June 2, 2021
Practical Law Canada Competition (of which I am Lawyer Editor) has published a new Legal Update, which discusses an important new Federal Court of Canada decision that held that section 45 of the Competition Act, R.S.C. 1985, c. C-34 (Competition Act) does not apply to upstream agreements (that is, agreements between competitors in relation to the purchase of a product or service). The decision is consistent with an Alberta Court of Queen’s Bench decision and the Competition Bureau’s recently revised Competitor Collaboration Guidelines. This new decision also adds new jurisprudence under section 48 of the Competition Act (conspiracies relating to professional sport), which has seldom been considered by Canadian courts. Below is an excerpt with a link to the full Legal Update.
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Since section 45 of the Competition Act, R.S.C. 1985, c. C-34 was amended in 2009, there has been a debate as to whether it applies to upstream agreements (that is, agreements between competing buyers of products or services).
In 2018, the Alberta Court of Queen’s Bench held that an agreement that affected only the purchase of a product was not prima facie prohibited by section 45(1) of the Competition Act but could be prohibited under Competition Act, section 90.1 if it substantially lessened or prevented competition (see Dow Chemical Canada ULC v. NOVA Chemicals Corporation, 2018 CarswellAlta 2087 (Alta. Q.B.) (Dow Chemical), at paragraph 1357).
More recently, the Competition Bureau (Bureau) has taken the position that it will not assess buy-side agreements for the purchase of products and services (for example, no-poaching and wage-fixing agreements in the context of labour services) under Competition Act, section 45. The Bureau also updated its Competitor Collaboration Guidelines (Collaboration Guidelines) on May 6, 2021 with new guidance that while section 45(1) does not apply to buy-side agreements, it may review joint purchasing agreements between competitors under the civil reviewable matters provisions of the Competition Act (for example, under Competition Act, section 79, abuse of dominance, or Competition Act, section 90.1, the civil agreements provision). For more information, see Practice Note, Canadian Conspiracy (Cartel) Law and Legal Updates: Competition Bureau Publishes Updated Competitor Collaboration Guidelines (May 10, 2021), Competition Bureau Reiterates Narrow Enforcement Position on No-Poaching and Wage-Fixing Agreements Between Competing Employers and Competition Bureau Issues Updated Competitor Collaboration Guidelines for Public Comment.
Consistent with Dow Chemical and the Bureau’s position in its amended Collaboration Guidelines, the Federal Court of Canada issued a decision on May 27, 2021 in Kobe Mohr v. National Hockey League, et al., 2021 FC 488 (F.C.)(Mohr) holding, among other things, that sections 45(1)(a)–(c) of the Competition Act only apply to competitors who enter into a conspiracy, agreement or arrangement relating to either the supply or the production and supply of a product in respect of which they compete (that is, only downstream supply agreements).
In Mohr, a class action, the plaintiff alleged that certain hockey leagues, namely the National Hockey League (NHL), American Hockey League (AHL), ECHL, Canadian Hockey League (CHL), Quebec Major Junior Hockey League (QMJHL), Ontario Hockey League (OHL), Western Hockey League (WHL) and Hockey Canada had conspired under section 48 of the Competition Act(conspiracies relating to professional sport) to limit unreasonably class members’ opportunity to negotiate and play with teams. The plaintiff also alleged that the hockey leagues imposed unreasonable terms and conditions on class members, including the imposition of nominal wages and loss of rights to market their image, sponsorship, and endorsement opportunities.
Two of the defendants, the CHL and Hockey Canada, advised of their intention to bring a motion to strike the plaintiff’s statement of claim based on the fact that section 48 of the Competition Act could not apply to them because it only applies to intra-league agreements and arrangements between or among “teams and clubs” (that is, not between leagues themselves). The hockey league defendants then filed a motion to strike on December 14, 2020. At the same time, the plaintiff sought leave to amend its statement of claim.
The Court held, per Crampton C.J., that the plaintiff’s motion to amend the statement of claim should be dismissed and that the defendants’ motion to strike should be granted.
(…)
For the full Legal Update see: Federal Court Holds That Section 45 of the Competition Act Does Not Apply to Buy-Side Agreements Between Competitors in Hockey Leagues Class Action Decision.
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