Yesterday, the Competition Bureau registered a consent agreement with the Competition Tribunal to address its concerns related to certain aspects of the proposed formation of a gas processing joint venture between Pembina Pipeline Corporation and KKR's Global Infrastructure Funds. In particular, the Commissioner had concerns with the acquisition of a 50% interest in the Key Access Pipeline System (KAPS) project resulting from the associated purchase of the remaining portion of Energy Transfer Canada ULC (ETC) not already held by KKR's Global Infrastructure Funds. The Bureau is taking this action to preserve competition in pipeline transportation for natural gas liquids (NGLs) in Alberta.
Following a thorough review, the Bureau concluded that the proposed merger would likely result in a substantial prevention of competition in the supply of pipeline transportation for NGLs between northwest Alberta and Fort Saskatchewan, Alberta. Market participants have indicated that the proposed merger would weaken a likely competitive alternative to Pembina's Peace Pipeline system.
To remedy the Bureau's concerns, the consent agreement requires Pembina and KKR's Global Infrastructure Funds to sell ETC's interest in the KAPS project to a third party. Upstream energy companies have been able to leverage competition between the Peace Pipeline system and KAPS, including negotiating more competitive tolls and additional flexibility, for future NGL transportation on the pipelines. It is expected that this type of competition will continue when KAPS is operational.
The Bureau is satisfied that this agreement will address its competition concerns. The consent agreement is available on the Competition Tribunal's website.
