Difederico v. Amazon.com, Inc.

Difederico v. Amazon.com, Inc.
Court (s) Database
Federal Court Decisions
Date
2023-08-28
Neutral citation
2023 FC 1156
File numbers
T-445-20
Decision Content
Date: 20230828
Docket: T-445-20
Citation: 2023 FC 1156
Toronto, Ontario, August 28, 2023
PRESENT: Chief Justice Paul Crampton
PROPOSED CLASS PROCEEDING
BETWEEN:
STEPHANIE DIFEDERICO AND
JAMESON EDMOND CASEY
Plaintiffs
and
AMAZON.COM, INC., AMAZON.COM.CA, INC.,
AMAZON.COM SERVICES LLC,
AMAZON SERVICES INTERNATIONAL, INC., AND
AMAZON SERVICES CONTRACTS, INC.
Defendants
ORDER AND REASONS
I. Introduction 3
II. Background 4
III. The Parties 6
A. The Representative Plaintiffs and the Classes They Represent 6
B. Amazon 8
IV. Issues 8
V. Relevant Legislation 9
VI. Assessment 11
A. Do the pleadings disclose a reasonable cause of action? 11
(1) General principles 11
(2) Analysis of the MFN Clause in S-4 18
(a) Introduction 18
(b) The “agreement” 20
(c) Among “competitors” 24
(d) The subject matter and object of S-4 29
(i) Subsection 45(1) and the scheme of the Act 30
(ii) The jurisprudence 35
(iii) The legislative history of s. 45 38
(iv) Conclusion regarding the interpretation and scope of section 45 43
(v) Application of the interpretation of section 45 to the plaintiffs’ allegations regarding S-4 43
(vi) Section 46 58
(e) Conclusions regarding the allegations in relation to S-4 58
(3) Analysis of the Fair Pricing Policy 60
(a) Introduction 60
(b) The “agreement” 61
(c) Among “competitors” 61
(d) The subject matter of the Fair Pricing Policy 62
(i) Paragraph 45(1)(a) 62
(ii) Paragraphs 45(1)(b) and (c) 65
(iii) Section 46 66
(e) Conclusion regarding the allegations in relation to the Fair Pricing Policy 67
VII. Conclusion 68
Introduction
[1] The plaintiffs in the underlying action claim $12 billion in damages on behalf of three classes of consumers (collectively “Class Members”). In support of their claim, they allege breaches of sections 45 and 46 of the Competition Act, RSC, 1985, c C-34 (the “Act”). Those alleged breaches are based on two “agreements” that the defendants are said to have entered into with third parties (the “Allegedly Anti-competitive Agreements”).
[2] The first such agreement is a provision in the standard Business Solutions Agreement (the “BSA”) that the defendants (together, “Amazon”) entered into with third parties who sold products on Amazon’s online retail platform (“Third Party Sellers”) for part of the period of time in dispute. The plaintiffs describe that provision as a most-favoured nation (“MFN”) agreement. The second Allegedly Anti-competitive Agreement is the Amazon Marketplace Fair Pricing Policy (the “Fair Pricing Policy”) that Amazon first published on its website for Third Party Sellers in November 2017.
[3] In the present Motion, the plaintiffs seek various types of relief, including an order certifying their action as a class proceeding under Rule 334.16(1) of the Federal Courts Rules, SOR/98-106 (the “Rules”).
[4] For the reasons that follow, I have concluded that the plaintiffs have not established the first requirement for certification, namely, that the pleadings disclose a reasonable cause of action: Rule 334.16(1)(a). This is so for two reasons.
[5] First, the plaintiffs have not pled sufficient material facts with respect to all of the constituent elements of sections 45 and 46, for either of the Allegedly Anti-competitive Agreements.
