Mohr v. National Hockey League

Mohr v. National Hockey League
Court (s) Database
Federal Court Decisions
Date
2021-05-27
Neutral citation
2021 FC 488
File numbers
T-1080-20
Notes
Reported Decision
Decision Content
Date: 20210527
Docket: T-1080-20
Citation: 2021 FC 488
Ottawa, Ontario, May 27, 2021
PRESENT: Chief Justice Paul Crampton
PROPOSED CLASS PROCEEDING
BETWEEN:
KOBE MOHR
Representative Plaintiff
and
National Hockey League, AMERICAN HOCKEY LEAGUE INC,
ECHL INC., CANADIAN HOCKEY LEAGUE,
QUÉBEC MAJOR JUNIOR HOCKEY LEAGUE INC.,
ONTARIO HOCKEY LEAGUE, WESTERN HOCKEY LEAGUE,
HOCKEY CANADA
Defendants
ORDER AND REASONS
Table of Contents
I. Introduction 2
II. The Parties 5
III. Issues 6
IV. Relevant Rules 6
A. The Motion to Amend 6
B. The Motion to Strike 8
V. Analysis – Motion to Amend 8
A. Applicable legal principles 8
B. Assessment 10
(1) Is it plain and obvious, assuming the facts pleaded to be true, that the Amended Statement of Claim discloses no reasonable cause of action? 10
(a) Failure to disclose a reasonable cause of action 10
(i) Insufficient material facts and particulars 10
(ii) Failure to plead a reasonable cause of action under section 45 of the Act 14
(iii) Failure to plead a reasonable cause of action under Section 48 of the Act 25
(iv) Other claims are not within the scope of section 36 37
(b) Does the Amended Statement of Claim constitute an abuse of the Court’s process? 39
(i) The Ontario proceeding 40
(ii) The Alberta proceeding 41
(iii) The Quebec proceeding 42
(iv) Analysis 42
(c) Is the Amended Statement of Claim scandalous, frivolous or vexatious? 46
(d) Conclusion: It is plain and obvious that the Amended Statement of Claim discloses no reasonable cause of action 47
(2) Would the proposed amendments assist the Court to determine the real questions in controversy between the parties? 47
(3) Would the proposed amendments serve the interests of justice? 49
(4) Would the proposed amendments result in an injustice to the other party that is not capable of being compensated by an award of costs? 50
C. Conclusion 51
VI. Analysis – Motion to Strike 52
ORDER in T-1080-20 56
APPENDIX 1 1
I. Introduction
[1] These reasons concern two Motions in writing in this proposed class proceeding: (i) a Motion to Strike, brought by certain of the defendants, and (ii) a Motion to Amend, brought by the representative plaintiff, Mr. Kobe Mohr. I will deal first with the latter motion.
[2] In his Motion, Mr. Mohr seeks leave to amend a Statement of Claim filed on behalf of all major junior hockey players who signed a standard player agreement [SPA] that is at the heart of one or more of the conspiracies alleged to have been entered into between the defendants [the Class Members].
[3] In the Statement of Claim, Mr. Mohr alleges that the defendants entered into a single conspiracy contrary to subsection 48(1) of the Competition Act, RSC, 1985, c C-34 [the Act]. In particular, he claims that the defendants conspired to limit unreasonably the Class Members’ opportunity to negotiate and play with teams in the National Hockey League [NHL], the American Hockey League Inc. [AHL] and the ECHL Inc. (also known as the East Coast Hockey League) [ECHL]. He further claims that defendants conspired to impose unreasonable terms and conditions upon the Class Members. These include the imposition of “nominal wages” and “the loss of rights to market their image, sponsorship and endorsement opportunities.” Accordingly, Mr. Mohr seeks damages under section 36(1)(a) of the Act for losses suffered as a result of the alleged conspiracy. He estimates such losses to be approximately $825 million.
[4] This Motion was brought after the Canadian defendant leagues, their umbrella organization (the Canadian Hockey League [CHL]) and Hockey Canada advised of their intention to bring a Motion to Strike the Statement of Claim. Those defendants explained that their Motion to Strike would maintain that it is plain and obvious that section 48 of the Act cannot apply to them because it applies only to intra-league agreements and arrangements between or among “teams and clubs”, including their directors, officers or employees. They added that the Statement of Claim cannot be cured by amending it to claim damages suffered as a result of an agreement contemplated by the general conspiracy provisions in section 45 of the Act.
