Tervita Corporation v. Commissioner of Competition

Tervita Corporation v. Commissioner of Competition
Court (s) Database
Federal Court of Appeal Decisions
Date
2012-05-29
Neutral citation
2013 FCA 28
File numbers
A-302-12, A-457-12
Notes
Reported Decision
Decision Content
Date: 20130211
Dockets: A-302-12
A-457-12
Citation: 2013 FCA 28
CORAM: EVANS J.A.
STRATAS J.A.
MAINVILLE J.A.
BETWEEN:
TERVITA CORPORATION, COMPLETE ENVIRONMENTAL INC. and
BABKIRK LAND SERVICES INC.
Appellants
and
COMMISSIONER OF COMPETITION,
KAREN LOUISE BAKER, RONALD JOHN BAKER,
KENNETH SCOTT WATSON, RANDY JOHN WOLSEY
and THOMAS CRAIG WOLSEY
Respondents
Heard at Toronto, Ontario, on December 10 and 11, 2012.
Judgment delivered at Ottawa, Ontario, on February 11, 2013.
REASONS FOR JUDGMENT BY: MAINVILLE J.A.
CONCURRED IN BY: EVANS J.A.
STRATAS J.A.
Date: 20130211
Docket: A-302-12
A-457-12
Citation: 2013 FCA 28
CORAM: EVANS J.A.
STRATAS J.A.
MAINVILLE J.A.
BETWEEN:
TERVITA CORPORATION, COMPLETE ENVIRONMENTAL INC. and
BABKIRK LAND SERVICES INC.
Appellants
and
COMMISSIONER OF COMPETITION,
KAREN LOUISE BAKER, RONALD JOHN BAKER,
KENNETH SCOTT WATSON, RANDY JOHN WOLSEY
and THOMAS CRAIG WOLSEY
Respondents
PUBLIC REASONS FOR JUDGMENT
MAINVILLE J.A.
[1] These reasons concern two appeals challenging a divestiture order of the Competition Tribunal (“Tribunal”) dated May 29th, 2012 made pursuant to section 92 of the Competition Act, R.S.C. 1985, c. C-34 for reasons cited as 2012 Comp. Trib. 14 (“Reasons”).
[2] Appeal A-302-12 was brought under subsection 13(1) of the Competition Tribunal Act, R.S.C. 1985, c. 19 (2nd Supp.), while appeal A-457-12, dealing with questions of fact, was brought with leave of this Court under subsection 13(2) of that same statute. The appeals were consolidated and heard together. These reasons apply to both appeals, and a copy thereof shall be included in each appeal file.
CONTEXT AND BACKGROUND
[3] A detailed and precise description of the factual and contextual background to these proceedings can be found in the Tribunal’s lengthy decision. For the purposes of this appeal, it is sufficient to highlight some salient aspects.
[4] Oil and gas operations in North-Eastern British Columbia (“NE British Columbia”) produce hazardous waste which must be disposed of in accordance with a regulatory framework. One preferred method of disposal is to truck the waste to a secure landfill. Operators of secure landfills in British Columbia must hold permits and operate under British Columbia’s Environmental Management Act, S.B.C. 2003, c. 53 and the Hazardous Waste Regulation, B.C. Reg. 63/88.
[5] Oil and gas developers typically pay third-party trucking companies to transport the hazardous waste to a secure landfill, and these transportation costs usually represent a substantial portion of the developers’ overall cost of disposal. Secure landfill owners also charge the developers what is usually designated as a “tipping fee” to accept the waste.
[6] Four permits for dedicated landfill operations have been issued for NE British Columbia.
[7] Two permits are held for landfills owned or operated by the appellant, Tervita Corporation (“Tervita”), formerly known as CCS Corporation. These landfills are the Silverberry and Northern Rockies landfill sites, which have permitted capacities of 6,000,000 and 3,344,000 tonnes of waste respectively, and at which [omitted] and [omitted] tonnes of hazardous waste were tipped in 2010.
[8] A third permit was issued for the Peejay site located in a relatively inaccessible area near the Alberta border. This site was developed by an aboriginal community to serve nearby drilling operations. However, that secure landfill has not yet been constructed, and the Tribunal was of the view that the project may be encountering financial difficulties.
