Jurisdictional Issues in International Cartel Cases: A Canadian Perspective

• Author: Donald B. Houston and Jeanne L. Pratt
• Pages: 287-316

287

JURISDICTIONAL ISSUES IN

INTERNATIONAL CARTEL CASES:

A CANADIAN PERSPECTIVE

Donald B. Houston and Jeanne L. Pratt*

A. INTRODUCTION

In most industries, competition is increasingly global in scope, no longer

localized to one region, state, or country. Although borders have become

increasingly irrelevant in business, they raise important jurisdictional

issues in the enforcement of competition laws, both in criminal and civil

proceedings. International cartel activity presents challenging issues for

alleged cartel participants, enforcement authorities, and plaintiffs suing

to recover damages.

With respect to private actions in particular, jurisdictional issues

raised by a claim for damages allegedly suffered as a result of interna-

tional cartel activity can permeate every stage of an action, from service

of the claim to enforcement of any judgment or award of costs. For defen-

dants, jurisdictional challenges may be an important option to consider

in a defence strategy. For plaintiffs, overcoming the difficulties of having

a claim certified, proceeding through trial, and enforcing a judgment

against a defendant with no ties to Canada can present a challenging

prospect.

B. JURISDICTION OF CANADIAN COURTS

OVER “FOREIGN” CONSPIRACIES

1) Civil Actions Brought Pursuant to Section 36 of the

Competition Act

In Canada, private actions brought by persons who have been harmed

by the anti-competitive conduct of others are available as a means of pri-

* Both of Fraser Milner Casgrain LLP, Toronto.

288 LITIGATING CONSPIRACY: AN ANALYSIS OF COMPETITION CLASS ACTIONS

vate enforcement of competition laws. Section 36 of the Competition Act1

grants a right of private action with respect to conduct that is contrary to

the criminal provisions of the statute, allowing a plaintiff to sue to recover

damages. Claims brought pursuant to section 36 must be issued within

two years of the date of the completion of criminal proceedings or the last

date on which the conduct was engaged in, whichever is later.

For conspiracy claims, the most relevant criminal provisions of the

Competition Act are sections 45 and 46. Under section 45 everyone “who

conspires, combines, agrees or arranges with another person” to prevent

or lessen competition “unduly” is guilty of an indictable offence and

subject to criminal penalties. Under section 46 a corporation carrying

on business in Canada that implements a foreign conspiracy in Canada,

regardless of whether it has knowledge of the foreign conspiracy, is guilty

of an indictable offence and subject to criminal penalties. Section 36

allows persons who have suffered harm as a result of such conspiracies

to bring civil damage claims in the courts. Where one or more defendants

in a section 36 action has pleaded guilty to an offence under the statute,

the “record of proceedings” may be used in the subsequent civil action

against that defendant as proof that it engaged in conduct contrary to the

statute’s criminal provisions.2 In addition, any admissions made in the

criminal proceedings are admissible as evidence in the subsequent civil

proceedings.3

Unlike in private antitrust claims in the United States, there is no pro-

vision for treble damages in Canada. In a section 36 action, the plaintiff

must suffer quantifiable harm and must prove its actual loss at trial. The

plaintiff may only recover the amount of its actual losses plus the costs of

pursuing the legal action, including the costs of investigating the matter

and the costs of court proceedings.4 In addition to the statutory claim,

a plaintiff may (and generally does) allege common law tortious activ-

ity, such as civil conspiracy or intentional interference with economic

relations. A plaintiff may also claim punitive damages, provided that

common law tortious activity is proven in addition to a section 36 claim.

However, the threshold for an award of punitive damages is high. They

may only be awarded where there is evidence of egregious, high-handed

conduct on the part of the defendants.5

1 R.S.C. 1985, c. C-34.

2 Ibid. at s. 36(2).

3 Ibid.

4 Ibid. at s. 36(1).

5 Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130.