A major global distributor of electrical equipment and infrastructure has agreed to divest its Canadian utility and data communications divisions as a condition of its merger with a rival company. The Competition Bureau of Canada negotiated the terms of the agreement to address concerns that WESCO International’s $6.1-billion acquisition of Anixter International would allow one company to gain predominant market share, driving up prices for key components of electricity transmission/distribution systems and telecommunications networks.
WESCO and Anixter are the primary suppliers in the Canadian market of high/medium voltage equipment installed on power lines, copper, coaxial and fibre-optic cabling, and cabling infrastructure. The Competition Bureau’s review of the deal concluded that contractors, utilities, cable companies and telecommunications service providers could all suffer from the loss of rival suppliers and competitive pricing.
“These products are essential inputs in the delivery of electricity and internet to Canadians and Canadian businesses,” an Aug. 6 statement from the Competition Bureau reiterates. “The Bureau found that the remaining competitors in these markets generally could not offer comparable product selection, pricing and service, and that barriers to entry or expansion are high.”
WESCO has committed to immediately begin the process of divesting its utility and data communications divisions in Canada, which tallied about $150 million in sales in 2019.
“We are pleased to reach this agreement with the Commissioner of Competition and to resolve the Bureau’s remaining concerns. The Agreement does not impact the tremendous value creation opportunity of the transformational combination of WESCO and Anixter, and we continue to see significant upside potential versus our synergy targets,” says John Engel, WESCO’s president and chief executive officer.
“Canadians rely on companies like WESCO and Anixter to support their basic needs, such as light, heat and internet connectivity,” observes Matthew Boswell, the Commissioner of Competition. “We are confident that the agreement will preserve competition in markets vital to the basic needs of Canadians.”