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Competition - Remedies. 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.
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