Source: https://iclg.com/practice-areas/competition-litigation-laws-and-regulations/canada
Timestamp: 2019-04-23 18:23:45+00:00

Document:
The key legislation in Canada for the regulation of competition is the Competition Act, R.S.C. 1985, c. C-34 (Act). The purpose of the Act is to maintain and encourage fair competition in Canada by ensuring that Canadian firms and markets operate competitively. The Act includes provisions that regulate civil practices (such as mergers, refusals to deal, price maintenance, exclusive dealing, tied selling, abuse of dominance, competitor collaborations and deceptive marketing practices) and those that prohibit criminal conduct (e.g., conspiracies, bid-rigging, etc.).
Civil breaches of the Act are enforced by the Commissioner of Competition (Commissioner), an independent law enforcement official who is responsible for the administration and enforcement of the Act. The Commissioner is the head of the Canadian Competition Bureau (Bureau), an independent branch of the Federal Government, which investigates civilly reviewable matters under the Act.
Where parties have breached the civil provisions of the Act, the Commissioner can apply to the Competition Tribunal (Tribunal) (a specialised court responsible for adjudicating applications relating to civilly reviewable matters) to have the matter heard. The nature of the remedies that can be granted by the Tribunal vary depending on the civil provision that has been breached.
Breaches of the criminal provisions are prosecuted by the Public Prosecution Service of Canada (PPSC), a part of the Federal Department of Justice. While the Bureau investigates criminal violations, where there is evidence of a criminal offence, the matter may be referred to the PPSC for prosecution (along with the Bureau’s analysis and assessment of the matter, as well as its recommendations on immunity/leniency (if applicable) and sentencing).
Thus, competition litigation may arise in the context of the Commissioner enforcing the civil provisions of the Act or the PPSC enforcing the criminal provisions of the Act.
Additionally, section 36 of the Act provides that any person who has suffered loss or damage arising out of conduct that contravenes the criminal provisions of the Act, or as a result of a breach of a Tribunal (or court) order, has the right to commence a private right of action to recover the damages suffered (limited to the actual loss), plus legal costs. Under section 36, a claimant must establish (on a balance of probabilities – the civil standard of proof): (a) the elements of the offence; and (b) the actual loss or damage suffered (as a result of the illegal conduct). A civil action can be launched by a claimant acting either in an individual capacity or as a representative of a class of claimants in a class action.
Actions commenced under section 36 are generally accompanied by claims for breaches of various common law torts (e.g., civil conspiracy) and equitable relief. Section 36 actions are commenced by private parties, not the Commissioner.
This chapter will focus on civil competition litigation arising: (i) out of the Commissioner’s enforcement of the civil provisions of the Act; and (ii) actions launched under section 36 of the Act. It will not consider criminal litigation arising from the PPSC’s enforcement of the criminal provisions of the Act.
See our response to question 1.1 above.
National law. The Act is a federal statute; Canadian provinces do not have their own competition law legislation.
As discussed above in the response to question 1.1, civil breaches of the Act are reviewed by the Tribunal, a specialised court responsible for adjudicating applications relating to civilly reviewable matters under the Act. Appeals of decisions of the Tribunal are heard by Canada’s Federal Court of Appeal.
Claims commenced under section 36 of the Act can be commenced in Canada’s provincial courts or the Federal Court of Canada.
The Act confers on the Commissioner alone the authority to bring applications to enforce the civil provisions of the Act, subject to one exception under section 103.1. This section allows private litigants a limited right to seek relief directly from the Tribunal (with leave) from certain restrictive agreements or practices (namely, refusal to deal, price maintenance, exclusive dealing, tied selling and market restriction).
Whether an action will be certified as a class action will depend on whether it meets the criteria for certification in that jurisdiction. Typically, the following criteria must be met: (a) the claim must establish a viable cause of action; (b) there must be an identifiable class of two or more people who are willing to be represented by a representative plaintiff; (c) the claims of the class members raise common issues; (d) a class action would be the preferable procedure for resolution of the action; and (e) there is an appropriate representative plaintiff. Whether parties can “opt-in” to or “opt-out” of a class varies by jurisdiction.
Canadian administrative tribunals derive their jurisdiction from two sources: (i) express grants of jurisdiction (explicit powers); and (ii) the common law doctrine of jurisdiction by necessary implication (implicit powers) (ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 1 S.C.R. 140, at para. 38). The Tribunal derives its explicit powers come from the Act and the Competition Tribunal Act, R.S.C 1985, c.19.
