> Competition Act Private Actions | CANADIAN COMPETITION LAW

Categories

Archives


December 14, 2014

Earlier today I saw with some interest that a Canadian plaintiff lawyers’ firm has commenced competition class proceedings against the LCBO and the Beer Store (and the Beer Store’s parents) for alleged conspiracy conduct under the Competition Act (Competition Act), among other claims. The case relates to claims that the provincially operated LCBO and Beer Store entered into an agreement to allocate the types of beer products sold (allegedly for the LCBO to only sell six-packs with the Beer Store retailing larger cases).

If true, and depending whether a number of exemptions or defences apply, agreements between competitors to divide markets (for example, geographic markets, customers or in some cases the types of product sold) can constitute an indictable offence under the conspiracy section of the Competition Act (section 45). In reading the news releases related to this new case, it made me think about which Competition Act related cases plaintiff firms pursue and which they don’t (i.e., their “triage” process).

In general, some of the key decision making factors for plaintiff firms in bringing class cases under the Competition Act are as follows:

1. Whether there are defendants that could pay out damages claims in the event of a win (or to date, class claim settlements). In this regard, plaintiff firms tend to stay away from large groups of private companies and focus on concentrated groups of public or private firms with significant assets. Not much of a surprise.

2. Whether the Competition Bureau or another international enforcement agency has commenced enforcement in the relevant market.

3. Whether any accused has been convicted (or plead guilty), based on a very useful civil claim reverse onus provision under the Competition Act (section 36(2)) that provides that a conviction (including following a plea) is, unless shown otherwise, proof of the violation of the relevant criminal offence under the Competition Act.

4. The geographic scope of alleged anti-competitive conduct, which goes to both the potential damages that may be recoverable and provinces in which class claims can be commenced. Competition law class actions are brought under both section 36 of the Competition Act and applicable provincial class action legislation.

5. The length of time an alleged anti-competitive agreement has been in place. This is because the operative damages section of the Competition Act requires that actual loss or damages be proven (and thus, agreements or other illegal conduct that has been ongoing longer can equate to larger monetary recoveries by plaintiffs).

6. Whether there are some defendants that may settle and, therefore, prove to be a useful source of evidence in class proceedings. In this regard, it is not uncommon for competition class action firms to seek to settle with one or more of the smaller firms in an effort to build their theory of harm against larger parties that may provide more fruitful settlement targets (i.e., larger damages settlements).

7. Whether a claim involves direct or indirect harm (i.e., whether consumers have allegedly suffered damages as a result of purchasing products directly from suppliers or, alternatively, through intermediaries, which may complicate damage quantification and proof). While so-called “indirect purchaser class actions” have recently been cleared by Canada’s Supreme Court, as a practical matter, developing methodologies to both (i) get past certification and (ii) establish damages at trial, if a case got that far, remain genuine practical obstacles.

8. The likelihood that defendants will settle. In this regard, in reality some defendants are more likely to settle and move on than others. This is, of course, largely a matter of experience and judgment.

9. Available evidence. In some cases, there is relatively little available evidence. In others, evidence may include that provided by pleading parties (for example, under the Competition Bureau’s Leniency Program), evidence obtained from parties settling with class counsel and in some cases evidence that can be compelled from the competition enforcement authorities themselves (for example, the Competition Bureau). In some more unusual instances, the parties themselves may have inadvertently disclosed incriminating evidence into the public domain (for example, terms of agreements that violate the Act or news release or other statements that strengthen class counsel claims).

10. Whether an industry is regulated. This can be a key factor for plaintiff counsel evaluating whether to bring competition law class proceedings based in the fact that regulated conduct can be outside the scope of the Competition Act (and therefore mean that claims need to address whether conduct is within or outside regulated safe harbours, such as within the regulated conduct doctrine). Rather importantly, it is not a defence to merely assert that a government (whether federal, provincial or local) has informally sanctioned or encouraged conduct. Nor is it a defence to merely assert that an industry is regulated generally. To fall within the scope of Canada’s regulated conduct doctrine, parties seeking a safe harbour from the application of the Competition Act must show, among other things, that federal or provincial legislation has mandated or authorized the conduct being challenged.

11. Whether the firms participating in the alleged anti-competitive conduct possess market power. This is because if conduct is alleged to have occurred before March, 2010, then the former conspiracy offences under the Competition Act (under which private and class actions are commonly commenced) required that it be shown as one element that competition has been prevented or lessened “unduly”. This generally requires an inquiry into the purpose of a challenged agreement and an analysis of the relevant market, including the market shares of the parties. While conspiracy-based private actions may be brought under both the old and new conspiracy sections of the Competition Act, depending on limitation period restrictions, private action cases are potentially stronger where they challenge conduct that occurred both before and after section 45 of the Competition Act was amended. Also, while the limitation period for bringing such actions under the Act is relatively short (two years from the end of the conduct), Canada has a rather unique provision that can mean that the period will run from when “criminal proceedings are finally disposed of”. This can potentially mean that the limitation period could be significantly extended in some cases.

********************

SERVICES AND CONTACT

We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.

To contact us about a potential legal matter, see: contact

For more information about our firm, visit our website: Competitionlawyer.ca

Comments are closed.

    buy-contest-form Templates/precedents and checklists to run promotional contests in Canada

    buy-contest-form Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)

    WELCOME TO CANADIAN COMPETITION LAW! - OUR COMPETITION BLOG

    We are a Toronto based competition, advertising and regulatory law firm.

    We offer business, association, government and other clients in Toronto, Canada and internationally efficient and strategic advice in relation to Canadian competition, advertising, regulatory and new media laws. We also offer compliance, education and policy services.

    Our experience includes more than 20 years advising companies, trade and professional associations, governments and other clients in relation to competition, advertising and marketing, promotional contest, cartel, abuse of dominance, competition compliance, refusal to deal and pricing and distribution law matters.

    Our representative work includes filing and defending against Competition Bureau complaints, legal opinions and advice, competition, CASL and advertising compliance programs and strategy in competition and regulatory law matters.

    We have also written and helped develop many competition and advertising law related industry resources including compliance programs, acting as subject matter experts for online and in-person industry compliance courses and Steve Szentesi as Lawyer Editor for Practical Law Canada Competition.

    For more about us, visit our website: here.