|
Competition Act. Difederico v. Amazon.com, Inc.
In Difederico v. Amazon.com, Inc. (Fed CA, 2023) the Federal Court of Appeal considers (and dismisses) an appeal involving the application of an international arbitration forum selection clause, here in a context of Competition Act [s.45 and 46] allegations of price-fixing. The central issue is whether the transaction were consumer or commercial.
In these quotes the court sets out the relevant Competition Act sections, and it's analysis of whether the Act tolerates mandatory arbitration:[13] The relevant provisions of the Competition Act, R.S.C., 1985, c. C-34 (Competition Act) include sections 36, 45 and 46 [SS: English-only extracted]:Recovery of damages
36 (1) Any person who has suffered loss or damage as a result of
(a) conduct that is contrary to any provision of Part VI, or
(b) the failure of any person to comply with an order of the Tribunal or another court under this Act,
may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him, together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.
...
Offences in Relation to Competition
Conspiracies, agreements or arrangements between competitors
45 (1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges
(a) to fix, maintain, increase or control the price for the supply of the product;
(b) to allocate sales, territories, customers or markets for the production or supply of the product; or
(c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.
Penalty
(2) Every person who commits an offence under subsection (1) is guilty of an indictable offence and liable on conviction to imprisonment for a term not exceeding 14 years or to a fine not exceeding $25 million, or to both.
Foreign directives
46 (1) Any corporation, wherever incorporated, that carries on business in Canada and that implements, in whole or in part in Canada, a directive, instruction, intimation of policy or other communication to the corporation or any person from a person in a country other than Canada who is in a position to direct or influence the policies of the corporation, which communication is for the purpose of giving effect to a conspiracy, combination, agreement or arrangement entered into outside Canada that, if entered into in Canada, would have been in contravention of section 45, is, whether or not any director or officer of the corporation in Canada has knowledge of the conspiracy, combination, agreement or arrangement, guilty of an indictable offence and liable on conviction to a fine in the discretion of the court. ....
(3) Did the Judge err in concluding that section 36 of the Competition Act does not preclude mandatory arbitration?
[70] From the Judge’s reasons, it appears that in first instance, Ms. Difederico argued that the 2022 amendments to the arbitration agreement rendered it non-mandatory, as it now includes an explicit exception to arbitration where required by the law of the jurisdiction of residence. As noted above, the Judge did not agree that these amendments had a substantive effect, finding instead that it “simply sets out in express terms the legal principle already in place” (Judge’s decision at para. 88).
[71] In the same spirit, the Judge also addressed Ms. Difederico’s contention that the language of section 36 of the Competition Act restricts the enforceability of arbitration agreements, with reference to this Court’s decision in Murphy. In this regard, the Judge found that this Court had already recognized at paragraph 60 in Murphy that, “the Competition Act does not contain language which would indicate that Parliament intended that arbitration clauses be restricted or prohibited” (Judge’s decision at para. 89). As such, it was, in the Judge’s view, already settled law that claims for damages pursuant to section 36 of the Competition Act are arbitrable.
[72] Before this Court, Ms. Difederico challenges the Judge’s conclusion and argues that Murphy’s interpretation of the Competition Act is no longer tenable in light of Pioneer Corp v. Godfrey, 2019 SCC 42, [2019] 3 S.C.R. 295 (Godfrey).
[73] Specifically, Ms. Difederico notes that Murphy relies on the premise that since there is no public interest aspect to section 36 of the Competition Act, claims brought pursuant to it may be arbitrable. However, in Ms. Difederico’s view, the Godfrey decision, decided after Murphy, recognizes the public interest objectives of the Competition Act, such that claims under section 36 are no longer compatible with private dispute resolution (Appellants’ Memorandum of Fact and Law at paras. 78-79, 81-82). It follows, says Ms. Difederico, that Murphy cannot be considered authority for the proposition that an arbitration agreement may oust the court’s jurisdiction under section 36 of the Competition Act.
