Legal Alert: SCC Green Lights 2 Competition Law Class Actions – and Puts the Brakes on a 3rd

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Legal Alert: SCC Green Lights 2 Competition Law Class Actions – and Puts the Brakes on a 3rd

: November 1, 2013

On October 31, 2013 the SCC gave two proposed classes the green light to proceed with their class actions, but put the brakes on a third one. Each lawsuit is an action that groups of consumers – both direct and indirect – seeks to bring against manufactures on the alleged basis they bought products at prices that were inflated because the manufacturer engaged in price fixing:

Microsoft Loses in BC. In Pro-Sys Consultants Ltd. v. Microsoft Corporation, the SCC certified the proposed class of claimants – consisting only of indirect purchasers. The SCC decided the class of claimants did not have to establish it met each of the certification requirements on a “balance of probabilities”. Instead, the class only has to show the court there is “some basis in fact” for each certification requirement (except the requirement that the claim documents disclose a cause of action, in which case the court assumes all the facts set out in the claim are true). The SCC found there was at least some factual basis for each of the certification requirements. Click here to read the SCC’s decision in Pro-Sys Consultants Ltd. v. Microsoft Corporation.

But Sun-Rype Wins in BC. However, in Sun-Rype Products Ltd. v. Archer Daniels Midland Company, the SCC judges split. The proposed class consisted of both direct and indirect purchasers of a sweetener used in various food products. Both the majority and the dissenting SCC judges focussed on the “identifiable class” requirement of the certification test – a requirement that had not previously received a great deal of judicial attention. However, the majority of the SCC judges decided there was no identifiable class: a consumer could not know if the alleged price fixed product was in any of the products they purchased. As a result, the indirect purchasers would not be able to determine if they met the proposed class definition. Click here to read the SCC’s decision in Sun-Rype Products Ltd. v. Archer Daniels Midland Company.

DRAM Manufacturers Lose in Quebec. The SCC certified the proposed class in Infineon Technologies v. Option consommateurs, giving the group – consisting of both direct and indirect Quebec purchasers of Dynamic Random Access Memory (DRAM) – the go-ahead for its claim that DRAM manufacturers conspired to inflate the price of DRAM, causing damage to Quebec consumers. DRAM is a microchip that allows information to be stored electronically and rapidly retrieved, commonly used in a wide range of electronic devices. This is a Quebec claim so the decision is based on the Quebec Civil Code. The decision illustrates some of the differences in the class action regimes in Quebec and elsewhere in Canada. Click here to read the SCC’s decision in Infineon Technologies v. Option consommateurs.

All three decisions deal with certification of class actions in the context of alleged anti-competitive conduct. In each case, indirect purchasers seek to assert a claim under the civil action provisions of the Competition Act. The SCC left open the possibility that indirect purchasers may have a cause of action under the civil action section (section 36) of the Competition Act for overcharges by a product manufacturer that were “passed on” to them. Actions under section 36 of the Competition Act usually relate to alleged breach of section 45 (conspiracy) or section 78 (abuse of a dominant position); they are highly technical, involving sophisticated economic analyses of the nature of the product market and market power / market share. However, whether any class of indirect purchasers will succeed in such claim remains to be seen from the final decisions on the claims.

Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Class Actions Team or our Competition Law Team to discuss this topic or any other legal issue.

McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.

© McInnes Cooper, 2013. All rights reserved. McInnes Cooper owns the copyright in this document. You may reproduce and distribute this document in its entirety as long as you do not alter the form or the content and you give McInnes Cooper credit for it. You must obtain McInnes Cooper’s consent for any other form of reproduction or distribution. Click here to request our consent.

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