Who Gets In? Class Actions and Indirect Purchasers in Competition Law

Report of the C.D. Howe Institute Competition Policy Council

TORONTO, Oct. 30, 2013 /CNW/ - The Supreme Court will rule on Thursday, October 31, in landmark Competition Act decisions, Pro-Sys v. Microsoft, Sun-Rype v. Archer Daniels Midland, and Infineon Technologies AG et autres c. Option Consommateurs et autres. The key question before the Court is, when anticompetitive cartel behaviour is alleged in class action proceedings, should indirect purchasers, such as retailers and end consumers, have standing to sue for damages?

The Court's rulings will have important implications for class action law and competition practice. Given the structure of the Canadian economy, it may be that the group most affected by an international cartel's pricing behaviour will be indirect purchasers. Absent Canadian indirect purchasers having standing in a suit brought under the Competition Act, there could be no domestic route to a private action against an alleged cartel, or therefore no domestic compensation for those who have suffered loss.

Accurately determining appropriate damages and to whom they should be awarded in cartel cases is a complex and uncertain undertaking. Whether, and to what extent, a cartel overcharge might get passed down the distribution chain is a difficult economic and practical question. Complexity, however, should not necessarily be a bar to indirect purchasers' obtaining standing, although they may make a class proceeding unmanageable. Given the likelihood that awards to individual class members might be very small, or zero, even should a suit succeed, it appears that deterrence, not compensation, should be the aim of law and policy. This is the consensus view of the C.D. Howe Institute's Competition Policy Council, which held its sixth meeting on October 24, 2013.

The Competition Policy Council comprises top-ranked academics and practitioners active in the field of competition policy. The Council, chaired by Finn Poschmann, Vice President, Research at the C.D. Howe Institute, provides analysis of emerging competition policy issues. Professor Edward Iacobucci, Osler Chair in Business Law at the University of Toronto and Competition Policy Scholar at the Institute, advises the program, along with Benjamin Dachis, Senior Policy Analyst. The Council, whose members participate in their personal capacities, convenes a neutral forum to test competing visions and to share views on competition policy with practitioners, policymakers and the public.

For the full Communique go to: http://www.cdhowe.org/who-gets-in-class-actions-and-indirect-purchasers-in-competition-law/23346

SOURCE: C.D. Howe Institute

contact: Finn Poschmann, Vice President, Research, or Benjamin Dachis, Senior Policy Analyst, C.D. Howe Institute, 416-865-1904