CT-2015-003 THE COMPETITION TRIBUNAL IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; AND IN THE MATTER OF the proposed acquisition by Parkland Industries Ltd., a wholly-owned subsidiary of Parkland Fuel Corporation, of substantially all of the assets of Pioneer Petroleums Holding Limited Partnership, Pioneer Energy LP, Pioneer Petroleums Transport Inc., Pioneer Energy Inc., Pioneer Fuels Inc., Pioneer Petroleums Holding Inc., Pioneer Energy Management Inc., 668086 N.B. Limited, 3269344 Nova Scotia Limited and 1796745 Ontario Ltd.;
AND IN THE MATTER OF an Application by the Commissioner of Competition for one or more orders pursuant to section 92 of the Competition Act;
AND IN THE MATTER OF an Application for an interim order pursuant to section 104 of the Competition Act.
B E T W E E N: COMMISSIONER OF COMPETITION Applicant
- and -PARKLAND INDUSTRIES LTD., PARKLAND FUEL CORPORATION, PIONEER PETROLEUMS HOLDING LIMITED PARTNERSHIP, PIONEER ENERGY LP, PIONEER PETROLEUMS TRANSPORT INC., PIONEER ENERGY INC., PIONEER FUELS INC., PIONEER PETROLEUMS HOLDINGS INC., PIONEER ENERGY MANAGEMENT INC., 668086 N.B. LIMITED, 3269344 NOVA SCOTIA LIMITED and 1796745 ONTARIO LTD.
Respondents
RESPONSE OF PIONEER PETROLEUMS HOLDING LIMITED PARTNERSHIP, PIONEER ENERGY LP, PIONEER PETROLEUMS TRANSPORT INC., PIONEER ENERGY INC., PIONEER FUELS INC., PIONEER PETROLEUMS HOLDINGS INC., PIONEER ENERGY MANAGEMENT INC., 668086 N.B. LIMITED, 3269344 NOVA SCOTIA LIMITED and 1796745 ONTARIO LTD. TO THE COMMISSIONER'S APPLICATION FOR AN INTERIM ORDER
- 2 -INTRODUCTION 1. Pioneer Petroleums Holding Limited Partnership, Pioneer Energy LP, Pioneer Petroleums Transport Inc., Pioneer Energy Inc., Pioneer Fuels Inc., Pioneer Petroleums Holding Inc., Pioneer Energy Management Inc., 668086 N.B. Limited, 3269344 Nova Scotia Limited, and 1796745 Ontario Ltd. (collectively, "Pioneer") oppose the Commissioner of Competition’s application requesting an interim order directing Parkland Industries Ltd. and Parkland Fuel Corporation (collectively, "Parkland") to hold separate certain assets subsequent to the acquisition of certain assets from Pioneer. BACKGROUND 2. Pioneer carries on business as an independent marketer of fuel and petroleum products. It is headquartered in Burlington, Ontario. It delivers gasoline, diesel, propane, lubricants, heating oil, and other petroleum products to motorists, businesses, consumers, and wholesale customers in Canada. 3. Pioneer has been a gas retailer for over 50 years, starting in Ontario and gradually expanding its retail gas operations across the province and into Manitoba. In large part, Pioneer’s success is due to its strategy of providing high service levels and competitive prices to consumers. 4. Pioneer operates both retail gas stations ("Corporate Stations") and wholesales fuel to gas stations owned and operated by independent, third-party dealers ("Independent Dealer Stations"). While Pioneer sets the retail price of gasoline at Corporate Stations, the retail price at Independent Dealer Stations is determined exclusively by the third party dealers.
