|
Competition - Remedies. Cineplex Inc. v. Commissioner of Competition
In Cineplex Inc. v. Commissioner of Competition (Fed CA, 2026) the Federal Court of Appeal dismissed a Competition Act appeal, here brought against a Competition Tribunal finding that the appellant had "engaged in reviewable conduct by making pricing representations to the public that were false or misleading in a material respect" [CA ] - and issued a cease order, an administrative fine and costs.
Here the court considers remedies under the Competition Act, including prohibition orders - and administrative monetary penalties and their quantum:[21] Also relevant to this appeal is section 74.1(1) of the Competition Act, which deals with the remedial authority of the Competition Tribunal. This section provides that where the Tribunal determines that a person is engaging in or has engaged in reviewable conduct under the deceptive marketing practices provisions of the Competition Act, the Tribunal may, amongst other things, order the person not to engage in the conduct or substantially similar reviewable conduct for a period of up to 10 years.
[22] The Tribunal may also order a corporation to pay an administrative monetary penalty, in any manner that the Tribunal specifies, in an amount not to exceed the greater of $10,000,000.00 (and, for each subsequent order, $15,000,000.00) and three times the value of the benefit derived from the deceptive conduct. If that latter amount cannot be reasonably determined, section 74.1(1) authorizes the Tribunal to order an administrative monetary penalty of up to 3% of the corporation’s annual worldwide gross revenues.
....
VI. Did the Tribunal Err in the Remedy it Granted?
[235] Upon finding that a party has engaged in reviewable conduct contrary to the deceptive marketing practices provisions of the Competition Act, section 74.1(1) of the Act authorizes the Tribunal to make a variety of remedial orders, including an order that the party not engage in the conduct in question, or substantially similar reviewable conduct, for a period of up to ten years. Cineplex does not challenge the Tribunal’s order that it not engage in its reviewable conduct for a period of ten years.
[236] Section 74.1(1)(c) of the Competition Act further authorizes the Tribunal to order that an individual or corporation that has engaged in reviewable conduct pay an administrative monetary penalty in any manner that the Tribunal specifies. Insofar as corporations are concerned, the Act provides that the administrative monetary penalty must not exceed the greater of $10,000,000.00 (and, for each subsequent order, $15,000,000.00), and three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues.
[237] As noted earlier, after concluding that Cineplex had engaged in reviewable conduct contrary to the deceptive marketing provisions of the Competition Act, the Tribunal ordered that Cineplex pay an administrative monetary penalty in the amount of $38.978 million within 30 days of its Order, and that it pay the Commissioner’s costs of the Tribunal proceeding.
....
[243] The imposition of a remedy, including an administrative monetary penalty, is a highly discretionary decision—one that warrants deference from the reviewing court: Canada (Director of Investigation and Research) v. Southam Inc., 1997 CanLII 385 (SCC), [1997] 1 S.C.R. 748, 144 D.L.R. (4th) 1 at para. 87. See also Kish v. Sobchak Estate, 2016 BCCA 65 at para. 34, citing Friends of the Oldman River Society v. Canada (Minister of Transport) 1992 CanLII 110 (SCC), [1992] 1 S.C.R. 3 at p. 76–77.
[244] Indeed, section 74.1(1) of the Competition Act contains language indicative of the discretionary nature of the Tribunal’s powers to issue a remedy. As a result, absent a palpable and overriding error by the Tribunal, this Court should not interfere with the chosen remedy.
[245] However, if the reviewing Court determines that there has been a wrongful exercise of discretion in that no weight, or insufficient weight, was given to relevant considerations, then the reversal of the order on appeal may be justified: Friends of the Oldman River, above at pp. 76-77.
....
A. The Determination of the Appropriate Range of Administrative Monetary Penalties Available to the Tribunal
[247] The Tribunal determined that the maximum administrative monetary penalty that could be imposed on Cineplex in this case was the greater of $10 million and three times the benefit derived from the reviewable conduct (which it identified as being three times $38.978 million or approximately $116.9 million). The possible range for an administrative monetary penalty was therefore $0 to $116.9 million: Tribunal reasons at para. 459.
....
