The Lexpert Guides to the Leading US/Canada Cross-Border Corporate and Litigation Lawyers in Canada profiles leading business lawyers and features articles for attorneys and in-house counsel in the US about business law issues in Canada.
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COMPETITION CLASS ACTIONS years later, the court granted leave to appeal from a decision certifying a class action based on the exact same facts (Samsung), although this time coming out of the province of Québec. THE ARGUMENTS, PRO AND CON The main argument raised in favor of allowing indirect purchasers to sue for damages is that, in a large majority of cases, a class of Canadian-resident purchasers is likely to be overwhelmingly made up of indirect purchasers (usually consumers) and not direct purchasers. This is simply a function of the structure of the Canadian economy, which, regrettably, has few manufacturing entities higher up the supply chain, but numerous end-users of imported finished goods. Thus, preventing indirect purchasers (consumers) from suing may result in dramatically fewer price-fixing class actions being filed, with those that are filed being smaller and less remunerative to class counsel. If this thinking is correct, however, allowing indirect purchasers to sue may in fact raise more problems than it would solve — for example, if it is true that most direct purchasers are outside of Canada, they are likely not subject to the jurisdiction of the Canadian courts, and would not be party to the action or included in the class definition, making it difficult to obtain market information in order to determine how much, if any, of the alleged overcharge had been passed on down the supply chain. Furthermore, leaving aside the jurisdictional problems, given that direct and indirect purchasers have contradictory interests (since any amount recovered by an indirect purchaser would reduce the amount of recovery available to a direct purchaser, and vice versa, as the Courts of Appeal in Québec and British Columbia explicitly recognized in Samsung, Pro-Sys and Sun-Rype) it is difficult to understand how both groups could possibly be represented in a single class action by the same class counsel without that counsel becoming hopelessly entangled in serious conflicts of interest. Defendants rightfully fear that the likeliest outcome of allowing indirect purchaser claims in price-fixing class actions will be that direct purchasers will sue in a separate action in a jurisdiction outside of Canada to claim 100 percent of the amount of the alleged overcharge, and indirect purchasers will sue in Canadian courts to claim some portion of the overcharge, leaving defendants exposed to liability for double compensation, or worse. At the time of this writing, the Supreme Court of Canada has not yet released its judgment(s) in Samsung, Pro-Sys and Sun-Rype, but, however the court decides, it is sure to have a dramatic effect on the size and number of competition class actions launched in Canada. Canadian competition law will either take a significant final step towards harmonization with US federal antitrust law, with the incorporation of an Illinois Brick-type rule against indirect purchaser claims, or Canadian practitioners will look forward to a new and heretofore unexplored legal landscape of indirect purchaser cases that will generate novel controversies and ground-breaking precedents for years to come. Either way, interesting times lay ahead. Nick Rodrigo Davies Ward Phillips & Vineberg LLP Tel: (514) 841-6548 Fax: (514) 841-6499 nrodrigo@dwpv.com Nick Rodrigo is a partner and the practice group coordinator in the Montréal Litigation practice. Class-action defense work comprises the majority of Nick's practice, particularly relating to securities law, competition (anti-trust) law and consumer law . He has a broad range of trial and appellate experience, including at the Supreme Court of Canada. Adam Fanaki Davies Ward Phillips & Vineberg LLP Tel: (416) 863-5564 Fax: (416) 863-0871 afanaki@dwpv.com 38 | LEXPERT • December 2013 | www.lexpert.ca Adam Fanaki is a partner and member of the firm's Competition & Foreign Investment Review and Litigation practices in Toronto. He recently acted as the Senior Deputy Commissioner of Competition at the Canadian Competition Bureau and, previously, as Special Counsel to the Commissioner of Competition. He has acted as counsel for private parties and the Commissioner of Competition in a number of significant litigated proceedings before the Competition Tribunal and in class actions and other complex proceedings before various Canadian courts. He is frequently recognized as a leading advisor on all aspects of competition law, including merger transactions and criminal investigations.