Can indirect purchasers claim damages in tort for breaches of
the Competition Act? This was one of the issues before the
British Columbia Supreme Court in Fairhurst v Anglo American
PLC, 2014 BCSC 2270. Madam Justice Brown considered
the law on this issue to be contradictory, and held that the claims
based in tort were not "bound to fail". The claims were
This outcome is somewhat surprising, given the British Columbia
Court of Appeal's decision in Wakelam v Wyeth Consumer
Healthcare/Wyeth Soins de Sante Inc, 2014 BCCA 36, from earlier this year. The
Court of Appeal held that the Competition Act
comprehensively codifies the remedies available for a breach of the
Act, and therefore that it is not possible to claim equitable
remedies (such as restitution) based solely upon a breach of the
Act. The Court also suggested that breaches of the Competition
Act would be incapable of supporting claims based in tort (as
distinct from claims based on one of statutory causes of action
available under the Act). In Watson v Bank of American
Corporation, 2014 BCSC 532, the B.C. Supreme Court followed
Wakelam, and held that it was plain and obvious that tort
claims based solely on breaches of the Competition Act
would fail (at para. 190).
The same types of tort claims were made in Fairhurst.
The plaintiff, an indirect purchaser, alleged price-fixing and
bid-rigging in relation to diamonds. Amongst other things, the
plaintiff claimed damages based on the torts of unlawful means and
unlawful means conspiracy, and relied mainly on breaches of the
Competition Act as constituting the "unlawful
means". The defendants argued, following the B.C. Court of
Appeal decision in Wakelam, that plaintiffs cannot rely on
Competition Act breaches as the "unlawful means"
for either tort, because Parliament intended that section 36 of the
Competition Act be the exclusive civil remedy for
plaintiffs harmed by anticompetitive conduct.
Justice Brown rejected this argument, however, mainly in
reliance on the Supreme Court of Canada's decisions in
Pro-Sys Consultants Ltd v Microsoft Corporation, 2013 SCC 57, and A.I. Enterprises Ltd v
Bram Enterprises Ltd, 2014 SCC 12. In Pro-Sys, the Supreme
Court of Canada declined to strike claims for unlawful means and
unlawful means conspiracy, even though – as in
Fairhurst – they were based in breaches of the
Competition Act. In Bram, the Supreme Court of
Canada dealt with the elements of the unlawful means tort, and
suggested that a breach of statute could constitute "unlawful
means" for the purpose of the unlawful means conspiracy tort.
A case involving a breach of the Combines Investigation
Act (the predecessor to the Competition Act) was
favourably cited. Justice Brown described these decisions as
contradictory to Wakelam, but believed that she was bound
by the higher authority of the Supreme Court of Canada.
In our view, the viability of tort claims based on breaches of
the Competition Act remains an open question. While the
Supreme Court of Canada declined to strike such claims in
Pro-Sys, it did so solely on the basis that the elements
of the unlawful means torts were in flux, pending the release of
the decision in Bram (which at the time was still under
reserve). The Supreme Court of Canada did not give detailed reasons
for declining to strike the claims, and did not accept or reject
the codification argument from Wakelam (that decision had
not yet been released). The decision in Bram was released
after Wakelam, but only one day after, and it does not
engage with the codification issue either.
How to reconcile Wakelam on the one hand
with Pro-Sys and Bram on the other will be
before the British Columbia Court of Appeal next week, when it
begins hearing the appeal of the Watson decision. It
remains to be seen what approach will be taken by courts in Ontario
and other provinces, when faced with the codification argument. The
law in British Columbia is currently that breaches of the
Competition Act can be used to support claims in tort, but
not to support claims in equity. If there is any rational basis for
this distinction, courts have yet to suggest it.
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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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