[74] However, the issue relevant to section 36 of the Competition Act in Godfrey was that it was not plain and obvious that so-called “umbrella purchasers” do not have a cause of action under section 36 of the Competition Act (Godfrey at paras. 56-57). More importantly, Godfrey did not decide any issues relating to arbitration and does not distinguish or make reference to Murphy. Hence, Godfrey is not inconsistent with this Court’s reasoning in Murphy and does not cast doubt on the fundamental issue it ruled upon: a private claim for damages brought under section 36 of the Competition Act is arbitrable (Murphy at para. 40).
[75] Moreover, the circumstances of the case in Murphy and those of the present case are strikingly similar. In Murphy, like here, the appellant argued that a stay in favour of arbitration was wrongly ordered by the Federal Court and that the Federal Court erred in finding that the Competition Act did not include the kind of express legislative language necessary to oust an agreement to arbitrate. Likewise, the appellant in Murphy also contested on appeal the Federal Court’s finding that the reference to a “court of competent jurisdiction” in section 36 of the Competition Act does not declare the Federal Court to be the only competent forum and does not prevent parties from contracting out of that jurisdiction (Murphy at paras. 17, 41-42).
[76] In fact, Ms. Difederico’s argument amounts to requesting this Court to overrule the holding of the panel in Murphy pursuant to our Court’s decision in Miller v. Canada (Attorney General), 2002 FCA 370, 220 D.L.R. (4th) 149 (Miller), presumably on the grounds that Murphy is allegedly “manifestly wrong”. However, Ms. Difederico has not referred to Miller in her submissions before this Court nor has she attempted to explain the “exceptional circumstances” that would justify and satisfy the “manifestly wrong” test.
[77] Ms. Difederico wrongly asserts that damages claims under section 36 of the Competition Act cannot be subject to arbitration. This issue was clearly disposed of in Murphy. Ms. Difederico also contends that Murphy did not consider the issue of whether an arbitrator is a “court of competition jurisdiction” within the meaning of section 36(1) of the Competition Act (Appellants’ Memorandum of Fact and Law at para. 75). Again, the argument is misleading and must be rejected. Although the “court of competent jurisdiction” issue was not the focus of the reasons in Murphy, it was nonetheless addressed and dismissed (Murphy at paras. 17, 41-42) in accordance with Desputeaux. In that case, the Supreme Court found, with respect to the interpretation of section 37 (since repealed) of the Copyright Act, R.S.C., 1985, c. C-42, that:The purpose of enacting a provision like s. 37 of the Copyright Act is to define the jurisdiction ratione materiae of the courts over a matter. It is not intended to exclude arbitration. It merely identifies the court which, within the judicial system, will have jurisdiction to hear cases involving a particular subject matter. It cannot be assumed to exclude arbitral jurisdiction unless it expressly so states. [Emphasis added].
(Desputeaux at para. 42) [78] Finally, Ms. Difederico refers to Douez v. Facebook, Inc., 2017 SCC 33, [2017] 1 S.C.R. 751 (Douez), where the Supreme Court held that a forum selection clause that ousted British Columbia’s jurisdiction in a privacy matter was unenforceable. Ms. Difederico contends that Douez is authority for the proposition that courts can deny enforcing a forum selection clause when the legislature has manifested an intention “to protect ‘the social, economic, or political policies of the enacting state in the collective interest’”. Here, says Ms. Difederico, “[i]t is incompatible with the public interest and with the policy of the Competition Act to permit criminal anti-competitive conduct to be shielded from view through mandatory arbitration” (Appellants’ Memorandum of Fact and Law at paras. 83-84).