Provincial courts and the Federal Court of Canada have jurisdiction to hear section 36 actions, whether brought on behalf of an individual or on behalf of a class.
Where a claim concerns conduct that has taken place outside of Canada, an issue may arise as to whether the court can assume jurisdiction over the proceedings. This will depend on whether there is a “real and substantial” connection between the action and the jurisdiction. Canadian courts have considered a court’s jurisdiction to hear section 36 actions arising from conduct which occurred outside of Canada and have typically found in favour of plaintiffs (e.g., Vitapharm Canada Ltd. v. F. Hoffmann-La Roche Ltd., 2002 20 C.P.C. (5th) 351 (Ont. S.C.J.); Fairhurst v. Anglo American PLC, 2012 BCCA 257). However, in a recent case (Shah v. LG Chem, Ltd., 2015 ONSC 2628), an Ontario court found in favour of the defendants. Applying the presumptive connecting factors outlined by the Supreme Court of Canada in Club Resorts Ltd. v. Van Breda, 2012 SCC 17, the court found it had no jurisdiction over the two defendants that brought the application. In Van Breda, the court identified four presumptive connecting factors, where a tort is pled, that prima facie entitle a court to assume jurisdiction over a dispute: (a) the defendant is domiciled or resident in the province; (b) the defendant carries on business in the province; (c) the tort was committed in the province; and (d) a contract connected with the dispute was made in the province. The court noted these factors were not exhaustive and new ones could be identified in the future.
The court must also have personal jurisdiction over a party, in that the party must be properly served with the action. Rules of procedure in each province (and the Federal Court) outline the requirements for service on parties located outside of Canada.
The judicial process in Canada is adversarial.
Interim remedies are available for breaches of the civil provisions of the Act. They are not available for section 36 actions.
The Commissioner may seek interim remedies, both before and after he has commenced an application under the civil provisions of the Act.
For example, prior to bringing an application to challenge a merger, the Commissioner may ask the Tribunal to issue an interim order (a section 100 order) that would prevent the completion or implementation of the proposed merger. The Tribunal will issue such an order where it finds that in the absence of the interim order, it is likely that an action would be taken that would substantially impair the ability of the Tribunal to remedy the effect of the proposed merger on competition because the action would be difficult to reverse (or where there has been a breach of the notification provisions of the Act, which require that certain transactions be notified to the Commissioner before they are completed).
Similarly, the Commissioner may, prior to bringing an application challenging conduct that constitutes a refusal to deal, price maintenance, exclusive dealing, tied selling, market restriction or abuse of dominance, ask the Tribunal to issue an interim order (a section 103.3 order) that would prevent the continuation of the conduct. The Tribunal will issue such an order where the Commissioner certifies that an inquiry is being made into such conduct (e.g., the conduct is being investigated) and in the absence of an interim order, the following could happen: (a) injury to competition that cannot be adequately remedied by the Tribunal is likely to occur; (b) a person is likely to be eliminated as a competitor; or (c) a person is likely to suffer a significant loss of market share, revenue, or other harm that cannot be adequately remedied by the Tribunal.
After an application has been made to challenge certain civil conduct, the Tribunal may, on application by the Commissioner, issue an order (a section 104 order) it considers appropriate, having regard to the principles ordinarily considered by superior courts when granting interlocutory or injunctive relief. The Supreme Court of Canada has identified these principles as: the applicant must establish there is a serious issue to be tried; irreparable harm would be caused to the applicant if the injunctive relief was not granted; and the balance of convenience favours the granting of the order (RJR-Macdonald Inc. v. Canada (Attorney General), 1994 1 S.C.R. 311).
Interim remedies can also be ordered under the deceptive marketing provisions of the Act. Remedies vary depending on the practice (e.g., they can include prohibition orders; interim restitutionary orders, etc.).
Private parties can also seek interim remedies, however, only after they have filed an application to challenge conduct that constitutes a refusal to deal, price maintenance, exclusive dealing, tied selling or market restriction. The order is sought under section 104 and private parties must meet the same test as the Commissioner.
Remedies are available under the civilly reviewable matters where the Tribunal finds that the conduct results in a substantial lessening or prevention of competition (SPLC) in a relevant market (in the case of mergers, exclusive dealing, tied selling, market restriction, competitor collaborations or abuse of dominance) or an adverse effect on competition (in the case of a refusal to deal and price maintenance).
