Federal Court of Appeal’s Decision in Mohr Provides Guidance Under Section 48 of the Competition Act
August 24, 2022
Practical Law Canada Competition, of which I am Lawyer Editor, published a new Legal Update that discusses the recent Federal Court of Appeal (FCA) decision in Mohr v. National Hockey League, 2022 CarswellNat 3155 (F.C.A.), which upheld the Federal Court’s decision granting the defendants’ motion to strike in a class action against six hockey leagues and two other defendants under sections 45 (conspiracy) and 48 (conspiracies relating to professional sport) of the Competition Act, R.S.C. 1985, c. C-34. This Update discusses section 48 of the Competition Act, the decisions of the Federal Court and FCA and subsequent implications for professional sport-related class actions under sections 45 and 48.
Below is an extract of the new Legal Update with a link to the full Update.
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In a recent decision, the Federal Court of Appeal (FCA) held that section 48 of the Competition Act, R.S.C. 1985, c. C-34 (conspiracies relating to professional sport) applies only to conspiracies between professional sports teams and clubs in the same league (see Mohr v. National Hockey League, 2022 CarswellNat 3155 (F.C.A.) (Mohr)). The FCA also held, consistent with some provincial court decisions, that section 45 of the Competition Act is limited to sell-side conspiracies (that is, conspiracy agreements relating to the supply and not the purchase of a product or service).
Given that there has been limited jurisprudence under section 48 of the Competition Act to date, the Mohr decision provides useful guidance on the scope of section 48 in the context of civil actions commenced for alleged conspiracies involving professional sports teams and clubs that are members of professional leagues.
Overview of Section 48 of the Competition Act
The Competition Act contains a specific provision (section 48) dealing with restrictions on the ability of athletes and teams to participate in professional sports leagues. In this regard, section 48 of the Competition Act makes it a criminal offence for “teams and clubs engaged in professional sport as members of the same league,” or directors, officers or employees of such teams and clubs, to enter into agreements or arrangements to either: (i) limit unreasonably the opportunities for any other person to participate, as a player or competitor, in professional sport or to impose unreasonable terms or conditions on those persons who so participate; or (ii) limit unreasonably the opportunity for any other person to negotiate with and, if agreement is reached, to play for the team or club of his choice in a professional league (section 48(1) and 48(3), Competition Act).
Parties found guilty of contravening section 48 of the Competition Act are liable on conviction to a fine in the discretion of the court, to imprisonment for up to five years, or to both (section 48(1)).
Although section 48 of the Competition Act was enacted in 1976, it has been relied on only infrequently since then and there has been relatively little judicial interpretation of the section. To the extent that the Competition Bureau has investigated restrictions imposed by professional sports leagues, it has tended to do so pursuant to the Competition Act’s abuse of dominance provision rather than as a potential offence under section 48.
Like the other criminal offences under the Competition Act, however, section 48 can be the basis of civil actions or class actions commenced under section 36, as it was in this case.
For more information about private actions under the Competition Act, see Practice Notes, Competition Act Class Actions and Private Competition Law Actions.
The Mohr Decision
In Mohr, the plaintiff alleged that six hockey leagues, including the National Hockey League, and two other defendants conspired under section 48 of the Competition Act (conspiracies relating to professional sport) to limit the opportunities of hockey players to play in Canadian major junior and professional hockey leagues (see Mohr v. National Hockey League, 2021 CarswellNat 2809 (F.C.)).
The plaintiff also alleged that the 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. For a discussion of the decision of the Federal Court, see Legal Update, 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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For the full Legal Update, see here.
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