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FTC not happy with merger of Canadian chemicals Superior Plus and Canexus

Staff writer ▼ | June 28, 2016
The Federal Trade Commission (FTC) filed an administrative complaint charging that the proposed $982 million merger of Canadian chemical suppliers Superior Plus Corp. and Canexus Corp. would violate the antitrust laws.
FTC
Higher prices   FTC filed an administrative complaint
The merger, FTC says, by significantly reducing competition in the North American market for sodium chlorate – a commodity chemical used to bleach wood pulp that is then processed into paper, tissue, diaper liners, and other products.

Toronto-based Superior, and Canexus, headquartered in Alberta, are two of the three major producers of sodium chlorate in North America. If the merger takes place, the new company and rival AkzoNobel will control approximately 80 percent of the total sodium chlorate production capacity in North America.

The complaint alleges that there are no viable substitutes for sodium chlorate in the pulp bleaching process, and that there are no meaningful imports to compete against the North American producers.

By combining more than half of all North American sodium chlorate production capacity in the merged Superior and Canexus, the acquisition is likely to lead to anticompetitive reductions in output and higher prices, the complaint alleges.

Additionally, by removing Canexus as an independent sodium chlorate producer, with its large scale and low-costs, the acquisition will also increase the likelihood of coordination in an already vulnerable market, according to the complaint.

Because building a new manufacturing facility would be time-consuming and costly – estimated at $200 million – barriers to new entry and expansion are high, and entry is unlikely, the complaint states.

The FTC has authorized staff to seek a temporary restraining order and a preliminary injunction in federal court to prevent the parties from consummating the merger and to maintain the status quo pending the administrative proceeding.

The FTC and the Canadian Competition Bureau collaborated in this investigation.

The Commission votes to issue the administrative complaint and to authorize staff to seek a temporary restraining order and preliminary injunction in federal court were both 3-0. The administrative trial is scheduled to begin on November 29, 2016.


 

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