Competition Bureau requires WESCO to divest its datacom and utility divisions
By Anthony Capkun
August 6, 2020 – Canada’s Competition Bureau registered a consent agreement with the Competition Tribunal to address its concerns related to WESCO International Inc.’s acquisition of Anixter International Inc., which would have combined the two largest distributors of pole line hardware and datacom products in Canada.
“These products are essential inputs in the delivery of electricity and internet to Canadians and Canadian businesses,” says the Competition Bureau.
Following a review, the bureau concluded “this transaction would likely have substantially lessened competition in these markets by eliminating the rivalry between WESCO and Anixter, resulting in higher prices and lower quality of service for a large number of customers, including contractors, utilities, cable companies and telecom service providers”.
The combination of the two companies would have resulted in high market shares in various markets across the country. However, the bureau also 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.
To remedy the bureau’s concerns, the consent agreement requires WESCO to divest its datacom division and its utility division.
“The remedy includes thousands of customer accounts, inventory, key personnel, branch locations and relationships with key manufacturers,” says the Competition Bureau, adding it is, “[…] satisfied that this agreement will address its competition concerns in Canada.”
“Canadians rely on companies like WESCO and Anixter to support their basic needs, such as light, heat and internet connectivity. We are confident that the agreement signed today will preserve competition in markets vital to the basic needs of Canadians,” said Matthew Boswell, Commissioner of Competition.
The consent agreement will be available on the Competition Tribunal website shortly.
Pole line hardware includes a variety of high-/medium-voltage equipment installed on electrical transmission/distribution lines, and is purchased by electrical utilities, among others.
Datacom products include copper, cox and fiber optic cabling, cabling infrastructure products, and associated equipment used by telecom and cable companies, internet service providers, data centres, etc.