More Abuse?: The Competition Bureau Proposes Revised Guidelines on Abuse of Dominant Market Position

James Musgrove is a partner and a member of the Board of Partners at McMillan LLP. He practices primarily in the areas of competition, antitrust, and marketing law. He advises on antitrust, distribution, and competition law matters, mergers, cartels, and misleading advertising, and makes regular representations and submissions to the Competition Bureau. Among other major publications he is the author of the Competition Law tab division of CCH Canadian Limited’s Canada Corporations Law Reporter.

 Dr. A. Neil Campbell is a partner in the Competition and Trade Law groups at McMillan. He represents companies in cartel, abuse of dominance, and other competition law proceedings, including merger clearances under the Competition Act and foreign investment reviews under the Investment Canada Act. His trade law practice includes advising in antidumping and subsidy proceedings, NAFTA, WTO, and Canadian Internal Trade Agreement matters, export/import controls and trade sanctions, and foreign corrupt practices.

This article appeared on the McMillan website and is reproduced by permission. © McMillan LLP.

On March 22, 2012 the Canadian Competition Bureau released revised Draft Enforcement Guidelines on the abuse of dominance provisions of the Competition Act (the “New Draft Guidelines“¹). The New Draft Guidelines provide a summary of the Competition Bureau’s approach to the enforcement of the abuse of dominant market position (or ”monopolization”) regime. The most significant differences between the existing guidelines issued in 2001 (the “2001 Guidelines“), the 2009 Draft Guidelines, which were never finalized, and the New Draft Guidelines are summarized below.

Supreme Court of Canada Sets the Rules on When Canadian Courts Have Jurisdiction

Article written by Kenneth A. Dekker, Partner, Affleck Greene McMurtry LLP

Mr. Dekker is a leading practitioner in Civil Litigation, Corporate & Commercial Litigation, Insurance Litigation, Employment Law, and Securities.

Last Wednesday, April 18, Canada’s Supreme Court released a trilogy of long-awaited decisions in which it set universal rules on when courts across Canada can properly take jurisdiction over claims against foreign defendants. The first two cases, Club Resorts Ltd. v. Van Breda and Club Resorts Ltd. v. Charron., related to claims brought against the operator of resorts in Cuba at which the plaintiffs had suffered serious injuries or death. The third case, Breeden v. Black, related to defamatory statements made about Conrad Black by persons in the United States. In each case, the Ontario-based plaintiffs sought to have their claims tried in Ontario and the foreign defendants sought to stay the actions on the basis that Ontario courts did not have jurisdiction over the claims against them or, alternatively, on the basis that Ontario was not a convenient forum for those claims

2011: The Year in Competition Law

This article was edited by Michael Osborne, a partner of Affleck Greene McMurtry LLP, with contributions from AGM’s competition law group. This article was originally published on the firm’s website, www.agmlawyers.com, and is reproduced with permission. © Affleck Greene McMurtry LLP. Michael Osborne practises competition law and commercial litigation at Affleck Greene McMurtry LLP. He also teaches competition law at the Schulich School of Law, Dalhousie University.

Top Stories

Can Indirect Purchasers Sue for Price-Fixing Losses?

Can indirect purchasers sue to recover losses from price-fixing that are passed on to them by direct purchasers? Indirect purchasers are purchasers who buy a product from direct purchasers, who in turn buy it directly from cartel members. In April,  in Sun-Rype Products Ltd. v. Archer Daniels Midland Company and Pro-Sys Consultants Ltd. v. Microsoft Corporation, the British Columbia Court of Appeal ruled that indirect purchasers cannot sue. Since it is no defence to say that direct purchasers passed on the loss, direct purchasers are entitled to recover the entire overcharge, leaving nothing for indirect purchasers. The court thus refused to certify class actions alleging that producers of high-fructose corn syrup conspired to fix prices (Sun-Rype), and that Microsoft conspired with computer manufacturers to keep prices high (Pro-Sys).

Not long after, an Ontario court certified a class action on behalf of direct and indirect purchasers alleging that makers of LCD panels fixed prices, and a Quebec court certified a class action consisting mainly of indirect purchasers alleging that makers of DRAM chips conspired to fix prices. The British Columbia Court of Appeal certified a case alleging that Toyota Canada and its dealers conspired to fix retail car prices and even suggested that it may not be necessary to prove damages. As well, past cases in British Columbia and Ontario have held that indirect purchasers can sue.

