October 30, 2013
Canada’s Supreme Court is expected to release a long awaited indirect purchaser competition class action decision tomorrow. This case, and the tortuous (and conflicting) lower court appellate decisions before it in British Columbia, Ontario and Quebec, is expected to clarify the right of “indirect purchasers” to commence Competition Act class actions (i.e., consumers or other parties that have not purchased products directly from parties to a price-fixing or other cartel agreement). In advance of this important decision, commentary for and against indirect purchaser class action rights has once again begun, including today with a new C.D. Howe Institute report that advocates in favor of the right of indirect purchasers’ right to commence class actions.
In this new report, members of the C.D. Howe’s Competition Policy Council debate the pros and cons of allowing indirect purchasers class action rights and two of the policy rationales underpinning such rights: compensation and deterrence (concluding that deterrence is the more important rationale for allowing class action access to indirect purchaser classes).
This debate, and indeed these two rationales, are not new, either in relation to competition law remedies or criminal law sanctions more generally. It seems to me that both are in fact equally important as underlying rationales for indirect purchaser class action standing based, among other things, on the clear language of the Competition Act’s private access provision, which gives plaintiffs that have suffered loss or damage the right to recover damages (not merely in non-complex cases, where damage assessments are difficult, etc.); and based on what I would have thought by now a highly orthodox, uncontroversial and prevailing view that per se price-fixing and other cartels among competitors should be deterred and discouraged.
It also seems to me that Canada’s experience with competition/antitrust damage assessments on the merits is in such a fledgling state that it seems difficult to see why the Supreme Court would deny indirect purchaser rights so soon on any policy grounds. In any event, in its quite good and focused note, the C.D. Howe’s Council addresses a number of these and other considerations in evaluating whether Canadian courts should unambiguously open the door to indirect purchaser class action suits (though it remains to be seen how the Supreme Court will actually land until its decision is released tomorrow).
New C.D. Howe Institute report – abtract
“The Supreme Court will rule on Thursday, October 31, in landmark Competition Act decisions, Pro-Sys v. Microsoft, Sun-Rype v. Archer Daniels Midland, and Infineon Technologies AG et autres c. Option Consommateurs et autres. The key question before the Court is, when anticompetitive cartel behaviour is alleged in class action proceedings, should indirect purchasers, such as retailers and end consumers, have standing to sue for damages?
The Court’s rulings will have important implications for class action law and competition practice. Given the structure of the Canadian economy, it may be that the group most affected by an international cartel’s pricing behaviour will be indirect purchasers. Absent Canadian indirect purchasers having standing in a suit brought under the Competition Act, there could be no domestic route to a private action against an alleged cartel, and no domestic compensation for those who have suffered loss.
Accurately determining appropriate damages and to whom they should be awarded in cartel cases is a complex and uncertain undertaking. Whether, and to what extent, a cartel overcharge might get passed down the distribution chain is a difficult economic and practical question. Complexity, however, should not necessarily be a bar to indirect purchasers’ obtaining standing, although they may make a class proceeding unmanageable. Given the likelihood that awards to individual class members might be very small, or zero, even should a suit succeed, it appears that deterrence, not compensation, should be the aim of law and policy. This is the consensus view of the C.D. Howe Institute’s Competition Policy Council, which held its sixth meeting on October 24, 2013.”
For a copy of the C.D. Howe Institute’s new report see:
Who Gets In? Class Actions and Indirect Purchasers in Competition Law
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