Supreme Court Of Canada Recognizes Indirect Purchaser Claims

On October 31, 2013, the Supreme Court of Canada (SCC) released long awaited decisions in three high profile class action cases involving alleged price-fixing conspiracies: Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2013 SCC 57 [Pro-Sys]; Sun-Rype Products Ltd. v. Archer Daniel Midland Company, 2013 SCC 58 [Sun-Rype]; and Infineon Technologies AG v. Option consommateurs, 2013 SCC 59 [Infineon]. All three appeals were from certification motions. At stake, the fate of indirect purchaser claims in Canada.

Specifically, the Court in all three cases considered the threshold question of whether indirect purchasers could recover losses that were "passed on" to them by someone else. The Court concluded unanimously on this issue that indirect purchasers do have a right of action. The Court also considered the applicable standard of proof on a certification motion (or motion for authorization in Québec) and whether certification (or authorization) was appropriate in each case.

Background

In Sun-Rype, the plaintiffs commenced a class action in British Columbia to recover alleged overcharges related to high-fructose corn syrup (HFCS), a food additive found in many snacks and beverages. In Pro-Sys, the plaintiffs commenced a class action claim in British Columbia against Microsoft for allegedly overcharging for its PC operating systems and PC applications software. The Sun-Rype class included both direct and indirect purchasers, while the Pro-Sys class was made up entirely of indirect purchasers. Both cases were certified at first instance but reversed by a majority of the British Columbia Court of Appeal, which found that indirect purchasers could not, as a matter of law, recover losses resulting from alleged overcharges.

In Infineon, the plaintiff applied for authorization to institute a class action suit in Québec to recover alleged losses from overcharges for Dynamic Random Access Memory (DRAM) chips that are found in various electronic devices. The motion judge declined to authorize the proposed class action on the ground of lack of jurisdiction of the Québec courts. The Québec Court of Appeal reversed the judgment and authorized the class action, finding that indirect purchasers can bring a claim to recover losses from overcharges.

Indirect Purchaser Actions

Most of the Supreme Court's analysis of the "indirect purchaser" issue is found in the Pro-Sys decision. The Court concluded that indirect purchasers have a right of action and in so doing addressed the various arguments raised by the defendants and relied on by the majority of the BC...