Bureau Moves Iron Mountain in Recall Acquisition

Not quite king of the hill

Iron Mountain Inc. agreed to divest assets and customer contracts in 6 of the 10 markets where its acquisition target, Recall Holdings, operates. Iron Mountain will divest assets in Toronto, Montreal, Ottawa, Calgary, Edmonton and Vancouver, retaining Recall assets only in Kitchener, Winnipeg, Halifax and Victoria.

Although it was not a notifiable transaction under the Competition Act, the Bureau reviewed the proposed merger of Canada’s two largest records management companies under its general mandate to determine whether it would likely result in a substantial lessening or prevention of competition in the market for business records management.

This global $2.6 billion transaction was also reviewed by competition authorities around the world, including the US, the UK, and Australia.

In Canada, the Bureau was concerned with the fact that affected customers would primarily include governments, banks and medical institutions that rely on records management services to safely store vital and highly confidential information.

The Bureau concluded that customer switching fees would be a barrier to entry or expansion by a new or existing competitor. or new entrant’s most significant barrier to expansion or entry is the payment of these customer switching fees. These fees would make it difficult for competitors to recoup infrastructure and equipment start‑up costs.

The Bureau thus concluded that Iron Mountain would be able to raise prices after acquiring Recall, a vigorous and effective competitor.