[6] Second, it is plain and obvious that neither of the Allegedly Anti-competitive Agreements is an agreement contemplated by sections 45 and 46 of the Act. Sections 45 and 46 target conspiracies, agreements and arrangements, also known as “hard-core” or “naked” cartel agreements, that are generally recognized to have unambiguously harmful effects on competition and consumers. For this reason, those sections establish indictable criminal offences and provide for the harshest penalties in the Act.[1] On their face, the Alleged Anti-competitive Agreements do not contemplate conduct that could reasonably be said to be likely to have unambiguously harmful effects on competition and consumers.
[7] Having regard to the foregoing, and for the reasons further explained below, this Motion will be dismissed.
I. Background [8] The MFN “agreement” is a clause (the “MFN Clause”) in a provision (“S-4”) that was included in the BSA from June 1, 2010 through March 2019.
[9] S-4 was one of the “Selling on Amazon Service Terms” that were explicitly part of the BSA. The MFN Clause in S-4 essentially required Third Party Sellers to ensure that the prices of products they sold on Amazon’s platform were at least as favourable as the selling prices of those products on any other e-commerce website (the “MFN Price”). The plaintiffs characterize this as an MFN provision because it resembles a most-favoured nation clause.
[10] The Fair Pricing Policy articulates Amazon’s commitment to provide its customers with the largest selection of products, at the lowest price, and with the fastest delivery. In support of that commitment, Amazon states that it regularly monitors the prices of items on its platform and that it may take certain actions, including suspending or terminating selling privileges, when it identifies “pricing practices that harm customer trust.” Such practices are said to include “[s]etting a price on a product or service that is significantly higher than recent prices offered on or off Amazon.”
[11] Among other things, the plaintiffs allege that S-4 and the Fair Pricing Policy permit Amazon to shelter its online business from price competition. More specifically, they assert that those “agreements” allow Amazon to ensure that the prices of products sold by Third Party Sellers on its platform and on competing e-commerce websites never drop below a particular level, namely, the sellers’ marginal cost plus Amazon’s fees. The plaintiffs maintain that this permits Amazon to (i) set anti-competitive fees, and (ii) create a floor price under which the products in question cannot be offered for sale on any e-commerce website. The plaintiffs state that this has inflated the prices of products sold on Amazon’s platform as well as on other e-commerce websites used by Third Party Sellers. They estimate this inflationary impact on prices paid by Canadian consumers to be “upwards of $12 billion.” The products in question (referred to herein as “Amazon Products”), include products sold on Amazon’s platform by the Third Party Sellers, as well as by Amazon itself.
[12] This proceeding is one of three of which the Court is aware that have been initiated in Canada against Amazon in relation to the Alleged Anti-competitive Agreements. The other two were filed before the Ontario Superior Court of Justice (Sweet v Amazon.com, Inc, File No. CV-20-00640850-00CP (the “Ontario Proceeding”) and the Quebec Superior Court (Wells v Amazon.com, Inc, File No. 500-06-001055-207 (the “Quebec Proceeding”), respectively). During the hearing of this Motion, counsel advised that the Ontario Proceeding had been stayed and that a decision on an application for authorization in the Quebec Proceeding was under reserve.
II. The Parties A. The Representative Plaintiffs and the Classes They Represent [13] The plaintiffs assert that three classes of consumers have suffered damages as a result of the Allegedly Anti-competitive Agreements. The representative plaintiff Stephanie Difederico seeks to represent a class of consumers characterized as the “Amazon E-Commerce Class,” which is defined as follows:
All persons or entities in Canada who, from 1 June 2010 to the date this action is certified (the “Class Period”), purchased Amazon Products on Amazon.ca or Amazon.com. Excluded from the Amazon E-Commerce Class are the defendants and their parent companies, subsidiaries, and affiliates.
[Formatting added on defined term.]
[14] The representative plaintiff Jameson Edmond Casey seeks to represent two additional classes of consumers, namely, the “Other E-Commerce Class” and the “Umbrella Class.”
