Competition Class Actions: A Year of Substantial Change

One year ago, plaintiffs' prospects of certifying complex, competition-related class actions in Canada seemed bleak. Indeed, some commentators asked whether competition class actions were dead in Canada. However, in the last 12 months a series of judicial decisions has clearly signalled that a plaintiff-friendly approach has been adopted at the certification stage, thereby making this type of case once again a growth area in Canadian class action litigation.

Pre-September 2009

The case which seemed to present an obstacle to many competition class actions was Chadha v. Bayer,1 decided in 2001. Chadha involved a conspiracy to fix the prices of iron oxide, a pigment used as a colourant for concrete bricks. Accordingly, the proposed class was principally comprised of people who had purchased homes built with bricks containing the iron oxide in question. These home owners were, in effect, indirect purchasers of the iron oxide. Establishing that there was any passing on of the increased costs of the iron oxide to the ultimate home purchaser would have been a complex and difficult matter. Ultimately, the Court of Appeal upheld the Divisional Court's reversal of original decision to certify the case. The Court of Appeal held that damages, which were a necessary component of the cause of action, could not be established on a class-wide basis. The decision in Chadha was regularly cited for the proposition that the aggregate damages provisions of section 24 of the Class Proceedings Act (CPA) are only applicable after liability has been established. However, the court did not close the door to price fixing class actions holding that, in Chadha, the proponents of certification were "unsuccessful...because they did not present the evidentiary basis for a certifying court to be satisfied that loss as a component of liability could be proved on a class-wide basis." The court went on to note that it was not clear whether such evidence "could have been obtained".

The New Approach Starts to Emerge

In 2007, the Ontario Court of Appeal again had the opportunity to consider the question of determining damages on a class-wide basis. Although Markson v. MBNA2 and Cassano v. The Toronto-Dominion Bank3 were not competition class actions, the Court of Appeal held that section 24 of the CPA could be used to calculate damages as long as the plaintiffs had shown that the defendants had potential liability to the entire class, even if individual assessments would be required to determine entitlement to monetary relief for individual class members.

The decision in Chadha had been regularly cited for the proposition that the aggregation provisions of section 24 of the CPA are applicable only after liability, particularly in indirect purchaser class actions, has been established. In Irving Paper v. Atofina Chemicals, released on September 28, 2009,4 Justice Rady of the Ontario Superior Court suggested that the Markson/Cassano principles signaled a more relaxed approach to damages for thepurposes of certification. In Markson, the Court of Appeal had referred to the need to establish "potential liability" before the aggregation provisions in section 24 of the CPA could be invoked. On this basis, Justice Rady found that Markson/Cassano had overtaken Chadha and that it was not necessary to demonstrate...