The Competitor : Canada Competition / Antitrust Blog by Stikeman Elliott Lawyers & Attorneys

Susan M. Hutton and Solène Murphy -

April 3, 2013 the Ontario Court of Appeal released its reasons for decision in R v. Dowdall, affirming the Superior Court’s earlier decision to commit 17 defendants to stand trial on charges of bid-rigging under s.47 of the Competition Act. The defendants had argued that tenders submitted to pre-qualify as approved suppliers, or to create a standing order, if and when such services were required, was not a “bid or tender” and thus fell outside the ambit of the prohibition against bid-rigging.

Both the Superior Court and Court of Appeal agreed that the preliminary inquiry judge reasonably concluded that there was some evidence that the process of obtaining a Standing Offer Agreement was contractual and could be considered a “request for bids or tenders” under the bid-rigging offence.

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Sultana L. Bennett -

On April 15, 2013, the Competition Tribunal dismissed the Competition Bureau’s application (the Application) against Canada’s largest real estate board, the Toronto Real Estate Board (TREB). The Tribunal found that the abuse of dominance provision under section 79 of the Competition Act (the Act) did not apply to the facts of the case, which pertained to TREB’s membership rules governing the use of its Multiple Listing Service (MLS) data.

The Bureau’s May 27, 2011 application requested that TREB eliminate rules allegedly denying its real estate agent members the ability to introduce Internet-based real estate brokerage services by limiting the use the members could make of the MLS listings and related data.

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Susan M. Hutton, Paul Beaudry and Solene Murphy -

On February 25, 2013, the Federal Court of Appeal (FCA) released its decision upholding the Competition Tribunal’s Order requiring that Tervita Corporation (formerly known as CCS Corporation) divest the Babkirk hazardous waste landfill site in northeastern British Columbia following its acquisition of Complete Environmental Inc. The decision provides guidelines for determining a reasonable period of time for likely market entry in a “prevent” case, as well as clearer guidance on what is “in” and what is “out” for a section 96 efficiencies defense.  It also marks a rare challenge to a closed, and non-notifiable transaction.

Background

In February 2010, Complete received regulatory approval to open the Babkirk landfill. Construction had not yet commenced when Tervita acquired the site from Complete. At the time of the transaction, Tervita operated the only two operational secure landfills for hazardous waste in British Columbia.  The Commissioner of Competition therefore alleged that the transaction substantially prevented competition in hazardous waste landfill in northeastern B.C.

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Michael Kilby -

On September 12, my colleagues in the Competition & Foreign Investment Group hosted a breakfast seminar at which many of the recent developments in Canadian competition and foreign investment law were discussed and analyzed. As many of you know, there have been a number of important legal changes in the competition field in recent years. For example, a per se criminal offence for cartel conduct and a new civil provision for reviewing certain types of competitor collaborations have been introduced, competition law-related class action lawsuits have proliferated, a US-style two-stage merger review process has been created, penalties and enforcement activities associated with misleading advertising have been enhanced, and amendments to the Investment Canada Act have come into effect.

During the seminar, Paul Collins, having just returned to Stikeman Elliott following a two-year term as Senior Deputy Commissioner – Mergers Branch, spoke of recent developments at the Competition Bureau with a focus on recent enforcement activities and priorities. Litigator Katherine Kay summarized the current state of play of competition law class actions in Canada, while Shawn Neylan emphasized the importance of implementing an effective competition law compliance program in light of the Bureau’s recent enforcement activities. Meanwhile, Susan Hutton provided an update on and explained the significance of recent amendments and proposed amendments to the Investment Canada Act in relation to enforcement, review thresholds and new filing requirements.

A video and booklet of the seminar are available.

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 Susan M. Hutton & Edwin Mok -

The Canadian landfill company that lost a merger challenge at the Competition Tribunal in Canada’s first pure prevention of competition case has appealed to the Federal Court of Appeal.

On January 4, 2011, the Commissioner of Competition applied to the Tribunal for an order to dissolve a merger between CCS Corporation and Complete Environmental Inc. In the alternative, the Commissioner sought an order for CCS to divest itself of Complete or Complete’s wholly–owned subsidiary, Babkirk Land Services. Babkirk had obtained approval to operate a secure landfill site in northeastern British Columbia. As such, Babkirk had been poised to compete directly with CCS. The Commissioner alleged that the merger between CCS and Complete would result in a substantial prevention of competition in the market for hazardous waste disposal in northeastern British Columbia.

On May 29, 2012, the Tribunal ruled in favour of the Commissioner, finding that CCS’s acquisition of Complete would likely prevent competition substantially in the market for the supply of landfill services for solid hazardous oil and gas waste. The Tribunal ordered that CCS divest its shares or assets of Babkirk by December 28, 2012. On July 17, 2012, the Tribunal further issued a divestiture procedure order.

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Susan M. Hutton and Robert Mysicka

A recent decision by Justice K.M. van Rensburg of the Ontario Superior Court of Justice has affirmed the applicability of the Regulated Conduct Doctrine (RCD) as a possible defence to conduct prohibited by the Competition Act while also clarifying the extent to which evidence is necessary in order to assert the defence.  

In Fournier Leasing Company Ltd. v. Mercedes-Benz Canada Inc. the plaintiffs, a group of automobile dealers who import BMW, Mercedes Benz, and Mini vehicles into Canada, brought a motion to certify a class proceeding against BMW and Mercedes Canada for conduct that they alleged breaches Part VI of the Competition Act and also constitutes a tort. In regards to the Competition Act claims, the plaintiffs in their pleading alleged the existence of a conspiracy between the two car manufacturers and their dealers.

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Susan M. Hutton and Robert Mysicka -

On July 30, 2012 Corporate Research Group Ltd. (CRG) pled guilty to a charge of bid-rigging under subsection 47(2) of the Competition Act. The bid-rigging was in relation to federal government contracts for real estate advisory services in Canada.