[9] The fourth permit was issued for the Babkirk Site located in NE British Columbia approximately 81 km northwest (or one and a half hours by road) of Tervita’s Silverberry secure landfill. It is the acquisition of the Babkirk Site by Tervita which has triggered the Commissioner’s intervention and which is at the heart of the Tribunal’s decision. It is thus appropriate to briefly focus on the Babkirk Site and on the events which lead to its acquisition by Tervita.
[10] Babkirk Land Services Inc. (“BLS”) was founded in 1996 by Murray and Kathy Babkirk. For approximately 6 years, BLS operated the Babkirk Site as a facility for the treatment and short-term storage of hazardous waste. However, in 2004 BLS stopped accepting waste at that site.
[11] In 2006, BLS retained the services of SNC Lavalin, an engineering and project development firm, to prepare the documents required to apply for permits regarding a secure landfill at the Babkirk Site. At approximately the same time, a group composed of the individual respondents in this appeal (Karen Louise Baker, Ronald John Baker, Kenneth Scott Watson, Randy John Wolsey and Thomas Craig Wolsey, collectively referred to in these reasons as the “Vendors”) negotiated a handshake agreement to purchase all the shares of BLS from Murray and Kathy Babkirk. Following the issuance of an Environmental Assessment Certificate for the secure landfill at the Babkirk Site in December of 2008, the Vendors acquired in April of 2008 all the shares of BLS through a new corporation, Complete Environmental Inc. (“Complete”). BLS thus became a wholly owned subsidiary of Complete, which was itself owned and controlled by the Vendors.
[12] The Vendors intended to operate the Babkirk Site primarily as a bioremediation facility. Bioremediation is a method for treating contaminated soil by using micro-organisms to reduce contamination.
[13] Oil and gas drilling operations produce two principal types of hazardous waste: contaminated soil and drill cuttings. The soil may be contaminated with hydrocarbons, both heavy and light end, as well as with salts and metals: Reasons at paras. 30 to 32. The Tribunal found that soil contaminated with heavy-end hydrocarbons is not amenable to cost effective bioremediation because it is difficult, unpredictable, and very time consuming. Further, the Tribunal also found that waste contaminated with metals and salts cannot be effectively bioremediated with the technology currently approved for use in Canada: Reasons at para. 44.
[14] The Vendors were nevertheless confident that they could succeed with their bioremediation facility at the Babkirk Site if they could complement this service with a secure landfill facility allowing for the storage of waste which was not amenable to bioremediation. It was for this purpose that a permit for a limited capacity secure landfill facility operating alongside the bioremediation service was sought for the Babkirk Site. Following the issue of the Environmental Assessment certificate for the secure landfill, the Vendors received an operating permit. That permit was issued on February 26, 2010, and authorized a secure landfill at the Babkirk Site with a maximum storage capacity of 750,000 tonnes.
[15] Shortly afterwards, a company known as Integrated Resources Technologies Ltd. (“IRTL”) offered to purchase Complete for [omitted]. Before accepting that offer, the Vendors explored the possibility of selling to other third parties. Secure Energy Services (“SES”) showed some limited interest, but at a lower sales price. The Vendors thus decided to accept the offer from IRTL; however, that offer was withdrawn in early June of 2010 due to lack of financing. The Vendors decided to try to sell one last time, and pursued various discussions with SES and Tervita, then known as CCS Corporation. They reached an understanding with CCS Corporation (Tervita) in July of 2010, and signed a letter of intent on July 14, 2010. The sale of the Vendors’ shares in Complete (comprising its wholly owned subsidiary BLS and the Babkirk Site) eventually closed on January 7, 2011.
[16] Prior to the closing, the Commissioner informed the parties that she opposed the transaction on the ground that it was likely to prevent competition substantially in secure landfill services in NE British Columbia. Shortly after the closing, the Commissioner applied to the Tribunal pursuant to section 92 of the Competition Act seeking an order that the transaction be dissolved or, in the alternative, requiring that Tervita divest itself of Complete or BLS.
RELEVANT LEGISLATION
[17] The relevant extracts of the Competition Act are reproduced in the Schedule to these reasons. A brief overview of these provisions is set out below.
