The federal government's competition bureau has given its approval to the merger of two of Northwestern Ontario's main forestry players, on the condition that a pair of regional pulp and paper mills are sold.
The competition bureau on Thursday announced it has entered into a consent agreement with Domtar Corporation for the acquisition of Resolute Forest Products, a proposed transaction that was first announced in October.
Domtar was acquired by the Paper Excellence Group earlier in the year as a wholly-owned subsidiary.
The consent agreement includes an agreement by Domtar that it will sell its Dryden mill, as well as Resolute's Thunder Bay pulp and paper mill, to two independent buyers approved by the competition commissioner after the transaction is completed.
The competition bureau said the proposed transaction would likely lead to a substantial lessening of competition in the supply of northern bleached softwood kraft in eastern and central Canada, and in the purchase of wood fibre from private lands in Northwestern Ontario. The competition bureau also found the merger would likely enable Domtar to pay lower than competitive prices to wood fibre suppliers.
The competition bureau said the commissioner was satisfied that the sale of those two mills would resolve those competitive issues arising from the proposed transaction.
The two companies released statements on Wednesday, saying that the transaction is on course to close in the first half of 2023.