[5] In the Amended Statement of Claim, Mr. Mohr proposes to add 148 new defendants, namely, the individual teams of the three Canadian defendant leagues and the three United States-based defendant leagues. He also refers to multiple alleged illegal agreements within the hockey industry, rather than to a single alleged conspiracy. In his Notice of Motion, Mr. Mohr refers to these as being “both intra- and inter-league … [conspiracies that] … may perhaps be governed by one or the other of sections 45 and 48”.
[6] The Amended Statement of Claim also provides additional information regarding junior players’ remuneration, the restrictions to which they are subject, the benefits obtained by their clubs and leagues, the position of the various leagues in the industry hierarchy, the junior drafts, the NHL entry draft, the more favourable situation that allegedly exists for junior players from Europe and certain parts of the United States hockey system, the relevant product and the relevant markets. In addition, the Amended Statement of Claim briefly addresses some of the impugned agreements.
[7] Finally, the Amended Statement of Claim includes new requests for declaratory and injunctive relief, as well as “remedies justified by” certain non-criminal provisions situated in Part VIII of the Act.
[8] For the reasons set forth in part V of these reasons below, the Motion to Amend will be dismissed. For the reasons provided in part VI below, the Motion to Strike the Statement of Claim will be granted.
II. The Parties
[9] The representative plaintiff, Kobe Mohr, is a hockey player who played for a club in the Western Hockey League between 2015 and 2020.
[10] The CHL is an entity that organizes Canada’s three “major junior” hockey leagues, namely, the Québec Major Junior Hockey League [QMJHL], the Ontario Hockey League [OHL], and the Western Hockey League [WHL]. The QMJHL consists of eighteen clubs in Quebec and the Maritime provinces. The OHL consists of twenty clubs in Ontario and the United States. The WHL consists of twenty-two clubs in Western Canada and the United States.
[11] Hockey Canada is the national governing body for ice hockey in Canada. It is also the Canadian member of the International Ice Hockey Federation.
[12] The NHL is the top-tier professional hockey league in North America, consisting of thirty-two teams in the United States and Canada.
[13] The AHL is the second-tier professional hockey league in North America, consisting of thirty-one teams in the United States and Canada.
[14] The ECHL is the third-tier professional hockey league in North America, consisting of twenty-six teams in the United States and Canada.
III. Issues
[15] The plaintiff’s Motion to Amend raises a single issue, namely, whether Mr. Mohr has met the test for obtaining leave to amend the Statement of Claim.
[16] The Motion to Strike brought by certain of the defendants also raises a single issue, namely, whether it is plain and obvious that the Statement of Claim discloses no reasonable cause of action or is otherwise an abuse of process.
IV. Relevant Rules
A. The Motion to Amend
[17] The Motion to Amend was brought pursuant to Rule 75 of the Federal Courts Rules, SOR/98-106 [the Rules]. Rule 75(1) contemplates that the Court may, on motion, grant leave to a party to amend a document on such terms as will protect the rights of all parties.
[18] Rule 200 provides an exception to Rule 75 with respect to amendments to pleadings. However, that exception does not apply to a pleading that is subject to a motion to strike: Verma v Canada, 2006 FC 1353 at para 14.
[19] The defendants CHL, QMJHL, OHL, WHL and Hockey Canada [collectively, the Responding Defendants on the Motion to Amend, and the Moving Defendants on the Motion to Strike] filed their Motion to Strike on December 14, 2020, before Mr. Mohr filed this Motion to Amend. Accordingly, the exception set forth in Rule 200 does not apply, and leave to amend is required.
[20] For the reasons explained immediately below, Rule 221 is relevant to a consideration of a motion to amend a pleading. That provision provides as follows:
Motion to strike
221 (1) On motion, the Court may, at any time, order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it
(a) discloses no reasonable cause of action or defence, as the case may be,
(b) is immaterial or redundant,
(c) is scandalous, frivolous or vexatious,
(d) may prejudice or delay the fair trial of the action,
(e) constitutes a departure from a previous pleading, or
(f) is otherwise an abuse of the process of the Court,
and may order the action be dismissed or judgment entered accordingly.
