Superior Plus Corp. abandoned plans to buy rival chemical manufacturer Canexus Corporation after the US Federal Trade Commission challenged the merger.
Both the FTC and the Canadian Competition Bureau concluded that the merger would harm competition. The Bureau ruled that the merger would be saved by efficiency gains and gave the parties the go-ahead. In the US, where efficiencies are treated differently, theFTC filed an administrative complaint challenging the merger.
Toronto-based Superior and Calgary-based Canexus produce chemicals for the pulp and paper industry. The Bureau concluded that their merger would substantially lessen competition for the supply sodium chlorate and several other chemicals used principally by the pulp and paper industry,but also by a variety of other industries. Due to the minimal presence of foreign imports, the merger would raise prices for customers of Superior and Canexus, the Bureau found.
The FTC focused on sodium chlorate, a chemical used to bleach wood pulp. Superior and Canexus are two of only three major North American producers of sodium chlorate. Superior/Canexus would control more than half of North American production post-merger, and, with their rival AkzoNobel, they would enjoyover 80% of the market.
The Bureau concluded thatthe efficiencies generated by the merger would "clearly" outweigh itsanti-competitive effects. In Canada, unlike the US,this provides a complete defence for an anti-competitive merger under the Competition Act, the Bureau issued a No Action Letter indicating it would not challenge the merger.
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