Canada: Supreme Court Certifies Price-Fixing Class Actions Brought By Indirect Purchasers; Confirms Low Evidentiary Threshold For Certification

Last Updated: November 18 2013
Article by Heenan Blaikie

On October 31, 2013, the Supreme Court of Canada (the "Court") released its decisions in Pro Sys Consultants Ltd. v. Microsoft Corporation1 ("Pro-Sys"), Sun Rype Products Ltd. v. Archer Daniels Midland Company2 ("Sun-Rype"), and Infineon Technologies AG v. Option consommateurs3 ("Infineon"), (the "Trilogy"). In these long awaited decisions, the Court certified indirect purchaser classes in two cases4 and recognized that indirect purchasers of cartelized products (including Canadian consumers) have the right to pursue damages in private antitrust cases under the Canadian Competition Act.

The Court also confirmed the evidentiary standard on certification hearings under provincial class action legislation. However, the Court left key issues regarding how such class actions are to be managed unanswered. As trial courts wrestle with issues left open by the Court, much remains unanswered in how antitrust price-fixing cases will be managed in Canada.

By way of background, in split decisions in Pro-Sys and Sun-Rype, the British Columbia Court of Appeal held that indirect purchasers of cartelized goods did not have a right to sue under the Competition Act. The British Columbia Court of Appeal adopted the United States Supreme Court decisions in Hanover Shoe v. United Shoe Machinery5 which rejected the "passing-on" defence and Illinois Brick Co. v. Illinois6 where the court held, as a corollary to Hanover Shoe, that indirect purchasers had no cause of action to recover overcharges on cartelized goods which may have been passed on to them through the distribution chain. It dismissed the indirect purchaser claims and found that only direct purchasers had a cause of action.

In contrast, the Québec Court of Appeal reversed a decision of the Québec Superior Court and certified indirect purchaser claims in Infineon, rejecting the approach in Illinois Brick and the majority decision of the British Columbia Court of Appeal in Sun-Rype and Pro-Sys.

The Trilogy is significant to both the antitrust law bar, in finally determining whether indirect purchasers have a cause of action in Canada, as well as the class action bar, in reaffirming the certification test in Quebec and the common law provinces.

Indirect purchasers can participate in price-fixing class actions

In the Trilogy, the Court has clearly and definitively rejected the "passing-on defence" in Canadian law. The "passing-on defence" is typically raised by defendants that seek to limit their liability to direct purchasers who managed to pass on any overcharge to others in the distribution chain. The "passing-on defence" would allow defendants to argue that direct purchasers suffered no loss, having recovered any overcharge by passing it to others in the distribution chain. In rejecting the availability of the defence, the Court expressly accepted the US decision in Hanover Shoe, and confirmed that its own decision in Kingstreet Investments Ltd. v. New Brunswick (Finance)7 is not limited to the circumstances of that case, but applies to Canadian law of restitution in general.

However, the Court expressly rejected Illinois Brick (that passing-on cannot be raised offensively by indirect purchasers) as the "necessary corollary" of the rejection of the passing-on defence. Canadian consumers, regardless of whether they were direct purchasers or indirect purchasers of cartelized goods, have a right to maintain a cause of action against cartelists to recover an overcharge that has been passed on to them in price-fixing cases. However, as a result of the rejection of the passing-on defence, direct purchasers would be permitted to recover the entire amount of the overcharge, even if the overcharge had been passed on in the absence of actions by or including indirect purchasers.8

In the Court's view, the inclusion of direct and indirect purchasers in the same class does not enhance the risk of double recovery or multiple liability. The availability of the use of the aggregate damages provisions under provincial class action legislation provides trial courts with the tools to apportion recovery between direct and indirect purchasers once liability is established. Recovery by all class members from the defendants would be limited to the amount of the overcharge. Plaintiff's counsel could then determine (with the court's approval) the method of apportioning those damages to class members at different levels of the distribution chain.9 The Court held that Canadian courts can further manage the risk of multiple recovery by reducing damage awards or settlement amounts to account for recoveries in other actions or jurisdictions.10

The Trilogy deals only with the question of whether indirect purchasers can assert a cause of action to recover illegal overcharges passed on to them. However, it does not resolve any substantive issues regarding the nature of such claims in the context of statutory claims asserted under s. 36 of the Competition Act, or the interrelationship of indirect purchaser claims and direct purchaser claims in the context of the common law claims asserted by the representative plaintiffs in each of the Trilogy cases.

Evidentiary standard for certification

From the perspective of class action lawyers, the Trilogy reaffirms the evidentiary standard applicable on certification in both Quebec and the common law provinces.