[21] In considering Rule 221, it is important to keep in mind Rule 174, which provides as follows:
Material facts
174 Every pleading shall contain a concise statement of the material facts on which the party relies, but shall not include evidence by which those facts are to be proved.
[22] Finally, Rule 181 requires every pleading to contain particulars of every allegation contained therein.
B. The Motion to Strike
[23] Rule 221 authorizes the Court, on motion, to order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on numerous grounds. These include that the pleading discloses no reasonable cause of action or is otherwise an abuse of the process of the Court.
V. Analysis – Motion to Amend
A. Applicable legal principles
[24] The principles to be applied on a Motion to Amend a pleading were recently restated as follows:
[20] The general rule is that an amendment should be allowed at any stage of an action for the purpose of determining the real questions in controversy between the parties, provided, notably, that the allowance would not result in an injustice to the other party not capable of being compensated by an award of costs and that it would serve the interests of justice: Canderel Ltd. v. Canada, [1994] 1 F.C. 3, 157 N.R. 380 (C.A.); Enercorp at para. 19. However … the proposed amendment must have a reasonable prospect of success: Teva Canada Limited v. Gilead Sciences Inc., 2016 FCA 176, 140 C.P.R. (4th) 309 at paras. 29-32 (Teva). Another way to put this is that a proposed amendment will be refused if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action: R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, [2011] 3 S.C.R. 45 at para. 17 (Imperial Tobacco).
[21] In deciding whether an amendment has a reasonable prospect of success, its chances of success must be examined in the context of the law and the litigation process, and a realistic view must be taken: Teva at para. 30; Imperial Tobacco at para. 25.
McCain Foods Limited v J.R. Simplot Company, 2021 FCA 4 [McCain].
[25] In Teva, above, the requirement that the proposed amendments have a reasonable prospect of success was described as “a threshold issue”, in the sense that it ought to be addressed before going further and investigating other matters: Teva, above, at para 31. The Court added that “it makes no sense for a court to allow an amendment that is doomed to fail” and that if the amended pleadings “do not have some reasonable prospect of success, allowing them into the litigation does nothing other than to complicate and protract it needlessly and pointlessly”: Teva, above, at para 28.
[26] Based on the foregoing, in determining whether to grant leave to amend a pleading, the Court should consider the following:
1. Is it plain and obvious, assuming the facts pleaded to be true, that the amended pleading discloses no reasonable cause of action?
2. Would the proposed amendments assist the Court to determine the real questions in controversy between the parties?
3. Would the proposed amendments serve the interests of justice?
4. Would the proposed amendments result in an injustice to the other party that is not capable of being compensated by an award of costs?
B. Assessment
(1) Is it plain and obvious, assuming the facts pleaded to be true, that the Amended Statement of Claim discloses no reasonable cause of action?
[27] The Responding Defendants [1] submit that the Amended Statement of Claim would not survive a motion to strike under Rule 221 for three distinct reasons: (i) it does not disclose any reasonable cause of action, (ii) it constitutes an abuse of the Court’s process, and (iii) it is scandalous, frivolous and vexatious. For the reasons set forth below, I agree with the first two of those submissions. Consequently, I consider it unnecessary to address the third.
(a) Failure to disclose a reasonable cause of action
(i) Insufficient material facts and particulars
[28] The Responding Defendants assert that the Amended Statement of Claim does not provide sufficient material facts and particulars, as required by Rules 174 and 181. Specifically, they maintain that whereas the Statement of Claim alleged a single conspiracy contrary to section 48 of the Act, the Amended Statement of Claim refers to multiple alleged conspiracies, without providing sufficient material facts and particulars to understand the case to be met by any given defendant. I agree.