[79] Ms. Difederico’s contention cannot stand. The Supreme Court’s comments in Douez on the effect of legislative intent to protect the public interest were made with respect to the enforceability of a forum selection clause in the context of an action brought under the Privacy Act, R.S.B.C. 1996, c. 373. As mentioned, the Competition Act has already been interpreted by our Court to not demonstrate this kind of legislative intent (Murphy at paras. 63-64). It is also recalled that the British Columbia Supreme Court considered very similar arguments on the impact of Douez on arbitration agreements in Williams v. Amazon.com Inc., 2020 BCSC 300, [2020] B.C.J. No. 344 (Williams), and in Petty v. Nianti Inc., 2022 BCSC 1077, [2022] B.C.J. No. 1156 (Petty). In both cases, it was found that the analysis pertaining to forum selection clauses could not be transposed to apply to arbitration agreements (Williams at paras. 69-77; Petty at paras.101-12). In particular, it was highlighted that arbitration does not carry the same concern as forum selection clauses that “a court will be required by a contractual agreement between the parties to adjudicate a dispute that is not properly before it” (Williams at para. 77; Petty at para. 104).
B. Concluding Remarks
[80] Purchasing goods and services online has become ubiquitous in everyday life. While this has been true for many years, the COVID-19 pandemic further increased reliance on online retailers. Consumer transactions online are often completed through digital adhesion contracts, which, as in the circumstances of this appeal, usually include a mandatory arbitration agreement. Some provinces have reacted to this reality by adopting legislation protecting consumers from the potential unfairness of such adhesion contracts. For example, in Ontario, section 7 of the Consumer Protection Act, 2002, S.O. 2002, c. 30, Sch. A, declares mandatory arbitration clauses invalid while section 8 renders invalid any clause that would operate to prevent a consumer class action. Similarly, section 11.1 of Quebec’s Consumer Protection Act, chapter P-40.1, prohibits any stipulation that obliges a consumer to refer a dispute to arbitration as well as any stipulation that attempts to prevent a class action. By virtue of the same section, consumers have the option of agreeing to arbitration after a dispute has arisen. In contrast, section 172 of British Columbia’s Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2, has been interpreted to oust mandatory arbitration clauses but only in relation to claims brought under that particular section. In adopting these provisions, each provincial legislature made a policy choice to shield consumers from arbitration clauses to varying degrees.
[81] Nothing precludes Parliament from making such a policy choice in the context of the Competition Act. However, in the absence of any indication of Parliamentary intent to do so, mandatory arbitration clauses in consumer adhesion contracts will be enforced, subject to the limited exceptions developed by the Supreme Court of Canada and addressed in these reasons. . Jensen v. Samsung Electronics Co. Ltd.
In Jensen v. Samsung Electronics Co. Ltd. (Fed CA, 2023) the Federal Court of Appeal considered 'conspiracy' under s.45 of the Competition Act - here in a class action context, specifically whether a 'reasonable cause of action' was pled for certification purposes [paras 54-69].
. Canada (Commissioner of Competition) v. Rogers Communications Inc.
In Canada (Commissioner of Competition) v. Rogers Communications Inc. (Fed CA, 2023) the Federal Court of Appeal considered a Commissioner of Competition s.13 appeal against a corporate telecommunications merger:[3] To make an order blocking the overall transaction, the Tribunal would have had to find that it would be likely to prevent or lessen competition substantially: section 92 of the Competition Act, R.S.C. 1985, c. C-34.
....
[5] On appeal, we are to treat the order of the Competition Tribunal "“as if it were a judgment of the Federal Court”": Competition Tribunal Act, s. 13(1).
[6] This means that we can reverse the Competition Tribunal where it has erred on:. legal points, including legal points that dominate the answer to a question of mixed fact and law, or
. factually suffused questions of mixed fact and law,
and the error(s) could have affected the result. ....
[8] Section 13 of the Competition Tribunal Act does not allow appeals on pure questions of fact where, as here, leave has not been sought. The case is brief for such a high-media case, but useful to understand anti-competitive merger law.
. Mohr v. National Hockey League
In Mohr v. National Hockey League (Fed CA, 2022) the Federal Court of Appeal considers s.45 and s.48 of the much-underused Competition Act:[2] In broad terms, section 45 of the Competition Act prohibits conspiracies, agreements or arrangements between competitors to fix or maintain prices, allocate markets or customers, or restrict markets for the production or supply of a product. If established, the anti-competitive effect of the agreement is presumed, giving rise to both criminal sanctions and civil remedies.
