Update: SCC Grants Leave to Appeal on Umbrella Purchaser Issue

Written by on June 18, 2018.

A recent hot topic in price-fixing class actions has been whether so-called “umbrella purchasers” have a cause of action. See our recent articles here and here. Umbrella purchasers are individuals who purchased the affected product from  non-conspirator manufacturers. In support of umbrella purchaser claims, plaintiffs argue that cartel members dominated  the relevant market to such an extent that they were able to drive up prices across the entire market. As a result, non-conspirator manufactures were able to—and did—charge their customers higher prices than they would have in a competitive market.

Currently, the law on umbrella purchasers is split between courts in Ontario and British Columbia. In Ontario, in Shah v LG Chem (a class action alleging price-fixing in the market for lithium-ion batteries), the Divisional Court rejected umbrella purchaser claims on the basis that they would expose the defendants to indeterminate liability. The Ontario Court of Appeal granted leave to on the umbrella purchaser issue, and the appeal was heard in May 2018.  The Court of Appeal’s decision is currently under reserve.

In contrast, in Godfrey v Sony (a class action alleging price-fixing in the market for optical disc drives), the British Columbia Court of Appeal affirmed a lower court decision certifying the claims of umbrella purchasers. Notably, while Godfrey and Shah are based on a similar factual records, the British Columbia Court of Appeal came to the opposite conclusion as the Ontario Divisional Court, holding that “the concern over indeterminate liability does not arise in the context of umbrella purchaser claims based on an alleged price-fixing conspiracy contrary to the Competition Act.”

On June 7, 2018, the Supreme Court of Canada granted the Godfrey defendants’ motion for leave to appeal. Among other things, the Supreme Court will consider whether umbrella purchasers are able to bring claims under s. 36 of the Competition Act. The result of this appeal will have important implications for both plaintiffs and defendants because it will affect who can bring a claim and the scope of the defendants’ liability.

Posted in Class Actions, Price Fixing