Court of Appeal for British Columbia bars indirect purchaser suits

Posted on April 19, 2011

Katherine L. Kay and Mark Walli

On April 15, 2011, the Court of Appeal for British Columbia released judgments in two competition class actions which concluded for the first time in Canada that indirect purchasers of allegedly price-fixed products “have no cause of action recognized in law.”  Pro-Sys Consultants Ltd. v. Microsoft (Microsoft) and Sun-Rype Products Ltd. v. Archer Daniels Midland Company (Sun-Rype) were appeals heard one after the other by the same panel of three judges. Both cases were decided by a two to one majority and overturned chambers judgments certifying class actions (see  Microsoft and Sun-Rype respectively) .

The majority judgments found that the issue of whether indirect purchasers could sue to recover a price-fixing overcharge passed on to them by the defendants’ customers (or other intermediaries in the product distribution chain) was a “pure question of law” capable of being resolved at the pleadings or class certification stage of the case, and that it was “plain and obvious” that indirect purchasers had no such claims.

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Credit cards face class action in Canada

Posted on April 1, 2011

A class action was commenced on March 28, 2011 against VISA™ and MasterCard™ and the major Canadian banks, in British Columbia, Canada. Mary Watson, owner of a furniture store in Vancouver, is the representative plaintiff. 

The suit alleges that, contrary to s. 45 of the Competition Act, the defendants fixed, maintained, and controlled the Merchant Discount Fees charged to merchants who accept credit cards as payment, monitored adherence to the Fees, and also controlled the supply of credit card network services. Section 36 of the Competition Act permits private parties to bring actions for damages suffered as a result of criminal (but not civil) violations of the Act. According to the plaintiffs, merchants in Canada paid $5 billion dollars in Merchant Discount Fees in 2009.

This class action follows on the heels of related cases in Canada and the United States and Europe. In December 2010, the Competition Bureau filed an application with the Canadian Competition Tribunal against VISA and MasterCard under s. 76 of the Competition Act, a civil provision enabling the Tribunal to prohibit anti-competitive resale price maintenance (being civil in nature, the case will not permit private parties to bring actions for damages suffered, even if the Commissioner’s case succeeds). The Bureau alleges that each of VISA and Mastercard require banks to impose rules which, among other things, prevent merchants from encouraging the use of cards with lower discount fees, thereby lessening competition between and among the credit card networks. Each of VISA and Mastercard dispute the Commissioner’s claims. The Department of Justice in the United States had previously brought a similar case in the United States against each of VISA, Mastercard and American Express (VISA and Mastercard agreed to a settlement in late 2010, while the case against American Express is ongoing), as has the European Commission.

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