The guilty plea follows the Competition Bureau’s investigation into CRG’s activities after being contacted by the Department of Public Works and Government Services Canada (PWGSC). The specific complaint related to a Request for Standing Offers (RFSO) issued by PWGSC for real estate advisory services. In its guilty plea, CRG admitted that Louis Facchini, a company representative carrying on business as First Porter Consultancy, submitted bids, in response to the RFSO, that were arrived at through an agreement that was not disclosed to PWGSC.

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Ashley Weber -

On May 29, 2012, the Competition Tribunal ruled in favour of the Commissioner of Competition, and ordered CCS Corporation to divest a hazardous waste landfill site, the acquisition of which the Commissioner had alleged would result in a substantial prevention of competition in the market for hazardous waste disposal in northeastern British Columbia. This was the first contested challenge to a merger by the Commissioner since 2005. 

Complete Environmental had received regulatory approval to open the Babkirk landfill in February 2010, and had not yet started construction when CCS Corporation acquired the site. CCS already operates the only two operational secure landfills for hazardous waste in British Columbia. The Commissioner alleged that, through the acquisition of the Babkirk landfill, CCS had prevented the entry of a potential competitor, thereby substantially preventing competition.

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Michael Laskey -

On March 16, the Competition Tribunal rejected a motion by the Insurance Bureau of Canada for the rescission of an interim supply agreement in its ongoing dispute with the Used Car Dealers Association of Ontario despite objections from one of IBC’s members, holding that the industry association had also bound its members when it agreed to the interim supply agreement. The decision, which has the effect of maintaining a mandatory supply order despite the objections of an IBC member which had directed IBC not to supply its confidential information, has important implications for industry associations and their members.

UCDA is a not-for-profit trade association representing motor vehicle dealers in Ontario. Among other services, it provides a service called “Auto Check”, which allows dealers to verify accident history information about vehicles they intend to sell. IBC, which collects and provides the data for the Auto Check service, is a not-for-profit corporation made up of 139 member insurance companies. On June 17, 2011, IBC terminated UCDA’s access to its insurance data, and UCDA was forced to suspend its Auto Check service. The reasons for the termination, and UCDA’s allegations that the termination constituted a “refusal to deal” contrary to section 75 of the Competition Act, are described in our earlier article. Meanwhile, the parties agreed to an interim supply agreement pursuant to which IBC would continue to supply UCDA with claims data while the case was before the Tribunal, and the agreement was formalized by an order of the Tribunal.

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Ashley Weber -

In February 2012, the SCC released its decision in Richard v. Time Inc., a case brought forward from the Quebec Court of Appeal, which considered the “general impression” test in relation to the misleading advertising provisions of the Quebec Consumer Protection Act (CPA). Given the recently increased enforcement activity of the Competition Bureau with respect to deceptive marketing practices, companies that advertise to consumers anywhere in Canada should take heed of the SCC decision. The misleading advertising provisions of the Quebec CPA are based, to a large extent, on what is now the federal Competition Act, and similar types of consumer protection laws exist in the other Canadian provinces. Accordingly, the impact of the SCC decision will go beyond the CPA, affecting enforcement of deceptive marketing practices under both federal and provincial consumer protection laws in Canada. 

The SCC decision provides clear guidance on how to assess an advertisement’s target audience for purposes of the “general impression” test, and clarifies that both the layout of the advertisement and the meaning of the words, taken in their entirety, form the general impression of an advertisement. As such, regulators and companies now have a firmer understanding of what test to consider when determining whether an advertisement is misleading in a material respect.

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Sultana L. Bennett -

The Federal Court of Appeal, in a recent decision under the Competition Act, (the Act), has confirmed that the effects of a conspiracy do not have the effect of extending the limitation period under the Act, but also declined to close the door against the extension of the limitation period by the application of the discoverability principle in future cases.

In August 2008, Garford Pty Ltd. (Garford) sued Dwyidag Systems International, Canada, Ltd. (DSI) and others for patent infringement and alleged breaches of the Act. Garford claimed that DSI, having entered into three purchase agreements to acquire the assets of certain entities in the cablebolt market, breached subsection 45(1) of the Act, which prior to its amendment in 2010 prohibited conspiracies, agreements and arrangements that unduly lessened competition.

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Michael Kilby and Kim Lawton -

The Court of Queen’s Bench in Alberta has recently ruled in 321665 Alberta Ltd. v. ExxonMobil Canada Ltd,  on several issues relating to costs under section 36 of the Competition Act. The ruling follows an award of damages in a civil case involving a rare buyer-side conspiracy, brought under the pre-2009 section 45 of the Act.

By way of background, section 36 of the Competition Act provides a statutory cause of action to any person who has suffered loss or damage arising from the breach of any of the criminal provisions in Part VI of the Act. These criminal provisions include conspiracy, bid-rigging, misleading advertising, and deceptive telemarketing.

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Susan M. Hutton and Marisa Berswick -

Rogers Communications Inc. will appear before the Ontario Superior Court in June, claiming that two aspects of the Competition Act dealing with civilly reviewable misleading advertising are unconstitutional: AMPs (administrative monetary penalties) in the millions of dollars, and the “adequate and proper” testing requirements. If they are ruled unconstitutional, the case stands to gut the Competition Bureau’s ability to seek multi-million dollar penalties under the civil misleading advertising provisions of the Competition Act, and may have implications for its ability to do so in abuse of dominance provisions as well.

The Competition Bureau’s legal proceedings against Rogers began in September, 2010 when Wind Mobile filed a formal complaint with the Competition Bureau regarding Roger’s new discount cell phone service, Chatr Wireless. In November 2010, the Commissioner started legal proceedings against Rogers to stop the allegedly misleading advertising of Chatr, based on claims that it had fewer dropped calls than competitors.

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Susan Hutton and Robert Mysicka -

On February 17, the Competition Bureau announced that three construction companies—Construction G.T.R.L. (1990) Inc., Acoustique JCG Inc., and Entreprises de Construction OPC Inc.—have pled guilty to charges of bid-rigging in a construction project involving the expansion of the Chicoutimi hospital. The case comes less than half a year after a similar bid-rigging scheme involving ventilation companies in Montreal was uncovered and prosecuted, resulting in the imposition of a substantial fine and a prohibition order.