[18] When reviewing a merger under section 92 of the Competition Act, the Tribunal primarily determines whether the merger is likely to prevent or lessen competition substantially. For this purpose, the Tribunal must determine whether the merger will create, enhance or facilitate the exercise of market power. The factors considered for this purpose include, but are not limited to, defining the relevant product and geographic market, determining market shares and industry concentration levels, identifying effects that could result from the merger, and determining the likelihood of countervailing bargaining power by customers.
[19] Some mergers are not driven by the desire to increase profits through greater market power, but rather seek to allow greater profits through gains in efficiency. These gains can be beneficial to the Canadian economy. Subsection 92(2) of the Competition Act provides that the Tribunal cannot find that a merger prevents or lessens competition substantially solely on the basis of concentration or market share. Further, section 96 specifically provides for a defence based on gains in efficiency. If it can be established that the gains in efficiency resulting from the merger are greater than and offset its anti-competitive effects, the Tribunal is prohibited from making an order under section 92.
[20] The main sources of gains in efficiency in mergers “are reductions in costs through the realization of economies of scale, such as the sharing of fixed costs or greater efficiency in the deployment of some types of capital; reduced transportation costs through rationalization of shipping and distribution networks; savings attributable to the transfer of superior production techniques, know-how, or intellectual property rights from one merging party to the other; and gains in efficiency accruing to buyers from the ability to choose from a wider variety of products and services”: M. Trebilcock, R.A. Winter, P. Collins, and E.W. Iacobucci, The Law and Economics of Canadian Competition Policy (Toronto: University of Toronto Press, 2002) at pp. 145-146. The analysis of productive and dynamic gains in efficiency is usually the distinguishing feature of merger analysis: B.A. Facey and D.H. Assaf, Competition & Antitrust Law: Canada & the United States, 3rd ed. (Toronto: LexisNexis Butterworths, 2006) at p. 201.
THE TRIBUNAL’S DECISION
(a) The section 92 analysis
[21] The Tribunal defined the relevant product market as “solid hazardous waste generated by oil and gas producers and tipped into secure landfills in [NE British Columbia]”: Reasons at para. 91. The Tribunal has traditionally considered it necessary to also define a relevant geographic market before assessing the competitive effects of a merger. In this case, the Tribunal found that, at a minimum, the area of 11,000 square kilometres identified by Tervita’s expert, Dr. Kahwaty, and designated the “Contestable Area”, was part of the relevant geographic market. It was satisfied that a hypothetical monopolist supplying secure landfill services in that area would have the ability to impose a small but significant price increase (typically 5%) and sustain it for a non-transitory period of time (typically one year): Reasons at para. 98.
[22] The Tribunal was also of the view that this Contestable Area likely understated the geographic market. However, it found that it was not necessary in this case to define precisely the geographic scope of the relevant market beyond the Contestable Area since Tervita “would remain the sole supplier of Secure Landfill services to any reasonably defined broader group of customers”: Reasons at paras. 92, 93, 117 and 118.
[23] The Tribunal noted that “prevention” of competition cases have been rare: Reasons at para. 121. Consequently, no detailed analytical framework had previously been determined for the “prevention” branch of section 92 of the Competition Act. The Tribunal thus set out at paras. 122 to 125 of its Reasons the analytical framework it intended to apply to “prevention” cases in general, and to the merger at hand specifically. This framework will be reviewed and discussed in the analysis section of these reasons.
[24] The Tribunal focused on the period during which the merger occurred, i.e. the period between July 2010, when the letter of intent was signed, and January 2011, when the merger transaction closed. It concluded that only two realistic scenarios existed during this period for the Babkirk Site absent the merger: (a) the Vendors would have sold to SES which would have operated a secure landfill on the site; or (b) the Vendors would have operated a bioremediation facility together with a half-cell secure landfill: Reasons at para. 132.
[25] After extensively reviewing the large amount of evidence submitted on these two scenarios, the Tribunal found that, on a balance of probabilities, SES would not have made an acceptable offer for Complete at the end of July 2010 or at any time in the summer of 2010: Reasons at para. 154. It further found that the Vendors would have moved forward with their own plan to develop the Babkirk Site as a bioremediation facility for hazardous waste with a small incidental half cell (125,000 tonnes) secure landfill in which to move the soil that was not successfully treated: Reasons at para. 197. The Tribunal also found that this bioremediation facility at the Babkirk Site would have been fully operational by October 2011: Reasons at para. 200. This facility would not have been serious competition for Tervita’s secure landfills, since bioremediation does not compete in the same market as the supply of secure landfill services, and exercises no constraining influence on price and non-price competition in that market: Reasons at paras. 223-224.
