Engaging and Competing in Conspiracy Class Actions in Quebec

April 23rd, 2014

The authors are involved in Québec as well as in other common law provinces as lead counsel in various class action proceedings involving competition law issues. This text is an extract of a previous article written by Chantal Chatelain and Vincent de l’Étoile, “Engaging and Competing in Conspiracy Class Actions in Quebec: Overview of Applicable Legal Principles”, Développements récents au Québec, au Canada et aux États-Unis, Service de la formation continue, Barreau du Québec, Volume 380, 2014, p. 405.

Anti-trust and competition enforcement efforts have been steadily increasing throughout the world, notably in the United States of America and in Canada.

Mostly in the United States, these efforts have led to increasing criminal investigations and consequent indictments, the filing of guilty pleas and, ultimately, convictions. This has shed light on a plethora of alleged cartel offences under anti-trust legislation and price-fixing schemes in relation to diverse products or components of such products sold across the globe to direct or indirect purchasers.

In turn, class action litigation has mirrored these efforts on both sides of the border and it is not uncommon for class action proceedings instituted on the heels of the anti-trust investigations to be brought contemporaneously in the U.S. and in Canada, including in Québec.

The Superior Court of Québec is thus currently seized with dozens of proposed class actions alleging anti-competitive conduct and conspiracies that have been instituted against entities that are domiciled around the globe and which are sometimes not even present in the province, although their products are sold in the Québec market or constitute a component of a product sold in Québec.

Yet, prior to the matter of Infineon Technologies AG v. Option consommateurs1, few cases originating in Québec had dealt with a contested conspiracy cause of action at the authorization stage. A review of the case law reveals that there is a dearth of judgments that have decided on motions for authorization to institute a class action alleging violations of section 45 of the Competition Act2 (hereinafter, the “Act”). Indeed, most of the decisions which are reported deal with motions to authorize the institution of a class action for settlement purposes only, while many other matters are simply stayed or held in abeyance pending further developments in companion cases elsewhere in Canada or in the U.S.3

Thusly, the case law emanating from Québec has provided very limited guidance to date as to the satisfaction of the criteria set forth in Article 1003 of the Code of Civil Procedure (hereinafter the “CCP”) for authorizing the institution of a class action in such a context.

It is thus crucial to properly appreciate the applicable legal principles in relation to the authorization in Québec of class actions alleging a breach of section 45 of the Act.

I. Overview of the legal framework of a conspiracy cause of action

Section 45 of the Act creates a criminal offence to be tried before a superior court of criminal jurisdiction pursuant to charges usually laid by the Attorney General of Canada (through the Director of Public Prosecutions).

In such cases, the strict rules of evidence and the criminal standard of proof (i.e. beyond a reasonable doubt) apply. In case of a conviction, the courts may impose a fine, order imprisonment, issue prescriptive or prohibition orders and interim injunctions, or any combination of the foregoing.

In addition, aside from these criminal prosecutions, section 36 of the Act gives a limited right of private action to any person4.

The implementation of a conspiracy may also give rise to a cause of action under Québec civil law if the constitutive elements giving rise to a person’s extra-contractual liability are present.

A. The offence under section 45 of the Act

Section 45 of the Act, which addresses conspiracies and cartel-like activities, is at the very core of that statute and has been recognized by various authors as being the keystone of Canadian competition law and one of the oldest and most important components of Canadian public policy in the economic field.

Amendments to the Act enacted on March 12, 20095 and which came into force on March 12, 2010, modified section 45 of the Act and the applicable test thereunder.

It is important to note the transitional effect of these amendments considering that while agreements that were in existence prior to the 2010 amendments are subject to the current provision, it should be remembered that agreements that were terminated prior to March 12, 2010 are still subject to the old law. Agreements that were in force both before and after the amendments may be governed by both regimes.

Under both regime, the applicable test to prove a contravention of section 45 is multi-fold and, considering the criminal nature of the provision, an act (the actus reus) and an intent (the mens rea) on the part of the alleged perpetrator of a conspiracy need to be proven to conclude that an offence has been committed.

B. The private right of action under section 36 of the Act

Section 36 of the Act provides that any person who has suffered loss or damage caused by criminal conduct that is prohibited under Part VI of the Act (i.e. sections 45 to 62) may bring a civil action in damages before any court of competent jurisdiction to seek to recover the damage proved to have been suffered.

There is no requirement that a person be previously convicted of a criminal offence under Part VI of the Act (sections 45 to 62) before he or she may be the subject of a section 36 action.

Indeed, the claimant may bring suit and seek to prove directly that the anti-competitive conduct occurred, in contravention of the relevant provision of Part VI of the Act relied upon.