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Sultana L. Bennett -

On December 1, 2011, the Supreme Court of Canada granted leave to appeal in the British Columbia Court of Appeal decisions Pro-Sys Consultants Ltd. v. Microsoft Corporation (Microsoft) (2011 BCCA 186) and Sun-Rype Products Ltd. v. Archer Daniels Midland Company (Sun-Rype) (2011 BCCA 187). Microsoft and Sun-Rype were two to one majority decisions concluding for the first time in Canada that indirect purchasers of allegedly price-fixed products have no cause of action recognized in law. (see our ealrier post titled: Court of Appeal for British Columbia bars indirect purchaser suits.)

Earlier this month the Québec Court of Appeal in Option Consommateurs v. Infineon Technologies AG (2011 QCCA 2116), unanimously overturning a Superior Court decision that had denied a motion to authorize class action proceedings, allowed indirect plaintiffs to proceed with their price-fixing suit, expressly disagreeing with the British Columbia Court of Appeal’s rulings in Microsoft and Sun-Rype that such plaintiffs have no claim in law. (see our earlier post titled: Québec Court of Appeal authorizes price-fixing class action involving indirect purchasers.)

These appeals will mark the first time the highest court in Canada will consider this issue in the context of competition class actions.

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Sultana L. Bennett -

On November 16, 2011, the Québec Court of Appeal issued a judgment unanimously reversing the 2008 Québec Superior Court decision in Option Consommateurs v. Infineon Technologies AG dismissing the motion for authorization to institute class action proceedings. Significantly, the class includes both direct and indirect purchasers, and the Quebec decision thus follows the dissent in the 2011 British Columbia Court of Appeal decision in Sun-Rype Products Ltd. v. Archer Daniels Midland Company, holding that the defendants would not face an unfair risk of double recovery because the plaintiffs alleged a single, aggregate loss notwithstanding the mix of direct and indirect purchasers in the class.

Background and Decision in the Superior Court

The defendants were manufacturers of dynamic random access memory or “DRAM,” a semiconductor memory product used in electronic devices, each of whom had admitted participation in a price-fixing conspiracy between 1999 and 2002 and all but one of whom had pleaded guilty to Sherman Antitrust Act violations arising from that conduct in the United States.

In its motion to institute the proceedings in Québec Superior Court, Option Consommateurs, a consumer advocacy organization, alleged that the defendants failed to respect statutory obligations under the Competition Act, and breached the general extracontractual duties imposed upon them by the Civil Code of Québec. Claudette Cloutier, a Montreal resident, sought status as the designated representative in the proceedings on behalf of direct and indirect purchasers of DRAM in Québec. In October 2001, Cloutier had purchased a computer containing DRAM online from Dell Computer Corporation’s website, and claimed to have paid an artificially inflated price for the computer as the result of the defendants’ price-fixing activity.

Justice Mongeau of the Superior Court denied the motion to authorize proceedings on two grounds: first, that Québec did not have proper territorial jurisdiction to hear the class action, but that even if it had, the allegations did not meet the test for authorization under Québec class proceedings law. Option Consommateurs and Cloutier appealed the ruling to the Court of Appeal.

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Susan Hutton & Lindsay Gwyer -

On November 3, 2011, the Competition Tribunal issued a decision refusing to grant summary disposition to the vendor respondents in Commissioner of Competition v. CCS Corporation, thus confirming dissolution as a possible remedy in the case. The proceedings centre on the Commissioner’s application challenging CCS Corporation’s completed acquisition of Complete Environmental Inc., which owns the Babkirk Secure Landfill located in northeastern British Columbia, on the basis that the transaction is likely to substantially prevent competition for the disposal of hazardous waste in northeastern British Columbia (for more on the case, see our earlier post).

Because the proceedings deal with a completed transaction, the vendor respondents maintain that they are only implicated to the extent that the Tribunal would order dissolution as a remedy.  Consequently, the vendor respondents moved to have the Commissioner’s application dismissed against them on the ground that there was no genuine basis for the Tribunal to order dissolution. They argued that dissolution was an overly broad and punitive measure, and that divesture would be an effective and more appropriate remedy (assuming that the Commissioner is able to prove that the acquisition would substantially prevent competition). On the other hand, the Commissioner maintained that dissolution might be a necessary remedy, and argued that the application should be allowed to proceed to a hearing in order to determine several factual issues that would impact on the viability of either divesture or dissolution as an appropriate remedy.

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Michael Laskey -

The Competition Tribunal today released an interim supply order requiring the Insurance Bureau of Canada to continue to supply access to its Web Claims Search Application to the Used Car Dealers Association of Ontario. The IBC, which consented to the interim supply order, must continue to supply the UCDA until the disposition of the UCDA’s application under the refusal to supply provision (section 75) of the Competition Act.

As described in our earlier article, the UCDA alleges that the IBC is refusing to supply it with automobile accident history data, which the UCDA says it requires in order to supply its Auto Check service to its members. The UCDA was granted leave to bring its application on September 9, 2011, and the matter is currently pending before the Tribunal.

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D. Jeffrey Brown and Lindsay Gwyer -  

In a recent decision, the Competition Tribunal granted the Commissioner of Competition’s motion requesting that the Toronto Dominion Bank (TD) produce complete versions of a number of documents, including several that had previously been produced in a redacted form. The motion was part of the Commissioner’s proceedings against Visa Canada and Mastercard International under the Competition Act’s civil resale price maintenance (RPM) provision, enacted as part of the substantial amendments to the Competition Act in 2009. TD was granted leave to intervene in that proceeding in respect of a number of issues earlier this year.

The motion stemmed from the redaction by TD of certain documents produced by it in response to the Tribunal’s order granting it leave to intervene, which also ordered it to produce documents relative to the issues within the scope of its intervention. TD submitted that redactions are permitted if information is irrelevant and confidential, or if it is contained in an irrelevant portion of a segmented document. The Tribunal rejected this view, and held that, as a general rule, irrelevant portions of otherwise relevant documents must be disclosed. After reviewing relevant jurisprudence, the Tribunal held that redaction is permissible only in exceptional circumstances, such as where the redacted information is embarrassing or harmful or where there is an “enormous” volume of redacted material.

