Forecasting developments in competition litigation always involves two considerations: what are the Competition Bureau’s enforcement priorities for the coming year, and what might occupy the attention of the courts?
Competition Bureau priorities
On the enforcement side, the Commissioner of Competition stated clearly since the start of the COVID-19 pandemic that robust enforcement of competition laws will be critical, in his view, to ensuring a strong economic recovery. In a recent speech, the Commissioner said that the Bureau would “remain vigilant” against attempts by firms to insulate themselves from competition.
The Bureau has signaled that its main priorities in 2021 will be focusing on ensuring that “digital giants” compete fairly, and safeguarding competition in the digital age. It will also continue to advocate for increased competition in telecommunications markets. The Bureau has been particularly active over the past few years in enforcing the misleading advertising provisions of the Competition Act, leading to ten consent agreements resolving investigations from 2018 through 2020. We expect this trend to continue into 2021.
On the litigation front, we expect 2021 to provide opportunities for superior courts in various provinces to consider and apply the Supreme Court’s most recent guidance on certifying class actions advancing claims under the Competition Act.
Pioneer Corporation v. Godfrey was released in September 20191. It is a sequel of sorts to the 2013 Pro-Sys v. Microsoft decision, which was the last time the Supreme Court considered a competition class action2.
Plaintiffs in competition class actions usually seek damages from co-conspirators who are alleged to have agreed to fix the prices of their products, on behalf of both direct purchasers (those who bought the product directly from a defendant) and indirect purchasers (usually consumers, though there can be other intermediate purchasers in the supply chain).
The Supreme Court decided in Pro-Sys that indirect purchasers could sue defendants for damages, and that they could be part of the same class of plaintiffs as direct purchasers. The Court also clarified what sort of expert evidence was required to certify common issues related to damages suffered by class members. In short, the plaintiffs had to show there was a “credible or plausible methodology” to establish loss on a class-wide basis.
Exactly how these rules should be applied continued to be a battleground between plaintiffs and defendants following the release of the decision in 2013. Defendants said that plaintiffs had to show the methodology could identify whether particular class members had suffered damage and how much damage before a case could be certified. Plaintiffs argued that all that was required was for them to show that some harm had been passed on to the consumer level.
In tandem with that issue, courts also grappled with a question that was not addressed in Pro-Sys: whether “umbrella purchasers” could sue alleged conspirators for damages. Those purchasers bought the affected product from a non-conspirator, though they claim damages because the conspiracy created a price “umbrella” that is said to have allowed other firms to charge higher prices than they otherwise would have.
The Supreme Court addressed both issues in Godfrey, and decided both in favour of the plaintiffs. Umbrella purchasers can sue for damages, and plaintiffs have to show “a plausible methodology to establish that loss reached one or more purchasers – that is, claimants at the ‘purchaser level’”3.
These conclusions will likely lead to plaintiffs seeking to certify larger classes and may impact the nature of expert evidence submitted by plaintiffs and defendants. This will become clearer as courts consider the case in the coming year. However, the Supreme Court was careful to note again, as it has in past cases, that class actions do not relieve plaintiffs from the burden of proving that class members have actually suffered loss before they can recover damages.
While the Supreme Court decided these issues against the defendants in Godfrey, the decision serves as a reminder that success at certification is not the same as success on the merits of a common issues trial, and proving that class members suffered damages remains an extremely complicated undertaking.
1 2019 SCC 42
2 2013 SCC 57
3 2013 SCC 57, para. 107
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