[29] The Amended Statement of Claim refers to what appear to be six separate conspiracies, or groups of agreements that each constitute a conspiracy:
1. An agreement between the NHL and the CHL. This agreement, which is addressed at paragraphs 3.1, 47.1 and 47.2, is described as having defined “the modalities of a partnership to their mutual interest, but to the detriment of Canadian CHL players.” However, the particulars of those modalities and their impact on Canadian hockey players have not been provided. The Amended Statement of Claim simply makes a vague reference to “various activities including the enforcement of restrictive rules alleged here to be illegal and unreasonable restraints of trade.” Likewise, no material facts or explanation are provided to indicate how this agreement is believed to, or could, contravene either section 45 or section 48 of the Act.
2. An unspecified number of agreements between the NHL, NHL clubs and the CHL, which are mentioned at paragraph 47.3. It is alleged that pursuant to these agreements, NHL clubs have agreed not to sign players under the age of 18 playing in the CHL, or to assign a player who has an NHL/AHL contract under the age of 20 to their AHL/ECHL affiliate if that player also has a contract in the CHL. However, once again, no other information is provided regarding those agreements (including whether two or more clubs are parties to any of them) or the basis upon which they are asserted to, or could, contravene sections 45 or 48 of the Act.
3. An unspecified number of alleged agreements between NHL clubs and their AHL/ECHL affiliate clubs, pursuant to which the parties are said to have agreed not to sign any North American players who play or have played for a CHL club, until the end of his eligibility in the CHL. Apart from this bare assertion, which is made at paragraphs 47.6 and 47.18, no further information has been provided. In the absence of any further material facts or particulars, it is not apparent how these alleged agreements are considered to contravene sections 45 or 48.
4. One or more agreements among the CHL, the WHL, the OHL and the QMJHL, pursuant to which they are alleged to have agreed to standardize player contracts that, among other things “impose very low ceilings for the remuneration of players, and will deprive those players of any opportunity to market [their] time, skills or talents or even their own image or name for the purpose of endorsement or sponsorship”. Those agreements are referenced at paragraphs 3.2, 13, 14 and 47.8. As with the alleged agreements discussed above, the Amended Statement of Claim does not describe how these alleged agreement(s) among the CHL and its three member leagues to impose SPAs meet(s) the requirements of sections 45 and 48 of the Act. Instead, the Amended Statement of Claim simply repeats the language of paragraphs 48(1)(a) and (b) by alleging that the SPAs limit players’ opportunities to participate in a professional sport, impose unreasonable terms and conditions (including unreasonable compensation and restrictions on players’ abilities to market their own image), and limit their opportunity to negotiate with the team of their choice.
5. One or more agreements among the Responding Defendants and between them and “the NHL and its affiliates” which, among other things, prevent Canadian hockey players from playing in other leagues or with other clubs. These agreements, which are mentioned at paragraph 47.8, are alleged to “unreasonably limit the opportunities of Class Members to play professional hockey” and to “offer their services elsewhere, mostly in the AHL/ECHL, for better remuneration”, until the end of their CHL eligibility. However, once again, this simply paraphrases the language in paragraphs 48(1)(a) and (b) of the Act, respectively, without providing any other material facts or particulars. In addition, no explanation is provided as to why those limitations are considered to be unreasonable, within the meaning of section 48, and having regard to the matters identified in subsection 48(2) of the Act.
6. An agreement between the CHL, Hockey Canada and one or more unnamed entities in the United States which deprives Class Members of the benefit of competition for their services. This agreement, which is mentioned at paragraph 8.2, is described as being “the amendment to the Hockey Transfer Agreement among the USA, CHL and [Hockey Canada] to ensure that Class Members cannot seek scholarships in exchange for playing within the NCAA.” No further information regarding that alleged agreement is provided. Indeed, no allegations are made that the parties to this agreement are “competitors”, as contemplated by section 45 of the Act, or that the agreement contravenes section 48 in any particular way.
[30] The absence of the material facts and particulars described above leaves the Amended Statement of Claim without a sufficient foundation to support the amended allegations that have been made. This provides a sufficient basis for concluding that it is plain and obvious that the Amended Statement of Claim discloses no reasonable cause of action: Pelletier v Canada, 2020 FC 1019 at paras 46-47.
[31] Notwithstanding this conclusion, I will proceed to address certain of the other submissions made by the Responding Defendants in support of their position that Mr. Mohr should not be granted leave to file the Amended Statement of Claim.
