Canada: Recent Developments In Competition Class Actions In Canada

Last Updated: January 19 2010
Article by Donald B. Houston and Emily Rix

Most Read Contributor in Canada, September 2018

Competition class actions are on the upswing in Canada, especially those involving allegations of price-fixing. Two upcoming developments could have a significant impact on whether the number of competition class actions continues to increase:

  • the ultimate outcome of two class certification applications in British Columbia and Ontario; and
  • the coming into force of amendments to Section 45 of the Competition Act on March 12, 2010.

The British Columbia and Ontario Applications

In a class action alleging price-fixing, classes of purchasers of the allegedly price-fixed products claim damages for higher prices paid (overcharges) as a result of the alleged conspiracy. To date, there have been several settlements of competition class actions, but plaintiffs have had limited success in contested certification applications. That is largely because price-fixing allegations raise difficult issues relating to the pass-through of any overcharge through the distribution chain. While the existence (or not) of a conspiracy can be an issue common to all class members, that is not the end of the story: the plaintiffs must also prove where in the distribution chain any loss was suffered. Members of the proposed class may have conflicting interests, especially when the proposed class includes direct and indirect purchasers. Hence, liability may not be a common issue for the class, and a class proceeding may not be the preferable procedure for resolution of the dispute. In recent cases, the British Columbia and Ontario courts took different approaches to these issues and came to different conclusions. The ultimate outcome of these cases could have a significant impact on future class actions in this area.

Pro-Sys Consultants Ltd. v. Infineon Technologies AG

In its May 2008 decision in Pro-Sys Consultants Ltd. v. Infineon Technologies AG, the British Columbia Supreme Court refused to certify a class action on behalf of direct and indirect purchasers of DRAM (Dynamic Random Access Memory) products, which are memory chips used in personal computers and other "high tech" products. The proposed class was " ... all persons resident in British Columbia ... who purchased DRAM or products which contained DRAM in, into or from British Columbia ...." The court denied certification because the plaintiffs had failed to establish that liability to class members was a common issue: the plaintiffs did not demonstrate "a class-wide basis of establishing that an overcharge filtered down to and was borne by direct and indirect purchasers of DRAM products in British Columbia." Without this methodology to identify harm on a class-wide basis, the court found that the case "dissolves into a series of individual inquiries that would overwhelm the common aspects of the case." The decision has been appealed to the British Columbia Court of Appeal and the appeal court's decision is under reserve.

Irving Paper Ltd. v. Atofina Chemicals Inc.

In contrast, the Superior Court of Ontario, in its September 2009 decision in Irving Paper Ltd. v. Atofina Chemicals Inc., granted certification of a proposed class consisting of "all persons in Canada ... who purchased hydrogen peroxide, products containing hydrogen peroxide, or products produced using hydrogen peroxide in Canada ...." The proposed class included virtually the entire Canadian population. Nevertheless, the court granted certification on the basis that a) it is not necessary for plaintiffs to demonstrate that liability is a common issue for all members of the class, and b) with respect to pass-through, at the certification stage, the court only needs to be satisfied that a "methodology may exist for the calculation of damages." Hence, the court certified the case by essentially deferring the pass-through issue to the trial judge. The defendants in the hydrogen peroxide case have sought leave to appeal the decision from the Ontario Divisional Court.

The approaches taken by the courts in these two cases are markedly different. If the British Columbia Court of Appeal ultimately accepts the DRAM case approach of requiring plaintiffs to demonstrate, at the certification stage, a viable method of dealing with pass-through issues, plaintiffs will continue to have difficulty certifying price-fixing cases. On the other hand, if the courts adopt the approach of deferring that issue to trial, as was done in the Ontario hydrogen peroxide case, more cases are likely to be certified.

Competition Act Amendments

In January 2009, the Parliament of Canada enacted significant amendments to the Competition Act. Most of those amendments came into force in 2009, but one of the more significant amendments was deferred to March 12, 2010 — the one changing the conspiracy provisions in Section 45 of the Competition Act. For a discussion of details of changes to Section 45 and other significant changes to Canada's competition laws, see our August 2009 issue.

The current Section 45 requires the Crown (and class action plaintiffs) to demonstrate in a price-fixing case that the agreement in question is likely to lessen competition "unduly." Under the new Section 45, that element will be removed for agreements among competitors involving price-fixing, market allocation or supply restriction. Instead, those agreements will be subject to criminal prosecution and civil liability upon proof of the existence of the agreement. The Crown and class action plaintiffs will no longer be required to prove that the alleged conspiracy is likely to have anti-competitive effects. This will bring Canada's conspiracy law more in line with that of the United States, where there has been per se liability for so called "hard core" price-fixing for a considerable period of time.

From a class action perspective, the new Section 45 will make it easier for class action plaintiffs to prove liability by removing the requirement that they prove anti-competitive effects. This may lead to some increase in class action activity.

McCarthy Tétrault Notes:

The new Section 45 may encourage plaintiffs' class action counsel to bring more price-fixing cases. However, under the new Section 45, the plaintiffs will still have to prove damages and will still have to deal with "pass-through" issues. As such, whether the number of competition class actions in Canada will continue to increase is likely to depend more on the outcomes of the DRAM and hydrogen peroxide cases than on the enactment of new Section 45.

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 Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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