Defendants prevail in recent competition class actions

Courts across Canada have released several decisions over the past year dismissing proceedings or motions to certify proposed class actions alleging breaches of the Competition Act. We review a number of decisions from across Canada issued this year which suggest Canadian courts are prepared to apply meaningful scrutiny to proposed class actions alleging anti-competitive behaviour.

Competition class actions review

Lilleyman v Bumblebee Foods LLC

In Lilleyman v Bumblebee Foods LLC, 2023 ONSC 4408, the Ontario Superior Court of Justice dismissed a motion to certify a pair of proposed class actions alleging a price-fixing conspiracy by canned tuna companies. Notwithstanding successful prosecutions by the U.S. Department of Justice, including a jail sentence for the CEO of one of the defendants, the Court dismissed the motion for certification on the basis that the plaintiffs had failed to demonstrate “some basis in fact” that the conspiracy extended to Canada.

Williams v Amazon.com Inc. and Petty v Niantic Inc.

In Williams v Amazon.com Inc, 2023 BCCA 314 and Petty v Niantic Inc, 2023 BCCA 315, the British Columbia Court of Appeal upheld the partial stay of two proposed competition class actions on the basis of arbitration agreements in the electronic terms of service between the plaintiffs and defendants in the respective cases. Notably, the Court of Appeal confirmed that, in the absence of a clear legislative intention to the contrary (as exists, for example, with claims under the BC Consumer Protection Act), arbitration agreements are presumptively enforceable, even when contained in standard form contracts in the consumer context (including to prevent class actions relating to claims under the Competition Act). The British Columbia Court of Appeal’s decisions are consistent with another recent decision of the Federal Court of Appeal in Difederico v Amazon.com Inc, 2023 FCA 165, in which that Court dismissed an appeal of a decision staying a portion of a proposed competition class action on the basis of the arbitration clause in Amazon’s terms of service.

Difederico et al v Amazon.com Inc et al

In Difederico et al v Amazon.com Inc et al, 2023 FC 1156 (a separate decision), the Federal Court dismissed the remainder of the proposed class action against Amazon that had not been stayed. The Court concluded that provisions in Amazon’s agreements with third-party sellers and its “Fair Pricing Policy” that restricted sellers from setting significantly higher prices for products sold on Amazon compared to other platforms disclosed no cause of action under sections 45 and 46 of the Competition Act. Notwithstanding that these sections prohibit parties from arranging to fix, maintain or control prices for the supply of a product, the Court held that they did not apply to Amazon’s contractual provisions because those sections of the Act are intended to prevent “hard-core” or “naked” cartel conduct as opposed to conduct that may be anti-competitive in some way, but functions in a manner favourable to consumers.   

Sunderland v Toronto Regional Real Estate Board et al

In Sunderland v Toronto Regional Real Estate Board et al, 2023 FC 1293, the Federal Court partially dismissed a proposed class proceeding against various real estate brokerages, franchisors and trade associations under the Competition Act. The plaintiff had advanced claims under section 45 of the Act in relation to how commissions for “Cooperating Broker Services” (i.e., services provided to buyers, rather than sellers) are set and paid. The defendants brought a motion to strike the claim. Although the Federal Court allowed the plaintiff to proceed to certification on claims related to an arrangement to “control” prices and against the brokerage defendants and real estate associations for allegedly aiding, abetting and counselling the impugned arrangement, it struck out the aspects of the claim related to fixing, maintaining or increasing prices for Cooperating Broker Services, relying on the Court’s prior decision in Difederico.

Jensen v Samsung Electronics Co. Ltd.

In Jensen v Samsung Electronics Co. Ltd., 2023 FCA 89, the Federal Court of Appeal upheld the dismissal of a motion to certify a proposed class proceeding alleging a conspiracy among manufacturers of dynamic random-access memory (DRAM) chips. The decision to uphold was made on the basis that:

• the manufacturers’ private communications and public statements pleaded in support of the alleged conspiracy were consistent with lawful, unilateral conduct and conscious parallelism (wherein a business adopts a similar approach as a competitor without actively conspiring with the competitor); and
• there was no other evidence of an actual conspiracy.

In upholding the dismissal, the Court of Appeal emphasized that the degree of scrutiny applied by the motion judge in analyzing the claim was appropriate to avoid certification motions becoming a “mere formality”. The Quebec Court of Appeal came to a similar conclusion in upholding the dismissal of a motion to authorize a class proceeding involving another alleged price-fixing conspiracy in the DRAM chip market in Hazan v Micron Technology Inc., 2023 QCCA 132, rejecting the plaintiff’s argument that the motion judge had engaged in an impermissible assessment of the merits of the case instead of a prima facie screening of the facts.

What’s next

These decisions follow another significant decision by the Federal Court of Appeal last year in Mohr v National Hockey League, 2022 FCA 145, upholding a decision to strike a claim alleging a breach of the Competition Act by professional and junior hockey leagues in North America.

While the bar for certification of class proceedings in Canada remains low, these cases reflect that the winds may be shifting for defendants facing potential class actions, and that Canadian courts will meaningfully scrutinize both the evidence and legal theory of competition claims before certifying them as class proceedings.