FTC Challenges Proposed Merger of Canadian Chemical Companies Superior Plus Corp. and Canexus Corp

The Federal Trade Commission today 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 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, a public version of which will be linked to this news release shortly, 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.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest.

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