General introduction to the legislative framework for private antitrust enforcement
Like most competition regimes, Canada's Competition Act deals with three broad areas: coordinated conduct among competitors, unilateral conduct by firms with market power and mergers. Somewhat unusually, the Competition Act also deals with a variety of marketing practices, such as false advertising.
The Competition Act applies a mix of criminal and civil (administrative) approaches to the areas it covers, as well as both public and private remedies.
Private actions for damages are only available for breaches of the Competition Act's criminal provisions. The key criminal provisions are conspiracies to fix prices, allocate markets or reduce output, bid rigging and false advertising.
Importantly, unilateral conduct by firms with market power, such as abuse of dominance, exclusive dealing, tied selling and refusal to deal, are not subject to criminal sanction. In fact, they are not even prohibited unless they cause a substantial lessening or prevention of competition, in which case the Competition Tribunal can prohibit the conduct. Agreements between competitors that are not hardcore cartels and price maintenance are subject to the same treatment.
Section 36 of the Competition Act creates a civil cause of action for damage caused by breaches of the criminal provisions of the Competition Act. To succeed, the plaintiff must prove that the defendant committed a criminal offence under the Competition Act, and that he or she suffered damage caused by the criminal offence. The standard of proof is on a balance of probabilities.
A conviction is, in the absence of proof to the contrary, sufficient to prove that the defendant committed the offence. The plaintiff must show actual damage, and that the damage was caused by the offence.
Section 36 itself specifies two remedies: damages and costs. The amount of damages is limited to the actual loss suffered by the plaintiff, plus the costs of investigation and of the proceeding.
Actions under Section 36 are subject to a two-year limitation period that commences on the last day on which the offence was engaged in, or from the day on which criminal proceedings were finally disposed of. Whether discoverability applies to extend this limitation period is an issue currently before the courts. Both the Ontario Court of Appeal and the British Columbia Court of Appeal have ruled that it can, and the issue will be taken up by the Supreme Court in 2019.
Both direct and indirect purchasers can sue and recover damages for price fixing.
Section 36 actions can be brought in the superior courts of any province, as well as the Federal Court of Canada. They can be structured as class actions under the class proceedings statutes or rules in most Canadian provinces, as well as the Federal Court. In Ontario, for example, the Class Proceedings Act, 1992 (CPA) provides for certification of class actions, and several other provinces have similar legislation. Historically, plaintiffs typically started at least three class actions for each case: one in Quebec, for a class of consumers and small businesses; one in British Columbia, for British Columbia consumers and businesses; and a national class in Ontario covering Ontario and the rest of the country. In 2018, British Columbia changed from being an opt-in class action regime for out-of-province class members to being an opt-out jurisdiction for such class members. It remains to be seen whether this changes the filing strategy among the plaintiff class action bar going forward.
Ontario's class action legislation is similar to (and indeed, modelled on) Rule 23 of the US Federal Rules of Civil Procedure. In contrast to Rule 23's requirement that the common issues predominate over individual issues, however, the CPA sets a lower threshold, requiring that a class proceeding be 'the preferable procedure for the resolution of the common issues'. The court considers the proposed class action in light of the three goals of class actions: judicial economy, access to justice and behaviour modification. The importance of the common issues in relation to the claim as a whole is a factor in this analysis. If resolution of the common issues would not significantly advance the litigation, and individual trials for each class member would be required, the action will not be certified.