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Competition Bureau, Domtar reach agreement to preserve industry competitiveness

The Competition Bureau has entered into a consent agreement with Domtar Corporation to address competition concerns with its acquisition of Resolute Forest Products Inc.

A Bureau review concluded that the proposed transaction would likely lessen competition substantially in the supply of northern bleached softwood kraft (NBSK) pulp in Eastern and Central Canada and in the purchase of wood fibre from private lands in northwestern Ontario.

The Bureau determined that Domtar and Resolute account for a significant portion of the supply of NBSK in Eastern and Central Canada. The proposed transaction would result in market shares well above the 35 per cent threshold established in the Bureau’s Merger Enforcement Guidelines.

The Bureau established that substantial obstacles exist to new entry in the market, or expansion of an existing mill. As well, the Bureau determined that the proposed transaction would likely provide Domtar with monopsony power in northwestern Ontario and enable Domtar to pay lower than competitive prices to suppliers of wood fibre.

To resolve the Bureau’s concerns, Domtar Corporation has agreed, post-transaction, to sell its Dryden pulp mill and Thunder Bay pulp and paper mill to two independent purchasers approved by the Commissioner of Competition.

The commissioner is satisfied that the sale of the Dryden pulp mill and Thunder Bay pulp and paper mill will resolve the competitive issues arising from the proposed transaction.

The complete consent agreement is available on the website of the Competition Tribunal.