The basic remedy available to the Tribunal is to issue an order prohibiting the conduct. But certain provisions have more specific relief. For example, in the case of mergers, the Tribunal could order: (i) dissolution of the merger; (ii) disposition of assets or shares; or (iii) any other action with the consent of the person against whom the order is directed. In the case of a refusal to deal, the Tribunal could require a party to supply customers on usual trade terms. In an abuse of dominance or deceptive marketing case, the Tribunal can order administrative monetary penalties.
The substantive statutory test applied to all mergers is whether the merger is likely to result in a SPLC in a relevant market. In making this determination, the Tribunal will look at many factors (e.g., remaining competition, substitutes, barriers to entry, etc.) and consider whether the merged firm will be able to exercise market power. The Tribunal will also consider any efficiencies resulting from the proposed merger, as section 96 of the Act sets out an express efficiencies defence to anti-competitive mergers, where the efficiencies from the merger are likely to be greater than and offset any effects of the SPLC.
These provisions apply where a supplier refuses to supply a customer with an adequate supply of a product, which results in an adverse effect on competition in a market.
These provisions apply where a supplier “by agreement, threat, promise or any like means” influences upward or discourages the reduction of the price at which a reseller supplies a product within Canada, which results in an adverse effect on competition in a market. It can also include a refusal to supply a product to, or otherwise discriminate against, a person for their low pricing policy (where it results in an adverse effect on competition in a market).
The provisions apply where competition is substantially lessened by the following conduct: (a) a practice of requiring or inducing a customer to deal only or primarily in products of the supplier by means of more favourable terms or conditions (exclusive dealing); (b) a practice of requiring or inducing a customer to buy a product as a condition of supplying the customer with another product (tied selling); and (c) a practice of requiring a customer to sell a product only in a defined market as a condition of supplying that product (market restriction).
For the Tribunal to find an abuse of dominance, the Commissioner must prove that dominant firm(s) has/have engaged in a practice of anti-competitive acts, which have or are likely to result in a SPLC in a relevant market.
Legitimate (i.e., non-cartel) collaborations, agreements and arrangements between competitors, which are likely to result in a SPLC, are not allowed under the Act.
Deceptive marketing practices include misrepresentations to the public, improper representations as to the ordinary selling price of a product, improper representations as to tests and testimonials, bait and switch selling, sales of a product above the advertised price and improper promotional contests. There are specific tests for establishing each practice.
Under section 36, a party is entitled to damages, plus costs. The party must prove the breach of that section and the damages suffered, on a balance of probabilities (the civil standard of proof).
Damages are not available for a breach of the civil provisions of the Act, unless the breach results in a breach of a Tribunal order. In such a case, the party can seek damages under section 36 (see response below).
Plaintiffs will seek general damages, to compensate for the losses they suffered as a result of a breach of section 36.
Section 36 actions are typically brought because of alleged breaches of the criminal provisions of the Act (e.g., conspiracy, bid-rigging). In such cases, plaintiffs will often claim relief for the breach of various torts and thus also seek exemplary damages (which are designed to punish the defendant and to deter the defendant and other potential wrongdoers) tied to these torts. In addition, they will seek restitution and disgorgement of profits the defendants allegedly earned from the illegal conduct.
Section 36 breaches are compensable by actual damages, plus costs. However, to the extent that common law claims are also brought, available remedies may be broader.
No section 36 actions (brought on the basis of breaches of the conspiracy or bid-rigging provisions of the Act) have ever gone to trial. Hence, it is not clear whether Canadian courts will take into account any fines imposed by Canadian courts for criminal conduct and/or any redress scheme already offered to those harmed by the infringement.
Civil Provisions: Balance of probabilities.
Section 36 Actions: Balance of probabilities.
Civil Provisions: The Commissioner or private litigant(s) bringing the application.
Section 36 Actions: The plaintiff(s).
In Canada, there is no presumption of loss. Both the loss and the quantum of damages need to be proven.
The type of evidence that can be put before the Tribunal is governed by the Act and the Competition Tribunal Rules. Generally, applicants (i.e., the Commissioner or private litigant(s)) and responding parties can rely on witness testimony and documentary evidence. Expert evidence may also be heard and accepted by the Tribunal.
