When It Rains, It Pours – Supreme Court Of Canada Allows Umbrella Purchaser Claims

Author:Canadian Class Actions Monitor, Nikiforos Iatrou and Stéphanie St-Jean
Profession:McCarthy Tétrault LLP

On September 20, 2019, the Supreme Court of Canada released its highly-anticipated decision in Pioneer Corp. v. Godfrey, addressing how Canadian courts should approach the certification of competition (antitrust) class actions. In the first of a five part series, we summarized the Supreme Court's findings on the four key issues the Court addressed: (1) umbrella purchasers, (2) loss as a common issue, (3) limitation periods, and (4) whether the Competition Act (the "Act") is a complete code. In this second part of the series, we go deeper on the Supreme Court's decision that umbrella purchaser claims can be certified and form part of a class action.

What Are Umbrella Purchasers?

Umbrella purchasers are persons who purchased a product that was neither manufactured nor supplied by the cartel members. The idea is that the cartel members' activity creates an "umbrella" of supra-competitive prices, causing non-cartel manufacturers to also raise their prices (called an overcharge). If proven, the umbrella purchaser would claim from the cartel members these overcharges, even though the purchaser was not a customer of the cartel members.

The Majority Allows Umbrella Purchaser Claims

The Court approached the question of whether umbrella purchasers have a cause of action under section 36 of the Act as a question of statutory interpretation, and concluded that umbrella purchaser claims are permitted.

Section 36 creates a statutory cause of action that allows for the recovery of damages or loss that resulted from conduct contrary to Part VI of the Act (Offences in Relation to Competition):

36 (1) Any person who has suffered loss or damage as a result of

conduct that is contrary to any provision of Part IV, [...]

may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct [...] an amount equal to the loss or damage 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.

The majority found that the use of the words "any person" in the Act showed an intention to not restrict who could be a possible claimant. It noted that interpreting "any person" as allowing umbrella purchasers to claim damages was consistent with the Act's objectives and purposes to deter anti-competitive behaviour and compensate victims of such behaviour. Since umbrella...

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