A recent decision by Justice K.M. van Rensburg of the Ontario
Superior Court of Justice has affirmed the applicability of the
Regulated Conduct Doctrine (RCD) as a possible defence to conduct
prohibited by the Competition Act while also clarifying the
extent to which evidence is necessary in order to assert the
In Fournier Leasing Company Ltd. v. Mercedes-Benz Canada
Inc. the plaintiffs, a group of automobile dealers who import
BMW, Mercedes Benz, and Mini vehicles into Canada, brought a motion
to certify a class proceeding against BMW and Mercedes Canada for
conduct that they alleged breaches Part VI of the Competition
Act and also constitutes a tort. In regards to the
Competition Act claims, the plaintiffs in their pleading
alleged the existence of a conspiracy between the two car
manufacturers and their dealers.
The plaintiffs' business of importing vehicles from the
United States is subject to a regulatory regime known as the RIV
program, jointly administered by Transport Canada and the Canada
Border Services Agency (CBSA). Under this regime, all vehicles
imported into Canada must be inspected and certified under the Motor Vehicle Safety Act in order to ensure
that they comply with Canadian motor vehicle safety standards.
Central to this regulatory regime is the existence of an
admissibility list maintained by Transport Canada which provides a
list of vehicles that are admissible, and therefore importable,
into Canada from the United States.
The plaintiffs have alleged that between 2006 and 2007 Mercedes
and BMW demanded that Transport Canada remove all of their vehicles
from the admissibility list in an effort to prevent Canadians from
importing vehicles from the U.S., where the cars were priced
significantly lower. The allegation, therefore, is that Mercedes
and BMW conspired to limit the supply of vehicles, contrary to
subsection 45(1) of the Competition Act.
In their defence, Mercedes and BMW brought a motion to strike
the plaintiffs' pleadings for failure to disclose a cause of
action. In this motion, BMW and Mercedes raised the RCD in support
of the view that the claims relating to the alleged breach of Part
VI of the Competition Act had no hope of success since the
impugned conduct was authorized by the federal government under a
comprehensive regulatory scheme.
Justice van Rensburg rejected Mercedes and BMW's claim that,
under the circumstances, it was plain and obvious that simply
invoking the RCD would suffice to exclude any action taken by them
from the application of Part VI of the Competition Act. In
this regard, Justice van Rensburg relied on the Federal Court's
decision in Mansoor Electronics Ltd. v. BCE Mobile
Communications Inc. where Richard J. refused to strike a claim
under the Competition Act on the basis that the RCD must
be pleaded in the Statement of Defence so that a court may give due
consideration to its application on such facts as are adduced at
Besides establishing that the RCD must be pleaded as part of a
defence and facts adduced in support, Justice van Rensburg affirmed
the applicability of the RCD as a defence that may be relied on by
parties that engage in conduct authorized under valid provincial or
federal legislation. In this respect, she found that:
The authorities are clear. In order for the regulated conduct
exception or defence to apply, the actions in question must have
been directed or authorized by the statute or regulation. The fact
that the importation program is administered by Transport Canada
and the CBSA under a legislative scheme is not sufficient.
In the result, Justice van Rensburg refused to strike the
pleadings relating to the allegations of conduct contrary to Part
VI of the Competition Act. The motion was allowed,
however, in part, in respect of the aspects of the pleadings that
related to the claims made in tort.
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guide to the subject matter. Specialist advice should be sought
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The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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