International Mass Actions and Class Actions - A. Canada

• Pages: 231-264

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CHAPTER IX

INTERNATIONAL MASS ACTIONS AND CLASS

ACTIONS – A. CANADA

This sub-chapter provides an overview of antitrust class action

litigation in Canada and consists of five parts. The first part provides a

brief history of private antitrust litigation in Canada, including the

growing importance of antitrust class action litigation. The second part

explores antitrust claims potentially suitable for class treatment in

Canada, including a review of statutory and common law causes of

action. Part three discusses class certification procedure. Part four

addresses antitrust class certification requirements and standards,

including a review of the Supreme Court of Canada’s recent antitrust

class action trilogy in which it rejected the Illinois Brick doctrine and

prescribed the standard of proof at the certification stage. Finally, part

five considers antitrust class action settlements in Canada.

A. Brief History of Private Antitrust Litigation in Canada

Antitrust law in Canada dates back to 1889 with the enactment of

federal criminal “anti-combines” legislation prohibiting conspiracies,

combinations and agreements that unduly restrained trade.1 A private

statutory right of action for damages has existed for the last forty years,

starting in 1976, when the civil statutory cause of action now found in

section 36 of the federal Competition Act was enacted.2

Since 1986, the Competition Act3 has been the primary antitrust

statute in Canada. It is administered by the Competition Bureau (the

“Bureau”),4 an independent government agency headed by the

1. An Act for the Prevention and Suppression of Combinations formed in

Restraint of Trade, S.C. 1889, c. 41 (Can.).

2. See An Act to Amend the Co mbines Investigatio n Act and the Bank Ac t

and to repeal an Act to amend an Act to amend the Combines

Investigation Act a nd the Criminal Code, S.C. 1974-75-76, c. 76 § 12;

Combines Investigation Act, R.S.C. 1970, c. C-23 § 31.1.

3. R.S.C., c. C-34 (Can.).

4. Competition Bureau, available at http://www.competitionb ureau.gc.ca.

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Commissioner of Competition. The main substantive provisions of the

Competition Act include criminal offences in Part VI (“Offences in

Relation to Competition”) and civil “reviewable matters” in Parts VII.1

(“Deceptive Marketing Practices”) and VIII (“Matters Reviewable by

Tribunal”). The criminal offences found in the Competition Act include

conspiracies between competitors (section 45), bid-rigging (section 47)

and intentional false or misleading representations (section 52).

Misrepresentations to the public,5 refusal to deal,6 price maintenance,7

tied selling,8 and abuse of dominance9 are civilly reviewable by the

Competition Tribunal10 (the “Tribunal”) and, in certain cases, the courts

under Parts VII.1 and VIII of the Competition Act. As discussed below,

section 36 of the Competition Act creates a private right of action for

damages only in respect of breaches of the criminal provisions in Part VI

or of an order made under the Competition Act, and not the civilly

reviewable practices.

Historically, there has been limited private competition litigation in

Canada (both in absolute terms and in comparison to the United States).

However, since the enactment of provincial class proceedings legislation

(which occurred at various times depending on the jurisdiction), antitrust

class actions have become common in Canada. A relatively recent

plaintiff-friendly shift in the approach by Canadian courts to the

certification of antitrust class actions brought on behalf of plaintiff

classes consisting in whole or in part of indirect purchasers—a

possibility under Canadian law insofar as (discussed below) the Illinois

Brick doctrine11 does not apply in Canada—is further increasing antitrust

class actions in Canada. Canadian plaintiffs frequently pursue both

“copycat suits” initiated after class proceedings have been commenced in

the United States and, to a much lesser extent, class actions targeting

anti-competitive conduct occurring within Canada only.