B. The Proportionality of the Administrative Monetary Penalty and the Tribunal’s Consideration of the Aggravating and Mitigating Factors
[258] Subsection 74.1(5) of the Competition Act identifies the aggravating and mitigating factors that are to be considered by the Tribunal in determining the amount of an administrative monetary penalty. These factors are:(a) the reach of the conduct within the relevant geographic market;
(b) the frequency and duration of the conduct;
(c) the vulnerability of the class of persons likely to be adversely affected by the conduct;
(d) the materiality of any representation;
(e) the likelihood of self-correction in the relevant geographic market;
(f) the effect on competition in the relevant market;
(g) the gross revenue from sales affected by the conduct;
(h) the financial position of the person against whom the order is made;
(i) the history of compliance with this Act by the person against whom the order is made;
(j) any decision of the court in relation to an application for an order under paragraph
(1)(d);
(k) any other amounts paid or ordered to be paid by the person against whom the order is made as a refund or as restitution or other compensation in respect of the conduct; and
(l) any other relevant factor. ....
[263] The Tribunal was well-aware of the Chatr decision [SS: Canada (Commissioner of Competition) v. Chatr Wireless Inc., 2014 ONSC 1146], discussing it at some length in the remedial section of its reasons: see, for example, paras. 426, 461, 474 and 479. It further observed that while some guidance can be obtained from prior cases in applying the factors listed by Parliament to reach an appropriate quantum for the administrative monetary penalty, none of these cases considered the current monetary range of such penalties authorized by the 2022 amendments to the Competition Act. Moreover, several were decided before the amendments to the Act in 2009 that raised the maximum administrative monetary penalty from $100,000 to $10 million: S.C. 2009, c. 2, subs. 424(2): Tribunal reasons at para. 461.
[264] The Tribunal further observed that none of these earlier decisions involved making or analyzing a possible concurrent order under paragraph 74.1(1)(d): citing Chatr, above at paras. 54–77; Canada (Commissioner of Competition) v. Yellow Page Marketing B.V., 2012 ONSC 927, at paras. 57–69; Commissioner of Competition v. Premier Career Management Group Corp and Minto Roy, 2010 Comp Trib 17; Commissioner of Competition v. Sears Canada Inc, 2005 Comp. Trib. 13; PVI International Inc, above at paras. 65–66; Gestion Lebski inc, above at paras 310–313, 318–319: Tribunal reasons at para. 461.
....
[270] The Tribunal identified the following additional aggravating factors that, in its view, justified the imposition of a substantial administrative monetary penalty in this case. These included the fact that the reviewable conduct:(a) Affected consumers across Canada and in all of Cineplex’s theatres, and that, as of December 31, 2023, Cineplex owned, leased or had a joint venture in 1,631 screens in 158 theatres;
(b) Occurred every day starting in mid-June 2022 and continued up to the commencement of the hearing; and that it
(c) Affected tens of thousands of consumers: Tribunal reasons at para. 462. [271] The Tribunal also identified mitigating factors operating in Cineplex’s favour. These included the fact that:(a) This was not a case in which the conduct was designed deliberately to deceive members of the public, nor were the representations directed at a vulnerable segment of the public;
(b) Cineplex will suffer harm to its reputation and, as was the case in Chatr 2014, will likely take steps to end the reviewable conduct;
(c) No evidence suggested that Cineplex had any history of non-compliance with the Competition Act; and
(d) While the reviewable conduct had been occurring for more than 19 months at the time of the hearing, Cineplex had requested a prompt hearing on the merits of the Commissioner’s application, which occurred: Tribunal reasons at para. 479. [272] The Tribunal was also well aware of the fact that this case involved matters of first impression, and that, while denying any wrongdoing, Cineplex had argued that the Tribunal should not impose an administrative monetary penalty as this was the first case heard by the Tribunal involving section 74.01(1.1) of the Competition Act, and amounted to the first interpretation of that provision: Tribunal reasons at para. 426. Indeed, the Tribunal expressly took this into account in fashioning the remedy in this case: Tribunal reasons at para. 480.
[273] The Tribunal additionally had regard to the purpose behind recent statutory amendments, which significantly raised the monetary maximum for administrative monetary penalties. It noted the need to ensure that non-compliance with the provisions of the Competition Act not be treated as a licence fee or a cost of doing business, as this would "“undermine, rather than advance, the objectives of the deceptive marketing provisions and would not promote conformity with the statute”": Tribunal reasons at para. 439. . Difederico v. Amazon.com, Inc. [remedies]
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.
|
