Antitrust Law Daily Wrap Up, ANTITRUST—Can. S.Ct.: Class action procedures in Canada Competition Law cases clarified by country’s highest court, (Nov 1, 2013)

By Jeffrey May, J.D.

In a series of decisions issued yesterday, the Supreme Court of Canada has clarified rules for consumer antitrust class actions (Pro-Sys Consultants Ltd. v. Microsoft Corp., Rothstein, M.; Infineon Technologies AG v.Option consommateurs, LeBel, L., and Wagner, R.; Sun-Rype Products Ltd. v. Archer Daniels Midland Co., Rothstein, M.; October 31, 2013).

In Pro-Sys Consultants Ltd. v. Microsoft Corp., the court held that indirect purchasers have the right to bring an antitrust action. Pro-System brought an action against Microsoft, on behalf of a proposed class of ultimate consumers, who acquired Microsoft’s products from re-sellers. The complaint alleged that Microsoft engaged in unlawful conduct by overcharging for its Intel-compatible PC operating systems and Intel-compatible PC applications software.

The indirect purchasers can seek to recover overcharges “passed on” to them through the chain of distribution, even though the passing-on defense was unavailable as a matter of restitution law, the court ruled. Risks of double recovery could be managed by the courts. Moreover, the court rejected Microsoft’s arguments that it should follow the U.S. approach prohibiting indirect purchaser actions under U.S. federal antitrust law based on the U.S. Supreme Court’s 1977 decision in Illinois Brick Co. v. Illinois, 431 U.S. 720.

Direct, Indirect Purchaser Classes. Price fixing claims against manufacturers of dynamic random access memory (DRAM), a microchip that allows information to be electronically stored and rapidly retrieved, could be pursued by a group of both direct and indirect purchasers who claimed to be overcharged, the court held in Infineon Technologies AG v.Option consommateurs. There are no differences between the members of the proposed group at the authorization stage that adversely affected the unity of the group, it was decided. Any conflict between the direct and indirect purchasers could be considered at subsequent stages of the proceedings, once any aggregate loss has been established.

Option consommateurs, a not-for-profit consumer association, sought to pursue a class action against the DRAM manufacturers to recover damages on behalf of direct and indirect purchasers who suffered losses by absorbing, in whole or in part, the inflated portion of the price of DRAM sold in Quebec. Option consommateurs designated as a member of the group a resident of Montreal who purchased a personal computer containing DRAM on Dell’s website with her credit card. The court ruled that the evidentiary and the legal threshold requirements for authorization of a class action had been met.

Lastly, Sun-Rype Products Ltd. v. Archer Daniels Midland Co. involved price fixing claims against producers of high fructose corn syrup (HFCS)—a sweetener used in various food products, including soft drinks and baked goods. At issue was the inclusion of indirect and direct purchasers in a proposed class. The court found that the inclusion of indirect and direct purchasers in the proposed class did not produce difficulties that would warrant dismissing the action. However, the case did not meet the certification requirements because there is not an identifiable class of indirect purchasers as required for certification under the British Columbia Class Proceedings Act.

The Pro-Sys Consultants Ltd. v. Microsoft Corp. decision is 2013 SCC 57.

The Infineon Technologies AG v. Option consommateurs decision is 2013 SCC 59.

The Sun-Rype Products Ltd. v. Archer Daniels Midland Co. decision is 2013 SCC 58.

Attorneys: (Camp Fiorante Matthews Mogerman) for appellant Pro-Sys Consultants Ltd. (McCarthy Tétrault LLP) and (Blake, Cassels & Graydon LLP) for Microsoft Corp. Yves Martineau (Stikeman Elliott) for Infineon Technologies AG. Daniel Belleau (Belleau Lapointe s.a.) Maxime Nasr for Option consommateurs. (Camp Fiorante Matthews Mogerman) for Sun-Rype Products Ltd. (Norton Rose Fulbright) for Archer Daniels Midland Co.

Companies: Pro-Sys Consultants Ltd.; Microsoft Corp.; Infineon Technologies AG; Option consommateurs; Sun-Rype Products Ltd.; Archer Daniels Midland Co.

Cases: Antitrust