Keyera Corp. (TSX:KEY) experienced a sharp decline in its share price on Tuesday, dropping 6.3% after Canada’s Competition Bureau announced it would challenge the midstream operator’s planned purchase of Plains All American Pipeline LP’s Canadian natural gas liquids (NGL) business.
The Calgary-based company recorded its largest one-day percentage fall since 2021 following the regulator’s move. The Competition Bureau filed an application with the Competition Tribunal seeking to block the transaction that Keyera and Plains announced last year.
In announcing the filing, the Bureau said that after an extensive investigation it concluded the proposed transaction "is likely to harm competition in natural gas liquids processing and storage, particularly at Fort Saskatchewan, Alberta, Canada’s primary hub for these services." That finding underpins the Bureau’s decision to pursue the matter before the tribunal.
The regulator also said it will host a technical briefing for media to outline more detail on its concerns about the transaction and to explain the process the agency follows when reviewing mergers. The Bureau framed the briefing as a means of providing additional context to its position.
Market participants responded quickly to the regulatory development, pushing Keyera’s stock down to the level of decline not seen since 2021. The Bureau’s action represents a direct regulatory hurdle to the completion of a deal announced last year, leaving the future of the transaction uncertain while the tribunal considers the application.
For stakeholders in the energy and midstream sectors, the filing highlights the role of competition review in transactions affecting processing and storage hubs. The Bureau’s stated focus on effects at Fort Saskatchewan centers the regulatory concern on a specific geographic concentration of NGL services.
Context and next steps
The Competition Tribunal will now consider the Bureau’s application to block the deal. The Bureau’s technical briefing is intended to clarify its investigative findings and the merger review process, but the tribunal’s proceedings will determine whether the transaction can proceed.