Breach of undertaking puts acquirer in the poo

Published On 21/09/2012 | By Peta Stevenson | Enforcement, Mergers

Canada’s Competition Bureau has announced criminal charges against Progressive Waste Solution Ltd for multiple breaches of a merger consent order under section 66 of the Competition Act 1985. It is alleged that Progressive violated the terms of the Consent Agreement by: soliciting and acquiring a customer whose contract had been divested under the agreement; providing a false declaration of compliance; and failing to promptly notify the Bureau that the agreement had been breached.

In Australia, a comparable situation arose in ACCC v Alinta 2000 Ltd [2007] FCA 1362 where the respondent breached its section 87B undertaking (equivalent to Canada’s section 66) to keep two businesses separate by assigning certain responsibilities to one of its executives in breach of the undertaking. A $250,000 penalty was imposed.

Whilst Rod Sims stated earlier this year that merger clearance undertakings would be grounded in commercial reality, the flexing of the Canadian Bureau’s enforcement muscle is a timely reminder to Australian companies that, when negotiating informal clearances with the ACCC, they need to take obligations given under section 87B undertakings seriously as breach of an undertaking can lead to penalties and/or compensation orders.

Photo credit: Misserion / Foter / CC BY

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About The Author

is a partner in the Sydney office of King & Wood Mallesons where she specialises in competition litigation with experience in a wide range of jurisdictions. Peta also advises clients on the application of the anti-competitive conduct, consumer protection and access provisions of the Competition & Consumer Act 2010 (Cth) and related state legislation. In 2001/02 she undertook her LLM at the University of Cambridge, during which time she developed a passionate if fleeting interest in rowing.

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