On September 1st, 2016, the Competition Bureau announced that, following a review of Crop Production Services (Canada) Inc.’s ("CPS") proposed acquisition of substantially all of the assets of Andrukow Group Solutions Inc. and related vendors (collectively referred to herein as "AG+") it has reached an agreement with CPS that preserves competition for the sale of nitrogen fertilizers in Alberta and Saskatchewan. The Consent Agreement has been filed with the Competition Tribunal on September 1st, 2016.

This statement summarizes the approachFootnote1 taken by the Competition Bureau in its review of the proposed transaction.


Background

CPS, a subsidiary of Agrium Inc. (Agrium), and AG+ both operate retail stores in Alberta and Saskatchewan that sell crop inputs to farmers including urea, urea‑ammonium nitrate (UAN) and anhydrous ammonia (three forms of nitrogen fertilizer), as well as seeds, crop protection products, and other fertilizers.

CPS is proposing to buy substantially all the assets of AG+ associated with its seventeen agri‑product retail stores in Alberta, located in Amisk, Camrose, Clyde‑Flatlander, Daysland, Dewberry, Gaudin (Fort Saskatchewan), Mundare, Paradise Valley, Provost, Rycroft, Ryley, Sedgewick, St. Paul, Strathmore, Viking, Wainwright and Waskatenau and one agri‑product retail store in Marsden, Saskatchewan.

Under the terms of the Consent Agreement, CPS must divest the AG+ agri‑product retail locations in Sedgewick, AB and Wainwright, AB and the CPS agri‑product retail locations in St. Paul, AB and Marwayne, AB.

In the course of its review, the Bureau: conducted interviews with numerous market participants including farmers in Alberta and Saskatchewan along with competing agri‑product retailers; reviewed documents and information provided by the parties and third parties; and analyzed industry financial and transaction level data.


Analysis

The Bureau found that AG+ and CPS compete against each other to provide crop inputs to farmers in the areas around each of the AG+ retail locations.

As it did in its review of Agrium’s purchase of Viterra’s agri‑product retail facilities in 2013, the Bureau’s review focused on the local retail supply of nitrogen‑based fertilizers to farmers.

The Bureau reviewed the competitive dynamics in each of the markets around the AG+ retail locations. Using sales information obtained from the parties and third party competitors, the Bureau identified a number of markets with high concentration. Market contacts were conducted with customers and competitors in each of these local markets to assess the competitive landscape and potential effects of the proposed transaction.

The Bureau concluded that the proposed transaction would lead to a substantial lessening or prevention of competition in the retail supply of urea, UAN or anhydrous ammonia in a number of local markets in Alberta and Saskatchewan. The Bureau believes that the Consent Agreement entered into with CPS to divest four retail stores resolves these concerns.

This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.

However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.