[15] The Other E-Commerce Class is defined as follows:
All persons or entities in Canada (“Canadian Consumers”) who, from 1 June 2010 to the date this action is certified (the “Class Period”), purchased Amazon Products on any website other than Amazon.ca or Amazon.com. Excluded from the Other E-Commerce Class are the defendants and their parent companies, subsidiaries, and affiliates.
[16] The Umbrella Class is characterized in the following terms:
All persons or entities in Canada (“Canadian Consumers”) who, from 1 June 2010 to the date this action is certified (the “Class Period”), purchased products from any website other than Amazon.ca or Amazon.com which products are not Amazon Products. Excluded from the Umbrella Class are the defendants and their parent companies, subsidiaries, and affiliates.
[17] In the fall of last year, Justice Furlanetto of this Court issued a stay of Ms. Difederico’s claims relating to her purchases on the Amazon.ca store, in favour of arbitration: Difederico v Amazon, 2022 FC 1256, aff’d 2023 FCA 165.[2] The implications of that decision for the purposes of this Motion were disputed during the hearing of this Motion. Given the conclusion that I have reached with respect to the failure of the plaintiffs to plead a reasonable cause of action, it is unnecessary for me to address this issue.
B. Amazon [18] The plaintiffs allege that Amazon is the world’s largest online retailer, accounting for almost 50 percent of e-commerce retail purchases in Canada. The plaintiffs further assert that, during the Class Period, Amazon’s sales as the seller of record accounted for between 40 and 66 percent of the sales on its platform. The remaining sales were made by Third Party Sellers, who paid certain fees to Amazon to be able to market and sell their products on its platform. The plaintiffs assert that Amazon and Third Party Sellers are competitors because Amazon sells products as the seller of record that Third Party Sellers themselves also sell, either on Amazon’s platform, on their own e-commerce websites or on other e-commerce platforms.
[19] The plaintiffs add that Amazon and Third Party Sellers are also potential competitors in respect of other products. These products include products that are included within the same broad product categories (for example “Home and Garden”), in which Amazon and the Third Party Sellers already participate. The plaintiffs assert that Amazon regularly monitors the selling data of Third Party Sellers on its platform and then launches products in competition with the products sold by those sellers.
III. Issues [20] Pursuant to Rule 334.16(1), the Court shall certify a class proceeding if the five conditions set out in paragraphs 334.16(1)(a) – (e) are satisfied. The full text of Rule 334.16(1) is reproduced in Annex 1 to these reasons. The following five issues reflect the requisite and conjunctive pre-conditions for certification:
A. Do the pleadings disclose a reasonable cause of action?
B. Is there an identifiable class of two or more persons?
C. Do the claims of the Class Members raise common issues of law or fact?
D. Is a class proceeding the preferable procedure for the just and efficient resolution of the common questions of law or fact?
E. Do the representative plaintiffs meet the requirements of Rule 334.16(1)(e)?
IV. Relevant Legislation [21] The sole cause of action in this proceeding is for recovery of damages under paragraph 36(1)(a) of the Act, as a result of conduct contrary to sections 45 and 46 of that legislation. Subsection 36(1) provides as follows:
Recovery of damages
Recouvrement de dommages-intérêts
36 (1) Any person who has suffered loss or damage as a result of
36 (1) Toute personne qui a subi une perte ou des dommages par suite:
(a) conduct that is contrary to any provision of Part VI, or
a) soit d’un comportement allant à l’encontre d’une disposition de la partie VI;
(b) the failure of any person to comply with an order of the Tribunal or another court under this Act,
b) soit du défaut d’une personne d’obtempérer à une ordonnance rendue par le Tribunal ou un autre tribunal en vertu de la présente loi,
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.
peut, devant tout tribunal compétent, réclamer et recouvrer de la personne qui a eu un tel comportement ou n’a pas obtempéré à l’ordonnance une somme égale au montant de la perte ou des dommages qu’elle est reconnue avoir subis, ainsi que toute somme supplémentaire que le tribunal peut fixer et qui n’excède pas le coût total, pour elle, de toute enquête relativement à l’affaire et des procédures engagées en vertu du présent article.
