I OVERVIEW OF RECENT PRIVATE ANTITRUST LITIGATION ACTIVITY
Private antitrust litigation in Canada takes place either in the civil courts of the various provinces of Canada or before the federal Competition Tribunal (the Tribunal), depending on the nature of the matter. Most of the litigation activity to date has occurred in the civil courts. Of those cases, most are class proceedings that allege the existence of price-fixing cartels among groups of defendants and seek damages for the 'overcharge' (or inflated price) paid for the product.
In most of these class proceedings, the alleged price-fixed product is an input into another product (e.g., a microchip) that passes through a chain of distribution to end users or consumers (e.g., a computer). Given the requirement, discussed below, that a plaintiff must have suffered harm to have a private antitrust claim, important questions may arise as to whether direct purchasers of the price-fixed product passed on some or all of the overcharge down the chain of distribution to indirect purchasers, and if so, whether the indirect purchasers passed on some or all of the overcharge even further down the chain.
Until 2011, to the extent that Canadian courts had considered the 'pass-on' issue, they had ruled that both direct and indirect purchasers have standing to bring pricefixing conspiracy claims, and that defendants can use 'pass-on' to raise issues to challenge the benefit of certification of the class or to otherwise challenge a plaintiff's claim of loss or damage. However, in April 2011, the Court of Appeal of British Columbia reversed certification orders in the Microsoft and Sun-Rype cases upon concluding that indirect purchasers have 'no cause of action recognized in law' and therefore no capacity to sue to recover an alleged overcharge.2
The plaintiffs in both Microsoft and Sun-Rype were granted leave to appeal these decisions to the Supreme Court of Canada on 1 December 2011. On 17 May 2012 the Supreme Court of Canada granted leave to appeal the Quebec Court of Appeal's decision in the Infineon case, which certified a class action including indirect purchasers.3 The appeals were heard together on 17 October 2012 and it is anticipated that these decisions will clarify the law with respect to claims by indirect purchasers in Canada.
II GENERAL INTRODUCTION TO THE LEGISLATIVE FRAMEWORK FOR PRIVATE ANTITRUST ENFORCEMENT
i Section 36: private actions for damages incurred as a result of criminal conduct
Section 36 of Canada's Competition Act (the Act) provides that individuals or companies can bring private actions in a court of competent jurisdiction to recover damages incurred as a result of an alleged violation of the Act's criminal provisions.4 The offences in respect of which damages can be sought are conspiracy,5 bid rigging,6 misleading advertising7 and deceptive telemarketing.8,9 Recovery in such cases is limited to the actual loss suffered by the plaintiff, plus the full cost of any investigation and legal costs in connection with the matter. Double or treble damages are not recoverable, nor are punitive damages.
If the private defendant has been convicted of a criminal offence under the Act, the record of the criminal proceedings constitutes proof that the defendant engaged in anti-competitive conduct, absent evidence to the contrary. However, an essential element of actions under Section 36 is that the plaintiff must have suffered actual loss or damage as a result of the defendant's conduct. It is not enough for the plaintiff to point to anticompetitive conduct that did not affect it. Where, however, the private defendant has not (yet) been convicted of a criminal offence under the Act, the plaintiff bears a burden of proof on the traditional civil 'balance of probabilities' standard.
A civil claim for damages under Section 36 is also available against a party that has breached an order of the Tribunal, the federal adjudicative body with exclusive jurisdiction over all non-criminal antitrust offences.10
ii Section 103.1: private access to the Tribunal for civil offences
Section 103.1 of the Act permits private litigants to bring an application before the Tribunal for certain civil 'reviewable matters'. Private access to the Tribunal is permitted only with respect to the following restrictive trade practices: refusal to deal;11 resale price maintenance and refusal to supply;12 and exclusive dealing, tied selling and market restriction.13 Notably, no private actions are permitted in respect of mergers or abuse of dominance. Further, even if an applicant is ultimately successful in showing that the respondent violated a provision of the Act, the Tribunal is only permitted to order the respondent to cease its anti-competitive behaviour. The Tribunal has no jurisdiction to grant monetary remedies or awards.