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D. Jeffrey Brown and Robert Mysicka - 

In a recent ruling, Ontario’s Superior Court of Justice explored the principles underlying the law respecting sealing orders and its application to reviewable matters under Part VII.1 of the Competition Act.  On a motion by the Commissioner of Competition, the Court issued a partial confidentiality (or sealing) order with respect to certain information used by the Commissioner in her application against Rogers Communications Inc. and its wholly owned subsidiary, Chatr Wireless Inc., for alleged misleading advertising. Information about “dropped call” rates, which the Court characterized as being at the “very heart” of the Commissioner’s application, was excluded from the sealing order after the Court determined that it was essential for that aspect of the proceedings to remain transparent. 

Investigation into Misleading Advertising

The application to which the confidentiality order relates originated in November, 2010, when the Competition Bureau commenced legal proceedings against Rogers and Chatr. The Bureau’s application came after complaints were made by competing discount wireless carriers, Wind Mobile and Mobilicity, alleging that Rogers’ Chatr discount brand was misleading consumers into believing that its network was more reliable and had fewer “dropped calls” than those of other discount carriers.

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Susan M. Hutton and Robert Mysicka -

Les Entreprises Promécanic Ltée (Promécanic), a ventilation company based in Laval, Québec, has pleaded guilty to three criminal charges of bid-rigging for tenders issued by its contractors in 2004 and 2005. On July 19, 2011, Promécanic was fined C$425,000 by the Superior Court of Québec for participating in agreements to fix the outcome of bids for the installation of residential ventilation systems in Montreal.

In December, 2010, the Competition Bureau’s investigation of eight ventilation systems companies culminated in the laying of criminal charges for bid-rigging against Promécanic and seven others. Bid-rigging, which is defined in section 47 of the Competition Act, prohibits bidders from entering into an agreement not to submit bids or to submit pre-arranged bids when responding to a bid or tender call. The criminal sanction under section 47 applies if the person calling for the bids is not made aware of the agreement at or before the time when the bid or tender is submitted or withdrawn. In this case, the Bureau’s investigation found evidence of collusion among the eight ventilation companies in five separate competitive bidding processes valued at approximately C$8 million. The maximum penalties for bid-rigging include a fine that is at the discretion of the court and/or a prison term not exceeding 14 years.

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Ashley Weber and Graeme Deuchars  -

On June 8, 2011, the UK Advertising Standards Authority (ASA) found that online coupon provider Groupon, Inc. had misrepresented the ordinary selling price of a third party service that was advertised to Groupon’s online subscribers, and ordered Groupon to remove the advertisement from circulation.  The ASA also ordered Groupon to ensure its compliance with proper advertising policies, so as to prevent similar events in the future.  The decision is one of several regulatory decisions by the ASA in recent months, illustrating that – despite disclaimers to the contrary in the terms of use - “deal-a-day” online websites offering “red flag” or “last minute” for third party products and services may not be immune to scrutiny for representations made in online advertising in the UK, and possibly elsewhere.  Whether such services could rely upon the exception in Canada’s Competition Act for those who “print, publish or otherwise disseminate” an advertisement has not been tested.

The ASA decision came in response to a complaint that Groupon had overstated the savings for a third party salon treatment that was offered to Groupon subscribers at “£24 instead of £90”. The ASA found that Groupon did not have adequate evidence to substantiate the ordinary selling price of £90 in order to make the savings claim (Groupon had relied on an e-mail price list provided by the third party salon which quoted the regular price of the treatment).  The ASA ruled that the advertisement could not appear again in its current form, and informed Groupon that it would need to obtain documentary evidence of its suppliers’ pre-discount prices for future advertising.

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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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Shawn Neylan and Sharon Seung

In a judgment rendered June 8, 2010, the Ontario Superior Court dismissed a motion by FMC Corporation and FMC of Canada, Ltd. (collectively, FMC) for leave to appeal a September 28, 2009 decision certifying a class action. The motion was supported by Arkema Inc., Arkema Canada Inc. and Arkema S.A. (collectively, Arkema). Both FMC and Arkema were among the defendants in the class action proceeding.

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Shawn Neylan and Sharon Seung

On May 25, 2010, the Quebec Superior Court acquitted Electromega Limited (Electromega), a traffic lights manufacturer, of a bid-rigging charge relating to the supply of LED traffic lights in Quebec.

Prior to the trial, Electromega had brought an application for a stay of proceedings on the basis that the death of its president in September 2009 deprived it of an essential witness and therefore a right to a fair and public hearing pursuant to paragraph 11(d) of the Canadian Charter of Rights and Freedoms. The court concluded that Electromega had not proven that the missing evidence created a prejudice of such magnitude that it amounted to a deprivation of the opportunity to make full answer and defence. Consequently, Electromega’s application was dismissed. However, at trial, the case was dismissed on the basis that the Crown had failed to prove an agreement.

The facts in issue arose in July 2004, when the city of Quebec solicited bids for the supply of LED traffic signals sourced by Gelcore (distributed in Quebec by Electromega), or Dialight (distributed by Tassimco Technologies Inc. (Tassimco)).

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On May 27, 2010, the Ontario Superior Court dismissed a motion brought by Bell Canada  (“Bell”) for an interlocutory injunction restraining Rogers Communications Inc. and Rogers Cable Communications Inc. (“Rogers”) from advertising that Rogers’ internet service is the "fastest" and/or the "most reliable."  Among other things, Bell alleged that the advertising in question breached the misleading advertising provisions of the Competition Act.

The court held that irreparable harm was not established because similar advertising claims had been made by Rogers since 2008, and because Bell and Rogers had litigated other advertising disputes in the past. The court also found that Bell had not factually established that it had suffered actual losses in the market or damage to its reputation as a result of the ads.

On the question of the "balance of convenience," the court concluded that the parties were "aggressive advertisers" and that it would not be justified to interfere in the "advertising war" between two large corporations.

