Canada Decision Poses Antitrust Risk for U.S. Manufacturers

Last fall, Canada’s Supreme Court released three class action certification decisions with wide-ranging implications for U.S. companies supplying goods or product components in Canada. The decisions mean that individuals or companies that have acquired products from resellers (indirect purchasers) can bring class actions for damages based on violations of Canada’s competition laws. This is in contrast both to a U.S. Supreme Court decision that prohibits such claims on the federal level and numerous state’s laws.

Pro-Sys Consultants Ltd. v. Microsoft Corporation involved allegations that Microsoft Corporation and Microsoft Canada Co./Microsoft Canada CIE overcharged for PC operating systems and applications software. In Sun-Rype Products Ltd. v. Archer Daniels Midland Company, a class comprised of direct and indirect purchasers alleged that the defendant companies had conspired to fix prices.

Infineon Technologies AG v. Option Consommateurs involved a proposed class action by direct and indirect purchasers under the Quebec Code of Civil Procedure, alleging that a price-fixing conspiracy had artificially inflated the prices of dynamic random-access memory chips sold in Quebec.

The SCC’s key holding, applicable to all three cases, is that indirect purchaser actions are available in Canada.

Where simultaneous proceedings are brought in the United States and Canada, counsel will confront differing legal standards in the two jurisdictions. U.S. and Canadian counsel will need to coordinate strategy across the jurisdictions, particularly in cases where the defendant must prove double or multiple recovery.