Private litigants must obtain leave from the Tribunal before being allowed to bring an application. To obtain leave, an applicant must show that it is 'directly and substantially affected' in its businesses by the allegedly anti-competitive conduct; to do so it must, at a minimum, provide 'sufficient credible evidence of what is alleged to give rise to a bona fide belief by the Tribunal (i.e., that the applicant may have been directly and substantially affected in the applicant's business by a reviewable practice)', which is 'a lower standard of proof than proof on a balance of probabilities'.14 While this test might not seem difficult to meet, private litigants to date have faced some difficulty in obtaining leave.
iii Common law: torts of conspiracy and interference with economic interests
In practice, claims for damages under Section 36 of the Act are often accompanied by claims in tort. One potential reason for a plaintiff to add a common law tort claim is that it may allow for claims of punitive damages, which cannot be awarded under Section 36. The two tort claims most frequently pleaded in conjunction with Section 36 claims are claims of common law conspiracy and unlawful interference with economic interests. The constituent elements of these torts are different from the elements of claims under the Act but they can be complementary.
iv Limitation period
The limitation period is set out in Subsection 36(4) of the Act. Actions must be commenced within two years of the later of (1) a date on which the anti-competitive conduct was engaged in or (2) the final disposition of any criminal proceedings relating to the anti-competitive conduct.
i General jurisdictional rule
In order for a Canadian court to have jurisdiction over a dispute, there needs to be a 'real and substantial link' between Canada and the conduct in issue in the case.15 In the context of private actions alleging anti-competitive conduct, the courts have held that the language of Section 45 of the Act prohibiting anti-competitive conspiracies is not limited to conduct that has taken place in Canada.16 An Ontario court held that the ultimate issues for the court were whether the subject matter of the action 'has a real and substantial connection to Ontario' and whether 'the foreign defendant is connected to that subject matter'.17 In order to establish a connection between the subject matter and Ontario, the court said that '[t]here must be a causal connection between the alleged damage (sustained in Canada) and the defendants to establish a realistic possibility that the defendants may be responsible in law for the damage through their unlawful conduct'.18 In many cases, jurisdiction has been taken by Canadian courts on the basis of sales of a product having been made in Canada even if the defendant in question had no presence in Canada. While the Supreme Court of Canada has endorsed the situs of a tort as a presumptive connecting factor to establish jurisdiction, the Supreme Court recently rejected the location of damages as establishing any presumption of jurisdiction on the basis that it risks sweeping into the jurisdiction claims that only have a limited relationship with the forum.19 Although this case was not a price-fixing claim, it raises some questions regarding the requisite jurisdictional link required to establish a real and substantial connection.
ii Forum non conveniens
Even though the jurisdiction of a court to examine the conduct in question may be established, the court still has the discretion to decline jurisdiction, based on the doctrine of forum non conveniens.20 The test on a motion for a stay of proceedings on the basis of forum non conveniens is whether there is clearly a more appropriate forum in which the case should be tried other than the forum chosen by the plaintiff.21 'Where a plaintiff has an action as of right against domestic defendants, the burden is upon the foreign defendants to establish that the domestic forum is forum non conveniens.'22
iii Export cartels
Section 45(5) of the Act provides that the cartel provision of the Act does not apply to cartels that engage only in the export of products from Canada, unless the impugned cartel has resulted or is likely to result in a reduction or limitation of the real value of exports of a product; has restricted or is likely to restrict any persons from entering into or expanding the business of exporting products from Canada; or is in respect only of the supply of services that facilitate the export of products from Canada.
i Standing under Section 36
Under Section 36 of the Act, 'any person' can bring a private action for damages against a defendant alleged to have violated a criminal provision of the Act or the order of a court or the Tribunal issued under the Act. However, as noted in Section II, supra, the plaintiff must have suffered actual loss or damage from the impugned conduct. Quantifiable proof of harm is an important part of establishing liability under Section 36 of the Act. As noted in Section I, supra, the standing of indirect purchasers to bring claims under Section 36 is expected to be addressed by the Supreme Court of Canada. ii Standing under Section 103.1
'Any person' may apply to the Tribunal for leave to bring a case under Sections 75 to 77 of the Act.23 As discussed in Section II, supra, leave will only be granted to persons who are 'directly and substantially affected' in their business by the defendant's allegedly anticompetitive conduct, and the applicants must provide 'sufficient credible evidence' of the alleged conduct to give rise to a bona fide belief by the Tribunal that the alleged activity could be subject to an order under Sections 75, 76 or 77.
