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Oil and gas joint venture not in violation of the Competition Act

The Supreme Court of Canada refused leave to appeal the Alberta Court of Appeal’s decision in 321665 Alberta Ltd. v. Husky Oil Operations Ltd. (2013 ABCA 221), which found that in certain circumstances, legitimate oil and gas joint ventures should not be considered anti-competitive action in breach of the Competition Act RSC 1985, c C-34.

 In 1995 Husky Oil Operations Ltd. (Husky) and Exxon Mobil Canada Ltd. (Mobil) discussed ways to reduce inefficiencies and costs by using a single source fuel hauler to service two of their closely located facilities in Northern Alberta. Two fuel haulers were considered, and only one contract was awarded. The company that was not selected suffered significant financial hardship, and made a claim that Husky and Mobil had violated section 45 of the Competition Act by the undue lessening of competition.

The trial judge found the Competition Act was breached, and awarded damages to the small trucking company. The Court of Appeal overturned the decision, finding instead that both trucking companies were given a fair opportunity to compete for the fuel hauling contract and that it was not wrong for Husky and Mobil to find better ways to manage operations, reduce their costs and increase efficiencies. This particular joint venture was not intended to hinder the competition of the fuel suppliers, but instead was formed for a legitimate business purpose. In such circumstances, oil and gas companies should not be prevented from entering into joint ventures that streamline operations.

 The application for leave to appeal to the Supreme Court from the judgment of the Court of Appeal was dismissed on June 14, 2013.

The decision of the Alberta Court of Appeal can be read here: http://www.canlii.org/en/ab/abca/doc/2013/2013abca221/2013abca221.html