[26] The Tribunal then expanded its analysis further into the future. It found that the bioremediation facility offered at the Babkirk Site would have been unprofitable since (a) it would have attracted few customers and (b) the tipping fees it would have charged for bioremediation would have been substantially higher than Silverberry’s tipping fees for a secure landfill: Reasons at paras. 201 to 204. It further found that the Vendors would not have been prepared to operate an unprofitable bioremediation facility beyond one year, i.e. from October 2011 to October 2012: Reasons at paras. 205 and 206.
[27] Consequently, the Tribunal concluded that by October 2012 the Vendors would have sought to generate additional revenues by accepting more waste into the half-cell secure landfill which would have been part of their facility. It further concluded that by the spring of 2013, the Vendors would have either (a) started to operate a full service secure landfill operation; or (b) sold the facility to someone who would have operated it as a full service secure landfill. In either scenario, the Tribunal was of the view that the Babkirk Site and Tervita’s secure landfills would have become direct, serious and substantial competitors by no later than the spring of 2013: Reasons at paras. 207 to 209 and 215.
[28] The Tribunal found that there were no other proposed new entrants in the Contestable Area, and that the barriers to entry into the relevant market were significant, as it would take a new entrant at least 30 months to open a new secure landfill: Reasons at paras. 216 to 222. Finally, it also found that the customers of Tervita did not have significant countervailing power in order to significantly lower tipping fees in the absence of competition for secure landfill services: Reasons at paras. 226 to 228.
[29] The Tribunal concluded its section 92 analysis by finding that the impugned merger was likely to prevent competition substantially in the supply of secure landfill services in at least the Contestable Area, and by no later than the spring of 2013. The Tribunal was also satisfied that prices likely would have been at least 10% lower in the Contestable Area in the absence of the impugned merger. It further concluded that the merger would more likely than not maintain the ability of Tervita to exercise materially greater market power than if it did not occur: Reasons at para. 229.
(b) The section 96 analysis
[30] The Tribunal noted that under section 96 of the Competition Act, it is necessary to: (a) identify and, if possible, quantify the gains in efficiency resulting from the merger; (b) identify and, if possible, quantify the effects resulting from the merger; and (c) determine if these gains in efficiency exceed and offset these effects. The Tribunal further noted that the Commissioner bore the burden of proving the extent of the anti-competitive effects resulting from the merger where they are quantifiable, even if only roughly so, as well as any non-quantifiable or qualitative anti-competitive effects. On the other hand, Tervita bore the burden of establishing that the gains in efficiency resulting from the merger are likely to be greater than, or to offset, these effects: Reasons at paras. 232-233.
(i) Gains in efficiencies
[31] The Tribunal eliminated most of the gains in efficiency claimed by Tervita on the basis that these would likely be attained through (a) alternative means if the Tribunal were to make the order necessary to ensure that the merger does not prevent competition, or (b) the merger, even if the order were made: Reasons at para. 264.
[32] The only three gains in efficiency which remained after applying this filter were: (1) one year of transportation gains in efficiency; (2) one year of market expansion gains in efficiency, and (3) overhead gains in efficiency: Reasons at para. 265.
[33] The Tribunal found, as a matter of law, that the one year transportation gains in efficiency and the one year market expansion gains in efficiency were not cognizable under section 96 of the Competition Act. The Tribunal found these to be the result of delays in the implementation of its order, and concluded that it would be contrary to the purposes of the Competition Act to recognize them. Consequently, the Tribunal only recognized the overhead gains in efficiency: Reasons at paras. 268, 270 and 279.
[34] The overhead gains in efficiency are the savings that Tervita would likely have achieved by its ability to draw on its existing administrative staff in operating a secure landfill at the Babkirk Site: Reasons at para. 253. These overhead gains in efficiency were marginal, and estimated to represent no more than approximately [omitted] per year: Reasons at para. 279.
(ii) Effects
[35] The Tribunal recognised that there were no socially adverse effects: Reasons at para. 284. Consequently, the only effects which were to be considered were quantitative and qualitative anti-competitive effects resulting from the merger.