(ii) Failure to plead a reasonable cause of action under section 45 of the Act
[32] The Responding Defendants assert the plaintiff has not pleaded a reasonable cause of action under section 45 of the Act because that provision applies only to certain agreements between “competitors” relating to the “production or supply” of a product. They add that section 45 does not apply to agreements between buyers pertaining to the purchase of a service.
[33] I agree, although I expressly limit my agreement with the latter assertion to the proposition that section 45 does not apply to the types of agreements that are alleged in the Amended Statement of Claim. Among other things, those agreements are not the types of unambiguously harmful “hard core cartel” agreements, also known as “naked” cartel agreements, that are contemplated by section 45. This is because they cover a range of matters that have nothing to do with the matters described in paragraphs 45(1)(a) – (c): see for example, paragraphs 66-67 below.
[34] Subsection 45(1) states as follows:
Conspiracies, agreements or arrangements between competitors
Complot, accord ou arrangement entre concurrents
45 (1) Every person commits an offence who, with a competitor of that person with respect to a product, conspires, agrees or arranges
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) to fix, maintain, increase or control the price for the supply of the product;
a) soit pour fixer, maintenir, augmenter ou contrôler le prix de la fourniture du produit;
(b) to allocate sales, territories, customers or markets for the production or supply of the product; or
b) soit pour attribuer des ventes, des territoires, des clients ou des marchés pour la production ou la fourniture du produit;
(c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.
c) soit pour fixer, maintenir, contrôler, empêcher, réduire ou éliminer la production ou la fourniture du produit.
[35] As is apparent from the plain language of subsection 45(1), it applies only to “competitors” who enter into a conspiracy, agreement or arrangement concerning either the “supply” or the “production or supply” of the product in respect of which they compete. These elements of subsection 45(1) pose an insurmountable hurdle for the plaintiff.
The existing defendants and many of the proposed defendants are not “competitors … with respect to a product”
[36] With the exception of the clubs within the AHL and the ECHL (discussed at paragraph 32.1 of the Amended Statement of Claim) and possibly the clubs within the NHL (mentioned at paragraph 31.2), none of the other existing or proposed defendants are alleged to have been a party to any conspiracy, agreement or arrangement with a “competitor … with respect to a product”. The only passage in the Amended Statement of Claim that may suggest otherwise is the following sentence, which is difficult to understand: “31.2 Defendant clubs and leagues are competitors in the NHL, for Championships, the best players available and market shares.”
[37] It is plain and obvious that the NHL, the CHL and Hockey Canada are not “competitors” of any other party to any of the alleged agreements, “with respect to a product”.
[38] Moreover, given that it is common ground between the parties that the NHL, the AHL and the ECHL are the first, second and third-tier professional hockey leagues in North America, those leagues are not “competitors” of each other, at least with respect to the product at issue in these proceedings. I will discuss that product in the next two paragraphs below. Likewise, the clubs within one of those leagues are not “competitors” of any club in the either of the other two leagues. The same is true for the QMJHL, the OHL and the WHL. Those leagues are not “competitors” of each other, and the clubs within any one of those leagues are not “competitors” of the clubs in either of the other two leagues. I will address further below the competition that exists between clubs within each of those three leagues.
The remaining proposed defendants are not parties to an alleged conspiracy, agreement or arrangement with respect to the “production or supply” of the relevant product.
[39] The plaintiff alleges that the clubs within the AHL and the ECHL are “competitors in the hockey entertainment business.” However, those clubs are not competitors in the “production or supply” of the only relevant product in respect of which one or more agreements described in subsection 45(1) have been alleged.
[40] The “product” at issue in this proceeding consists of the services of the Class Members, namely members of “a class consisting of the Plaintiff and all individuals residing in Canada, who were Canadian resident or Canadian citizens and who have signed a [SPA] with a club in one of the three leagues comprising the CHL (the QMJHL, OHL and WHL)” during the relevant period: Amended Statement of Claim, at paragraph 24.
[41] It is trite law that “the words of a statute must be read ‘in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament’”: Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 117, quoting Rizzo & Rizzo Shoes Ltd (Re), [1998] 1 SCR 27 at para 21 [Rizzo]; and Bell ExpressVu Limited Partnership v Rex, 2002 SCC 42 at para 26, both quoting E. Driedger, Construction of Statutes, 2nd ed (Toronto: Butterworths, 1983) at 87.
