Competition Bureau statement regarding Summit Park’s acquisition of Iron Mountain assets
OTTAWA, January 11, 2017 — This statement summarizes the approach taken by the Competition Bureau in its review of the acquisition by Summit Park LLC (Summit) of eight records management facilities in six Canadian cities from Iron Mountain Incorporated (IRM). With the acquisition, Summit will sponsor a new entrant in the records management industry to be named Arkive. In addition to the Canadian IRM facilities, Summit will also acquire three facilities in the U.S. — two in Atlanta and one in Seattle. The divestiture is pursuant to an Asset Purchase Agreement which closed on December 29, 2016.
The divestiture is being made further to the March 2016 Consent Agreement between IRM and the Bureau relating to Iron Mountain’s acquisition of Recall Holdings (Recall). As such, the transaction was subject to the Commissioner of Competition’s approval in accordance with the terms of the Consent Agreement. Without a Consent Agreement, the Commissioner had concluded that IRM’s acquisition of Recall was likely to result in a substantial lessening or prevention of competition.
Overview of analysis
The Bureau’s criteria for approval are outlined in section 23 of the Consent Agreement. To approve the divestiture, the Commissioner must be satisfied that:
- Arkive and Summit are fully independent of and operate at arm’s length from IRM;
- IRM will have no direct or indirect interest in the assets to be sold following the sale, except for IRM’s ownership of the real property in the Comstock facility in Ottawa through a real estate investment trust;
- Arkive is committed to carrying on the businesses;
- Arkive has the managerial, operational and financial capability to compete effectively in the local and multi‑city markets for records management; and
- the sale of the assets do not raise issues with respect to its likely impact on competition.
In order to complete the divestiture, IRM and Arkive must complete an optimization process which will ensure that the records of customers being divested are stored in the correct facility. During the optimization process, the relationship between the parties will be governed by a transitional services agreement. The Bureau is satisfied that, once the movement of records is complete, Arkive and Summit will be fully independent of and operate at arm’s length from IRM.
Review of the asset purchase agreement between IRM and Summit confirmed that IRM will have no direct or indirect interest in the assets to be sold following the termination of the transitional services agreement.
In evaluating Arkive’s commitment to carrying on the businesses, the Bureau obtained and reviewed business documents from Arkive, in addition to speaking to members of the firm’s management team. In conducting its review, the Bureau gave particular weight to business plans and to the rigour with which Arkive had assessed the assets to be sold.
The Bureau thoroughly reviewed Arkive’s management presentations, financial projections and strategy documents. Arkive’s senior management team is staffed primarily by former Recall employees and executives. Its plans indicate that it has the managerial, financial and operational capabilities to compete in the records management industry.
Arkive will be a new entrant in the records management market in both Canada and the U.S. Further, no affiliates of Summit own or otherwise hold an interest in any competing business. As a result, the divestiture does not raise any competition concerns.
Based on the above, the Bureau determined that the sale of the assets to Arkive will preserve competition in the market for records management services in local and multi-city markets in Canada.
This publication is not a legal document. The Bureau’s findings, as reflected in this Position Statement, are not findings of fact or law that have been tested before a tribunal or court. Further, the contents of this Position Statement do not indicate findings of unlawful conduct by any party.
However, in an effort to further enhance its communication and transparency with stakeholders, the Bureau may publicly communicate the results of certain investigations, inquiries and merger reviews by way of a Position Statement. In the case of a merger review, Position Statements briefly describe the Bureau's analysis of a particular proposed transaction and summarize its main findings. The Bureau also publishes Position Statements summarizing the results of certain investigations, inquiries and reviews conducted under the Competition Act. Readers should exercise caution in interpreting the Bureau’s assessment. Enforcement decisions are made on a case‑by‑case basis and the conclusions discussed in the Position Statement are specific to the present matter and are not binding on the Commissioner of Competition.
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