This Week at the SCC (01/11/2013)

The Supreme Court of Canada released judgments in three cases and denied leave to appeal in one case of interest to Canadian businesses and professions.

In a trilogy of cases (Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57, Sun-Rype Products Limited v. Archer Daniels Midland Company, 2013 SCC 58  and Infineon Technologies AG v. Option consommateurs, 2013 SCC 59)  the Supreme Court of Canada recognized the right of indirect purchasers to assert competition claims while confirming its rejection of the "passing on" defence in this context.

The central issue in these appeals was whether indirect purchasers may assert actions based on alleged anti-competitive conduct and, if so, whether classes containing a mix of both direct and indirect purchasers are permissible. Indirect purchasers are those who have purchased the product not directly from the alleged over-chargers, but from an intermediary at some point in the chain of distribution.

Together, these three decisions permit, and set out the framework for, indirect purchaser actions in Canada. They also provide some important guidance on other elements of certification including the evidentiary burden and the role of aggregate damages provisions. My colleagues have prepared a detailed analysis of these cases and their impact on Canadian class action law and on consumer litigation more generally; their analysis can be found here.

Also, leave to appeal from the Federal Court of Appeal’s decision in Reliance Comfort Limited Partnership v. Commissioner of Competition, 2013 FCA 129 was denied.

The Commissioner of Competition commenced an application for an abuse of dominance proceeding against Reliance with respect to certain local markets for residential hot water heaters. To succeed in an abuse of dominance proceeding, the Commissioner has to prove three things: first, that Reliance “substantially or completely controls, throughout Canada or any area thereof, a class or species of business”, second, that Reliance has engaged in a practice of anti-competitive acts; and third, the practice has had, is having, or is likely to have the effect of preventing or lessening competition substantially in the market.

Reliance served the Commissioner with a demand for particulars to which there was, in Reliance’s view, an inadequate response. Reliance sought an order striking the Commissioner’s application, which was denied. The Federal Court of Appeal dismissed the appeal. Reliance appealed further,  arguing that a respondent facing a regulatory claim for a significant administrative monetary penalty should be afforded protection under s. 11 of the Charter and s. 2(e) of the Bill of Rights and claiming that the Federal Court of Appeal had erred in not affording Reliance such protection. Reliance also argued that the Competition Bureau had unilaterally shifted the persuasive burden relating to one element of the actus reus of a regulatory offence and the Federal Court of Appeal had erred in law in upholding this.

The Supreme Court declined to hear the appeal.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.




"passing on" defence Competition Act



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