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On June 3, 2010, the Supreme Court of Canada declined to hear an appeal by DRAM manufacturers of a decision of the British Columbia Court of Appeal that certified a class in a civil action alleging price-fixing with respect to dynamic random access memory. As is customary when leave to appeal is declined, the Supreme Court did not give reasons for its decision.

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Katherine L. Kay and Danielle Royal

Until recently, Canadian courts were generally reluctant to certify class actions alleging violations of competition law, principally on the basis that plaintiffs failed to put forward a workable class-wide method for determining the existence of harm for each class member.

In 2009, however, two significant decisions in Ontario and British Columbia - Irving Paper Ltd. v. Atofina Chemicals Inc.1 in the Ontario Superior Court of Justice and Pro-Sys Consultants Ltd. v. Infineon Technologies AG et al. in the Court of Appeal for British Columbia - signaled a new openness to such claims.

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Jeffrey Brown

While the Court in this case addressed numerous issues, the scope of this article is limited to the issue of the intellectual property-competition interface.On October 1, 2009, the Federal Court of Canada, in Eli Lilly and Company v. Apotex Inc.,rejected a counterclaim by Apotex, a generic pharmaceutical manufacturer, in which it had sought damages pursuant to section 36 of the Competition Act (the "Act") against two brand name pharmaceutical manufacturers in connection with a patent assignment. The decision follows the November 2005 judgment in which the Federal Court of Appeal characterized the assignment of a patent as including "evidence of something more than the mere exercise of patent rights" and, as such, not beyond the application of the Act's conspiracy provision(See "Canada's Federal Court of Appeal Rules on Competition Law/Patent Law Interface," Intellectual Property Update (January 18, 2006).)

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Jeffrey Brown and Susan M. Hutton

On October 15, 2009, the Federal Court of Appeal allowed the Commissioner of Competition's appeal of a Competition Tribunal decision involving misleading representations by a Vancouver career-consulting business.

The principal issue in the case, The Commissioner of Competition v. Premier Career Management Group Corp. and Minto Roy, 2009 FCA 295, was "whether . representations to certain individuals, though made individually and in private, were nevertheless made 'to the public'" within the meaning of the Competition Act. The Court also addressed the issue of whether or not the representations in question were false and misleading and, if yes, whether they were false and misleading in a material respect.

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Katherine L. Kay and Kevin Rushton

On November 12, 2009, the British Columbia Court of Appeal unanimously allowed an appeal from the dismissal of a class certification motion in an action alleging price-fixing against certain manufacturers of DRAM (dynamic random access memory) chips, which are found in a wide variety of electronics products. The B.C. Court of Appeal certified a class of direct and indirect purchasers of DRAM and products containing DRAM.1

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Jeffrey Brown and Alexandra Stockwell

In June 2009, the Federal Court of Appeal (FCA) upheld the Federal Court of Canada's decision in Laboratoires Servier v. Apotex Inc.1, a patent infringement case. In its decision, the trial Court had dismissed a counterclaim by the defendant, Apotex, alleging that the settlement agreement leading to the patent's issuance constituted a conspiracy to lessen competition and an offence under Canada's Competition Act. While the trial Court held that the defendant had failed to support its allegations with sufficient evidence, it nevertheless allowed that a patent settlement agreement could amount to a conspiracy under the Competition Act in some circumstances. The FCA agreed.

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Katherine L. Kay and Mark Walli

In a 2-1 decision released April 27, 2009, the Ontario Divisional Court allowed an appeal from the dismissal of a class certification motion and conditionally certified a class of present and former Canadian franchisees of the Quizno's quick-service restaurant chain.¹

The Plaintiffs, two of more than 400 Canadian Quizno's franchisees, alleged that they had been overcharged for food and other supplies they purchased for use in their Quizno's restaurants. They sought class certification of civil claims for damages against their Quizno's franchisors (the "Quizno's Defendants") for breach of contract and for breach of section 61 of the Competition Act (which, until its repeal and replacement with a civil provision on March 12, 2009, made price maintenance a criminal matter - section 36 of the Competition Act permits civil suits for damages incurred as a result of a violation of a criminal provision of the Act, even without a conviction), as well as a "civil conspiracy" claim against the Quizno's Defendants and Gordon Food Service Inc. and its affiliate (GFS), the primary distributor of many supplies to Canadian Quizno's restaurants.

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Kim D.G. Alexander-Cook

The parties in Maritime Travel Inc. v. Go Travel Direct.com Inc.,¹ a misleading advertising private action decided earlier this year, have recently filed their initial appeal and cross-appeal submissions.²

At trial, Maritime Travel, an established Canadian east-coast travel agency, alleged that upstart tour operator Go Travel Direct.com Inc. ran materially misleading newspaper advertisements. Maritime Travel claimed damages based on section 36 of the Competition Act, which provides a civil remedy for damages suffered as a result of a breach of a criminal provision of the Act. In this case, Maritime Travel alleged that Go Travel had knowingly or recklessly made representations to the public that were false or misleading in a material respect, contrary to section 52 of the Act. Developments in the law around sections 36 and 52 of the Act are important, because these sections provide the only basis for private damages for misleading advertising under the Act.

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The Competition Bureau recently published its Information Bulletin on Sections 15 and 16 of the Competition Act, which sets out the Bureau's practices and policies under the Competition Act's search warrant provisions and related powers for the search of computer systems. The Bulletin sets out what persons or businesses should expect from the Bureau during a search and with respect to the handling of any "records or other things" seized as a result of the search.

Although unable to provide for all eventualities, in our view the Bulletin provides general insight into the Bureau's approach to section 15 search warrants and the related use of computer systems. The Bulletin does not, however, reveal any material changes in the search procedures utilized by the Bureau in recent years.

