Canada: Supreme Court Of Canada Rules Indirect Purchasers Can Sue For Price-Fixing

On October 31, 2013, the Supreme Court of Canada released its decisions in three related appeals, two from the British Columbia Court of Appeal and one from the Quebec Court of Appeal, all dealing with the certification of price-fixing claims as class actions:

  • Sun-Rype Products Ltd. v Archer Daniels Midland Company1 (Sun-Rype)
  • Pro-Sys Consultants Ltd. v Microsoft Corporation2 (Microsoft)
  • Infineon Technologies AG v Options Consommateurs3 (Infineon)

Although these appeals addressed a number of important issues relating to price-fixing class actions and the certification of class proceedings in general, the key issue before the court in all three appeals related to the viability of claims by "indirect purchasers": consumers and others who did not purchase products directly from a defendant, and instead purchased such products indirectly, often as a component or ingredient of a finished product, from a non-defendant further down the product distribution chain.

In the BC cases, the majority of the BC Court of Appeal held that indirect purchasers 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 Quebec Court of Appeal came to the opposite conclusion and authorized a price-fixing class action brought on behalf of both indirect and direct purchasers, opening the door for some much-anticipated clarification from the Supreme Court of Canada. Leave to appeal to the Supreme Court of Canada was granted in all three cases and the appeals were heard together on October 17, 2012.

Appeal court decisions

Mr. Justice Lowry of the BC Court of Appeal, writing for the majority in both Sun-Rype and Microsoft, relied on the Supreme Court of Canada's decision in Kingstreet4 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, the Supreme Court determined a defendant cannot reduce its liability to those who paid an unlawful overcharge 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 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 this regard, Justice Lowry referred with approval to jurisprudence of the United States Supreme Court in which that court reached a similar conclusion: in Hanover Shoe, Inc. v United Shoe Machinery Corp.5, the US Supreme Court rejected the defensive use of pass-through; in Illinois Brick Co. v Illinois6 the US Supreme Court held that because pass-through cannot be used defensively it also cannot be used offensively.

Although it did not decide the issue, the majority of the BC Court of Appeal also expressed a concern that allowing both direct and indirect purchasers to pursue claims in the same class proceeding would create a conflict of interest, as it would be in the interests of direct purchasers to argue the overcharge was not passed through to the indirect purchasers, whereas indirect purchasers would be incented to argue it was.

Donald J.A., dissenting in Sun-Rype and Microsoft, and the Quebec Court of Appeal in Infineon took the view that the non-availability of the "pass-through" defence does not preclude indirect purchasers from asserting a claim based on pass-through. They reasoned that the legal impediments to indirect purchaser claims raised by Lowry J.A. could be addressed through the procedural mechanisms of the class proceedings legislation, using a two-stage approach

At the first stage, the court could determine the aggregate of the unlawful overcharge paid by all direct purchasers, irrespective of how much of that overcharge had been passed through to indirect purchasers. 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.

Donald J.A. held that this approach eliminates the possibility of double recovery because the damages would never exceed the amount of overcharge paid by the direct purchasers. The Quebec Court of Appeal further noted that this approach also addresses (or at least defers) any conflict of interest between direct and indirect purchasers. At the initial stage, direct and indirect purchasers share the same interest, i.e., to obtain the highest possible award for the benefit of the class as a whole.

Supreme Court of Canada decisions

On the seminal issue, the Supreme Court of Canada ruled indirect purchasers can sue for damages in tort or under the Competition Act based on unlawful overcharges passed through to the indirect purchasers by the direct purchasers of the product.

Although the Supreme Court confirmed pass-through could not be used as a defence to direct purchaser claims, the court held that it does not follow that direct purchasers are always entitled to 100% of the overcharge. Where there are claims by both direct and indirect purchasers, direct purchasers will be entitled to only that portion that was not passed through to the indirect purchaser claimants. In each case, the court can ensure the total recovery does not exceed the total of the overcharge, avoiding any double recovery.

The Supreme Court considered, but declined to follow the US Supreme Court's decision in Illinois Brick, which was largely premised on the risk of double or multiple recovery. The Supreme Court held that Canadian courts already have "practical tools" at their disposal to avoid such risks. The court also held that the fact there might be a conflict between the direct and indirect purchasers on the issue of pass-through should not preclude indirect purchasers from participating in the class action. Any such conflict "is not a concern of the [defendants]" and can be addressed at the distribution stage, after settlement or judgment on the aggregate amount of the overcharge.