At the certification stage of the proceedings, the motions court is required to assess the validity of the proposed class action in light of criteria applicable to the certification of class actions. In the Trilogy, the Court once again confirmed that the standard for certification is low, operating to screen or filter claims without any merit. It is not meant to be an assessment on the merits, particularly given the lack of any pre-certification discovery. Plaintiffs are not required to establish more than a "good colourable right" or "some basis in fact" for each element of the certification test, save for the requirement that the pleadings disclose a cause of action. Significantly, the Court reaffirmed its decision in Hollick v. City of Toronto12 and expressly rejected recent US decisions imposing a higher evidentiary threshold.13

Despite reaffirming that the certification test is low, the Court only certified two of the three proceedings on its application. In dismissing the certification motion in Sun-Rype, the Court found a lack of an identifiable class, which is required by s. 4(1)(b) of the British Columbia Class Proceedings Act. The Court held that the plaintiffs did not introduce sufficient evidence to show that members of the proposed class could identify that they purchased a good containing the cartelized product (high fructose corn syrup), since there was an uncartelized substitute that might also have been used in products purchased by end-use consumers.

The Court's analysis must be understood within the certification framework. The Trilogy does not change existing law on certification of class actions or existing law on price-fixing. At trial, judges will still have to determine whether a plaintiff is entitled to compensation.

Jurisdiction of the courts over foreign defendants

In Infineon, the Court discussed the issue of jurisdiction of Quebec courts and confirmed the reasoning of the Court of Appeal: Quebec courts have jurisdiction over a claim – be it a class action or an individual claim – when economic damage is suffered, as opposed to merely recorded, in the province. Damage suffered in Quebec is an independent connecting factor and there is no need for the alleged conspiracy to have occurred in Quebec. In Infineon, since petitioners suffered a pecuniary loss as a direct result of a contract made in Quebec, the jurisdiction of Quebec courts is established. In such a context, the existence of a contract concluded in Quebec14 is a juridical fact relevant to the issue of jurisdiction, regardless of the fact that the respondents were not parties to the contract.

Similarly, the Court affirmed the application of the "real and substantial connection" test in determining whether the British Columbia court15 had jurisdiction over conduct of foreign defendants. It clarified that recent decisions clarifying the test for jurisdiction16 have not overruled case law determining jurisdiction over foreign participants in price-fixing conspiracies.17


The Court has answered some of the high-level conceptual issues in consumer price-fixing class actions. It has adopted a policy-based approach based on restitutionary concepts with a view of compensating the ultimate victims of antitrust price-fixing cartels through the disgorgement of the overcharge to direct and indirect purchasers. The Court relied heavily on the ingenuity of trial counsel and trial judges to avoid the risk of double recovery or multiple liability. How this will be managed in practice is entirely unclear and may well yet require the Court to grapple with the questions left unanswered in the Trilogy.


1 2013 SCC 57, on appeal from the British Columbia Court of Appeal. The proposed class in Sun-Rype comprised of direct and indirect purchasers of purchasers of high fructose corn syrup or products containing high fructose corn syrup, a sweetener used in food products.

2 2013 SCC 58, on appeal from the British Columbia Court of Appeal. The proposed class in Pro-Sys comprised entirely of indirect retailer purchasers of licenses for Microsoft software or operating systems.

3 2013 SCC 5, on appeal from the Québec Court of Appeal. The proposed class in Infineon consisted of direct and indirect purchasers of dynamic random access memory ("DRAM") products, a product used in the manufacture of electronic devices. The central issue in each appeal was whether the indirect purchasers of the products alleged to have been the subject of price-fixing can maintain a cause of action against manufacturers.

4 In a split decision, the indirect purchaser class in Sun-Rype was not certified.

5 Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968) ("Hanover Shoe").

6 431 US 720 (1977) ("Illinois Brick").

7 2007 SCC 1, [2007] 1 S.C.R. 3.

8 Pro-Sys, paras. 24-34, 50; Sun-Rype, paras. 22-23; 38; Infineon, paras. 101-112. It is interesting to note that the Court did not discuss the specific language of the statutory cause of action contained in s. 36 of the Competition Act. Section 36 provides for compensation for "an amount equal to the loss of damage proved to have been suffered." It is unclear how the Court's statement at para. 23 of Sun-Rype that, in the absence of an indirect purchaser action, direct purchasers would be able to recover the entire amount of the overcharge is consistent with a statutory cause of action that requires actual damage or loss.

9 Sun-Rype, paras. 17-21; Infineon, para. 115.

10 Pro-Sys, paras. 35-41.

11 Meeting the low threshold set out in Hunt v. Carey Canada Ltd. [1990] 2 SCR 959.

12 [2001], 3 SCR 158.

13 See for example, In re: Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3rd Cir. 2008); Wal-Mart Stores, Inc. v. Dukes, 564 U.S. _____ (2011).

14 The contract was concluded over the Internet and was deemed under the Quebec Consumer Protection Act, R.S.Q. c. P-40.1, to have been concluded in Quebec.

15 This test applies to all Canadian common law provinces.

16 See Club Resorts Ltd. v. Van Breda 2012 SCC 17.

17 See Vitapharm Canada v. F. Hoffmann-LaRoche Ltd., (2002) 20 CPC (5th) 351 (ONSC), Fairhurst v. Anglo American PLC, 2012 BCCA 257 and British Columbia v. Imperial Tobacco Canada Ltd., 2006 BCCA 398.

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
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.