[42] On their face, the three offences proscribed in subsection 45(1) of the Act apply solely to either the “supply” or the “production or supply” of the same product in respect of which the alleged conspirators are competitors. This is readily apparent from the use of the definite article “the” before the word “product” in each of paragraphs 45(1)(a)-(c).
[43] By their express terms, those provisions do not apply to the purchase or other acquisition of a product, although I do not exclude the possibility that paragraph 45(1)(c) may apply to a supplier boycott or other “hard core cartel” agreement among competitors in a downstream market to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product in respect of which they compete. The agreements alleged in the Amended Statement of Claim are plainly not of this type.
[44] Pursuant to subsection 2(1) of the Act, “supply” means, “in relation to a service, sell, rent or otherwise provide a service or offer so to provide a service” (emphasis added).
[45] As recognized at paragraph 2.7 of the Amended Statement of Claim, hockey players “offer” their services to teams, who then acquire those services.
[46] Given that it is the players, rather than the clubs within the AHL and ECHL, who “offer” and then “provide” the services at issue in this proceeding, it is readily apparent from the ordinary meaning of the words in subsection 45(1) that the clubs within those leagues are not competitors in the production or supply of those services, as contemplated by the Act. Based on the legislative history and the scheme of the Act discussed below, it is also readily apparent that the agreements to which the clubs in the AHL and the ECHL are alleged to be a party are not agreements with respect to the production or supply of those services, as contemplated by subsection 45(1).
[47] To the extent that the words in subsection 45(1) might somehow be said to permit a broader interpretation that would bring within its scope the sorts of agreements alleged in the Amended Statement of Claim, the penal nature of that provision would entitle the defendants to the benefit of any ambiguity: R v McLaughlin, [1980] 2 SCR 331 at 335; R v McIntosh, [1995] 1 SCR 686 at 702 and 705.
[48] I will now turn to address the individual clubs within the QMJHL, the OHL and the WHL. As recognized at the end of paragraph 38 above, clubs within each of those leagues evidently compete – in the sense of being rivals to win hockey games, championships and perhaps even the services of players. However, it has not been alleged that they are “competitors” in the “production or supply” of the services of the Class Members. Indeed, it is plain and obvious that they are not in fact competitors in this capacity. They may well compete to sign young players to SPAs or other contracts. But in this capacity they are competitors in the acquisition of the hockey-related services of those players. For the same reasons discussed at paragraphs 39-47 above, those clubs are not competitors in the “production or supply” of the services at issue in this proceeding.
[49] This interpretation is supported by the legislative history of subsection 45(1). That history also supports the Responding Defendants’ position that the agreements to which they are alleged to be parties are not agreements with respect to the production or supply or supply of services, as contemplated by subsection 45(1).
[50] Prior to entry into force of the current wording of that provision in March 2010, paragraph 45(1)(c) applied to any agreement between competitors that prevented or lessened competition unduly “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” (emphasis added). (The full text of subsection 45(1), as it existed prior to March 2010, is reproduced in Appendix 1 to these reasons.)
[51] The fact that the word “purchase” was eliminated from the text of subsection 45(1) is a strong indication of Parliament’s intention to exclude from the scope of that provision agreements and other arrangements that, in pith and substance, pertain to the purchase or other acquisition of a product. That amendment was made following a long period of consultation and assessment.
[52] In 2002, the House of Commons Standing Committee on Industry, Science and Technology issued a report containing a number of recommendations to amend the Act. Recommendation 12 of that report stated as follows:
12. That the Government of Canada amend the Competition Act to create a two-track approach for agreements between competitors. The first track would retain the conspiracy provision (section 45) for agreements that are strictly devised to restrict competition directly through raising prices or indirectly through output restrictions or market sharing, such as customer or territorial assignments, as well as both group customer or supplier boycotts. The second track would deal with any other type of agreement between competitors in which restrictions on competition are ancillary to the agreement’s main or broader purpose.
House of Commons Standing Committee on Industry, Science and Technology, A Plan to Modernize Canada’s Competition Regime, (tabled April 23, 2002, adopted April 9, 2002), at xvi.
