Indirect Purchaser Litigation In Canada

In an era of increasingly globalized markets and economies, one
increasingly encounters antitrust complaints having some
international aspect. This is particularly true in the context of matters
involving indirect purchasers, since supply and distribution chains
frequently involve expansive networks that extend across borders.
There is a growing appreciation among U.S. courts and legal
practitioners of the developing body of foreign jurisprudence, policy,
and legislation that may have relevance to the resolution of antitrust
concerns. Whether for comparative analysis of the merits and
disadvantages of alternative approaches to considering indirect
purchaser issues, or when addressing questions of extraterritorial
impact and risk, it is helpful to have some understanding of the
international arena.
Canada’s approach to indirect purchaser claims is a relevant
example. Class actions were introduced into Canadian Provincial
jurisdictions decades ago; however, the jurisprudence has been
relatively slow to develop as few cases have proceeded to
determination on the merits. Until recently, there was considerable
uncertainty in Canada regarding whether, and to what extent, indirect
purchasers could pursue civil remedies for alleged antitrust wrongs.
A lack of clear, consistent guidance from the Canadian courts
eventually led to direct conflict among the appellate courts of
different Canadian jurisdictions. That direct conflict, in turn, brought
this issue before the Supreme Court of Canada.
In 2012, the Supreme Court of Canada heard arguments in a
trilogy of cases that would determine whether indirect purchasers
have a legal cause of action in Canada to recover antitrust losses. In
October 2013, in decisions released concurrently in the three cases,
the Supreme Court concluded that indirect purchaser claims are
recognized in Canadian law. The Supreme Court “Indirect Purchaser
Trilogy,” as it has become known, has significantly changed the
Canadian legal landscape.
When considered together with Canada’s expansive approach to
jurisdiction, Canada’s new approach to indirect purchasers and
private enforcement is likely to prove increasingly relevant for U.S.
practitioners and their clients. This Chapter provides a brief overview
of Canadian competition (or antitrust) law, and the avenues for
pursuing indirect purchaser claims in Canada. It reviews the
development of indirect purchaser legal claims in Canada, and the
conflict in the case law that eventually culminated in the Indirect
346 Indirect P urchaser Litigation Ha ndbook
Purchaser Trilogy. Finally, this Chapter examines the Indirect
Purchaser Trilogy and considers its potential extraterritorial impact.
A. Brief Synopsis of Canadian Competition Law
The primary legislation governing competition in Canada is the
federal Competition Act (the “Act”).1 The Act’s stated purpose is to
“maintain and encourage competition in Canada in order to promote
the efficiency and adaptability of the Canadian economy, in order to
expand opportunities for Canadian participation in world markets
while at the same time recognizing the role of foreign competition in
Canada, in order to ensure that small and medium-sized enterprises
have an equitable opportunity to participate in the Canadian economy
and in order to provide consumers with competitive prices and
product choices.”2
The Act governs most commercial conduct in Canada. The
legislation contains both criminal and civil provisions, as well as
private rights of action.
Examples of criminal offenses contained in the Act include
conspiracy,3 bid-rigging,4 some types of misleading advertising,5
deceptive telemarketing,6 and pyramid schemes.7 The Act also
contains a foreign directed conspiracy offense, which criminalizes
any i mplementation by a Canadian corporation of “a directive,
instruction, intimation of policy or other communication, given by a
person outside Canada “who is in a position to direct or influence the
policies” of the Canadian company, where the communication is “for
the purpose of giving effect to a conspiracy.”8
There were important changes to the Act that came into effect in
March 2010.9 Among the changes were amendments to the criminal
offense provisions, including a shift fr om Canada’s former partial
rule of reason approach to a new per se offense.10
In addition to criminal offenses, the Act also describes
“reviewable” practices. These practices are considered potentially
anticompetitive. Reviewable practices include refusal to deal;11 price
1. Competition Act, R.S.C. 1985, c. C-34 (Can.).
2. Id. § 1.1.
3. Id. § 45.
4. Id. § 47.
5. Id. § 52.
6. Id. § 52.1.
7. Id. § 55.1.
8. Id. § 46.
9. Budget Implementation Act, 2009, S.C. 2009, c. 2, § 444 (Can.).
10. Competition Act, R.S.C. 1985, c. C-34, §45(1) (Can.).
11. Id. § 75.
Indirect P urchaser Litigation In Ca nada 347
maintenance;12 exclusive dealing, tied selling, and market
restriction;13 and abuse of dominant market position.14 Reviewable
practices that substantially prevent or lessen competition may be
restrained by the Competition Tribunal, a specialized adjudicative
body for non-criminal competition matters.15
While the stated purpose of the Act is to “maintain and
encourage competition in Canada,”16 the Act may apply to conduct
and companies outside of Canada.17
B. Private Actions Under the Competition Act
Canadian law does not recognize a tort of breach of statute,18
although there is continuing uncertainty as to whether breach of the
Competition Act constitutes a basis for a claim for common law
conspiracy.19 Remedies for breach of the Act are limited to two
statutory avenues expressly provided for in the Act: (i) a limited
opportunity to seek leave to make a private application to the
Tribunal;20 and (ii) a right to bring a civil action in Canadian courts to
recover loss or damage suffered as a result of an offense under the
1. Application to the Tribunal
Section 103.1 of the Act provides a limited ability for a person to
initiate proceedings before the Tribunal if a person is directly and
substantially affected by certain “reviewable” trade practices.22
Under this section, a person may apply to the Tribunal for leave to
make an application for a finding that another person is engaging in
restrictive trade practices of refusal to deal,23 price maintenance,24
exclusive dealing, market restriction, or tied selling.25
12. Id. § 76.
13. Id. § 77.
14. Id. § 78.
15. Id. Part VIII, “Matters Reviewable by Tribunal”, §§ 75 -103.1.
Competition Tribunal Act, R.S.C. 1985, c. 19 (2nd Supp.) (Can.).
16. Competition Act, R.S. 1985, c. C-34, §1.1 (Can.).
17. See, e.g., Sun-Rype Products Ltd. v. Archer Daniels Midland
Company [2013] 3 SCR 545, 2013 SCC 58, ¶¶ 46-47.
18. The Queen (Can.) v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205.
19. See Wakelam, 2014 BCCA.
20. Competition Act, R.S.C. 1985, c. C-34, §103.1 (Can.).
21. Id. § 36(1).
22. Id. § 103.1.
23. Id. § 75.
24. Id. § 76.
25. Id. § 77.

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