On April 15, 2011, the B.C. Court of Appeal released two
decisions that overturned lower court decisions certifying claims
of classes of indirect purchasers and determined that indirect
purchasers do not have a valid cause of action for damages for
price-fixing.1 These decisions, if upheld, will have a
significant impact on competition class actions in Canada.
In Sun-Rype, a combined class of direct and indirect
purchasers claimed that the defendants had conspired to fix the
price of high-fructose corn syrup, a sweetener that was used by
direct purchasers in the manufacture of products, or components of
products, that were ultimately purchased by indirect purchasers. In
Microsoft, a class of indirect purchasers claimed that
Microsoft conspired with various computer manufacturers (the direct
purchasers) to overcharge for Microsoft products that came
preloaded on computers. The appeals involved overlapping issues and
the decisions were released together.
In each case, the majority of the Court of Appeal found that a
2007 decision of the Supreme Court of Canada "made clear
beyond question" that defendants cannot raise the defence of
"passing on" to defeat claims made by direct purchasers
who may have passed on to their customers (that is, to indirect
purchasers) an alleged overcharge resulting from
price-fixing.2 The majority determined that, as a matter
of Canadian law, direct purchasers are entitled to recover the
entire overcharge, regardless of whether and to what extent it was
passed on. Adopting the rationale in the U.S. Supreme Court's
1977 decision in Illinois Brick Co. v. Illinois,3 the
majority concluded that indirect purchasers have no claims under
Canadian law because the law does not permit a direct purchaser to
assert that an overcharge may have been passed on to them.
The Sun-Rype and Microsoft decisions signal a
greater alignment between Canadian and U.S. federal law regarding
price-fixing claims. They could also drastically limit the
availability of consumer class actions for price-fixing.
Applications for leave to appeal to the Supreme Court of Canada
will certainly be made. The wider implications of these decisions
(which are binding only in British Columbia) are currently unclear
for certified indirect purchaser class actions in other provinces.
However, it appears likely that existing indirect purchaser claims
may be stalled pending the determination of the applications for
1. Sun-Rype Products Ltd. v. Arthur Daniels Midland
Company, 2011 BCCA 187 (Sun-Rype) and Pro-Sys
Consultants v. Microsoft Corporation, 2011 BCCA 186
2 Kingstreet Investments Ltd. v. New Brunswick
(Finance), 2007 SCC 1.
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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