[53] Later in 2002, the Government of Canada broadly endorsed the foregoing recommendation when it stated the following:
The Government supports the need to amend section 45 and indeed believes that such amendments are essential for effective enforcement of the provision.
The Government further endorses the basic principle of a two-track approach for conspiracies under which hard core cartel behaviour, such as agreements to fix prices, allocate markets or restrict supplies, would be criminal offences without a competition test or an efficiency defence. Other types of agreements between competitors would be subject to a civil review …
Government Response to the Report of the House of Commons Standing Committee on Industry, Science and Technology, “A Plan to Modernize Canada’s Competition Regime”, (October 1, 2002), at 3.
[54] In 2008, a panel appointed by the federal government issued a report on this country’s competition policy that included various recommendations to amend the Act. With respect to the criminal provisions of the Act, the panel observed:
The Panel is of the view that the criminal law, with its attendant sanctions including fines and imprisonment, should be reserved for conduct that is unambiguously harmful to competition and where clear standards can be applied that are understandable to the business community.
[…]
At the same time, criminal law is too blunt an instrument to deal with agreements between competitors that do not fall into the “hard core” cartel category, such as restrictions on advertising or strategic alliances, but that may harm competition nonetheless. A more sophisticated economic approach to address the latter has been advocated by the Bureau and other experts to deal with this category of agreements between competitors.
Government of Canada, Compete to Win: Final Report – June 2008, at 58-59 [Compete to Win] (emphasis added).
[55] Having regard to the foregoing, the panel recommended that the government “repeal the existing conspiracy provisions and replace them with (i) a per se criminal offence to address hard core cartels, and (ii) a civil provision to deal with other types of agreements between competitors that have anti-competitive effects”: Compete to Win, Recommendation 14(d), at 127 (footnote omitted).
[56] The following year, Bill C-10, a budget implementation bill that included amendments to section 45 and several other provisions of the Act, was submitted to Parliament. The wording of the proposed amendments to section 45 and a new civil provision in section 90.1 addressing non-hard core cartel agreements among competitors was enacted without any change and entered into force in March 2010.
[57] This legislative history supports the Responding Defendants’ position that section 45 does not apply to the types of purchasing agreements to which they or the other defendants are alleged to be parties: see also Dow Chemical Canada ULC v NOVA Chemicals Corporation, 2018 ABQB 482 at para 1357. In brief, in addition to the elimination of the word “purchase” as part of the amendments in 2010, it is clear that Parliament intended to limit the application of section 45 to hard core cartel agreements, namely, agreements that are unambiguously harmful to competition. These are also known as “naked” cartel agreements. Other agreements between competitors, including those that include ancillary provisions that can adversely impact the production or supply of a product, were intended to be reviewed under the new non-criminal provision in section 90.1 of the Act, which is reproduced in Appendix 1 to these reasons.
[58] Another aspect of the amended statutory scheme that supports the foregoing interpretation is the new provision in subsection 45(4), which states as follows:
Defence
Défense
(4) No person shall be convicted of an offence under subsection (1) in respect of a conspiracy, agreement or arrangement that would otherwise contravene that subsection if
(4) Nul ne peut être déclaré coupable d’une infraction prévue au paragraphe (1) à l’égard d’un complot, d’un accord ou d’un arrangement qui aurait par ailleurs contrevenu à ce paragraphe si, à la fois :
(a) that person establishes, on a balance of probabilities, that
a) il établit, selon la prépondérance des probabilités :
(i) it is ancillary to a broader or separate agreement or arrangement that includes the same parties, and
(i) que le complot, l’accord ou l’arrangement, selon le cas, est accessoire à un accord ou à un arrangement plus large ou distinct qui inclut les mêmes parties,
(ii) it is directly related to, and reasonably necessary for giving effect to, the objective of that broader or separate agreement or arrangement; and
(ii) qu’il est directement lié à l’objectif de l’accord ou de l’arrangement plus large ou distinct et est raisonnable-ment nécessaire à la réalisation de cet objectif;
(b) the broader or separate agreement or arrangement, considered alone, does not contravene that subsection.
b) l’accord ou l’arrangement plus large ou distinct, considéré individuellement, ne contrevient pas au même paragraphe.
