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Nearly every Canadian consumer has purchased something that contains a price-fixed component. Price-fixing occurs in many industries – from components of consumer electronics to chemicals to auto parts to chocolate. Price-fixing occurs where competing companies agree to increase prices, reduce supply or allocate markets or customers. As a result, consumers and businesses are forced to pay artificially inflated prices. Price-fixing class actions seek to recover the amount that purchasers overpaid. Siskinds is one of Canada’s leading law firm in the prosecution of price-fixing conspiracy class actions and has recovered hundreds of millions of dollars for victims of price-fixing.

In a recent decision, Fanshawe College of Applied Arts and Technology v AU Optronics Corporation, 2016 ONCA 621, the Ontario Court of Appeal ruled on two issues that have a significant impact on the ability of Canadians pursue price-fixing class actions.

On the appeal, the defendant endeavoured to set up a perfect legal condition for cartel participants to profit from their misconduct at the expense of Canadians. The defendant argued that the limitation period contained in the Competition Act, RSC 1985, c C-34 (“Competition Act”) runs from the date of the conduct and is not subject to discoverability (discoverability asks when the claimant discovered or reasonably could have discovered the legal claim). The defendant further argued that the Competition Act is a complete code, such that common law claims (which are subject to discoverability) cannot be commenced premised on a breach of the Competition Act. If accepted, the cumulative effect of the defendant’s arguments would have allowed wrongdoers who successfully conceal their conduct for two years to escape civil liability and left their victims without any avenue of redress. Thankfully for Canadians, the Court of Appeal rejected both arguments – thus helping to ensure cartel participants are held accountable for their conduct.

Background

The litigation relates to allegations of price-fixing in the market for liquid crystal display (LCD) panels and computer monitors, notebook computers and televisions containing LCD panels between 1998 and 2006. The plaintiff commenced this action, asserting claims in civil conspiracy and pursuant to s. 36 of the Competition Act, predicated on a breach of s. 45. Siskinds and Camp Fiorante Matthews Mogerman of British Columbia are counsel in the action.

Defendants brought a motion for summary judgment on the basis that the plaintiff’s claim was time-barred by s. 36(4)(a) of the Competition Act, which provides that no action may be brought “after two years from … a day on which the conduct was engaged in …” The court rejected this argument, finding that s. 36(4)(a) was subject to the discoverability principle. This meant that the statutory limitation period did not begin to run until the plaintiff, through a reasonable exercise of diligence, discovered or ought to have discovered the wrongful conduct.

The plaintiff brought a motion to amend their claim to add an additional representative plaintiff. This motion was also denied. The motion judge determined that the plaintiff’s proposed amendments constituted an expansion of the claims asserted and were therefore statute barred.

The plaintiff appealed the motion to amend to the Court of Appeal. The defendants sought leave to appeal the summary judgment motion to the Divisional Court and were granted leave on the issue of whether discoverability applies to s. 36(4)(a) of the Competition Act. The two appeals were subsequently consolidated at the Court of Appeal. Defendant’s appeal was denied and the plaintiff’s appeal was granted.

Court of Appeal Decision

Discoverability applies to s. 36(4) of the Competition Act

The Court of Appeal upheld the motion judge’s finding that discoverability applies to s. 36(4)(a) of the Competition Act. In doing so, the court relied on comments from the Supreme Court of Canada that “the fundamental unfairness of requiring a plaintiff to bring a cause of action before he could reasonably have discovered that he had a cause of action is a compelling consideration.” The Court of Appeal noted that this consideration is particularly applicable in the context of secretive and deceptive anti-competitive agreements and concluded that any other interpretation of section 36(4) had the potential to deprive victims of the chance to make a claim.

This ruling is significant. Had the court accepted the defendants’ position, wrongdoers who successfully concealed their conduct for two years would have escaped civil liability and left their victims without any avenue of redress. Fortunately for Canadian consumers, the court recognised the inherent unfairness in the defendants’ position and opted instead to protect the right of Canadians to participate in price-fixing class actions.

Complete code argument rejected

Defendants asserted that the inclusion of the remedy in section 36 of the Competition Act meant that the Competition Act was a complete code, such that the plaintiff could not rely on a breach of the Competition Act to provide the unlawful act that would form the basis of the tort claim in unlawful conspiracy. The Court of Appeal rejected this assertion, holding that it would be incongruous with the purpose of the Competition Act to eliminate a tort claim that serves to punish anti-competitive behaviour. This issue was more significant prior to the Court of Appeal ruling on s. 36(4), but affects the remedies available for victims of price-fixing. Broader remedies are available under tort.

Scope of the Appeal

On the summary judgment appeal, the defendant essentially sought to re-argue the underlying motion. The Court of Appeal held that leave was granted on the discrete issue of whether discoverability applies to s. 36(4)(a) of the Competition Act. It was therefore not open to the defendants to raise additional issues for which leave was not granted. This finding should help to streamline appeals on a going forward basis and avoid leave to appeal on a particular issue being used as a springboard to re-argue the entire motion.

Status of the LCD Class Action

Class action lawsuits were commenced in Ontario, British Columbia, and Quebec alleging that the Defendants conspired to fix prices in the market for LCD Panels and LCD Products in Canada.

The litigation involves two separate actions. The first action was certified as a class action. The second action, which was commenced in 2009, names companies based in Taiwan. That litigation was commenced separately due to concerns that it might not be possible to serve Taiwanese companies in an effective manner. The second action has not yet been certified.

Settlements have been achieved with five groups of defendants, totalling $37.6 million. Those settlement funds (less court approved counsel fees and disbursements) were distributed to eligible class members in 2015. The litigation is continuing against the remaining defendants.

For more information about the LCD class action and to register to receive updates about the status of the action, including any settlements, click here.

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