April/May 2023
In this edition: New criminal no poach and wage fixing prohibitions take effect soon, Competition Bureau commences drip pricing application against Cineplex, Commissioner of Competition continues campaign for sweeping changes to Canada's competition laws and more…
News You Need to Know
- The new criminal no poach and wage fixing prohibitions of the
Competition Act take effect in less than a month, on June
23, 2023.
- The Competition Bureau has commenced an application before the Competition Tribunal
against Cineplex Inc. for allegedly advertising movie tickets at a
lower price than what consumers have to pay. According to the
Bureau, Cineplex imposes a mandatory fee which purportedly raises
the price paid by consumers for tickets purchased online above
their advertised price. Among other relief, the Bureau is seeking
orders compelling Cineplex to stop the impugned advertising, pay a
fine and provide restitution to affected consumers.
- The Commissioner of Competition (the head of the Competition
Bureau) is continuing his campaign for sweeping changes to
Canada's competition laws. On May 1, 2023, the Globe & Mail
newspaper published an opinion by Commissioner Boswell in which he
argued that important sectors of the Canadian economy are
"increasingly concentrated [and] dominated by giants" and
that Canada needs the "better and stronger competition
laws" proposed by the Competition Bureau in its March 2023 legislative reform recommendations
to the government of Canada. More recently, on May 16, 2023, in a
speech titled "Why Canada needs an urgent
competition upgrade," the Commissioner pointed to his loss in
the Rogers/Shaw litigation and the "unprecedented power [in
Canada] and elsewhere" of "[d]igital giants [that]
dominate today's global economy" in arguing that Canada
must "recalibrate the role of competition in [its]
economy."
- The Competition Bureau has announced that the filing fee for merger reviews increased from $77,452.36 to $82,719.12. The new filing fee came into effect on April 1, 2023. It applies to entities filing a pre-merger notification and/or requesting an Advance Ruling Certificate.
Bureau Business
- The Competition Bureau has obtained a disclosure order against Dominion Lending
Centres Inc. (DLC) in furtherance of its civil investigation into
whether DLC (which provides technology solutions and support
services to mortgage brokers in Canada) has engaged in conduct that
is harming competition in Canada's mortgage brokerage
industry.
- The Competition Bureau has published its 2023-2024 Annual Plan, "Driving
competition forward for all Canadians," which outlines the
Bureau's enforcement and competition promotion priorities. The
new plan focuses on affordability for Canadians, including:
- Cracking down on anticompetitive practices in areas that have
the greatest impact on the affordability of daily life for
Canadians;
- Strengthening and expanding the Bureau's capacity to take
timely enforcement action in both traditional and digital
marketplaces;
- Publishing the findings of the Bureau's Retail Grocery Market Study with
recommendations for improving competition in the grocery sector;
and
- Supporting the Government of Canada's ongoing review of the Competition Act and championing the importance of modernized competition laws that benefit all Canadians.
- Cracking down on anticompetitive practices in areas that have
the greatest impact on the affordability of daily life for
Canadians;
According to the Bureau, these efforts will also advance its
goal of becoming a "world-leading competition agency that is
at the forefront of the digital economy and champions a culture of
competition for Canada."
- The Competition Bureau has issued a position statement relating to its review of
Paper Excellence's acquisition of Resolute Forest Products. The
Bureau and Domtar Corporation (an affiliate of Paper Excellence)
registered a consent agreement in December 2021 to address
the Bureau's concerns regarding the merger. The position
statement outlines the analysis that led the Competition Bureau to
reach its conclusion that the proposed transaction would likely
lessen competition substantially in the supply of northern bleached
softwood kraft pulp in Eastern and Central Canada and in the
purchase of wood fibre from private lands in northwestern Ontario.
It also describes the Bureau's rationale for seeking the
divestitures that were made pursuant to the consent
agreement.
- The acquisition of Sunwing Airlines Ltd. by WestJet Airlines Ltd. has been approved by the federal cabinet. The approval was granted against the backdrop of an October 2022 report from Competition Bureau which concluded that the merger would likely result in a substantial lessening or prevention competition in the provision of vacation packages on 31 routes between Canada and Mexico or the Caribbean, including a merger to monopoly on 16 of those routes. The approval was subject to certain terms and conditions aimed addressing the Competition Bureau's concerns and other public interest concerns of the Minister of Transport relating to the national transportation system.
- The Competition Bureau has released Volume 6 of its Deceptive Marketing Practices Digest. The topics addressed in this volume include scarcity cues, drip pricing and the Competition Bureau's recent presidency of the International Consumer Protection and Enforcement Network. Cassels competition group members, Jennifer McKenzie and Eric Buist, have drafted a comment on the new volume which can be read here.