[36] The total economic efficiency loss resulting from a monopoly is commonly described as the “deadweight loss”: The Law and Economics of Canadian Competition Policy, above at p. 53. The Merger Enforcement Guidelines define the “deadweight loss” as the “reduction in total consumer and producer surplus in Canada”: Competition Bureau, Merger Enforcement Guidelines (October 2011) (“MEGs”) at para. 12.25. The Tribunal defined the “deadweight loss” as “the loss to the economy as a whole that results from the inefficient allocation of resources which may occur when (i) customers reduce their purchases of a product as its price rises, and shift their purchases to other products that they value less, and (ii) suppliers produce less of the product”: Reasons at para. 244.
[37] Though the Tribunal recognized that the Commissioner had failed to meet her burden of quantifying the “deadweight loss” (Reasons at para. 246), it nevertheless allowed the Commissioner to submit an expert reply report setting out a calculation of the “deadweight loss” resulting from the merger. Tervita objected to the use of a reply report for this purpose. The Tribunal rejected this objection on the ground that Tervita’s own expert witness had been able to effectively attack the reply report in his oral testimony, and that consequently Tervita had not been prejudiced: Reasons at paras. 246 and 288.
[38] The Tribunal then proceeded to adopt the approach to the calculation of the “deadweight loss” proposed by the Commissioner’s expert in his reply report, namely: (i) that competition in the provision of secure landfill services between Silverberry and Babkirk would likely result in prices being, on average, at least 10% lower; (ii) that this price reduction would apply as a minimum in the Contestable Area; and (iii) that market expansion gains in efficiency would result from this lower price, i.e. the reduction in price would attract more hazardous waste to both the Babkirk Site and the Silverberry secure landfill than would otherwise have been the case without the price reduction: Reasons at paras. 297 to 300.
[39] The Tribunal was thus persuaded, on a balance of probabilities, that the approach adopted by the Commissioner’s expert and the numbers he used in reaching his estimate of the likely “deadweight loss” were reasonable for the purposes of the Tribunal’s assessment of effects under section 96 of the Competition Act. It added that this approach and the numbers submitted were sound, reliable and conservative: Reasons at para. 301.
[40] The Tribunal thus accepted the estimate of [omitted] presented by the Commissioner’s expert in his reply report as being the minimum annual “deadweight loss” resulting from the merger: Reasons at para. 303.
[41] The Tribunal acknowledged that this approach to calculating the “deadweight loss” was deficient, but it found nevertheless that the “rough” estimate produced by this approach was sufficiently reliable for its purposes:
[302] The Tribunal acknowledges Dr. Kahwaty’s [the expert for Tervita] testimony that, to calculate the DWL [“deadweight loss”], it is necessary to know the shape of the demand curve, and that, when prices are likely to differ across customers, it is necessary to have customer-specific elasticity data. However, the Tribunal is persuaded that, in the absence of such information, a reliable “rough” estimate of the likely DWL can be obtained based on information such as that which was used by Dr. Baye in reaching his estimated annual welfare loss of approximately [omitted].
[42] Turning to the qualitative effects resulting from the merger, the Tribunal recognized that the reduction in tipping fees resulting from competition between Silverberry and Babkirk would induce waste generators to more actively clean up legacy sites in NE British Columbia. It identified this qualitative effect as reduced site clean-up and the benefits that such remediation would confer on area residents, wildlife, and the overall environment: Reasons at paras. 306 and 316. The Tribunal did not discuss why this effect had not already been captured in the “rough” “deadweight loss” calculation it had approved, and which was itself based on market expansion.
[43] Second, the Tribunal also recognized as a qualitative effect the reduction in “value propositions”. It found that competition from the Babkirk Site would lead Tervita to offer certain of its customers link prices on some of its other services, which would in turn lead to a lower total cost for overall waste services used by such customers. Though these “value propositions” had not been quantified by the Commissioner’s expert, the Tribunal was satisfied, on a balance of probabilities, that competition from the Babkirk Site would lead to important non-price benefits to waste generators in the form of such “value propositions”: Reasons at para. 307.
(iii) The offset
[44] The Tribunal then set out its methodology for determining whether the gains in efficiency resulting from the merger would offset its anti-competitive effects. It stated that the appropriate method was to compare the magnitude of the gains in efficiency to the magnitude of the effects within the framework of a subjective balancing exercise: Reasons at para. 309.
