Courts hold lower threshold for price-fixing class action certification

Two recent decisions in Ontario and British Columbia certifying class actions alleging price fixing indicate that the courts in Canada may be adopting a new approach to these types of claims, potentially opening the door to more litigation in this area, according to Michael Brown, a lawyer with Ogilvy Renault.
In his paper, Possible Changes in the Canadian Landscape for Price-Fixing Class Action Certification, Brown outlines two recent decisions.
On Nov. 12, 2009, British Columbia’s Court of Appeal reversed a lower court decision in Pro-Sys Consultants Ltd. v. Infineon Technologies AG and certified a class proceeding.
In Sept. 2009, the Ontario Superior Court of Justice certified a class proceeding in Irving Paper et. Al. v. Atofina Chemicals et al.
The central allegation in both of these actions is that the defendant competitors entered into an unlawful agreement related to the pricing or supply of a particular product that resulted in purchasers of the product paying above what would otherwise have been paid in a competitive market, Brown wrote.
“Historically, the problem plaintiffs have faced in the certification of these claims as class action stems from the determination of how much, if any, of the overcharge paid by the direct purchasers was “passed through” from the direct purchaser down through the chain of distribution to the indirect purchasers,” he wrote.
“The pass through issue presents a problem in the class action context because the question of whether the pass through occurred and, accordingly, whether class members actually suffered harm, is not easily determinable on a class-wide basis.”
Prior to the two decisions mentioned above, Canadian courts have generally held the inability to determine the existence of harm (and therefore liability) on a class-wide basis makes these cases unsuitable for certification as a class action.
In Pro-Sys Consultants and Irving Paper, however, although the courts did not disagree with the defendants’ respective arguments (outlined in the previous paragraph), they nevertheless appear to have applied a lower threshold for certification, Brown wrote.
“Not only are these two decisions inconsistent with prior jurisprudence on price-fixing class actions, but the suggested use of statistical evidence and aggregate assessment to determine liability absent proof of individual harm also appears inconsistent with the well-established principles that a class proceeding is a procedural mechanism only and should not affect the substantive legal rights of the parties.”