The admissibility of evidence is governed by the common law rules of evidence. The plaintiff(s) and defendant(s) will rely on witness testimony and documentary evidence. Section 36 provides that where a party has been convicted of a criminal offence (either at trial or as a result of a guilty plea in the context of a leniency settlement) or convicted of or punished for breaching a Tribunal or court order, the record of the court proceedings can also be used as evidence in proving the conduct, in the absence of evidence to the contrary. Expert evidence may also be heard and accepted by the courts.
Prior to the commencement of an application, the Commissioner may seek documents from the target of his investigation (or other third parties) pursuant to section 11 of the Act, which provides that the Tribunal can issue an order requiring the production of documents or other records. Section 11 is not available to private litigants.
Once an application has been commenced, parties are required to prepare and provide to the other side an affidavit of documents, which identifies the documents that are relevant to any matter in issue and that are or were in the possession, power or control of the party.
Parties may also have certain rights to obtain documents from third parties, depending on the rules of procedure in the jurisdiction in which the action has been commenced.
Plaintiffs in section 36 actions may seek to obtain disclosure from the Bureau. The issue of disclosure was addressed in two recent cases by the Supreme Court of Canada (the highest level of court in Canada). In the first case, the plaintiffs sought access to wire-tap evidence collected by the Bureau in the course of its investigation. The Supreme Court of Canada ultimately ruled in favour of the plaintiffs and ordered the disclosure (see Imperial Oil v. Jacques, 2014 SCC 66). In the second case, the plaintiffs sought to examine the Bureau’s senior investigator. The Supreme Court of Canada ruled against the plaintiffs and refused to order the disclosure on the basis that there was no obligation on the Crown to submit to proceedings in which it was not a party (see Canada (Attorney General) v. Thouin, 2017 SCC 46).
Prior to an application being commenced, the Commissioner may seek to examine a witness in person, or through written interrogatories, pursuant to section 11 of the Act, which provides that the Tribunal can issue an order requiring the witness to appear or deliver written responses (under oath). Section 11 is not available to private litigants.
Once an application has been commenced, parties have the ability to cross-examine witnesses that have been put forward by the other side. A party may also obtain a subpoena, to force a witness to testify.
Prior to discovery, parties may (depending on the jurisdiction in which the action is commenced) have the right to examine witnesses that put forward evidence at the certification stage (such as an affiant from a company or an expert witness).
At the discovery stage, parties have the right to examine a representative of the other side. Depending on the jurisdiction in which the action is commenced, they may also have the ability to examine more than one representative.
At trial, parties have the right to cross-examine the other side’s witnesses. A party may also obtain a subpoena, to force a witness to testify.
Damages are not available under the civil provisions of the Act.
As discussed above in the response to question 4.4, section 36 provides that where a party has been convicted of a criminal offence (either at trial or as a result of a guilty plea in the context of a leniency settlement) or convicted of or punished for breaching a Tribunal or court order, the record of the court proceedings can also be used as evidence in proving the conduct, in the absence of evidence to the contrary. This only applies to breaches of Canadian law.
Plaintiffs may seek to adduce into evidence decisions of international competition authorities relating to the conduct alleged. In broad terms, such evidence could be used by the courts (but could face admissibility challenges).
Additionally, plaintiffs may seek to adduce into evidence civil judgments in other jurisdictions or may seek to rely on such decisions in a summary judgment motion.
The Tribunal can issue confidentiality orders to protect competitively sensitive information arising in both testimonial and documentary evidence (e.g., testimony could be heard in camera; documents could be redacted).
Courts can issue confidentiality orders to protect competitively sensitive information arising both in testimonial and documentary evidence (e.g., testimony could be heard in camera; documents could be redacted).
Section 103.2 provides that where a party is granted leave to bring an application under section 103.1, the Commissioner can intervene and participate in the proceedings.
The Commissioner will not generally intervene in section 36 actions or comment on them.
In 2013, the Supreme Court of Canada ruled that the passing on defence is not available and that indirect purchasers have legal standing to sue (Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57).
Depending on a jurisdiction’s rules of civil procedure, defendants may have the ability to cross-claim or bring a third party claim against a party they allege is liable to the defendant for all or part of the plaintiffs’ claim.