[22] In brief, subsection 36(1) permits the recovery of loss or damages suffered as a result of (a) conduct that is contrary to any of the provisions in Part VI of the Act (which establishes various criminal offences), or (b) the failure of any person to comply with an order of the Competition Tribunal or another court under the Act. It also permits recovery of costs associated with investigating the matter and then bringing proceedings.
[23] Subsection 45(1) creates an indictable offense for anyone who conspires, agrees or arranges with a competitor to do certain specific things. The provision 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.
[24] The various parts of section 45 that are relevant for the present purposes are reproduced in Annex 2 to these reasons.
[25] Section 46 essentially creates an indictable offence for a corporation carrying on business in Canada to implement a communication from a person outside Canada made for the purpose of giving effect to a foreign conspiracy, combination or agreement that, if entered into in Canada, would have been in contravention of section 45. The person outside Canada must be in a position to direct or influence the policies of the corporation within Canada. An offence is committed whether or not any director or officer of the corporation in Canada has knowledge of the impugned conspiracy, agreement or arrangement. The full text of subsection 46(1) is reproduced in Annex 2.
V. Assessment A. Do the pleadings disclose a reasonable cause of action? (1) General principles [26] The principle objectives of a class proceeding are “to facilitate access to justice, to modify harmful behaviour and to conserve judicial resources”: L’Oratoire Saint-Joseph du Mont-Royal v J.J., 2019 SCC 35 at para 6 [Oratoire]. These objectives must be kept in mind when determining whether a proposed class proceeding meets the requirements for certification: Jensen v Samsung Electronics Co Ltd, 2021 FC 1185 at para 54 [Jensen FC]; aff’d 2023 FCA 89 [Jensen FCA], leave to appeal to SCC requested.
[27] The test for assessing whether the pleadings disclose a reasonable cause of action is the same as the test applicable on a motion to strike, namely, whether “it is plain and obvious, assuming the facts pleaded to be true, that each of the plaintiffs’ pleaded claims disclose no reasonable cause of action”: Atlantic Lottery Corp Inc v Babstock, 2020 SCC 19 at para 14 [Atlantic Lottery]; Jensen FCA, at para 15. In brief, “if a claim has no reasonable prospect of success it should not be allowed to proceed to trial”: Atlantic Lottery, at para 14.
[28] A claim will fail to disclose a reasonable cause of action if it contains a “radical defect,” is “doomed to fail” or is “so clearly improper as to be bereft of any possibility of success”: Atlantic Lottery, at paras 89-90; Wenham v Canada (Attorney General), 2018 FCA 199 at para 33 [Wenham], citing Canada (National Revenue) v JP Morgan Asset Management (Canada) Inc, 2013 FCA 250 at para 47. [Wenham leave to appeal to SCC refused, 39518 (10 June 2021).]
[29] In applying this test, the Court’s task “is not to resolve conflicting facts and evidence and assess the strength of the case”: Wenham, at para 28. The Court’s focus is on the pleadings, not on the evidence: R v Imperial Tobacco Canada Ltd, 2011 SCC 42 at para 23 [Imperial Tobacco]; Jensen FCA, at para 52. Those pleadings must be read generously, holistically, and practically, with a view to “err[ing] on the side of permitting a novel but arguable claim to proceed”: Imperial Tobacco, at para 21; Wenham, at para 34; Mancuso v Canada (National Health and Welfare), 2015 FCA 227 at para 18 [Mancuso], leave to appeal to SCC refused, 36889 (23 June 2016).
