Damages in Competition Law
| Author | Sandra A. Forbes and Christopher D. Margison |
| Pages | 23-71 |
Damages
in
Competition
Law
Sandra
A.
Forbes
&
Christopher
D.
Margisori
A.
INTRODUCTION
The
main
source
of
Canadian
competition
law is the
federal
Competition
Act*
The
purpose
of the Act is set out in
section
1.1 as
follows:
The
purpose
of
this
Act is to
maintain
and
encourage competition
in
Canada
in
order
to
promote
the
efficiency
and
adaptability
of the Ca-
nadian economy,
in
order
to
expand opportunities
for
Canadian par-
ticipation
in
world markets while
at the
same time recognizing
the
role
of
foreign
competition
in
Canada,
in
order
to
ensure that small
and
medium-sized enterprises have
an
equitable opportunity
to
partici-
pate
in the
Canadian economy
and in
order
to
provide consumers with
competitive
prices
and
product choices.
The
Act
contains both criminal
offences
and
civil reviewable conduct.
The
primary criminal
offences
include
bid-rigging,
conspiracy,
preda-
tory
pricing,
price
discrimination,
and
misleading advertising.
The
civil
matters which
are
reviewable
by the
Competition Tribunal
under
the Act
Partners, Davies Ward Phillips
&
Vineberg LLP, Toronto.
The
authors wish
to ex-
press
their gratitude
to
Andrea
Jeffery
and
Roxana
Tavana, then articling students
and now
associates
at
Davies
Ward
Phillips
&
Vineberg
LLP,
for
their invaluable
assistance
in
preparing this paper.
R.S.C.
1985,
c.
034,
as
amended [the
"Competition
Act"
or the
"Act"].
23
i
24
SANDRA
A.
FORBES
&
CHRISTOPHER
D.
MARGISON
include abuse
of
dominance,
refusal
to
deal, exclusive dealing, tied sell-
ing,
market restriction,
and
certain deceptive marketing practices.
A
civil cause
of
action
for
damages
for
breach
of
competition
law
exists under statute
and at
common law.
The
statutory cause
of
action
is
found
in
section
36 of the
Act.
The
common
law
causes
of
action are,
in
most cases, various torts, including
the
tort
of
civil
conspiracy
and the
tort
of
intentional interference with contractual relations.
The
wrongful
or
unlawful
act
relied
on to
prove these torts
is
usually conduct
in
breach
of
the
Act. Recently, claims
for
unjust enrichment have also
surfaced,
especially
in the
class action context.
The
statutory
and
common
law
causes
of
action
are,
in
some
respects,
similar, and,
in
others,
quite
dif-
ferent.
Each
has its
advantages
and
disadvantages. This
lack
of
complete
symmetry
has
resulted
in the
vast
majority
of
plaintiffs
pleading both
section
36 of the Act and the
common
law
causes
of
action
in
claims
for
damages
for
breach
of the
Act.
We
examine here
the
ability
to
claim damages
for
breach
of
competi-
tion
law
under both
the
statutory cause
of
action
in
section
36 of the Act
and the
common law.
One
challenge
we
face
is the
lack
of
substantial
case
law on the
assessment
of
damages
in
this area.
In
fact,
relatively
few
cases have made
it to the
trial stage and,
of
those that have,
the
major-
ity
have been either unsuccessful
at
first
instance,
or
initially
successful
and
then
overturned
on
appeal. This
is
explained
by the
considerable
expense that usually must
be
incurred
to
prosecute these cases,
the in-
herent
difficulties
of
proving damages
in
these types
of
cases
and the
amount
of
damages that
are
likely available
if the
case
is
ultimately suc-
cessful,
which
can
seem minimal, especially when compared
to the ex-
pense
of
prosecuting
the
action.
B.
SECTION
36 OF THE
COMPETITION
ACT
•L)
History
and
Overview
Before
1976, there
was no
statutory cause
of
action
in
Canada allowing
a
person
to
claim damages arising
from
a
breach
of the
Combines
Inves-
tigation
Act.2
Accordingly,
a
person
injured
as a
result
of
conduct that
violated
the
Combines
Investigation
Act was
limited
to one or
more
of the
relevant
common
law
causes
of
action.
2
The
Combines
Investigation
Act was the
predecessor
to the
Competition
Act.
Damages
in
Competition
Law 25
Parliament
first
added
a
statutory cause
of
action
for
damages
to
the
Combines Investigation
Act in
1976
to
remedy
the
deficiency
which
emerged
from
the
judgment
of the
Supreme Court
of
Canada
in
Direct
Lumber
Co. v.
Western
Plywood
Co.3
In
that case, Direct Lumber brought
an
action
for
damages against Western Plywood alleging that Western
Plywood
had,
among other
things,
contravened
the
conspiracy
and
price
discrimination provisions
in the
Criminal
Code.
Western Plywood moved
successfully
at
trial
to
dismiss
the
action, claiming that
the
relevant pro-
visions
of the
Criminal
Code
did not
create
a
cause
of
action
in
favour
of
a
person discriminated against.
The
trial judge's decision dismissing
the
action
was
upheld
by
both
the
Alberta Supreme Court (Appellate Divi-
sion)
and the
Supreme Court
of
Canada.
In
delivering
the
judgment
of
the
Supreme Court
of
Canada, Judson
J.
held:
I
am
satisfied
...
after
a
full
review
of the
cases
...
that
this
criminal
legislation gives
no
civil
cause
of
action
for its
breach
and I
would
af-
firm
the
judgment under appeal
for the
reasons given
by
Johnson J.A.,
that this legislation creating
a new
crime
was
enacted solely
for the
protection
of the
public interest
and
that
it
does
not
create
a
civil
cause
of
action.4
Today,
subsection 36(1)
of the
Competition
Act
allows
a
private plain-
tiff
to sue for and
recover
"an
amount equal
to the
loss
or
damage proved
to
have
been
suffered
by
him"
as a
result
of a
defendant engaging
in
conduct contrary
to
Part
VI of the Act or
failing
to
comply with
an
order
made
pursuant
to the
Act.5
This
is the
only provision
in the
Competition
Act
that allows persons
to sue for
damages.6
3
(1962),
40
C.P.R.
9
(S.C.C.).
4
Ibid,
at 23.
5
Specifically,
ss.
36(1)
of the Act
provides
as
follows:
36.
(i)
Any
person
who has
suffered
loss
or
damage
as a
result
of
conduct that
is
contrary
to any
provision
of
Part
VI, or the
failure
of any
person
to
comply with
an
order
of the
Tribunal
or
another court under this
Act,
may,
in any
court
of
competent jurisdiction,
sue for and
recover
from
the
person
who
engaged
in the
conduct
or
failed
to
comply with
the
order
an
amount equal
to the
loss
or
dam-
age
proved
to
have been
suffered
by
him,
together with
any
additional amount
that
the
court
may
allow
not
exceeding
the
full
cost
to him of any
investigation
in
connection with
the
matter
and of
proceedings
under
this section.
6 As a
result
of
amendments that came into
force
on 21
June
2002,
s.
103.1
of the
Competition
Act now
provides private parties with
a
limited right
of
access
to the
Competition Tribunal under
the
refusal
to
deal, exclusive dealing, tied selling,
and
market restriction provisions.
In
order
to
lessen
the
risk
of
strategic litigation,
the
amendments include several stringent safeguards, such
as the
requirement that
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