The relevant civil provisions will typically identify the time period during which an application must be brought. For example, section 97 provides that the Commissioner may not bring an application challenging a merger more than one year after the merger has been substantially completed. Section 79 provides that the Commissioner may not bring an abuse of dominance application more than three years after the practice has ceased. With respect to section 103.1 applications by private litigants, these must be brought no more than one year after the practice or conduct that is the subject of the application has ceased.
With respect to breaches of the criminal provisions of the Act, section 36(4) of the Act provides that an action must be commenced within the later of: (i) two years from the day on which the conduct was engaged in; or (ii) two years from the day on which any criminal proceedings relating to the conduct were finally disposed of. As there is no statute of limitations in Canada for the laying of criminal charges, it is possible that a section 36 action could be brought more than two years after the alleged conduct has ceased.
Moreover, plaintiffs argue that the limitation period does not begin to run until the conduct is discoverable. In two recent decisions, two Canadian appellate courts have agreed. In 2016, the Ontario Court of Appeal (in Fanshawe College of Applied Arts and Technology v. AU Optronics Corporation, 2016 ONCA 621) found that the discoverability principle applies to part (i) of section 36(4). Although noting the principle probably did not apply to part (ii) of section 36(4), the court did not consider this to be a problem, finding there was no rule that suggests that both limitation periods in section 36(4) had to operate in the same way. More recently, in 2017, the Court of Appeal for British Columbia (in Godfrey v. Sony Corporation, 2017 BCCA 302) found that the provision was subject to the discoverability rule and adopted the reasoning of the court in Fanshawe. The Supreme Court of Canada has granted leave to the defendants to appeal the Godfrey decision (SCC 37810). At the time of publishing, the appeal had not yet been heard by the court.
With respect to breaches of a Tribunal (or court) order, section 36(4) of the Act provides that an action must be commenced within the later of: (i) two years from the day on which the order was contravened; or (ii) two years from the day on which any criminal proceedings relating to the conduct were finally disposed of.
Applications under the civil provisions of the Act could take one to two years before they are heard by the Tribunal. Appeals of such decisions could take several more years (e.g., three to five years), depending on the level of court to which the matter is appealed (the highest level being the Supreme Court of Canada).
No action brought pursuant to section 36 of the Act (for conspiracy or bid-rigging) has been fully adjudicated at trial. All actions have settled (typically after certification). It takes several years for a matter to reach certification. It would similarly take several years for a matter to be fully adjudicated at trial.
This will depend on various factors (e.g., rules of procedure in the jurisdiction; stage of proceedings; whether it is a class action, etc.). For example, if a matter is discontinued against a defendant without a settlement (e.g., in a case where the defendant has satisfied the plaintiff that it did not engage in the alleged conduct), permission of the court may or may not be required, depending on the jurisdiction in which the settlement is reached (e.g., in some provinces the court must approve a discontinuance) and depending on what stage the proceeding is at (e.g., prior to the close of pleadings, etc.).
Once an action has been certified as a class action, it can only be discontinued or abandoned with the approval of the court, on such terms as the court considers appropriate. Similarly, class action settlements must be approved by the court, which will consider whether the agreement is fair, reasonable and in the best interests of the settlement class.
Yes. See the response above to question 7.1.
Yes. The Tribunal has the authority to award costs and may determine by whom and to whom they are to be paid.
It depends on the province in which the case is commenced. Some provinces have “no cost” regimes, whereas in others, the winner is able to recover legal costs from the unsuccessful party.
Third party funding of competition law claims may be permitted. Plaintiffs’ have sought to use third party funding in Canadian class actions, including competition class actions.
The Tribunal’s decisions can be appealed to the Federal Court of Appeal as of right, with respect to questions of law, and with leave, with respect to questions of fact. Decisions of the Federal Court of Appeal can be appealed to the Supreme Court of Canada, with leave.
Decisions of provincial courts or the Federal Court of Canada can be appealed to the provincial court of appeal or the Federal Court of Appeal, respectively. In some cases, a party may be required to seek leave to appeal a decision. Further appeals may be made to the Supreme Court of Canada, with leave.
However, participants in either programme (whether successful or not in obtaining immunity or leniency) are not immune from being named as defendants in a civil action for damages.
Rules of discovery differ by province, but defendants (whether successful or unsuccessful immunity or leniency applicants) are generally required to provide plaintiffs with all non-privileged documents that are relevant to the litigation. This would include documents that are incriminating (and that may have been shared with regulators in seeking immunity or leniency).

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