[30] Nevertheless, the court has an important screening role to play: Desjardins Financial Services Firm Inc v Asselin, 2020 SCC 30 at para 74; Jensen FCA, at para 49; Mohr v National Hockey League, 2022 FCA 145 at paras 49 and 53 [Mohr FCA], leave to appeal to SCC refused, 40426 (20 April 2023). That role includes assessing whether the pleadings (i) are “sufficient to put the defendant on notice of the essence of the plaintiff’s claim” (Atlantic Lottery, at para 89), (ii) have adequately addressed “the constituent elements of each cause of action”, and (iii) provide enough facts or particulars to ensure that the trial proceedings will be “both manageable and fair”: Mancuso, at paras 18-19. See also Pro-Sys Consultants Ltd v Microsoft Corporation, 2013 SCC 57 at para 104 [Pro-Sys].
[31] Moreover, the presumption of truth that applies to pleaded facts:
“…does not extend to matters which are manifestly incapable of being proven, to matters inconsistent with common sense, vague generalization[s], opinion[s], conjecture[s], bare allegations, bald conclusory legal statements or speculation that is unsupported by material facts.”
Jensen FCA, at para 52(b), endorsing Jensen FC, at paras 81-82. See also Oratoire, at paras 59-60.
[32] In assessing the sufficiency of the pleadings, documents referred to therein, whether through direct quotes, summaries or paraphrases of documents, will be considered to be incorporated by reference and part of the pleadings “if they are central enough to the claim to form an essential element or integral part of the claim itself or its factual matrix”: Jensen FCA, at para 52(c), endorsing Jensen FC, at paras 85 and 87. In this regard:
If the documents referred to in the pleadings do not actually say what the plaintiff alleges they say, or if the plaintiff has ascribed a meaning to those paraphrases and quotes that is not consistent, on a plain reading, with the documents from which they originate, the court cannot consider these allegations as material facts. The certification judge’s task is not to look at these documents in detail to determine whether or not the plaintiff has correctly interpreted them, but can determine whether the references made by the plaintiff accurately reflect what has been expressly stated in the documents: Reasons at paras. 86-87.
Jensen FCA, at para 52(d). See also paragraph 59, where the Federal Court of Appeal endorsed this Court’s more detailed assessment of this issue, at Jensen FC paras 144-146.
[33] Where a cause of action is advanced under section 36 of the Act, the Court will assess the sufficiency of the pleadings with respect to (i) the alleged “loss or damage suffered”, (ii) whether that loss or damage was “as a result of conduct contrary to part VI of the Act”, and (iii) the cost of any investigation alleged to have been incurred in connection with the matter and the proceedings taken under that provision: see paragraphs 21-22 above: Jensen FCA, at para 19; Jensen FC, at paras 93 and 123.
(2) Elements of section 45 of the Act [34] Part VI of the Act establishes various criminal offences. In the present proceeding, the alleged “conduct contrary to … the Act” is conduct described in sections 45 and 46 of the Act. Accordingly, it is incumbent upon the Plaintiffs to plead sufficient material facts with respect to each of the constituent elements of those offences: Jensen FC, at paras 73, 75 and 94, aff’d Jensen FCA, at para 19; Rules 174 and 181.
[35] There are three constituent elements of section 45. These are: (i) a “conspiracy, agreement or arrangement”, (ii) with a “competitor”, (iii) to do one of the things set forth in paragraphs 45(1)(a) – (c), respectively: see paragraph 23 above.
[36] It bears underscoring that if an impugned conspiracy, agreement or arrangement does not contravene section 45, it cannot contravene section 46. This is because an important element of the latter provision is the existence of a conspiracy, agreement or arrangement entered into outside Canada that, if entered into in Canada, would have been in contravention of section 45. It follows that if a Statement of Claim does not disclose a reasonable cause of action under section 45, it will not disclose a reasonable cause of action under section 46.
