains All American Pipeline LP’s Canadian natural gas liquids (NGL) business.
Competition Bureau needs to keep ‘foot on gas’ amid economic headwinds, acting commissioner says
Last June, Calgary-based Keyera announced plans to create a domestic NGL champion by linking Plains pipelines and storage facilities to its own network. The two company’s businesses are largely complementary, rather than overlapping, which minimizes regulatory concerns over competition.
Plains, which is headquartered in Houston, has been selling Canadian assets for several years to focus on building out its U.S. operations.
Keyera and Plains also expected to get a relatively smooth ride through the Competition Bureau because both strike decade-long contracts with their clients, which are major gas producers. Keyera cannot start jacking up fees once it buys Plains operations.
When the potential impact of a decrease in competition is years down the road, legal precedents show the Bureau should attach minimal importance to the issue.
Everyone involved in this acquisition, including Keyera’s lawyers at Norton Rose Fulbright Canada LLP and McCarthy Tétrault LLP and Plains legal counsel at Bennett Jones LLP and Vinson & Elkins, expected the deal to close by March.
Last week, Keyera announced it still hasn’t received the Bureau’s blessing. The transaction is now expected to close by the end of May.
“We remain fully confident that this transaction is in the best interest of industry, Keyera, and Canada,” said Keyera chief executive officer Dean Setoguchi in a press release.
“Bringing these assets under Canadian ownership would advance national energy security, strengthen competition, and ensure that value and investment stay in Canada,” Mr. Setoguchi said. A spokesperson for Keyera declined further comment on the regulatory process.
Even if the Keyera acquisition wins approval, as it should, the slow-as-molasses approval process at the Bureau is out of step with what the Prime Minister has promised and what the country desperately needs.
The federal government is currently choosing a successor to former Commissioner of Competition Matthew Boswell, who stepped down in December. He joined Norton Rose, one of Keyera’s law firms.
Mr. Boswell built his reputation on pushing back against consolidation in regulated industries such as telecom – the Bureau unsuccessfully opposed Rogers Communications Inc.’s purchase of Shaw Communications Inc.
Mr. Boswell also added teeth to takeover regulation by eliminating the efficiency defence, which previously allowed acquisitions to proceed if the overall economic benefits, including cost savings for the merging companies, outweighed harms to consumers.
Jeanne Pratt, the Bureau’s acting Commissioner, wants to remove the “acting” part of her title by succeeding Mr. Boswell. She joined the agency almost 15 years ago – from McCarthy Tétrault, Keyera’s other law firm – and spent the past 11 years overseeing mergers.
In February, as part of what looks like Ms. Pratt’s campaign for the top job, the Bureau released a study calling for “more competition-friendly” rules in four sectors: energy, transportation, retail distribution and professional services.
“This study shows just how much Canada could gain from a pro-competitive regulatory reform,” said Ms. Pratt in a press release.
As acting Commissioner, Ms. Pratt’s agenda includes a number of worthy goals, such as reducing inter-provincial trade barriers and making it easier for workers to move between provinces.
However, the Bureau has lost the plot by standing in the way of a high-profile acquisition that makes it easier for Keyera to get natural gas from Western Canada producers to customers across North America and around the world.
If Ms. Pratt cannot see how it serves the national interest to approve a Calgary company’s purchase of Canadian pipelines from a Texas utility in a timely manner, the Prime Minister needs to find a Commissioner of Competition who is paying attention.