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Katherine Kay and Mark Walli

Stikeman Elliott is counsel to a group of defendants in a very recent proposed class action decision in Ontario in which certification was dismissed, adopting earlier court approaches in applying the test for certification where competition law violations are alleged. The Ontario Superior Court of Justice dismissed the motion for certification in a proposed class proceeding brought by two Ontario franchisees of the Quiznos restaurant chain against their Quiznos franchisors and Gordon Food Service, Inc. and GFS Company Inc. (GFS), the primary food distributors to the Quiznos franchise system.¹ The plaintiffs, who sought to represent a class of all Canadian Quiznos franchisees, brought claims for civil conspiracy against GFS and the Quiznos franchisors, together with claims for breach of section 61 of the Competition Act, R.S.C. 1985, c.19 (2nd Supp) (the Act) and breach of contract against Quiznos. Katherine Kay and Mark Walli of our firm represent GFS.

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Kevin Rushton

On December 20, 2007, the Competition Bureau announced the end to five years of litigation concerning the Stocking Distributor Program (SDP) of Canada Pipe Company Ltd. with the filing of a consent agreement with the Competition Tribunal. The consent agreement pre-empts the Tribunal's re-determination proceedings in the case.  As a result, the proper legal approach to the Competition Act's abuse of dominance provision, in light of the Commissioner of Competition's position in the proceedings, has yet to be resolved.

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Justine Whitehead, D. Jeffrey Brown

On July 26, 2007, the Supreme Court of Canada (SCC) issued its decision in the case of Kraft Canada Inc. v. Euro Excellence Inc. The SCC allowed the appeal of Euro Excellence, thereby disallowing Kraft Canada's claim of secondary infringement of copyright against Euro Excellence.

While the SCC's decision to allow the appeal was made by a margin of seven to two, a deeply divided SCC produced four sets of reasons in reversing the decisions of both the Federal Court of Appeal (2005 FCA 427) and Federal Court (2004 FC 652). The decision raises interesting questions about the interface of intellectual property and competition law, in particular the extent to which copyright law can and should be used to limit competition from grey-market imports.

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An extract from The European Antitrust Review 2008, a Global Competition Review special report.

Susan Hutton

Any discussion of the enforcement cooperation activities of the Canadian Competition Bureau (the Bureau) and the Directorate General for Competition of the European Commission (the Commission) must at this stage focus not only on communications between them but also on results. It would appear that after years of working together in both bilateral and multilateral fora on the development of competition law enforcement policies and practices, and of cooperationin the investigation of individual cases, different results are still sometimes apparent. That said, the ultimate goal of consistency and convergence among the agencies can only be achieved through continued such dialogue and cooperation, and overall the glass should likely still be viewed as half full.

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On May 10, 2007, Canada's Supreme Court denied leave to appeal the Federal Court of Appeal's decision in The Commissioner v. Canada Pipe et al., the first and only appellate decision in respect of the abuse of dominance and exclusive dealing provisions of Canada's Competition Act.

As a result of the Supreme Court's decision, the case will be remanded back to the Competition Tribunal for decision in accordance with the legal tests established by the Federal Court of Appeal. The Commissioner of Competition has, in previous statements, confirmed that the Federal Court of Appeal's decision will not alter the Bureau's approach to enforcement of these provisions, as detailed in its Abuse of Dominance Guidelines.

Stikeman Elliott successfully represented the Commissioner of Competition as lead counsel before the Federal Court of Appeal and the Supreme Court of Canada in this matter, during his tenure as Special Counsel to the Commissioner of Competition during 2005 and 2006.

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Susan M. Hutton and Ian Disend

Section 75 of the Competition Act addresses the reviewable practice of "refusal to deal." In June of 2002, the Act was amended so as to allow private parties to bring actions under this section before the Competition Tribunal (the Tribunal), where leave has been granted by the Tribunal pursuant to s. 103.1 of the Act. Prior to the 2002 amendments, s. 75(1) had required four conditions to be met before relief could be granted. Pursuant to those amendments, however, a fifth condition was added; namely, that the refusal to deal must have caused or be likely to cause an "adverse effect" on competition in a market.

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The Competition Tribunal has dismissed an application by the Commissioner of Competition to delay closing of a transaction between Labatt Brewing Company and Lakeport Brewing Income Fund. Both parties sell beer in Ontario. Stikeman Elliott represented Lakeport on the transaction and before the Competition Tribunal.

On February 1, 2007, Labatt and Lakeport jointly announced a supported offer by Labatt for all of Lakeport's trust units. The parties mailed their offer materials on February 22 and the offer period expired on March 29. The parties also filed long form merger notification materials under the Competition Act - the statutory waiting period relating to those expired on March 26. Lakeport units trade on the Toronto Stock Exchange.

The support agreement included an obligation for Labatt to attempt to negotiate a "hold separate" arrangement with the Commissioner of Competition, if needed, and to take any and all possible steps within the requirements of the support agreement to be able to pay for the units at the earliest possible date, including vigorously resisting any application by the Commissioner to delay closing.

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Susan M. Hutton

In a ruling of the Newfoundland Provincial Court dated September 18, 2006, D. Orr Provincial Court Judge dismissed, after a preliminary hearing, charges laid under Section 45 of the Competition Act (Canada) against six companies and seven individuals in respect of an agreement among them to refuse to bid on certain contracts for exclusive supply rights at the St. John's Airport and other St. John's locations (R. v. Budgens Taxi, [2006] N.J. No. 250). The Judge found that the Crown's economic expert failed to provide any evidence as to the absolute size of the relevant market, therefore making it impossible to determine the impact of the agreement on competition. While stating that the regulated conduct defence could not be considered at the stage of the preliminary inquiry, he also stated that the accused "were acting within the confines of a regulated industry", and had brought the issue to the attention of the appropriate regulatory body, and could not be said to have "unduly" impacted the market.

