Chapter XI. Indirect Purchaser Litigation In Canada

• Pages: 275-304

275

CHAPTER XI

INDIRECT PURCHASER LITIGATION IN CANADA

As national economies globalize, and antitrust laws move toward at

least some degree of international harmonization, it is appropriate for

U.S. courts and practitioners to consider some of the lessons that can be

learned from other countries that have begun addressing the issues

presented by indirect purchaser litigation. Moreover, where the alleged

antitrust violation is global in scope, American practitioners should have

at least some understanding of the role that their part of the case will play

in the international arena.

Private antitrust enforcement is in its infancy in most jurisdictions

outside the U.S., but there are indications that increased availability of

private enforcement may be on the horizon. The European Commission,

for example, recently published a report detailing possible options to

facilitate private damages actions in its member countries.1020 The

Commission included in its report several alternatives for dealing with

the issues of indirect purchasers and the availability of the pass-through

defense.1021 To date, though, there remain few examples of countries

other than the U.S. that have actually dealt with such matters in the

context of private damage actions.1022 This Chapter therefore focuses on

1020. See Commission of the European Communities, Green Paper: Damages

Actions for Breach of the EC Antitrust Rules (Dec. 12, 2005), available

at http://ec.europa.eu/comm/competition/antitrust /others /actions_for_

damages/gp.html [hereinafter, Green Paper]. See also Commission of the

European Communities, Commission Staff Working Paper: Annex to the

Green Paper (Dec. 19. 2005), available at http://ec.europa.eu/comm/

competition/antitrust/others/. actions_for_damages/sp.html [hereinafter

Working Paper].

1021. Suggested options posed by the Commission’s Green Paper include: (1)

allowing the pass-through defense and permitting both direct and indirect

purchasers to sue; (2) prohibiting use of the pass-through defense and

barring indirect purchaser claims; (3) prohibiting use of the pass-though

defense, but allowing both direct and indirect purchasers to sue,

potentially opening the door to duplicative recovery; and (4) excluding

the pass-through defense and allowing both direct and indirect purchaser

suits, but requiring an allocation of the overcharge to prevent duplicative

recovery. Green Paper, supra note 1020, at 7-8; Working Paper, at 45-

51.

1022. A study compiled at the request of the European Commission found that,

as of 2004, no member states in the European Union had any case law on

276 Indirect Purchaser Litigation Handbook

the Canadian experience, which is farther along in its development of

private enforcement than most other jurisdictions, and can provide some

important lessons for American practitioners.

Similar to the Clayton Act in the U.S., the Competition Act in

Canada provides that “[a]ny person who has suffered loss or damage as a

result of [criminal violations] … may sue for and recover from the

[violator] … an amount equal to the loss or damage proved to have been

suffered by him.”1023 This Chapter, after briefly describing the substance

of Canadian antitrust (or “competition” law), explores the procedures for

asserting private antitrust claims, including indirect purchaser claims.

A. Brief Synopsis of Canadian Competition Law

The federal Competition Act1024 is Canada’s principal competition

legislation. It applies to almost all sectors of the Canadian economy. The

Competition Act deals with four broad areas: criminal anticompetitive

conduct; civil anticompetitive conduct; mergers; and marketing practices.

Some of the criminal prohibitions are similar to those found in U.S.

law—conspiracy and bid rigging1025—but others (such as price

maintenance)1026 might not be viewed as criminal offenses in the U.S.

Section 45 prohibits agreements that lessen competition “unduly,”1027

which imports a standard somewhere between per se and rule of

the subject of indirect purchaser suits. Denis Waelbroeck, Donald Slater

& Gil Even-Shoshan, Study on the Conditions of Claims for Damages in

Case of Infringement of EC Competition Rules: Comparative Report, at

78 (Aug. 31, 2004), available at http://ec.europa.eu/comm/competition/

antitrust/others/actions_for_damages/study.html.

1023. Competition Act, R.S.C. 1985, c. C-34, § 36.

1024. No Canadian province has adopted competition legislation of general

application. Some federal and provincial regulatory legislation deals with

competition issues for particular industries; but these are few, and limited.

The only area of significant overlap is in the field of marketing practices,

where provincial consumer protection legislation frequently overlaps with

the Competition Act.

1025. Competition Act §§ 45, 47.

1026. Id. § 61.

1027. For example, § 45 prohibits conspiracies, combinations, agreements, and

arrangements to “to prevent, limit or lessen, unduly, the manufacture or

production of a product or to enhance unreasonably the price thereof.”