[45] In this case, the quantified anti-competitive effects exceeded the quantified gains in efficiency: Reasons at paras. 310 to 313.
[46] As an alternative conclusion, the Tribunal was further persuaded, on a balance of probabilities, that even if no weighting at all were give to the quantitative anti-competitive effects, and even if it were to accept and give full weight to the one year transportation and market expansion gains in efficiency it had discarded, the qualitative anti-competitive effects taken together would outweigh the merger gains in efficiency under any reasonable approach: Reasons at paras. 314 to 316.
[47] The Tribunal closed its section 96 analysis by adding that the merger would maintain a monopolistic structure in the relevant market and also preclude benefits that may arise from competition in ways that defy prediction: Reasons at para. 317.
[48] The Tribunal then turned to whether dissolution or divestiture was the appropriate remedy. It found that, in this case, dissolution would be intrusive, overbroad and would not necessarily lead to a timely opening of the Barkirk Site as a full service secure landfill: Reasons at para. 341. It consequently ordered Tervita to divest the shares or assets of BLS: Reasons at paras. 342 to 344.
ISSUES RAISED IN THIS APPEAL
[49] Tervita and the other appellants submit that the Tribunal committed at least seven important errors. Four of these alleged errors concern the Tribunal’s analysis under section 92 of the Competition Act, while the remaining three concern its analysis under section 96.
[50] The alleged errors in the analysis under section 92 may be stated as follows:
1. By extending the analysis to include the feasibility of the Vendor’s bioremediation service, its eventual failure and its consequential transformation into a full service hazardous landfill operation by the spring of 2013, the Tribunal acted on an theory of the case that had not been pleaded, thus breaching the appellants right to a fair hearing.
2. The Tribunal erred in law by extending the analysis of potential entry beyond the time of the impugned merger through an analysis of the feasibility of the Vendor’s bioremediation service extending to the spring of 2013.
3. This led the Tribunal to err in its assessment of the facts by engaging in speculation regarding possible future events.
4. The Tribunal compounded these errors by reversing the onus and shifting the burden of proof by requiring Tervita and the Vendors to prove the economic viability of the Babkirk Site bioremediation operation.
[51] The alleged errors in the analysis under section 96 may be stated as follows:
5. The Tribunal erred in law by considering the Commissioner’s “deadweight loss” quantification in the face of a finding that the Commissioner had failed to meet her burden to prove such quantification. The Tribunal compounded this error by allowing the Commissioner to submit a “rough estimate” of the “deadweight loss” in a reply report, by failing to provide the appellants with a formal opportunity to respond to this report, and by failing to recognize that the appellants’ right to a fair hearing was seriously prejudiced as a result.
6. The Tribunal erred in law by not considering the one year transportation and market expansion gains in efficiency resulting from the merger.
7. The Tribunal erred in law by applying an offset methodology which tipped the scale in favour of anti-competitive effects on the basis of an unreasoned and subjective assessment of unquantifiable qualitative effects which could not, in any event, be considered under the scheme of the Competition Act.
THE STANDARD OF REVIEW
[52] The Tribunal’s findings on questions of law are to be reviewed in this appeal on a standard of correctness, while its findings on questions of fact or of mixed law and fact are to be reviewed on a standard of reasonableness.
(a) Questions of law
[53] This Court has consistently held that questions of law raised in an appeal from a decision of the Tribunal are to be reviewed on a standard of correctness: Canada (Commissioner of Competition) v. Superior Propane Inc., 2001 FCA 104, [2002] 3 F.C. 185 (“Superior Propane #2”) at para. 68; Air Canada v. Canada (Commissioner of Competition), 2002 FCA 121, [2002] 4 F.C. 598 at para. 43; Canada (Commissioner of Competition) v. Canada Pipe Co., 2006 FCA 233, [2007] 2 F.C.R. 3 at para. 34; Canada (Commissioner of Competition) v. Labatt Brewing Co., 2008 FCA 22, 289 D.L.R. (4th) 500 at para. 5; Canada (Commissioner of Competition) v. Premier Management Group, 2009 FCA 295; [2010] 4 F.C.R. 413 at para.67; Nadeau Poultry Farm Ltd. v. Groupe Westco Inc., 2011 FCA 188; 419 N.R. 333 at para. 48.
