Competition Law


Within the short span of nine days in August 2016, Ontario courts managed to add new horizons to the potential liability of defendants in the burgeoning arena of price-fixing conspiracy class actions.

Each of the four August cases engaged a separate conspiracy involving LCD panels (Fanshawe v. AU Optronics), lithium-ion batteries (Shah v. LG Chem), CRT technology (Fanshawe v. Hitachi), and shipments of cargo by air (Airia v. Air Canada).

All the cases were based on s.45 of the Competition Act, which makes conspiracies to fix prices illegal. Arguably, the most important issue addressed was whether “unconnected” or “umbrella purchasers” can be included in a price-fixing conspiracy case. Three of the four cases addressed the issue: in both CRT and Air Cargo, the Superior Court of Justice ruled that the claim against umbrella purchasers could proceed to trial; and in Lithium-Ion, the Divisional Court granted leave to appeal from Justice Paul Perell’s decision excluding umbrella purchasers from the class.

Umbrella purchasers are consumers or businesses who bought products from someone other than the named defendants. The theory behind including umbrella purchasers is that because the defendant conspirators controlled the market, non-conspirators will follow their lead on pricing.

The case for including such purchasers, then, depends on expert evidence showing that the defendants controlled more than half the market and that their conduct impacted market prices generally. That’s not usually a problem for plaintiffs because most price-fixing cases involve defendants who together have two-thirds or more of the market share between them.

Still, given the huge stakes involved in price-fixing cases, the inclusion of umbrella purchasers in a class can ramp up risk materially for defendants. Even if the umbrella purchasers account for only 10 or 20 per cent of sales on a global basis, the increase in liability can be quite significant.

CRT, Air Cargo and Lithium-Ion bring the issue to a head. Although the issue will not be resolved to any degree of certainty at least until the Divisional Court rules on the substantive appeal in Lithium-Ion, there’s little doubt that the trend — including the Divisional Court’s decision to grant leave from Perell’s refusal and a recent ruling from the BC Supreme Court in Godfrey v. Sony — favors the inclusion of umbrella purchasers.

The other key issue arising from the August cases is whether the Competition Act is a “complete code” or whether plaintiffs may pursue common law civil conspiracy claims based on breaches of the legislation in addition to or instead of asserting their rights under s. 36 of the Competition Act.

In LCD, the Ontario Court of Appeal, in conformity with the BC Court of Appeal’s 2015 decision in Watson v. Bank of America, ruled that the Competition Act was not a complete code and that the common law claims could proceed.

Defendants needn’t necessarily panic: despite what appears to be a trend to broadening the scope of price-fixing class action, the Supreme Court of Canada hasn’t had its crack at the can yet.


Canada’s Competition Tribunal has denied a software vendor’s application to sue suppliers, including Auto Trader and Kijiji, whose refusal to provide key data affected almost one-quarter of the vendor’s business.

The Tribunal concluded, in a case called  Audatex Canada, ULC v. CarProof Corporation, that Audatex had not demonstrated that it had been “directly and substantially affected” by the suppliers’ actions. The decision continues the Tribunal’s longstanding history of shutting down complaints under the refusal to deal provisions of the Competition Act.

Before 2002, only the Commissioner of Competition could advance refusal to deal cases before the Tribunal. That changed when the federal government amended the Competition Act to allow private proceedings — but only if the applicant first obtained leave by meeting the “directly and substantially affected” test and demonstrating that reasonable grounds existed to make out the statutory components of refusal to deal.

Audatex provided data and software solutions to automobile insurance companies and repair shops. Automobile sales listing data was a key input for providing these services. Trader Corporation (which owns the Auto Trader site) and Marketplaats B.V. (which owns Kijiji) were the two largest generators of such listing data in Canada.

Early in 2015, both Trade and Marketplaats refused to supply Audatex with further data as they had entered into exclusive supply agreements with CarProof Corporation, which used the material to create vehicle-history reports for used car sellers and buyers. Although CarProof sublicensed some of the data to other industry participants, Audatex could not negotiate an agreement.

Audatex then brought its application to commence proceedings under the refusal to deal provisions. The company sought an order requiring CarProof, Trader and Marketplaats to provide the listings on usual trade terms. At the hearing, Audatex presented evidence indicating that the refusal to deal constituted between 22–23 per cent of the loss valuation business in issue. According to the Tribunal, that didn’t make the grade.

“This [evidence], in my opinion, is insufficient to establish that Audatex could be affected in an important or significant way by the alleged refusal,” the Tribunal concluded. “An effect of this magnitude does not rise to the level of substantial effect typically considered sufficient by the Tribunal to grant applications for leave under [the Competition Act].” 

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