Canada: Supreme Court Of Canada To Consider Indirect Purchaser Rights In Price-Fixing Class Actions

On December 1, 2011, the Supreme Court of Canada granted leave to appeal from a pair of British Columbia Court of Appeal decisions that overturned orders certifying price-fixing claims as class actions. The two BC cases relate to allegations of conspiracies to increase the prices of high-fructose corn syrup (HFCS) and computer software.  The BC appeals were argued consecutively before the same panel of judges and the decisions were released concurrently. In both instances, the majority of the BC Court of Appeal held that persons who did not purchase products directly from a defendant, and instead purchased such products indirectly from a non-defendant further down the product distribution chain, do not have a cause of action against the defendants in relation to an alleged unlawful conspiracy to fix the price of the product.

The case of Sun-Rype Products Ltd. v Archer Daniels Midland Company (Sun-Rype)1 is a proposed class proceeding brought on behalf of direct and indirect purchasers of HFCS, a sweetener used in various food products, but primarily soft drinks.  The claim alleges that the defendants unlawfully conspired to fix the price of HFCS sold to direct purchasers and that some of the overcharge was passed through to indirect purchasers, including end consumers.

The proposed class proceeding of Pro-Sys Consultants Ltd. v Microsoft Corporation (Microsoft)2 was commenced on behalf of retail purchasers of computers installed with Microsoft operating systems and applications software. The action alleges that Microsoft engaged in unlawful anti-competitive behaviour in order to overcharge for its products.

Decision of the BC Court of Appeal

Reasons of the majority

Mr. Justice Lowry, for the majority in both cases, relied on recent Supreme Court of Canada jurisprudence in concluding that indirect purchasers of products alleged to be the subject of an unlawful overcharge do not have a cause of action for price-fixing.  In Kingstreet,3 a case concerning an unlawful tax, the Supreme Court of Canada had determined that a defendant cannot reduce its liability to those who paid an unlawful charge by establishing that some or all of it was "passed through" to others. In other words, and if applied to the price-fixing context, the defendant is liable to the direct payor of the unlawful charge (the direct purchaser) for 100% of that charge, regardless of any passing through to others (the indirect purchasers). Lowry J.A. reasoned that if the law does not recognize pass-through as a defence to a claim, logically the law cannot recognize pass-through as the basis for a claim. In the context of a price-fixing class action, this means that if direct purchasers are entitled to recover 100% of an unlawful overcharge they paid, regardless of any pass-through, it follows that indirect purchasers cannot claim against the defendant for any portion of the overcharge passed through to them, as that would result in double recovery. In short, because pass-through cannot be a "shield," it also cannot act as a "sword."4 

Lowry J.A. considered and rejected the finding of the motions judge in Sun-Rype (and endorsed by the dissent on appeal, as discussed below) that the problem of double recovery could be avoided through the class action procedure. The motions judge proposed a "top-down" approach to assessing damages, whereby the class action proceeds first with an assessment of the aggregate unlawful overcharge allegedly taken by the defendants; only after such aggregate assessment would the court be asked to determine how the aggregate amount should be distributed as damages among the direct and indirect purchasers, thus avoiding double recovery. Justice Lowry held that such an approach ignores the fact that, at law, the direct purchasers are entitled to 100% of any unlawful overcharge and the indirect purchasers have no claim for any overcharge that might have been passed through. Referring to recent Supreme Court of Canada jurisprudence,5 he held that the Class Proceedings Act is a procedural statute that can neither create nor modify a cause of action. The fact that the indirect purchasers' claims are being advanced in a class proceeding cannot alter the fact that those claims do not disclose a cause of action.  

Reasons of the dissent

Donald J.A., in dissent in both cases, would have dismissed the appeals. Justice Donald agreed with the majority that the defence of pass-though was not available and that the rule against double recovery is a "bedrock principle." However, he held that it did not necessarily follow that indirect purchasers had no cause of action based on pass-through. Justice Donald reasoned that the Supreme Court of Canada's rejection of the pass-through defence is based on considerations of proximity which would not apply to pass-through as the basis for a claim. He held that it was not plain and obvious that indirect purchaser claims based on pass-through did not disclose a cause of action. Justice Donald further relied on the flexibility of the class proceedings legislation and endorsed the top-down approach to assessing damages suggested by the motions judge in Sun-Rype. Donald J.A. concluded that, in employing such an approach, there is no real possibility of double recovery as the total amount will never exceed the amount of the overcharge, and therefore there is no justification for barring indirect purchasers from making a claim.

