Court Grants Leave to Appeal on Umbrella Purchaser Issue

Written by on September 06, 2017.

Fanshawe College of Applied Arts and Technology v Hitachi, Ltd., 2017 ONSC 2791

In Fanshawe v Hitachi, the plaintiff alleges that the defendants engaged in a conspiracy to fix the prices for CRT (an older technology used in televisions and computer monitors).  The plaintiff alleges breach of the Competition Act, RSC 1985, c C-34 (the “Competition Act”), and the tort of unlawful means conspiracy based on the alleged breach of the Competition Act.

In August 2016, the Ontario court certified the action as a class proceeding on behalf of all purchasers of CRT in Canada during the class period, including persons who purchased the relevant product from a non-conspirator (“umbrella purchasers”). The theory behind the inclusion of umbrella purchasers in price-fixing cases is that the conspiracy participants dominated so much of the market that they were able to drive up prices for the entire market. As a result, non-conspirators were able to charge higher prices than they would have in a competitive market. Accordingly, even purchasers from non-conspirators would have been harmed by the unlawful activities of the conspirators.

The defendants sought leave to appeal from the certification decision on several grounds, including that the certification judge erred in certifying the claims of umbrella purchasers. The court granted leave to appeal only on the umbrella purchaser issue. The court’s decision in this regard was informed by conflicting decisions on the topic. While there were a number of lower court decisions certifying the claims of umbrella purchasers,[1] the Divisional Court had recently rejected such claims in Shah v LG Chem, Ltd.[2]  On this basis, the court ruled that the test for leave to appeal was met.

Following the release of this decision, the British Columbia Court of Appeal issued its decision in Godfrey v Sony Corp, certifying umbrella purchaser claims.[3] It is not yet known whether the defendants will seek to appeal from this decision. The parties in Shah have sought leave to appeal to the Ontario Court of Appeal.

[1] Fanshawe College of Applied Arts & Technology v LG Phillips LCD Co., 2011 ONSC 2484, aff’d 2015 ONSC 7211 (Div Ct); Irving Paper Ltd. v Atofina Chemicals Inc. (2009), 99 OR (3d) 358 (Sup Ct); Crosslink Technology Inc. v BASF Canada, 2014 ONSC 1682; Fairhurst v Anglo American PLC, 2014 BCSC 2270; and Godfrey v Sony Corp., 2016 BCSC 844

[2] Shah v LG Chem, Ltd., 2015 ONSC 6148, aff’d 2017 ONSC 2586 (Div Ct).

[3] Godfrey v Sony Corporation, 2017 BCCA 302

 

Posted in Class Actions, Price Fixing