Canadian competition watchdog investigates Halifax container terminal deal involving Singapore entity

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HALIFAX – Canada’s Competition Bureau is investigating whether a proposed merger between the only two container terminal operators at the Port of Halifax could lead to a market monopoly.

The bureau said last week it was specifically investigating whether a potential loss of competition could give PSA Canada, a Canadian affiliate of a global logistics company owned by Singapore’s finance ministry, the ability to raise prices or reduce the level of services offered to maritime carriers. . In an affidavit from the office’s investigator, Shawn Hashmi said that PSA Canada is ultimately controlled by Singaporean state investor Temasek Holdings.

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Two months after the merger was finalized in September, the competition bureau filed federal court orders requiring the two companies — PSA Canada being the buyer and Ceres Halifax being acquired — to provide records and information, including including pricing and bidding strategies to assess the potential of a monopoly. The proposed transaction, the terms of which have not been disclosed, would give PSA Canada all of the issued and outstanding shares of Ceres Halifax.

Subject of discussion

PSA Canada acquires its only competing terminal operator at the Port of Halifax. PSA Canada is owned by Temasek, an investment fund owned by the Government of Singapore. Court applications filed by the Competition Bureau signaled a potential monopoly in the port following the proposed merger between the two operators.

“It’s interesting because they’re relying on section 11 – a court order request for documents as opposed to a request for additional information,” said Keldon Bester, an independent policy researcher who previously worked for the Competition Bureau.

Bester said there are normally incentives for the merging parties to cooperate and provide information to the office to “avoid the hassle.”

“I think you could cut it two ways. You could say the office is aggressive. Or you could say that the merging parties are not providing information. We just don’t know.

In the office’s request to the tribunal, he said the port’s unique position would make it more difficult for others to compete with PSA Canada’s market power.

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PSA Halifax and Ceres Halifax did not respond to The logic request for comment.

“The Bureau’s investigation is ongoing and it may seek further orders for the production of records and information from parties or other market participants,” said Jean-Philippe Lepage, Bureau communications advisor. competition, in an email to The logic .

Innovation, Science and Economic Development Canada (ISED) declined to comment on whether the Investment Canada Act applies to the particular case.

“All foreign investments, including the acquisition of Canadian businesses, the creation of new Canadian businesses and non-controlling investments, are also subject to review for national security reasons under Part IV.1 of the Law, ”said ISED spokesperson Sean Benmor. in an e-mail to The logic .

The Port of Halifax is essential for shippers and receivers in central and eastern Canada. It is the “first in” port on a number of transatlantic trade routes past other East Coast ports in New York and New Jersey. It also sits on a series of trade routes that directly connect North America to South Asia, a feature that sets it apart from other ports such as the Port of Montreal.

The investigation comes as the supply chain industry and businesses grapple with backlogs and disruption around the world. At the Port of Halifax, shippers said they face skyrocketing shipping rates, despite not having experienced the same freight backlogs as other North American ports.

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PSA Canada has various subsidiaries, including PSA Halifax and PSA Halifax Leasing Limited Partnership. Through them, it leases and operates the South End Container Terminal at the Port of Halifax, which has 76.5 acres of land and 8,000 feet of double-deck railroad operations.

According to the bureau’s review, PSA Canada’s only major competitor was Ceres Halifax, which leases and operates the Fairview Cove container terminal, the city’s other major terminal. Ceres Halifax is wholly owned by Nippon Yusen Kabushiki Kaisha, a Tokyo-based publicly traded transportation and logistics company.

PSA Canada, first incorporated in British Columbia in 2019, along with its parent company PSA International, has a long history of acquiring port facilities in North America. In an investment agreement signed with the Ashcroft Terminal, an inland port facility located approximately 300 kilometers east of the Port of Vancouver, PSA Canada acquired 60 percent of the terminal’s activities in Western Canada.

In 2019, PSA International won a joint bid from Canadian National Railways and its partner, and acquired Heralm terminal, the largest container terminal in Eastern Canada, from Australian investment bank Macquarie Group.

In November, PSA International sign an agreement to acquire 100 percent of the shares of Philadelphia-based logistics solutions company BDP International. This transaction is subject to formal approvals from the competent authorities.

This section is powered by The logic. The Logic is Canada’s premier technology and business newsroom. For more news, visit thelogic.co.

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