While historically Canadian antitrust class actions tended to follow

investigations and/or prosecutions by the Canadian Competition Bureau

and/or foreign competition authorities, it is increasingly common for

such litigation to be commenced in advance of an investigation by, or

5. Competition Act, § 74.01 (Misrepresentations to the public).

6. Id. § 75 (Refusal to deal).

7. Id. § 76 (Price maintenance).

8. Id. § 77 (Exclusive Dealing, Tied selling and Market Restriction).

9. Id. § 79 (Abuse of dominance).

10. Competition Tribunal, available at http://www.ct-tc.gc.ca.

11. Illinois Brick Co. v. Ill., 421 U.S. 720 (1977).

International Mass Actions and Class Actions – A. Canada

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despite a decision of, the Bureau (or foreign authorities) not to pursue or

to discontinue an investigation.12

To date, the largest number of Canadian antitrust class actions have

involved allegations of price-fixing and other cartel conduct, almost

always in the context of an alleged international cartel.13 However, there

have also been antitrust class actions involving misleading advertising

and (prior to amendments to the Competition Act which de-criminalized

resale price maintenance) price maintenance claims.14

Although such class actions now arguably constitute the most

important type of private competition litigation in Canada, the extent of

the activity in Canada is (still) not nearly as great as in the United States.

This is principally due to the relatively modest amounts awarded in

Canadian litigation generally, the infrequency of civil jury trials, the lack

of availability of treble damages to plaintiffs, and the relatively small

amount of commerce affected by anticompetitive conduct in Canada

12. Fanshawe College of Applied Arts and Tech. v. AU Optronics Corp.,

2015 CarswellOnt ¶¶ 115-20 (Can. Ont. S.C.J.) (WL) (no known

investigation by the Canadian Competition Bureau of the alleged cartel

involving liquid crystal display panels), Osmun v. Cadbury Adams

Canada Inc., 2010 CarswellOnt 2813 (Can. Ont. S.C.J.) (WL) (class

actions in respect of alleged conspiracy involving chocolate products

preceded disclosure of Bureau investi gation) and Pro-Sys Cons ultants

Ltd. v. Infineon Tech. AG, 2009 CarswellBC 3035 (Can. B.C.C.A.) (WL)

(class proceedings in respect of alleged conspiracy in respect of dynamic

random access memory or DRAM commenced despite discontinuance of

Bureau investigatio n).

13. E.g., Chadha v. Bayer Inc (2003), 223 D.L.R. (4th) 158 (Can. Ont CA)

[Chadha], aff’g (2001), 200 D.L.R. (4th) 309 (Can. Ont. Div. Ct), rev’g

(1999), 45 O.R. (3d) 29 (Can. Ont. S.C.J), leave to appeal to SCC denied

[2003] SCCA no 106 (Can.) (QL); Harmegnies v. Toyota Canada, [2007]

J.Q. No. 1072 (Can. Que. S.C.J.) (QL), aff’ d 2008 QCCA 380 (Can.),

leave to appeal to SCC refused, [2008] S.C.C.A. No. 173 (Can.) (QL);

Price v. Panasonic Canada Inc (2002), 22 CPC (5th) 382 (Can. Ont.

S.C.J.); Watson v. Bank of Am. Corp., 2015 BCCA362 (Can.); Shah v.

LG Chem, Ltd., 2015 ONSC 6148 (Can.).

14. E.g., Fairview Donut Inc. v. The TDL Group Corp., 2012 ONSC 1252

¶¶ 635-50 (Can.), aff’d 2012 ONCA 867 (Can.), leave to appeal to the

S.C.C. refused, [2013] S.C.C.A. No. 47 (Can.) (QL); Ontario Ltd. v.

Quizno’s Canada Resta urant Corp. (200 8), 89 O.R. (3d), r ev’d (2009), 96

O.R. (3d) 252 (Can. Ont. Div. Ct.), appeal dis’d, 2010 ONCA 466 (Can.);

Axiom Plastics v. E.I. Dupont Canada (2007), 87 O.R. (3d) 352 (Can.

Ont. S.C.J.), aff’d (2008) 90 O.R. (3d) 782 (Can. Ont. Div. Ct.); Murphy

v. Compagnie Amway, 2015 CF 985 (Can.).