[3] Section 48 addresses conspiracies or arrangements in the context of professional sport. Again, in broad terms, section 48 prohibits agreements or arrangements which unreasonably limit the opportunities of a player to participate in professional sport, impose unreasonable terms on players, or unreasonably limit the ability of players to negotiate with and play with a team of their choice. The purpose of section 48 is to protect freedom of employment for players (John Barnes, The Law of Hockey (LexisNexis, 2010) at p. 322 [Barnes]). Like section 45, a breach of section 48 gives rise to criminal sanctions and civil remedies.
[4] There are two key differences between conspiracies under sections 45 and 48. If established, a conspiracy under section 45 is deemed anti-competitive. In contrast, under section 48, a court must take certain matters into account before determining that a conspiracy has been established. This includes the desirability of maintaining a balance among teams competing in the same league. In effect, section 48 exempts certain agreements or arrangements made in the context of professional sport from the general prohibition against anti-competitive agreements in section 45 of the Competition Act.
....
The interpretation of section 48
[13] A statute is to be read in its entire context, in its grammatical and ordinary sense, harmonious with the scheme and object of the statute. Sometimes legislative history can shed light on the matter. When the words of a statute are unequivocal, the ordinary meaning plays a dominant role in the interpretative process (Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601 at para. 10; Orphan Well Association v. Grant Thornton Ltd., 2019 SCC 5, [2019] 1 S.C.R. 150 at para. 88).
[14] The Court’s task is to discern the meaning of the words used by Parliament when it chose to enact its policy preferences. There is no room for the Court to inject its own policy preferences into the analysis. In this case, it is not for this Court to say whether section 48 is or is not a good thing. Our task is just to discern what Parliament chose to enact (TELUS Communications Inc. v. Wellman, 2019 SCC 19, [2019] 2 S.C.R. 144).
[15] Section 48 cannot be read, consistent with these principles, to mean that the prohibitions against anti-competitive arrangements in subsection 48(1) apply to inter-league conspiracies as pleaded in the statement of claim. To properly understand the scope of subsection 48(1) we must look to plain text of subsection 48(3) which reads as follows:
"(3) This section applies, and section 45 does not apply, to agreements and arrangements and to provisions of agreements and arrangements between or among teams and clubs engaged in professional sport as members of the same league and between or among directors, officers or employees of those teams and clubs where the agreements, arrangements and provisions relate exclusively to matters described in subsection (1) or to the granting and operation of franchises in the league, and section 45 applies and this section does not apply to all other agreements, arrangements and provisions thereof between or among those teams, clubs and persons.""(3)"" Le présent article s’applique et l’article 45 ne s’applique pas aux accords et arrangements et aux dispositions des accords et arrangements conclus entre des équipes et clubs qui pratiquent le sport professionnel à titre de membres de la même ligue et entre les administrateurs, les dirigeants ou les employés de ces équipes et clubs, lorsque ces accords, arrangements et dispositions se rapportent exclusivement à des sujets visés au paragraphe (1) ou à l’octroi et l’exploitation de franchises dans la ligue; toutefois, c’est l’article 45 et non le présent article qui s’applique à tous les autres accords, arrangements et dispositions d’accords ou d’arrangements conclus entre ces équipes, clubs et personnes." [16] The phrase "“as members of the same league”" must be given its plain, ordinary and otherwise clear meaning. The subsection also refers to "“the granting and operation of franchises in the league …”". Coherence within the subsection is reinforced by understanding the phrase in its plain and ordinary sense. While there could be some discussion around the boundaries of what constitutes a "“league”", this point was not argued before us (Barnes at p. 322).
[17] Subsection 48(3) allocates agreements and provisions "“between or among teams and clubs…of the same league”" that "“relate exclusively to matters described in subsection [48](1)”" to "“appl[y]”" under section 48 only. Conversely, it allocates "“all other agreements, arrangements and provisions thereof between or among those teams, clubs and persons”" to section 45 only. Thus, subsection 48(3) evidences a clear parliamentary intention to avoid overlapping or conflicting applications of section 45 and 48. Every agreement or provisions must "“appl[y]”" under either section 45 or 48.