Competition Litigation Update
- The Federal Court of Appeal has upheld a decision denying certification of a
proposed C$1 billion class action on behalf of all Canadians that
purchased dynamic random access memory products from defendant
companies between June 2016 and February 2018.
- The Court of Appeal concluded that the certification motion
judge "did not err when he concluded that the amended
statement of claim, even if read generously, did not disclose a
reasonable cause of action under [the criminal conspiracy provision
in] section 45 of the [Competition] Act. There is
no proper allegation on the main constituent element of a
conspiracy, namely the possible existence of an agreement between
the respondents. The test for a reasonable cause of action is low,
as the Motion Judge acknowledged, but it cannot be so low as to be
devoid of any meaning. If the requirement that the pleadings must
reveal a reasonable cause of action is to be more than perfunctory,
it cannot be satisfied when the main element of an alleged
conspiracy is absent."
- The appeals court also confirmed that, as applied to the common issues criterion of the class certification test, "the 'some basis in fact' test has a dual component: first that the putative class members must have a claim, or at the very least some minimal evidence supporting the existence of a claim, and second some evidence that the common issue is such that its resolution is necessary to the resolution of each class member's claim." Writing for the Court, Justice de Montigny added: "I am also in full agreement with the Motion Judge that the two-step approach is the only one consistent with the underlying rationale and the purpose of the certification process. If that process is to be meaningful and to achieve its objective to root out unfounded and frivolous claims, there must be a minimum assessment of the proposed common issue to ensure that it has an air of reality. Otherwise, the certification would not achieve its goal and almost any proposed certified action would have to be certified [...] To quote again from the Motion Judge, '[a] cause of action with no factual underpinning does not become somehow more founded because it is common to a group of plaintiffs, nor does it gain any more value or traction just because it is shared by hundreds, thousands or millions' [...] Allowing a common issue lacking a basis in fact to proceed to trial would certainly not promote judicial economy, nor would it promote behaviour modification, or enable access to justice."
- The Court of Appeal concluded that the certification motion
judge "did not err when he concluded that the amended
statement of claim, even if read generously, did not disclose a
reasonable cause of action under [the criminal conspiracy provision
in] section 45 of the [Competition] Act. There is
no proper allegation on the main constituent element of a
conspiracy, namely the possible existence of an agreement between
the respondents. The test for a reasonable cause of action is low,
as the Motion Judge acknowledged, but it cannot be so low as to be
devoid of any meaning. If the requirement that the pleadings must
reveal a reasonable cause of action is to be more than perfunctory,
it cannot be satisfied when the main element of an alleged
conspiracy is absent."
- The Supreme Court of Canada has dismissed an application for leave to appeal
by Apotex Inc. from an Ontario Court of Appeal decision rejecting
Apotex's damages claims against Eli Lilly Canada Inc.,
including under the Statute of Monopolies, related to an
Eli Lilly olanzapine patent which was found to be invalid in a
proceeding brought by another generic drug manufacturer. Apotex
claimed that it had been wrongfully delayed in entering the market
as a result of Eli Lilly's actions in improperly listing the
impugned patent on the Patent Register and initiating prohibition
proceedings under the Patented Medicines (Notice of
Compliance) Regulations (PMNOC Regulations). Apotex was forced
to attempt to rely on the Statute of Monopolies (as well
as on the Trademarks Act and the common law tort of civil
conspiracy) because it was not able to claim statutory damages
under section 8 of the PMNOC Regulations. In dismissing
Apotex's appeal, the Court of Appeal had held that:
- the PMNOC Regulations and Patent Act form a complete
code that bar Apotex from seeking relief under the auspices of
other statutory and common law claims;
- Eli Lilly was "not liable for actions that it was
authorized by law to take (including registering the impugned
patent and initiating and prosecuting a prohibition application to
prevent Apotex from entering the market) and for harms that were
[allegedly] caused [to Apotex] by the operation of the patent
regime [...] Absent abuse of process, which was not alleged or
found here, Eli Lilly was entitled to pursue the legal process
provided for under the [PMNOC] Regulations";
- the exemption from the prohibition on monopolies in the
Statute of Monopolies "does not distinguish between
valid and subsequently invalidated patents";
- there were no misrepresentations (contrary to sections 7(a) and
7(d) of the Trademarks Act) by Eli Lilly when it sought to
list the impugned patent on the Patent Register; and
- with respect to the alleged civil conspiracy, "there was no evidence to support th[at] claim [...] [T]here was nothing unlawful in Eli Lilly applying for and then protecting a validly registered patent under the Patent Act and its Regulations, notwithstanding that the [impugned patent] was later invalidated. Apotex relies on nothing else to support its claim for conspiracy."
- the PMNOC Regulations and Patent Act form a complete
code that bar Apotex from seeking relief under the auspices of
other statutory and common law claims;
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