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Kim D.G. Alexander-Cook and Michael Kilby

On June 23, 2006, the Federal Court of Appeal (the FCA or the Court) issued its decisions and reasons in the appeal by the Commissioner of Competition (the Commissioner) and the cross-appeal by Canada Pipe Company Ltd. (Canada Pipe) from an earlier ruling by the Competition Tribunal (the Tribunal). At issue was the Tribunal's dismissal, in February 2005, of the Commissioner's abuse of dominance and exclusive dealing case against Canada Pipe.1 This appeal represents the first time the FCA has been asked to consider the application of the abuse of dominance (section 79) and exclusive dealing (section 77) provisions under Canada's Competition Act (the Act). In allowing the Commissioner's appeal and, rejecting Canada Pipe's cross-appeal, the Court considered in detail each of the specific elements the Commissioner must address in bringing an application under sections 77 and 79 of the Act. The case has been sent back to the Tribunal for re-determination.

While the Court found errors of law in the way the Tribunal had framed and conducted its analysis under both sections 77 and 79, it is far from obvious that the result on re-determination by the Tribunal will be any different than at first instance.

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Jeffrey Brownand Alexandra Stockwell

The Federal Court of Canada has dismissed an application for judicial review of the Commissioner of Competition's decision to discontinue an inquiry into the distribution of motion pictures in Canada. The main issue was whether the Bureau was obliged to provide the complainants with a copy of an external economist's report, which had played a role in the Commissioner's decision to discontinue the inquiry. The complainant claimed that the Bureau's refusal to provide a copy of the report was a breach of its duty to act fairly, and also prevented the applicant from filing a reply to the report, in violation of its right to hear and respond to the case against it.

The Federal Court considered whether the Commissioner's decision to discontinue an inquiry is judicial or quasi-judicial in nature, or purely "administrative" (and thus less amenable to court interference). Based on the facts that the Competition Act does not provide for a hearing, the decision does not affect complainant rights or obligations, and the proceeding is not an adversarial one, the court concluded that the Commissioner's decision is an administrative act. The court referred to the Supreme Court's decision in Baker v. Canada (MCI) [1999] 2 S.C.R. 817 for the guidelines for analysing such discretionary decisions and held that "courts must defer to discretionary decisions in the absence of bad faith on the part of decision-makers, the exercise of discretion for an improper purpose, or the use of irrelevant considerations."

The Court held that there was no evidence of bad faith or the use of irrelevant considerations, and further held that the Bureau was under no obligation to provide a copy of the external economist's report to the complainants. It was sufficient that the essential points and conclusions of the economist's report were contained in the Commissioner's report, which was provided to the complainant. The court pointed out that the complainant was invited to reply to the Commissioner's report, and the applicant did not have a valid reason for not taking that opportunity, since it had no right to more information than what the Commissioner had already disclosed. This decision confirms the Commissioner's very broad discretion in conducting and discontinuing inquiries, and the high threshold for judicial intervention in the Commissioner's decisions in that regard.

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The Commissioner of Competition (the Commissioner) has filed a Memorandum of Fact and Law (the factum) in connection with the appeal of the Competition Tribunal's February 3, 2005 dismissal of her abuse of dominance and exclusive dealing case against Canada Pipe.1 The factum makes interesting reading.2 The Commissioner raises some important questions regarding the proper legal analysis of the abuse of dominance and exclusive dealing provisions of the Competition Act (the Act). In addition, certain of her arguments seem to favour turning business practices such as exclusivity discounts and loyalty programs into per se illegal behaviour for dominant firms. Therefore, the ultimate decision of the Federal Court of Appeal will be of significant interest not only to Canada Pipe, but also to competition law practitioners in Canada and elsewhere. Moreover, should Bill C-19 become law, giving the Tribunal the power to issue fines in respect of abuse of dominance, the Federal Court's decision in this case will only increase in importance.

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Culhane v. ATP Aero Training Products
Shawn C.D. Neylan

On April 11, 2005 the Federal Court of Appeal dismissed the appeal in Culhane v. ATP Aero Training Products. The case involved alleged predatory pricing in circumstances in which examination guides, formerly sold in a paper format, were made available at no charge on the Internet as a marketing tool. The trial judge had found that such activities amounted to selling a product at an unreasonably low price, but also found the plaintiff could not prove that it had been harmed by this activity. The Court of Appeal found that the trial judge had not made any palpable or overriding error in finding that proof of loss or damage resulting from the alleged predatory conduct was not made out. It therefore dismissed the appeal on that basis. Consequently, the Federal Court of Appeal did not need to address the issue of whether making the examination guides available on-line at no charge amounted to selling the guides at an unreasonably low price within the meaning of the criminal provision in the Competition Act concerning predatory pricing. Stikeman Elliott was co-counsel for the respondent on the appeal.

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Commissioner of Competition to Appeal
Kim Alexander-Cook

On February 14, 2005 the Competition Tribunal released its decision in the abuse of dominance and exclusive dealing case brought by the Commissioner of Competition against Canada Pipe in 2002.1 The main conduct at issue was a loyalty program comprised of rebates and purchase discounts to distributors who offered Canada Pipe's Bibby Ste-Croix division exclusivity in supplying their cast iron drain, waste and vent (DWV) requirements. The Commissioner alleged that this program worked to substantially prevent competitors from gaining access to Canada Pipe's distributors and sought an order that would eliminate the program. The Tribunal accepted that Canada Pipe held a dominant position in the relevant markets, but concluded that Canada Pipe's conduct was not intended to have a negative effect that was predatory, exclusionary or disciplinary on competitors, did not prevent or lessen competition substantially, and was not likely to do so. On March 8, 2005, the Commissioner announced her intention to appeal the Tribunal's decision in the case.

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An agreement dealing with patent rights that is specifically authorized by the Patent Act, including the assignment of a patent, involves the "mere exercise" of patent rights such that any resulting lessening of competition is not undue and cannot constitute the criminal offence of conspiracy under section 45 of the Competition Act (the Act). That is the recent finding of the Federal Court of Canada in Eli Lilly and Company v. Apotex Inc., which represents a significant departure from the Competition Bureau's stated approach to the interface between competition policy and intellectual property rights.

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Kevin Rushton

Following a hearing in the spring of 2004, the Competition Tribunal (the Tribunal) received this past August the final submissions of the Parties in Canada Pipe1.

