Court Sends Antitrust Class Action Claim to the Penalty Box

On May 27, 2021, Chief Justice Crampton of the Federal Court of Canada granted a motion brought by McCarthy Tétrault on behalf of our client, Hockey Canada,[1] striking out a class action claim and denying the plaintiff’s motion to amend. As described further below, the decision establishes important new law concerning the criminal cartel provisions of the Competition Act.

Mohr v. National Hockey League et al.[2] involved a class action claim brought in Federal Court alleging a vast conspiracy among all of the major hockey leagues in North America — the NHL, AHL, ECHL, CHL (and its member leagues, the WHL, OHL, and QMJHL) — and Hockey Canada to deny junior hockey players career opportunities and compensation. The suit sought $825 million in damages, and received extensive national media coverage. If successful, the claim would have represented an existential threat to the future of major junior hockey in Canada.

Within days of the first case management conference, Hockey Canada and the CHL defendants brought a motion to strike the claim in its entirety, arguing that:

  • The plaintiff errantly pleaded a violation of section 48 of the Competition Act, governing conspiracies relating to professional sport, as that provision applies only to agreements between teams and clubs within the same league, and not to an inter-league conspiracy as alleged by the plaintiff in his claim; and

  • The general conspiracy offence in section 45 of the Act did not apply to the conduct alleged, as the defendants were not “competitors” for the product or service at issue and, in any event, section 45 does not apply to agreements among buyers for the purchase of a product or service.

The Court accepted both of these arguments, acknowledging them to be “an insurmountable hurdle for the plaintiff”.[3] Notably, the Mohr decision represents the first substantive analysis of section 48 of the Competition Act by a Canadian court. Among other things, Chief Justice Crampton confirmed that:

  • The section 48 offence applies only to intra-league, not inter-league, conspiracies, finding that the “words, that scheme and the legislative history are all more consistent with the narrower interpretation advanced by the Responding Defendants, who maintain that the purview of subsection 48(1) is limited to the intra-league agreements described in subsection 48(3).[4]

  • As stipulated by section 48(3), any impugned agreement must also “relate exclusively” to the matters set out in section 48(1), that is: (1) agreements “to limit unreasonably the opportunities for any other person to participate, as a player or competitor, in professional sport or to impose unreasonable terms or conditions on those persons who so participate”; or (2) agreements to “limit unreasonably the opportunity for any other person to negotiate with and, if agreement is reached, to play for the team or club of his choice in a professional league.”[5] To the extent that an alleged agreement extends to other matters or conduct, it must necessarily fall outside the scope of section 48.

The decision is also the first to expressly recognize what cartel defence practitioners have long maintained, and the Competition Bureau has recently expressly acknowledged,[6] that section 45 of the Competition Act does not apply to agreements between buyers of a product or service. Our motion to strike dealt at length with the history and evolution of the offence, with much of this detail included in the Court’s decision,[7] culminating in the Court’s conclusion that sections 45(1)(a)-(c) “do not apply to the purchase or other acquisition of a product “.[8]

Interestingly, Chief Justice Crampton left a sliver of room for potential future buy-side agreement enforcement under section 45, noting that “I do not exclude the possibility that paragraph 45(1)(c) may apply to a supplier boycott or other ‘hard core cartel’ agreement among competitors in a downstream market to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product in respect of which they compete”, while acknowledging that “[t]he agreements alleged in the Amended Statement of Claim are plainly not of this type.”[9] Although this statement was clearly obiter dicta in the reasons for decision, one expects that any such agreement would need to result in some restrictions of output at the upstream level to even potentially engage section 45.

This decision represents a resounding victory for Hockey Canada and the CHL defendants, and stands as an important reminder to would-be plaintiffs that the cartel offences in the Competition Act are penal provisions and, consistent with longstanding jurisprudence, are to be narrowly construed.

McCarthy Tétrault LLP represented Hockey Canada, with a team led by Casey Halladay, including Isabelle Vendette, Dominic Thérien, Akiva Stern, and Stéphanie St-Jean.

[1] The motion was jointly brought by Hockey Canada and the Canadian Hockey League (and its member leagues, the WHL, OHL and QMJHL), with the CHL defendants ably represented by Norton Rose Fulbright.

[2] Case T-1080-20, Federal Court of Canada.

[3]Mohr v. National Hockey League et al., 2021 FC 488, at para 35.

[4]Ibid., at para 85.

[5]Ibid., paras 68, 70, 74 and 85.

[6]See Competition Bureau, News Release, “Competition Bureau statement on the application of the Competition Act to no-poaching, wage-fixing and other buy-side agreements”, 27 November 2020, https://www.canada.ca/en/competition-bureau/news/2020/11/competition-bureau-statement-on-the-application-of-the-competition-act-to-no-poaching-wage-fixing-and-other-buy-side-agreements.html. See also our client bulletin on those developments, “Canada’s Competition Act: No Poach, No Problem? A Qualified Yes”, 27 November 2020, https://www.mccarthy.ca/en/insights/articles/canadas-competition-act-no-poach-no-problem-qualified-yes.

[7]Supra, note 3 at paras 50-62.

[8]Ibid., at para 43.

[9]Ibid.

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