The Sun-Rype and Microsoft cases will be heard by the Supreme Court in October 2012.

Class Action Waiver Upheld in Competition Case

by Michael Osborne, Affleck Greene McMurtry LLP

In a recent decision, the Federal Court of Canada enforced a class action waiver and an arbitration clause in a private action under section 36 of the Competition Act.[1]

The decision is significant because it clearly states two important principles:

1. Class action waivers will be enforced unless they are contrary to statute;
2. Claims alleging breaches of the Competition Act are arbitrable.

In 2009, disgruntled Amway “independent business owner” (“IBO”)—that is, dealer—Kerry Murphy and his wife Cheryl Rhodes commenced a proposed class action against Amway in the Federal Court. They alleged that Amway’s business model contravened the rules for multilevel schemes set out in the Competition Act and constituted an unlawful pyramid scheme. They also alleged breaches of the misleading advertising provisions of the Act.

Amway responded by disputing the jurisdiction of the Federal Court and seeking a stay of the action in favour of arbitration.

Pro-Sys and Sun-Rype Head to the Supreme Court

By James Cappio, editor of Competition Law Clearinghouse

The Globe and Mail reports that the Supreme Court of Canada has agreed to hear appeals of the British Columbia Court of Appeal’s decisions in Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2011 BCCA 186, and Sun-Rype Products Limited v. Archer Daniels Midland Company, 2011 BCCA 187. As discussed by Andrew Roman and Hassan Ahmad in Class Action Certification for Indirect Purchaser Claims: The Sun-Rype And Pro-Sys Decisions Of The British Columbia Court Of Appeal, Pro-Sys and Sun-Rype both involved certification of plaintiff classes including indirect purchasers of the defendants’ products. The British Columbia Supreme Court certified the class in both cases, and the Court of Appeal allowed the appeal in both.

Supreme Court review of these cases is significant because over the last few years, beginning with Irving Paper Ltd. v. Atofina Chemicals Inc., 2010 ONSC 2705, the lower provincial courts have consistently certified classes containing indirect purchasers, contrary to what seemed to have been long-settled practice. The Court of Appeal decisions were the first to reject this tendency. As importantly, on November 16 the Quebec Court of Appeal upheld a class containing indirect purchasers in Option Consommateurs v. Infineon Technologies AG, 2011 QCCA 2116. There is thus a conflict among the provincial appellate courts that is ripe for resolution.

We will soon feature an analysis of Option Consommateurs, and will keep you informed of developments at the Supreme Court.

Joint Venture Decision Criminal, Alberta Court Says

JOINT VENTURE DECISION CRIMINAL, ALBERTA COURT SAYS
By Michael Osborne
Affleck Greene McMurtry LLP

An Alberta court has held that a decision by joint operators of an oil field to sole source a contract constituted a conspiracy contrary to section 45 of the Competition Act, a criminal offence, and awarded damages to the company that lost out on the business.[1]

The Rainbow Lake Oilfield

Husky Oil Operations Ltd. and Mobil OilCanada (now ExxonMobil Canada Ltd.) each owned 50% of theRainbowLakeoilfield and operated it jointly. They embarked on a joint synergy initiative called “Mosky”, whose object was to reduce costs on jointly owned properties in theRainbowLakearea. In 1996, as part of this initiative, they decided to sole source fluid hauling for theRainbowLakeoilfield. Fluid hauling was the second biggest cost of the oilfield. Before 1996, they had contracted with two fluid haulers. Husky and Mobil interviewed both incumbent fluid haulers, and decided on one of them. The loser, Kolt Oilfield, ultimately went out of business and sued.

Kolt claimed that the decision by the joint operators to sole source fluid hauling eliminated competition to supply fluid hauling to the oilfield and therefore offended section 45 of the Competition Act. At the time, this provision made it a criminal offence to enter into an agreement to lessen competition unduly.[2]

The Long Arm of U.S. Law Grabs Canadian Executive

By Michael Osborne, Affleck Greene McMurtry LLP

Doing business in the U.S. can be very lucrative. But Canadian (and other foreign) companies and their executives that engage in corrupt practices there can expect to face serious penalties there.

Former Bennett Environmental Inc. executive Robert Griffiths is a case in point. On September 12, 2011, he was sentenced to serve 50 months in a U.S. jail, after pleading guilty to participating in fraud and money-laundering conspiracies.