[18] Inter-league agreements are not "“between or among teams and clubs engaged in professional sport as members of the same league.”" Parliament clearly did not intend to apply two contradicting penal standards to inter-league conspiracies. But if inter-league agreements were caught by section 48, this is exactly what could happen. This demonstrates that Parliament did not intend to apply section 48 to inter-league agreements.
[19] Parliament was also consistent in the language and design of section 48. Paragraphs 48(2)(a) and (b) describe criteria to be considered in determining whether the prohibition against anti-competitive arrangements in subsection 48(1) has been violated. This includes, in paragraph 2(b) "“the desirability of maintaining a reasonable balance among the teams or clubs participating in the same league”" (emphasis added).
[20] Two points may be said about this. First, consistent with subsection (3), the focus of paragraph (2)(b) is on teams "“in the same league”". The second is that paragraph (2)(b) would be redundant, if not nonsensical, if the scope of subsection 48(3) were widened to include other leagues and umbrella organizations such as the respondent Hockey Canada, as argued by the appellant. The rule against tautological interpretations would be breached (Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Markham: LexisNexis, 2014) at § 8.23 [Sullivan]).
[21] Other provisions in the Act support the conclusion that subsection 48(3) means what it says. Section 6 of the Competition Act addresses amateur sport. Subsection 6(1) states: "“This Act does not apply in respect of agreements or arrangements between or among teams, clubs and leagues pertaining to participation in amateur sport.”"
[22] By its terms, subsection 6(1) applies to both intra-league and inter-league agreements, whereas subsection 48(3) references only intra-league agreements. By the choice of words "“between or among”" teams, clubs and leagues in subsection 6(1), Parliament demonstrated an understanding of the distinction between intra-league and inter-league agreements. It chose in subsection 6(1) to reference both, and in subsection 48(3) to reference only intra-league agreements. The principle of implied exclusion or expressio unius est exclusio alterius is engaged: the legislature’s failure to mention something can be a ground for inferring it was deliberately excluded (Sullivan at § 8.89-8.91).
[23] To conclude, where the words are precise and unequivocal, as they are here, the ordinary meaning plays a dominant role in the interpretation. As I will explain, the arguments advanced by the appellant do not shake the conclusion that the conspiracy provisions of section 48, when given their ordinary meaning, are confined to intra-league agreements.
....
The interpretation of section 45
[33] Section 45 applies where the anti-competitive agreement is between teams of different leagues or between umbrella organizations and teams or leagues. There is, however, an important caveat to the sweep of this provision. Section 45 is limited to agreements between competitors to fix prices or allocate markets relating to "“the production or supply”" of a product or a service—otherwise known as "“sell-side”" conspiracies.
[34] The plain meaning of production or supply leads to the conclusion that section 45 is limited to conspiracies relating to the provision, sale and distribution of products or services. It stands in contrast to purchase and acquire. While, as noted by the Federal Court, there may be circumstances in which section 45 could capture purchasers, that is not in issue before us (Reasons at para. 43). As the proposed amended statement of claim describes a conspiracy relating to the terms and conditions under which the leagues and teams purchased or acquired services of the players, the allegation under section 45 has no hope of success (see, e.g., proposed amended statement of claim at para. 2.7).
[35] This understanding of section 45 is confirmed by its legislative history. (Later in these reasons I will explain how legislative history informs the statutory interpretation exercise.)