Market Definition in Dispute

In his 2002 Application, the Commissioner alleged that a "Stocking Distributor Program" (the Program) operated by Canada Pipe's Bibby Ste-Croix Division ("Bibby") was substantially lessening or preventing competition among manufacturers and importers in the markets for cast iron drain, waste and vent (DWV) pipe, fittings and mechanical joint couplings (the "Products"), in six Canadian regions2. During the period from 1998 to 2002, Bibby accounted for more than 85% of total sales of the Products in Canada and for 80% or more of total sales of the Products in each of the six geographic markets. The Program provided preferential discounts and rebates to customers who purchased the Products exclusively from Bibby.

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Kevin Rushton

On July 13 and August 4, 2004, the Competition Tribunal granted leave to Robinson Motorcycle Limited (Robinson) and Quinlan's of Huntsville Inc. (Quinlans) to bring applications against Fred Deeley Imports Ltd. (FDI) under the refusal-to-deal provisions of the Competition Act1. The two decisions bring to four the number of leave applications granted to private parties since amendments to the Act in June of 2002. Unfortunately, these recent decisions appear to cloud the legal and evidentiary thresholds that will be applied by the Tribunal before granting leave.

As noted in the March 2004 edition of The Competitor, section 103.1 of the Act allows private parties to apply directly to the Tribunal to address alleged breaches of sections 75 (refusal to deal) and 77 (exclusive dealing, tied selling and market restriction). Obtaining leave of the Tribunal is a prerequisite to bringing such applications. To date, a total of nine applications for leave have been filed. Of these, the first was denied, four have been granted and the remaining four await decisions by the Tribunal.

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On April 29, 2004, the European Court of Justice (the ECJ) provided guidance on when, under European law, a company could be considered to be abusing its dominant position when it refuses to grant an intellectual property (IP) licence. This article will review the ECJ's decision in IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, and then consider whether Canadian competition law can be used to compel an IP owner to license its IP to a third party.

The IMS Health case concerns the rights to IMS Health's proprietary system for collecting and distributing drug sales data. In 1988, an IMS Health director left the company to establish a competing business, which eventually adopted a new database structure resembling that used by IMS Health.

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The Federal Court of Canada, in Michael J. Culhane v. ATP Aero Training Products Inc., Reilly James Burke, recently rejected a private-action claim for damages under s.36 of the Competition Act in relation to alleged predatory pricing contrary to s.50(1)(c) of the Act. The alleged conduct involved the defendants making available, on-line and at no charge, certain Canadian aviation exam guides, which according to the plaintiff reduced sales of his competing publications.

In its analysis of the claim, the Court first determined that the defendants, by providing their publications at no cost, were nevertheless engaged in a policy of "selling" products. The Court also concluded that they were doing so at "unreasonably low prices," taking into consideration such factors as the discrepancy between the defendants' costs and the price charged, the "indefinite period" for which the defendants intended to make the publications available at no charge, the offensive (rather than defensive) nature of the price reduction and the absence of evidence that the "free giveaways" had increased sales of the defendants' other products (or would do so in the future). However, the Court was not satisfied that the defendants' conduct had the effect or tendency of substantially lessening competition or that they had intended such an effect or to eliminate the plaintiff as a competitor. With this essential element of the offence absent, the Court rejected the plaintiff's claim.

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Section 65 of the Patent Act allows Canada's federal Attorney General or "any person interested" to apply to the Commissioner of Patents, at any time after three years from the date a patent is granted, for a remedy in respect of an alleged abuse of a patent. The provision has been so little used in its history that it would be easy to forget about it. However, a recent decision of the Federal Court of Canada serves as a reminder that, so long as a provision remains on the books, it is possible that someone will come along and try to breathe life into it.

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Michael Mahoney

On January 15, 2004, the Competition Tribunal (the Tribunal) granted leave to Barcode Systems Inc. (Barcode) to bring an application against Symbol Technologies Canada ULC (Symbol) under the refusal-to-deal provisions of the Competition Act (the Act). The event is noteworthy, because it marks the first time the Tribunal has granted leave to a private party since the Act was changed to permit private applications in June 2002. The decision also provides some clarification regarding the test that will be applied by the Tribunal before granting leave.

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In the Falconbridge case, the Ontario Court of Appeal has upheld application of the Mutual Legal Assistance Act to assist U.S. prosecution of antitrust behaviour.In a decision released on May 1, 2003, the Ontario Court of Appeal upheld the Superior Court of Justice's decision in Commissioner of Competition v. Falconbridge Limited et. al. to grant evidence-gathering orders and search warrants in order to investigate two mining companies, Falconbridge and Noranda, for alleged offences under U.S. antitrust law.  The United States requested and received legal assistance under a treaty 1 between Canada and the United States to investigate possible violations of the Sherman Act.  Falconbridge and Noranda subsequently applied to have the warrants and orders set aside arguing that they were invalid under the Mutual Legal Assistance in Criminal Matters Act (the Act).

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Shawn C.D. Neylan

On January 31, 2003 the Federal Court released its reasons for judgment in The Commissioner of Competition v. Superior Propane Inc. and ICG Propane Inc.

Background

The case began in 1998, when the Commissioner challenged the acquisition of ICG by Superior. In 2000, the Competition Tribunal allowed the merger, even though it found that it would likely substantially lessen and prevent competition. The Tribunal's decision was based on the so-called "efficiency defence," i.e. that the efficiencies generated by the transaction would outweigh its anti-competitive effects. Subsequently, the Federal Court of Appeal ordered the Tribunal to rehear the case, taking into account other effects of lessened competition beyond those addressed in its original efficiency analysis, which used a "total surplus standard" approach.

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D. Jeffrey Brown

As a result of a recent decision of the Quebec Court of Appeal, the Commissioner of Competition has lost what he had touted as an essential tool in his arsenal for controlling potential anti-competitive conduct by Air Canada.  In a unanimous judgment dated January 16, 2003, the Court held that section 104.1 of the Competition Act, which empowered the Commissioner to issue "temporary orders" against a dominant air carrier without prior notice to the carrier or prior judicial approval, is inoperative on the basis that it is inconsistent with paragraph 2(e) of the Canadian Bill of Rights.

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