Canadian Price-Fixing Class Actions: The Supreme Court of Canada Gives the Green Light to Indirect Purchaser Claims

By Rosenhek, Steven F.; Maric, Vaso | Defense Counsel Journal, July 2014 | Go to article overview

Canadian Price-Fixing Class Actions: The Supreme Court of Canada Gives the Green Light to Indirect Purchaser Claims


Rosenhek, Steven F., Maric, Vaso, Defense Counsel Journal


ON October 31, 2013, the Supreme Court of Canada released its highly anticipated rulings in Pro-Sys Consultants Ltd. v. Microsofi Corporation,1 Sun-Rype Products Ltd. v. Archer Daniels Midland Company,2 and Infineon Technologies AG v. Option consommateurs.3 In this trilogy of decisions, the Court considered, among other things, whether defendants in price-fixing and other class actions are entitled to invoke the "passingon" defense, whether indirect purchasers have a cause of action at law, jurisdictional issues, the appropriate standard of proof for certification under provincial class proceedings legislation, and whether aggregate damages provisions in such legislation can be used to establish liability.

I. Rejection of the Passing-On Defense

Like the Supreme Court of the United States in Hanover Shoe Inc. v. United Shoe Machinery,4 the Court rejected the passing-on defense, confirming that it is "inconsistent with the basic premise of restitution law",5 "economically misconceived,"6 and "would force a difficult burden of proof on the plaintiff to demonstrate not only that it had suffered a loss, but that it did not engage in any other transactions that would have offset the loss."7

II. Indirect Purchasers Have a Cause of Action

Unlike the approach taken by the majority of the Supreme Court of the United States in Illinois Brick v. Illinois,8 the Court concluded that prohibiting the "offensive use of passing on" was not a necessary corollary to its rejection of the passing-on defense, and that indirect purchasers therefore have standing to sue for losses passed on to them. In reaching that conclusion, the Court held that: (a) the risks of multiple recovery and the concerns of complexity and remoteness are insufficient bases for denying indirect purchasers a right of action; (b) the deterrence function of Canadian competition law is not likely to be impaired by indirect purchaser actions; (c) although the passing-on defense is contrary to basic restitutionary principles, allowing passing on to be used offensively promotes those very principles; and (d) there are numerous reasons to question the rationale of the rule in Illinois Brick, namely, the existence of numerous so-called "repealer" statutes at the state level, a report to Congress recommending its reversal at the federal level, and recent doctrinal commentary calling for Illinois Brick to be overturned.9

The Court further held that the risk of double recovery-which the majority in Illinois Brick identified as a key reason for barring indirect purchaser claims-could adequately be addressed at the trial stage. Specifically, the Court indicated that "it will be open to the defendant to bring evidence of this risk before the trial judge and ask the trial judge to modify any award of damages accordingly."10

In a similar vein, the Court concluded that: (a) the trial judge retains the discretion to deny the claim if the defendant presents evidence that the court's ability to mitigate the risk of double recovery is beyond its control; and (b) if the defendant adduces evidence of parallel suits pending in other jurisdictions that would have the potential to result in double recovery, the trial judge may deny the claim altogether or modify the damage award in accordance with an award sought or granted in the other jurisdiction in order to prevent overlapping recovery."

Importantly, the Court also held that classes may be composed of both direct and indirect purchasers, and that a conflict between those two groups as to how aggregate damages are to be distributed amongst them should not bar indirect purchasers from becoming members of a proposed combined class.'2

III. Jurisdictional Issues

In Sun-Rype, the respondents argued that the plaintiffs' claims failed to disclose a reasonable cause of action because, among other things, "an alleged conspiracy entered into outside Canada, among foreign defendants, to fix prices of products sold to foreign direct purchasers" lacks a real and substantial connection to Canada, and therefore does not give rise to a civil remedy under section 36 of the Competition Act}3 Although the Court agreed with the defendants that plaintiffs must demonstrate such a real and substantial connection to Canada, it disagreed with respondents' characterization of the factual situation in the case before it. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Canadian Price-Fixing Class Actions: The Supreme Court of Canada Gives the Green Light to Indirect Purchaser Claims
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.