Environmental Background Information Center

Providing the practical tools and strategies people need to confront corporate power.

In August 1983, Yeager bounced back as an independent, painting jungle scenes on his trucks and running under the name Community Disposal Service. His publicity campaigns attracted customers, some of whom had been served by BFI and WMI. But those who decided to switch to CDS found themselves boxed in.

The majors had introduced nearly identical service agreements, whose finely printed clauses and complicated cancellation terms gave legal gloss to an underlying reality. By signing them, customers for disposal services found themselves being corralled onto the domains of one or the other of the continental waste overlords.

Yeager complained to Ohio officials and later was to allege that these agreements were "part of BFI and WMI's attempt to create a master plan." The companies, in enforcing them, were alleged by Yeager to be sewing up much of his potential market with legal threats to customers who wished to switch to CDS. WMI's counsel had warned Yeager not to solicit its customers and BFI, asserting that Yeager was in breach of an undertaking not to compete with it, sued him. At the time, Ohio was unprepared to look at these agreements, called "evergreen" because they never expired. But when Laidlaw sought to introduce evergreen agreements elsewhere, the Canadian company was to discover that in other jurisdictions they were viewed less benignly.

Laidlaw had mailed agreements to commercial and industrial customers in San Diego County and throughout California, and, like Yeager, the customers raised a stink. The documents had removable stickers indicating the forms were required for insurance purposes or as pledges that customers (20,000 reportedly were involved) were disposing only non-hazardous wastes. However, according to California's attorney general who laid fraud charges under the business and Professions Code, once the signed forms were returned, the stickers were peeled off and filed as binding contracts.

Furthermore, the company (as was alleged in California v. Laidlaw) gave short shrift to customers claiming to have been gulled, refused to remove its dumpsters, threatened lawsuits, demanded a six-month service charge as a cancellation fee, threatened other waste firms who were invited in by their former customers, and for good measure, threatened employees impudent enough to protest such behaviour.

Without admitting liability, Laidlaw settled the California lawsuit for $3 million only to have similar cries of outrage arise from disaffected customers and competitors clustered along Highway Nos. 1 and 19 on the eastern side of Vancouver Island. These protests caught the attention of the Canadian anti-combines authorities who brought the matter to the Competition Tribunal.

Laidlaw had entered the Cowichan Valley, Nanaimo and Campbell River areas in the late 1980s and moved aggressively to buy out local competition. Evidence presented before the Tribunal revealed that the industry's primitive pre-Wall Street culture lived on in its supposedly more evolved stage of development. One small operator was warned that if he did not sell his company "Laidlaw would see it put out of business by causing [it] extensive and expensive litigation costs." Another was told Laidlaw would use its market power "to ensure that it was put out of the market by way of price competition." Yet another message had it that "Laidlaw had other methods of achieving what it wanted."

Once Laidlaw was in control of what the Tribunal estimated to be 87 per cent of the markets in question, the firm did what Dave Yeager had been complaining had been done to prevent the likes of CDS from competing in the Ohio market. The firm threw up a barrier in front of what would be independent poachers using the "evergreen" roll-over contracts.

The Tribunal raised a collective eyebrow upon hearing how Laidlaw managed to get these contracts signed: "A disturbingly recurring theme through much of the evidence before the Tribunal was that signatures on many of these contracts had been obtained by representing to the customers that the documents they were being asked to sign were a mere formality', or because it was the national corporate practice which Laidlaw followed.'"

As Yeager had asserted, customers only realized they had a written contract when they attempted to take their business elsewhere. Laidlaw quickly made its captive customer and prospective competitor aware that unless they desisted they would be in breach of contract. and the attendant legal costs would wipe out the customer's hoped-for savings. If the customer persisted, Laidlaw unleashed its local counsel. "I have personally handled several such actions," read one such lawyer's missive. "If Mr. Andrinopolos ' winds up paying Laidlaw damages for breach of contract, he will inevitably find that the expected short-term price of reduction will disappear." One local contractor opened his mail to find himself being apprised by a solicitor acting on behalf of the world's third largest waste disposal firm that "Laidlaw has pursued many such actions against its customers over the last few years and has not been unsuccessful to date."

In seeking to convince the Tribunal that the contracts were not designed specifically to restrict competition in Vancouver Island, Laidlaw made a very revealing argument. It asserted that the contracts were necessary on the larger stage where it had to go up against its real rivals- BFI and WMI. The Tribunal was unimpressed by the argument of "we are doing it because they are doing it and ultimately found (as Yeager originally had claimed) "there is no credible explanation for many of the provisions of these contracts other than to create barriers to entry for would-be competitors."

"No one can read the evidence concerning the use Laidlaw made of litigation and the threat of litigation in this case without a sense of outrage," the presiding Tribunal members wrote, quoting with approval the reflections of the conservative American jurist R.H. Bork. "As a technique for predation, sham litigation is theoretically one of the most promising...this mode of predation is particularly insidious because of its relatively low antitrust visibility." The Competition Tribunal went on to say that Laidlaw "used its vastly larger size and economic resources together with the threat of litigation and threatened litigation against its competitors to derive or attempt to drive them out of business by raising their costs of doing business. This is certainly predatory behavior."

The Tribunal ordered Laidlaw to modify its agreements in the minuscule markets at issue, but as for the question of the legitimacy of their on-going use throughout North America, this was a matter beyond the purview of the Tribunal and had to be left for another day and other jurisdictions (Crooks, 1993, pp. 152-155).