[54] A full standard of review analysis on this issue was carried out by our Court in Superior Propane # 2. Where the jurisprudence has already determined, in a satisfactory manner, the degree of deference to be accorded with regard to a particular category of question, this should normally be the end of the standard of review inquiry on that matter: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 (“Dunsmuir”), at paras. 57 and 62. However, the Supreme Court of Canada jurisprudence post-Dunsmuir has shifted towards greater deference to adjudicative tribunals when they are interpreting their enabling legislation or statutes closely connected to their functions.
[55] The Supreme Court of Canada has found that, since Dunsmuir, the interpretation by an adjudicative tribunal of its enabling statute or of statutes closely related to its functions should be presumed to be a question of statutory interpretation subject to deference on judicial review: Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61; [2011] 3 S.C.R. 654 (“Alberta Teachers’ Association”), at paras. 34 and 41. That presumption may however be rebutted if it can be found that Parliament’s intent is inconsistent with its application: Rogers Communication Inc. v. Society of Composers, 2012 SCC 35 at para. 15.
[56] In this case, Parliament has specifically provided that the decisions of the Competition Tribunal are subject to an appeal rather than judicially reviewed. Accordingly, the presumption set out in Alberta Teachers’ Association may not apply, but it is not necessary to decide this issue in this appeal. Indeed, I am of the view that if that presumption applies, it has been rebutted. Consequently, in my view, Superior Propane # 2 determined in a satisfactory manner that the standard of correctness is the appropriate standard of review on questions of law arising in an appeal from the Competition Tribunal.
[57] Without repeating here the entire analysis carried out in Superior Propane # 2, it is useful to point out that questions of law which arise in the course of proceedings before the Tribunal are determined only by the judicial members of the Tribunal sitting in those proceedings: paragraph 12(1)(a) of the Competition Tribunal Act. These judicial members are appointed from among the members of the Federal Court: paragraph 3(2)(a) of the Competition Tribunal Act. These decisions on questions of law are themselves subject, as of right, to appeal to this Court as if they were a judgment of the Federal Court: subsection 13(1) of the Competition Tribunal Act. As noted by Evans J.A. in Superior Propane # 2 at para. 68, “the existence of an unrestricted right of appeal on questions of law, and of a modified right of appeal on questions of fact, must be entered into as a factor indicative of Parliament’s intention that the Tribunal’s determinations on questions of law should be reviewable on appeal on a correctness standard.”
[58] To underline this point, it is useful to point out that subsection 28(2) and section 18.5 of the Federal Courts Act, R.S.C. 1985, c. F-7 specifically exclude judicial review when an Act of Parliament expressly provides for an appeal to the Federal Court of Appeal, in which case the decision is to be reviewed or otherwise dealt with in accordance with that Act. In subsection 13(1) of the Competition Tribunal Act, Parliament has clearly and unambiguously provided for an appeal as of right to this Court from a decision of the Tribunal on a question of law “as if it were a judgment of the Federal Court.” I do not believe that it is possible for Parliament to use any clearer language as to its intent. Since judgments of the Federal Court on questions of law are reviewed in appeal on a standard of correctness, decisions from the Tribunal on such questions are also to be reviewed on the same standard.
[59] The determination of the appropriate standard of review is essentially a search for legislative intent: Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557 at pp. 589-590; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982 at para. 26; Dr. Q v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226 at para. 21, Dunsmuir, at para. 30. Where, as here, that intent is clear, the judiciary should comply unless this offends the rule of law or some other constitutional principle.
(b) Questions of fact and of mixed law and fact
[60] Since the decision of the Supreme Court of Canada in Canada (Director of Investigations and Research) v. Southam Inc., [1997] 1 S.C.R. 748 (“Southam”), it is clear that the findings of the Tribunal on questions of fact and on questions of mixed law and fact from which a question of law cannot be extricated are owed particular deference on appeal: Southam at paras. 34 and 54. This is so notably because Parliament has provided for a limited right of appeal on questions of fact by requiring that an appeal on such questions only lies with leave of this Court: subsection 13(2) of the Competition Tribunal Act.
