Meat Packers Inc. was a producer of beef and beef by-products that operated a facility outside a large city. The site of the production facility was scheduled to become part of a new six-lane highway. The facility had been expropriated for the highway and Meat Packers had to vacate the premises. It was unable to locate suitable alternative premises on short notice. Meat Packers, therefore, decided to acquire the business of a competitor and shipped all of its equipment to the newly acquired facility. The two companies merged their operations and carried on under the name of Meat Packers Inc. The meat packing industry was currently in a slump, the result of a decline in consumption of red meat. As a result, there was excess capacity throughout the market area. All of the major competitors were located within the same geographic area. All of these factors were keeping meat prices low. When the Commissioner of Competition received notice of the acquisition, he ordered that Meat Packers Inc. divest itself of the competitor's business pursuant to s. 45 of the Competition Act. Meat Packers wishes to oppose the order. Discuss the arguments it will raise in opposition and indicate how you think the situation would be resolved.
C.P.R. (3d) 289.

The Commissioner of Competition would base his order on the provisions contained in s. 45 of the Competition Act, which prohibit the limitation of production facilities, the limitation of the production of a product and the lessening of competition in the production of a product. The Crown does not need to prove that the agreement or combination would completely eliminate competition or that the parties intended to eliminate competition.
Meat Packers would argue against the order by pointing to the prevailing market conditions in order to refute the claims of the Commissioner that production and facilities and, thereby, competition are being unduly limited by this merger. The company may also argue that the divestment would impose a hardship on it by forcing it to construct more facilities on short notice in a poor market.
The meat packing company would probably succeed in defeating the order as did the actual defendant in this case at the Competition Tribunal hearing. Although the merger would initially lessen competition to some degree, the prevailing poor market conditions of low demand and excess capacity would be sufficient to control the price of the product irrespective of the merger. The order would be no more effective in maintaining competition than existing market forces. Moreover, it would create a burden not only for the defendant but also for the industry by forcing the construction of more production facilities in an industry with existing excess capacity.
Based on: Canada (Director of Investigation and Research) v. Hillsdown Holding (Can.) Ltd. (1992), 41 C.P.R. (3d) 289.