V THE PROCESS OF DISCOVERY
In Canada, discovery is composed of document production obligations and oral examinations for discovery. In civil proceedings, parties are generally required to provide an affidavit of documents identifying the documents that are relevant to the litigation, and to produce those that are not privileged. Document production obligations can be very broad. Principles of proportionality are intended to ensure that the cost and burden of document production in a civil trial is proportional to the matters and amounts at issue in the claim. The challenges of electronic discovery and the increasingly technological nature of documentary production are issues that are the subject of frequent commentary by lawyers and judges alike. Privileged documents are not disclosed, but are required to be identified with sufficient particularity in the affidavit of documents to enable the other party to evaluate the privilege claim.
Oral examinations for discovery are generally more limited than in the United States and certain other jurisdictions. For instance, in Ontario a plaintiff to a proceeding is entitled as of right to examine only one representative per defendant. That representative is required to inform the plaintiff about the issues in the litigation and may answer questions by way of written undertaking in circumstances where the information is available but not within the personal knowledge of the representative being examined. In proceedings before the Tribunal, each party is required to serve an affidavit of documents identifying the documents that are relevant to any matter in issue. There are no provisions in the Tribunal Rules for pre-trial oral discovery, but the Tribunal maintains discretion to order it on a case-specific basis.
VI USE OF EXPERTS
The use of industry experts and expert economists is commonplace in Canadian private antitrust litigation. Expert affidavit evidence from economists is also typical in most Canadian jurisdictions at the class certification stage. Because a class certification motion is not a merits assessment, expert evidence tendered at this preliminary stage of the proceeding tends to focus on whether loss or damage can be proven on a class-wide basis. Both in civil trials and in hearings before the Tribunal, expert evidence plays a significant role. The civil procedure rules in each of the provinces address the delivery of expert reports before trial. The Tribunal Rules also provide for the delivery of expert evidence before the hearing. In addition, the Tribunal Rules provide the Tribunal the authority to appoint its own independent expert to inquire into or report on any question of fact or opinion relevant to an issue in the proceeding.24
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1 Eliot Kolers and Danielle Royal are partners at Stikeman Elliott LLP.
2 Pro-Sys Consultants Ltd v. Microsoft Corporation, 2011 BCCA 186 (Microsoft) and Sun-Rype
Products Ltd v. Archer Daniels Midland Company, 2011 BCCA 187 (Sun-Rype).
3 Option Consommaeurs v. Infineon Technologies, 2008 QCCA 2136 (Infineon).
4 Part VI, Sections 45–62.
5 Section 45.
6 Section 47.
7 Section 52.
8 Section 52.1.
9 Prior to its repeal in March 2009, price maintenance (Section 61) was also a per se offence under Part VI and there are several ongoing class actions that seek damages based on the now-repealed Section 61 of the Act. Prior to the 2009 amendments, geographic price discrimination and predatory pricing were also criminal offences. These former offence provisions remain civilly reviewable.
10 Canada Cement LaFarge v. BC Lightweight Aggregate,  1 SCR 452; Section 36 of the Act.
11 Section 75.
12 Section 76.
13 Section 77.
14 Symbol Technologies Canada ULC v. Barcode Systems Inc, 2004 FCA 339 (Barcode), at Paragraphs
16 and 17.
15 R v. Libman,  SCJ No. 56 at Paragraph 74.
16 Vitapharm Canada Ltd v. F Hoffmann-LaRoche Ltd,  OJ No. 298 at Paragraph 95 (Ont. Sup. Ct.), affirmed  OJ No. 1400 (Div. Ct.) [Vitapharm] (motion by five of the foreign defendants challenging the jurisdiction of the court).
17 Vitapharm Canada Ltd v. F Hoffmann-LaRoche Ltd,  OJ No. 298 at Paragraph 95 (Ont. Sup. Ct.), affirmed  OJ No. 1400 (Div. Ct.) [Vitapharm] (motion by five of the foreign defendants challenging the jurisdiction of the court).
18 Id. at Paragraph 97. In this case, some of the foreign defendants pleaded guilty to the offence of conspiracy. The court stated that when the alleged conspiracy was proven, there was a real and substantial connection to Ontario with respect to the subject.
19 Club Resorts Ltd v. Van Breda, 2012 SCC 17.
20 Id. at Paragraph 103.
21 Id. at Paragraph 108.
22 Id. at Paragraph 109.
23 Competition Tribunal Rules SOR/2008-141. Section 1 defines person as 'a corporation, a partnership and an unincorporated association'.
24 Competition Tribunal Rules (SOR/2008-141).
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.