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

The bureau said last week it is specifically investigating if a potential loss of competition might give PSA Canada, a Canadian subsidiary of a global logistics company owned by the Singapore finance ministry, the ability to price gouge or decrease the level of services offered to marine carriers. In an affidavit from the bureau’s investigator, Shawn Hashmi stated that PSA Canada is ultimately controlled by Singapore’s state-owned investor Temasek Holdings.

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 the acquiree—to provide records and information 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.

“This is interesting because they are relying on Section 11—a court-order request to gain documents as opposed to a supplementary information request,” said Keldon Bester, an independent policy researcher who used to work for the Competition Bureau. 

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

“I think you could cut it in two ways. You could say the bureau is being aggressive. Or you could say that merging parties are not being forthcoming with information. We just don’t know.” 

In the bureau’s application to the court, it states the unique position of the port would make it more difficult for others to compete with PSA Canada’s market power. 

PSA Halifax and Ceres Halifax didn’t respond to The Logic’s request to comment. 

“The bureau’s investigation is ongoing, and it may seek further orders for the production of records and information from the parties or other market participants,” said Competition Bureau communications advisor Jean-Philippe Lepage, 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 specific case. 

“All foreign investments, including the acquisition of Canadian businesses, the establishment of new Canadian businesses, and non-controlling investments, are also subject to review for national security-concerns under Part IV.1 of the Act,” ISED spokesperson Sean Benmor said in an email to The Logic. 

The Port of Halifax is critical for shippers and receivers in central and eastern Canada. It is the “first-in” port on a number of transatlantic trade routes ahead of other East Coast ports in New York and New Jersey. It’s also 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 probe comes as the supply-chain industry and companies grapple with backlogs and disruptions around the world. At Halifax’s port, shippers have said they face soaring shipping rates, while it hasn’t experienced the same cargo backlogs as other North American ports. 

PSA Canada owns 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 on-dock, double-stack rail 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 other large terminal in the city. Ceres Halifax is wholly owned by Nippon Yusen Kabushiki Kaisha, a Tokyo-based publicly traded shipping and logistics firm.

PSA Canada, first incorporated in B.C. in 2019, along with its parent company PSA International, has a long history of acquiring port facilities in North America. In a signed investment agreement with the Ashcroft Terminal, an inland port facility located about 300 kilometres east of the Port of Vancouver, PSA Canada acquired 60 per cent of the terminal’s business in Western Canada.

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

In November, PSA International signed an agreement to acquire 100 per cent of the shares of Philadelphia-based logistics-solutions company BDP International. That transaction is subject to formal approvals by relevant authorities.