To succeed in bringing a civil private action under section 36 of the Act, the claimant must thus establish the following:

  1. the commission of an offence under Part VI of the Act;
  2. that he or she suffered actual loss or damage as a result of the defendant’s conduct; and
  3. that such a loss is quantifiable and may be proven at trial.

To date, the case law has not fully appreciated or analyzed the impact of invoking a cause of action involving a criminal offence on the applicable burden at the authorization stage in accordance with Article 1003 (b) CCP which requires that the facts alleged in the motion for authorization to institute a class action seem to justify the conclusions sought. Arguably, the intrinsically criminal nature of a conspiracy offence and the correlative burden should be weighted in the appreciation of the latter criterion and be considered in determining if a motion for authorization to institute a class action presents a “defendable” cause of action or gives rise to a “good colour of right”.

C. The right of action under the Civil Code of Québec

The remedies under the Act and the civil remedy under the Civil Code of Québec (hereinafter the “CCQ”) are independent and not mutually exclusive. Indeed, the remedies available under the Act do not preclude the availability of other remedies.

Thusly, a conspiracy among competitors or the implementation of a price-fixing scheme may also give rise to extra-contractual liability under Québec’s general liability regime6.

Under this civil law regime, the proof of the following elements could lead to civil liability:

  1. a fault;
  2. an injury; and
  3. a causal connection between the fault and the injury.

Therefore, it may theoretically be possible to invoke Article 1457 CCQ in relation to alleged anti-competitive conduct independently of the Act’s provisions, i.e. even if all the requirements of section 45 of the Act are not met.

II. Conspiracy causes of action at the authorization stage: the decision of the Supreme Court of Canada in Infineon

As discussed previously, until recently only a few precedents showed the way to deal in Québec with motions for authorization to institute class actions that allege a breach of section 45 of the Act.

However, the matter of Infineon Technologies AG v. Option consommateurs7 now provides some guidance in this respect and will surely give rise to additional developments as future matters raising such causes of action come before the courts.

Infineon provides some long-awaited principles applicable to the authorization stage in the context of a conspiracy cause of action and offers guidance as to the proper approach to such cases.

The Supreme Court of Canada emphasized first of all that it is essential not to conflate or confound the authorization process with the trial of an authorized class action on the merits: each of these stages serves a different purpose, and any analysis must be conducted accordingly.8

Indeed, the requirements for the authorization of a class action have consistently been interpreted and applied broadly and the case law clearly favours easier access to the class action as a vehicle for achieving the twin goals of deterrence and victim compensation. The burden of proving the satisfaction of the authorization criteria of Article 1003 CCP has a low threshold.9

However, having renewed the analytical framework of a motion for authorization to institute a class action in relation to the criteria discussed below, Infineon will surely be referred to as a precedent for the simplification of the authorization process in relation to a conspiracy cause of action.

III. Going forward

Although the impact of the decision of the Supreme Court of Canada in Infineon on the authorization of motions to institute class actions invoking a conspiracy cause of action are not yet fully known, the Supreme Court of Canada did clearly indicate that the authorization of such a class action does not alter the burden the plaintiff will be facing at trial.

It remains though that the criteria to authorize the institution of a class action still need to be established and it is expected that defence lawyers have not closed the book on vigorously contesting proposed class action, be it in competition law or other fields.

Also, even if successful at the preliminary authorization stage, at trial, Plaintiffs will still have to demonstrate, on a balance of probabilities, all the essential components of the cause of action being alleged.

1 2013 SCC 59.
2 R.S.C. 1985, c. C-34.
3 However, the following matters did address alleged violations of section 45 of the Act either at the authorization stage or on the merits of the class action: Jacques v. Pétroles Therrien inc., Superior Court of Québec no. 200-06-000102-080 and its companion case Association pour la protection automobile v. Ultramar ltée., Superior Court of Québec no. 200-06-000135-114 dealing with an alleged conspiracy to fix the price of gasoline at the pump; Harmegnies v. Toyota Canada Inc., 2008 QCCA 380, motion for leave to appeal to the Supreme Court of Canada dismissed (32587, 2008-09-25), dealing with an alleged conspiracy to fix the price of vehicles under the Access Toyota Program; Savoie v. Compagnie pétrolière Impériale ltée, 2008 QCCS 6634 in which Justice Léger, as he then was, remarked that up until that point, no class action alleging violations of Title VI of the Act had been authorized in Québec (par. 47).
4 It should also be added that at common law, private actions with respect to unlawful activity such as the tort of conspiracy are also available. This article does not canvass the common law remedies.
5 The amendments to the Act were introduced by the Budget Implementation Act, 2009, S.C. 2009, c. 2.(Bill C-10), sections 410 and following.
6 Article 1457 CCQ.
7 Supra, note 2.

8 Supra, note 2, para. 58.
9 Supra, note 2, paras. 59 and 60.