[61] The Tribunal holds expertise in the economic and commercial issues which are at the heart of its mandate under the Competition Act. This Court sitting in appeal of its decisions should thus defer to its findings on these issues, including the inferences it draws from the evidence. Contrary to most trial courts, which are essentially concerned with ascertaining the facts relating to past events, the Tribunal’s role under sections 92 and 96 of the Competition Act requires it to project into the future various events in order to ascertain their potential economic and commercial impacts. The role of the Tribunal is thus to identify and remedy market problems that have not yet occurred. This is a daunting exercise steeped in economic theory and requiring a deep understanding of the economic and commercial factors at issue. Because an appellate court may encounter difficulties in fully understanding the economic and commercial aspects of the Tribunal’s decision, it must defer to its findings of fact and of mixed law and fact on these issues.
[62] Some controversy has however developed in the case law as to the appropriate standard of deference owed to the Tribunal over questions of fact and of mixed law and fact from which a question of law cannot be extricated: is it the “reasonableness” standard of deference used in judicial review or the standard of deference which applies in an appeal as described in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 (“Housen”)?
[63] Both the Commissioner and the appellants submit that the appropriate standard of deference in this case on questions of fact, and of mixed law and fact from which a question of law cannot be extricated, is the one which applies in appellate review as set out in Housen: Commissioner’s memorandum in appeal file A-302-12 at paras. 30-31; Commissioner’s memorandum in appeal file A-457-12 at paras. 8-9; appellants’ memorandum in appeal file A-457-12 at para. 43. This approach has also been adopted by our Court in Canada (Commissioner of Competition) v. Premier Career Management Group Corp., above. In that case, at paras. 67 and 71, Sexton J.A. applied the Housen standard on the ground that subsection 13(1) of the Competition Tribunal Act states that an appeal from the Tribunal is treated as if the original decision were a judgment of the Federal Court, and consequently “it makes more sense to apply the standard used to review decisions of lower courts rather than those used to review administrative tribunals.”
[64] There is much merit to the approach adopted by Sexton J.A. and supported by the parties in this appeal. However, in Southam Iacobucci J., writing for a unanimous Supreme Court of Canada, found that the applicable standard in such circumstances was that of reasonableness simpliciter, which he also found to be closely akin to the standard applied in reviewing findings of fact by trial judges: Southam at paras. 54 to 59. The reasonableness simpliciter standard has since been subsumed into the reasonableness standard, and it has consequently been considerably redefined: Dunsmuir at paras. 45 to 49. I am bound by these decisions of our highest court: Canada v. Craig, 2012 SCC 43 at para. 21. Consequently, the findings of fact, and of mixed law and fact from which a question of law cannot be extricated, made by the Tribunal shall be reviewed in this appeal under the standard of reasonableness. For the purposes of this appeal, it is not necessary to decide the extent to which this standard of reasonableness differs from that of overriding and palpable error as applied to questions of fact or of mixed law and fact.
(c) The distinction between questions of law and questions of mixed law and fact
[65] Though the Commissioner acknowledges in this appeal that questions of law are to be reviewed on a standard of correctness, he submits that the issues raised by the appellants in this case are actually questions of mixed law and fact: Commissioner’s memorandum at para. 30. Consequently, it is important in this appeal to review the distinction between questions of law and questions of mixed law and fact within the context of a decision of the Tribunal under sections 92 and 96 of the Competition Act. The reasons of the Supreme Court of Canada in Southam, which dealt with section 92 of the Competition Act, are most useful for this purpose.
[66] As aptly noted by Iacobucci J. in Southam, questions of law and questions of mixed law and fact in the context of a determination under section 92 (and by implication under section 96) of the Competition Act may be distinguished as follows:
(a) when the Tribunal determines what the correct legal test is under the pertinent provisions of the Competition Act, or when the Tribunal forges a new legal principle or legal test, then the matter is to be treated as a question of law; however, questions about whether the facts satisfy that legal test are deemed questions of mixed law and fact (Southam at paras. 35 and 45);
(b) if the Tribunal ignores items of the evidence that the law requires it to consider, then it errs in law; however when the Tribunal considered all the mandatory kinds of evidence, then its conclusion will be reviewed on a standard of reasonableness (Southam at para. 41);
(c) where the Tribunal fails to consider certain factors that the law requires it to consider then it errs in law; however, the weight accorded by the Tribunal to each factor, especially if the legal principle being applied involves a balancing test, will be reviewed on