An opportunity for clarification

Many price-fixing class actions certified in Canada have included both direct and indirect purchasers, often with reference to an approach similar to the top-down approach endorsed by the dissent in the Sun-Rype and Microsoft appeals.6 Such cases include the very recent decision of the Quebec Court of Appeal in Option Consommateurs v Infineon Technologies AG,7 in which the court considered and rejected the reasons of the majority in Sun-Rype and Microsoft, and instead favoured the approach of the dissent.

As a result, there are now conflicting decisions from appellate courts in different provinces on the key issue of whether indirect purchasers have a cause of action in the context of a price-fixing case. Now that leave to appeal has been granted in Sun-Rype and Microsoft, it is hoped that the Supreme Court of Canada will provide a clear answer to this important question. These two appeals from BC may also provide an opportunity for the Supreme Court of Canada to resolve other important issues common to price-fixing cases, such as whether the interests of indirect and direct purchasers are in conflict and whether the existence of pass-through – if legally relevant – can properly be determined on a class-wide basis. The Supreme Court of Canada's decision is bound to have an impact not only on future price-fixing class actions in Canada, but also on a number of existing class actions currently before the courts in different provinces, many of which include indirect purchasers as members of the class.


1. Sun-Rype Products Ltd. v. Archer Daniels Midland Company, 2011 BCCA 187.  Norton Rose OR LLP is co-counsel to Archer Daniels Midland Company.  In this case the Court also granted the defendants' motion for leave to cross-appeal with respect to whether the plaintiffs' claims in constructive trust disclose a cause of action.

2. Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2011 BCCA 186.

3. Kingstreet Investments Ltd. v. New Brunswick (Finance), 2007 SCC 1.  See also British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38 (per Lebel. J, dissenting, though not on this point).

4. Justice Lowry's reasons are consistent with earlier jurisprudence of the United States Supreme Court on these issues:  see Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968); Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).

5. Bisaillon v. Concordia University, 2006 SCC 19 at para. 17.

6. See Pro-Sys Consultants Ltd. v. Infineon Technologies AG, 2009 BCCA 503 and Irving Paper Limited et al. v. Atofina Chemicals et al., (2008) 89 O.R. (3d) 578 (Sup. Ct.) leave to appeal denied 2010 ONSC 2705.

7. 2011 QCCA 2116.  A summary of the decision, entitled "Indirect purchaser class actions: Quebec Court of Appeal decision highlights disparity in Canadian law" is available here.

Norton Rose OR LLP

Norton Rose OR LLP is a member of Norton Rose Group, a leading international legal practice offering a full business law service to many of the world's pre-eminent financial institutions and corporations from offices in Europe, Asia Pacific, Canada, Africa and the Middle East.

The Group's lawyers share industry knowledge and sector expertise across borders to support clients anywhere in the world. The Group is strong in financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and pharmaceuticals and life sciences.

Norton Rose Group has more than 2600 lawyers operating from 39 offices in Abu Dhabi, Amsterdam, Athens, Bahrain, Bangkok, Beijing, Brisbane, Brussels, Calgary, Canberra, Cape Town, Dubai, Durban, Frankfurt, Hamburg, Hong Kong, Johannesburg, London, Melbourne, Milan, Montréal, Moscow, Munich, Ottawa, Paris, Perth, Piraeus, Prague, Québec, Rome, Shanghai, Singapore, Sydney, Tokyo, Toronto and Warsaw; and from associate offices in Dar es Salaam, Ho Chi Minh City and Jakarta.

Norton Rose Group comprises Norton Rose LLP, Norton Rose Australia, Norton Rose OR LLP, Norton Rose South Africa (incorporated as Deneys Reitz Inc), and their respective affiliates.

On January 1, 2012, Macleod Dixon merges with Norton Rose OR, creating a global energy and mining powerhouse within Norton Rose Group. For more information, please visit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Affleck Greene McMurtry LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Affleck Greene McMurtry LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions