Garbage Scrap

The owner of a small garbage-hauling business is celebrating a victory over a pair of multi-
national competitors after federal watchdogs agreed that their behaviour amounted to “abuse of dominance.”

Derek Haarsma says he left the cut-throat garbage-truck business in 2003, moving on to open six car washes around Nanaimo. But many of his customers grew angry about increasing fees from the two big-time garbage businesses that came to dominate the market, he recounts. “So many of our customers would say, ‘When are you getting back in? It’s just getting ridiculous.’ ”

His decision last summer to start Nanaimo Hauling and compete with the big players landed Haarsma in a nightmare scenario. He says the customers who were keen to switch to his service soon discovered just how strict their contracts were with the big trash-hauling companies. These included long terms with automatic renewal clauses, steep financial penalties for breaking their contracts and rights of first refusal, giving the big guys the right to match any competing offers. Haarsma says he and interested clients were served notices warning that they could be sued if they broke pre-existing contracts. By October he’d had enough, he says, and launched a complaint with Competition Bureau Canada.

Allegations of abusive anti-competition practices in the garbage business are nothing new for Nanaimo.  Richard Bilodeau, the senior competition law officer with the bureau who investigated Haarsma’s complaint, says this case had many similarities to one filed against Laidlaw Waste Systems Ltd. in 1991. Laidlaw was brought to court and forced to relax its contracts. Bilodeau emphasizes that none of the offending contract clauses in this case are illegal by themselves, but taken together, they created an uncompetitive business environment.

In June leaders from the two dominant companies, Waste Services Canada Inc. and Waste Management of Canada Corp., signed a voluntary agreement to halt the controversial contracting practices in the Nanaimo market. Waste Management managers disagree with the bureau’s opinion that their contracts are abusive, says director of communications Wes Muir, but felt it was not worth the time or expense to fight a court battle over such a small business area.

Looking back on almost a year under threat of litigation, Haarsma says the fight was worth it. “They had the market here pretty much protected for five years,” he says. “Unless someone was willing to go the distance we went, you couldn’t get in; you couldn’t make a dent.”