- 3 -5. Pioneer currently operates 184 Corporate Stations and supplies fuel to 210 Independent Dealer Stations (this number varies as Pioneer opens new Corporate Stations or as it wins or loses supply contracts with Independent Dealer Stations). All of the stations owned or supplied by Pioneer are located in the provinces of Manitoba and Ontario. BACKGROUND OF TRANSACTION 6. The Respondents entered into an asset purchase agreement on September 17, 2014 (the "Proposed Transaction") and filed an advance ruling certificate request and Part IX notification with the Competition Bureau on October 3, 2014. The Proposed Transaction was to have closed on January 31, 2015, but has been extended four times to provide the Commissioner with additional time to conduct his review. On April 27, 2015, pursuant to their commitment to provide the Commissioner 15-days notice of closing, Parkland and Pioneer advised the Commissioner of their intention to close on May 13, 2015. 7. On April 30, 2015, the Commissioner filed a Notice of Application alleging that the Proposed Transaction would substantially lessen in fourteen areas (the "Relevant Areas"). On the same day, the Commissioner served materials in support of an order directing Parkland to hold separate certain the Pioneer assets in the Relevant Areas. CONCLUSION 8. Pioneer opposes the Commissioner of Competition's application for an interim order requiring Parkland to hold separate certain assets to be acquired from Pioneer on the following grounds: (a) There is no serious issue to be tried as:
- 4 -(i) Parkland, despite disagreeing with the Commissioner’s concerns, has agreed to remedies in eleven of the Relevant Areas and proposed to take steps in the remaining three Relevant Areas that fully address the Commissioner’s concerns; (ii) The Relevant Areas do not constitute proper competition law markets, as the Commissioner has failed to properly delineate their geographic scope, which is necessary to support his conclusion that the Proposed Transaction will result in a substantial lessening or prevention of competition in any of the Relevant Areas; (b) The balance of convenience weighs against directing Parkland to hold separate certain of the Pioneer assets in the Relevant Areas, as either Pioneer or Parkland have the option of terminating the Proposed Transaction if a hold separate is required in any of the Relevant Areas. (c) In light of the steps Parkland proposes to take in the Relevant Areas, allowing the Proposed Transaction to proceed will not result in irreparable harm to consumers pending the outcome of the Commissioner’s application. 9. Pioneer will rely on the materials filed by Parkland.
- 5 -TO: For the Commissioner of Competition: Department of Justice Canada Competition Bureau Legal Services Place du Portgage, Phase I 50 Victoria Street, 22 nd Floor Gatineau QC K1A 0C9 Tel: 819.997.2837 Fax: 819.953.9267
Attention: John Syme Antonio Di Domenico Tara DiBenedetto
AND TO: For Parkland Industries Ltd. and Parkland Fuel Corporation,: Bennett Jones LLP One First Canadian Place Suite 3400, P.O. Box 130 Toronto, ON Suite 201 Scotia Plaza Tel: 416.863.1200 Fax: 416.863.1716
Attention: John F. Rook Randal T. Hughes Emrys Davis Gannon G. Beaulne
IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; CT-2015-003 AND IN THE MATTER OF the proposed acquisition by Parkland Industries Ltd., a wholly-owned subsidiary of Parkland Fuel Corporation, of substantially all of the assets of Pioneer Petroleums Holding Limited Partnership, Pioneer Energy LP, Pioneer Petroleums Transport Inc., Pioneer Energy Inc., Pioneer Fuels Inc., Pioneer Petroleums Holding Inc., Pioneer Energy Management Inc., 668086 N.B. Limited, 3269344 Nova Scotia Limited and 1796745 Ontario Ltd.; AND IN THE MATTER OF an Application by the Commissioner of Competition for one or more orders pursuant to section 92 of the Competition Act; AND IN THE MATTER OF an Application for an interim order pursuant to section 104 of the Competition Act.
THE COMMISSIONER OF COMPETITION - and - PARKLAND INDUSTRIES LTD. et al Applicant Respondents THE COMPETITION TRIBUNAL RESPONSE OF PIONEER PETROLEUMS HOLDING LIMITED PARTNERSHIP, PIONEER ENERGY LP, PIONEER PETROLEUMS TRANSPORT INC., PIONEER ENERGY INC., PIONEER FUELS INC., PIONEER PETROLEUMS HOLDINGS INC., PIONEER ENERGY MANAGEMENT INC., 668086 N.B. LIMITED, 3269344 NOVA SCOTIA LIMITED and 1796745 ONTARIO LTD. TO THE COMMISSIONER'S APPLICATION FOR AN INTERIM ORDER
- 2 -CASSELS BROCK & BLACKWELL LLP 2100 Scotia Plaza 40 King Street West Toronto, ON M5H 3C2
Christopher M. Hersh (LSUC No.43080N) Telephone: (416) 869-5387 Fascimile: (416) 640-3017 Email: chersh@casselsbrock.com
Imran Ahmad (LSUC No.55438A) Telephone: (416) 860-6578 Fascimile: (416) 350-6934 Email: iahmad@casselsbrock.com Lawyers for the Respondents, Pioneer Petroleums Holding Limited Partnership, Pioneer Energy LP, Pioneer Petroleums Transport Inc., Pioneer Energy Inc., Pioneer Fuels Inc., Pioneer Petroleums Holding Inc., Pioneer Energy Management Inc., 668086 N.B. Limited, 3269344 Nova Scotia Limited and 1796745 Ontario Ltd.