In addition to the indirect purchaser issue, the Supreme Court's reasons in these decisions cover a number of issues that are important not only to price-fixing class actions but class actions in general, including:

  • The court confirmed the standard of proof on certification motion is "some basis in fact" as established by the Supreme Court in Hollick, and is not the "balance of probabilities" standard.
  • On the issue of the class-wide harm, the plaintiff's expert evidence need only show there is a "reasonable and plausible methodology" for determining harm on a class-wide basis. The judge on a certification motion should not be engaged in resolving conflicts between experts.
  • The court held that the class must be "identifiable" in the sense that prospective class members must be able to determine whether or not they are part of the class based on available evidence. This means indirect purchaser class members must be able to determine whether the finished product they purchased actually contained the price-fixed ingredient or component in issue. The majority of the court upheld the appeal in the Sun-Rype case and denied certification of the indirect purchaser claims on the grounds the indirect purchaser class in that case was not "identifiable" on the evidence.
  • The court confirmed the aggregate assessment of damages provisions of the class proceedings legislation are procedural only and cannot be used to establish liability. In the context of a price-fixing class action, the aggregate damages provisions cannot be used to establish the fact of loss to direct or indirect purchasers.

Significance of decisions

These decisions will have a significant impact on price-fixing class actions in Canada. As a result of the conflict in the appellate jurisprudence, many existing Canadian price-fixing class actions have been on hold for as long as a year pending the release of these decisions. Not only will those cases now proceed, but the filing of new claims is expected to increase, particularly in BC where indirect purchasers have not been able to bring claims since the Court of Appeal's rulings in early 2011.

Further, the arguably low standard of proof on certification motions adopted by the Supreme Court of Canada could result in a greater proportion of these cases being certified as class actions and possibly more cases going to trial. Indeed, the deferral of contested factual and evidentiary issues from the certification judge to the trial judge is a recurrent theme in the Supreme Court's reasons.

Another result of these decisions is Canadian and United States law now directly conflict on whether indirect purchasers can maintain an antitrust price-fixing suit. In Canada, they can, while in the US, they cannot.

The US prohibition on indirect purchaser claims traces back to the US Supreme Court's 1977 decision in Illinois Brick. Since Illinois Brick, a number of individual US states have enacted state law indirect purchaser statutes, which have been held enforceable7. But the state-specific nature of those claims has resulted in smaller, state-based class actions, rather than large national or international class actions. Sometimes, these cases can be removed to federal court under the US Class Action Fairness Act, and then transferred to one federal court for coordinated proceedings under the Multi-District Litigation rules8. But often defendants must defend multiple, separate indirect purchaser lawsuits filed in various state jurisdictions.

The Canadian Supreme Court's decision can also be expected to have significant effects on manufacturers who do business in both Canada and the US. First, the decision may embolden class action plaintiffs lawyers—who have endured a number of significant defeats under US law in recent years—to bring broad-based indirect purchaser class actions in Canada. Second, the decision will likely result in a number of multinational entities confronting litigation under different legal standards simultaneously in Canada and the US. It will, therefore, become increasingly important for corporations facing such circumstances to have experienced counsel capable of coordinating the proceedings in the competing jurisdictions.

Norton Rose Fulbright was co-counsel to Archer Daniels Midland in Sun-Rype.


1 2013 SCC 58: A BC class proceeding brought on behalf of persons in BC who purchased HFCS (high-fructose corn syrup—a sweetener used in various food and beverage products), or products containing HFCS. 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.

2 2013 SCC 57: A BC class proceeding commenced on behalf of BC 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.

3 2013 SCC 59: A Quebec class action against manufacturers of dynamic random-access memory chips (DRAM) on behalf of persons in Quebec who purchased DRAM, or products containing DRAM. The applicant alleges that the defendants were engaged in a global price-fixing conspiracy in the market for DRAM.

4 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).

5 392 U.S. 481 (1968)

6 431 U.S. 720 (1977)

7 See Cal. v ARC Am. Corp., 490 U.S. 93 (1989).

8 See 28 U.S.C. § 1332(d) (Class Action Fairness Act); 28 U.S.C. § 1407 (Multidistrict litigation statute).

Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global legal practice. We provide the world's pre-eminent corporations and financial institutions with a full business law service. We have more than 3800 lawyers based in over 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members ('the Norton Rose Fulbright members') of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.

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.

In association with
Related Video
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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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