[59] In brief, taken together, the statutory scheme contemplated by section 2, subsection 45(1), subsection 45(4) and section 90.1 support the position of the Responding Defendants that the types of agreements to which they and the other defendants are alleged to have been a party do not fall within the purview of subsection 45(1).
[60] I pause to observe that the Competition Bureau shares this interpretation of subsection 45 and the legislative history discussed above: see Competition Bureau, Competitor Collaboration Guidelines (May 6, 2021), at section 2.4.1 and Example 9; and Competition Bureau, Competition Bureau statement on the application of the Competition Act to no-poaching, wage-fixing and other buy-side agreements (November 27, 2020), available online: https://www.canada.ca/en/competition/bureau/news/2020/11/competition-bureau-statement-on-the-application-of-the-competition-act-to-no-poaching-wage-fixing-and-other-buy-side agreements.html.
[61] I acknowledge that subsection 48(3), discussed below, states that “section 45 applies and this section does not apply to all other agreements, arrangements and provisions thereof between or among [the] teams, clubs and persons” described in that provision. However, the language of subsection 48(3), which predates the amendments to section 45 discussed above, must be read together with those amendments. Pursuant to the plain terms of those amendments, subsection 45(1) now only applies to three narrowly defined types of agreement, whether the agreement is among teams and clubs as members of the same league, or otherwise. For the reasons discussed above, the agreements alleged to have been entered into among the current and proposed defendants are not one of those types of agreement.
[62] In summary, based on the ordinary meaning of the words in subsection 45(1), the legislative history of that provision, and the statutory scheme, it is plain and obvious that the plaintiff has not pleaded a reasonable cause of action in relation to section 45 of the Act. In other words, it is clear that the plaintiff has not pleaded a reasonable cause of action against the existing and proposed defendants under section 45, in relation to the production and supply of the services that are at issue in this proceeding.
(iii) Failure to plead a reasonable cause of action under Section 48 of the Act
[63] In their Motion to Strike, the Responding Defendants alleged that no viable cause of action has been pleaded in the plaintiff’s Statement of Claim, because it does not allege any “intra-league” agreement or arrangement described in subsection 48(3). In support of this position, they maintain that the opening words of subsection 48(3) (“This section applies”) limits the purview of subsection 48(1) to such intra-league agreements.
[64] Section 48 states as follows:
Conspiracy relating to professional sport
Complot relatif au sport professionnel
48 (1) Every one who conspires, combines, agrees or arranges with another person
48 (1) Commet un acte criminel et encourt, sur déclaration de culpabilité, une amende à la discrétion du tribunal et un emprisonnement maximal de cinq ans, ou l’une de ces peines, quiconque complote, se coalise ou conclut un accord ou arrangement avec une autre personne :
(a) to limit unreasonably the opportunities for any other person to participate, as a player or competitor, in professional sport or to impose unreasonable terms or conditions on those persons who so participate, or
a) soit pour limiter déraisonnablement les possibilités qu’a une autre personne de participer, en tant que joueur ou concurrent, à un sport professionnel ou pour imposer des conditions déraisonnables à ces participants;
(b) to limit unreasonably the opportunity for any other person to negotiate with and, if agreement is reached, to play for the team or club of his choice in a professional league
b) soit pour limiter déraisonnablement la possibilité qu’a une autre personne de négocier avec l’équipe ou le club de son choix dans une ligue de professionnels et, si l’accord est conclu, de jouer pour cette équipe ou ce club.
is guilty of an indictable offence and liable on conviction to a fine in the discretion of the court or to imprisonment for a term not exceeding five years or to both.
Matters to be considered
Éléments à considérer
(2) In determining whether or not an agreement or arrangement contravenes subsection (1), the court before which the contravention is alleged shall have regard to
(2) Pour déterminer si un accord ou un arrangement constitue l’une des infractions visées au paragraphe (1), le tribunal saisi doit:
(a) whether the sport in relation to which the contravention is alleged is organized on an international basis and, if so, whether any limitations, terms or conditions alleged should, for that reason, be accepted in Canada; and
a) d’une part, examiner si le sport qui aurait donné