[36] In March 2010, paragraph 45(1)(c) of the Competition Act was amended. The provision, prior to amendment, read:"Conspiracy "
"45(1) Every one who conspires, combines, agrees or arranges with another person "
"(a) to limit unduly the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any product, "
"(b) to prevent, limit or lessen, unduly, the manufacture or production of a product or to enhance unreasonably the price thereof, "
"(c) to prevent or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or "
"(d) to otherwise restrain or injure competition unduly, "
"is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million dollars or to both. "
"Complot "
"45(1)"" Commet un acte criminel et encourt un emprisonnement maximal de cinq ans et une amende maximale de dix millions de dollars, ou l’une de ces peines, quiconque complote, se coalise ou conclut un accord ou arrangement avec une autre personne : "
"a) soit pour limiter, indûment, les facilités de transport, de production, de fabrication, de fourniture, d’emmagasinage ou de négoce d’un produit quelconque; "
"b) soit pour empêcher, limiter ou réduire, indûment, la fabrication ou production d’un produit ou pour en élever déraisonnablement le prix; "
"c) soit pour empêcher ou réduire, indûment, la concurrence dans la production, la fabrication, l’achat, le troc, la vente, l’entreposage, la location, le transport ou la fourniture d’un produit, ou dans le prix d’assurances sur les personnes ou les biens; "
"d) soit, de toute autre façon, pour restreindre, indûment, la concurrence ou lui causer un préjudice indu. "
[37] Section 45, post amendment, reads:
"Conspiracies, agreements or arrangements between competitors "
"45(1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges "
"(a) to fix, maintain, increase or control the price for the supply of the product; "
"(b) to allocate sales, territories, customers or markets for the production or supply of the product; or "
"(c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product. "
"… "
"Complot, accord ou arrangement entre concurrents "
"45(1)"" Commet une infraction quiconque, avec une personne qui est son concurrent à l’égard d’un produit, complote ou conclut un accord ou un arrangement : "
"a) soit pour fixer, maintenir, augmenter ou contrôler le prix de la fourniture du produit; "
"b) soit pour attribuer des ventes, des territoires, des clients ou des marchés pour la production ou la fourniture du produit; "
"c) soit pour fixer, maintenir, contrôler, empêcher, réduire ou éliminer la production ou la fourniture du produit. "
"Definitions "
"(8) The following definitions apply in this section. "
"competitor includes a person who it is reasonable to believe would be likely to compete with respect to a product in the absence of a conspiracy, agreement or arrangement to do anything referred to in paragraphs (1)(a) to (c). (concurrent) "
"price includes any discount, rebate, allowance, price concession or other advantage in relation to the supply of a product. (prix) "
"Définitions "
"(8)"" Les définitions qui suivent s’appliquent au présent article. "
"concurrent"" S’entend notamment de toute personne qui, en toute raison, ferait vraisemblablement concurrence à une autre personne à l’égard d’un produit en l’absence d’un complot, d’un accord ou d’un arrangement visant à faire l’une des choses prévues aux alinéas (1)a) à c). (competitor) "
"prix"" S’entend notamment de tout escompte, rabais, remise, concession de prix ou autre avantage relatif à la fourniture du produit. (price)" [38] Gone from the current version is the requirement that the agreement "“unduly”" affect competition. It is no longer necessary to establish that these agreements have anti-competitive effects. Agreement alone is now sufficient—the anti-competitive effect is presumed. Gone too is the word "“purchase”" from paragraph 45(1)(c), confining the scope of section 45 to supply or sell-side conspiracies. Lest there be any doubt, the words "“for the supply of the product”" were added to the new paragraph 45(1)(a) (price-fixing) and the words "“production or supply of the product”" to paragraphs 45(1)(b) and (c) offences (market and supply restrictions).
[39] Contemporaneous with the amendments to section 45, section 90.1 was added to provide civil recourse, at the instance of the Competition Bureau, for any arrangements or agreements which have anti-competitive effects. While section 90.1 is generic in scope, it could encompass buy-side conspiracies, such as those that are founded on the purchase and acquisition of goods and services.
[40] Section 45 has been considered by two courts: Dow Chemical Canada ULC v. NOVA Chemicals Corporation, 2018 ABQB 482, 17 Alta. L.R. (7th) 83 [Dow Chemical] and Latifi v. The TDL Group Corp., 2021 BCSC 2183, 2021 CarswellBC 3523 at paras. 72 and 73 [Latifi]. In both cases the courts also reached the conclusion that section 45 only prohibits arrangements between suppliers and not buy-side or purchaser agreements.
|