[37] The words “conspiracy, agreement or arrangement” all “contemplate a mutual arriving at an understanding or agreement” between the alleged parties thereto: R v Armco Canada Ltd et al., 1976 CarswellOnt 771 at para 21, [1977] 13 OR (2d) 32, (ONCA) [Armco OCA], leave to appeal to SCC refused, [1977] 13 OR (2d) 32 (5 April 1976), see also: R v Gage (No 2), 1908 CarswellMan 20 at para 88, 13 CCC 428 (MBCA).[3] Stated differently, those words contemplate a “meeting of the minds” with respect to one or more of the matters described in paragraphs 45(1)(a) – (c): Jensen FCA, at paras 59 and 65-66; Watson v Bank of America Corporation, 2015 BCCA 362 at para 77 [Watson]. Another way of putting this is that there must be a conspiracy, agreement or arrangement to put into effect a common design with respect to one of those matters: The Queen v O’Brien, [1954] SCR 666 at 668-669 and 675 [O’Brien]; see also R v Aluminum Co of Can, 1976 CarswellQue 94 at paras 28-29, 29 CPR (2d) 183, (QCSC) [Aluminum].
[38] Until that “act of agreement” occurs, a mere intention or design on the part of one or more of the parties to the alleged agreement to enter into that agreement will not suffice: O’Brien; Aluminum; R v Armco Canada Ltd, [1974] OJ No 2200 at para 148, 6 OR (2d) 52, (ONHCJ) [R v Armco], aff’d Armco OCA; R v Abitibi Power & Paper Co, [1960] QJ No.7 at para 22, 131 CCC 201 (QCQB) [Abitibi].
[39] It is not necessary for a plaintiff to establish that there were any acts in furtherance of the agreement: Container Materials Ltd v The King, [1942] SCR 147 at 159 [Container Materials]; Abitibi, at para 22. An offence is committed once parties enter into an agreement proscribed by section 45, even if the agreement is not put into effect: O’Brien, at 669. Indeed, an offence is also committed even if “the agreement could not have been successfully carried into execution”: Howard Smith Paper Mills Ltd et al v The Queen, [1957] SCR 403 at 412 [Howard Smith]. In brief, “[t]he crime is in the conspiracy,” not in the acts that it contemplates: Howard Smith, at 413, quoting R v Elliott, [1905] 9 OLR, 648 at 651, 9 CCC 505 (ONHCJ), aff’d 9 CCC 505 (ONCA). Stated differently, the agreement itself is the “gist” of the offence: Atlantic Sugar Refineries Co Ltd et al v Attorney General of Canada, [1980] 2 SCR 644 at 674 [Atlantic Sugar], quoting Paradis v The King, [1934] SCR 165 at 168; see also Abitibi, at para 24. However, acts in furtherance may give rise to an inference that the alleged agreement was entered into and can provide evidence of the object(s) of the agreement: Container Materials; Jensen FC, at para 103; Regina v Northern Electric Co Ltd et al, [1955] OR 431 at 453, 456 and 469, 111 CCC 241,(Ont SC); see also subsection 45(3).
[40] It follows from the foregoing that to properly plead the requisite “act of agreement”, or actus reus, a plaintiff should provide material facts with respect to either (i) two way communications concerning one or more of the matters described in paragraphs 45(1)(a) – (c), or (ii) a communication from one party followed by a course of conduct from which a meeting of the minds or a concerted purpose can be inferred: Jensen FC, at para 98.
[41] Under the current wording of section 45, it is not necessary to plead any anti-competitive effects to meet the requirements of that provision: see the discussion at paragraphs 95-96 below. As a result of the 2010 amendments to s. 45, such effects are now relevant only to damages. They are no longer relevant to liability, unless they provide evidence of an impugned agreement.[4]
[42] In brief, section 45 is concerned with the objects or purposes of the impugned agreement, rather than with its effects: Container Materials; Mohr FCA, at para 38; Abitibi, at paras 119 and 126; R v Armco, at paras 148 and 164. See also R v Nova Scotia Pharmaceutical Society, [1992] 2 SCR 606 at 655 [PANS].[5]
[43] To properly plead the requisite mens rea, it is incumbent upon a plaintiff to provide sufficient material facts with respect to (i) a subjective intention to enter into the agreement and knowledge of its terms, and (ii) an objective intention to do one or more of the things described in paragraphs 45(1)(a)-(c): PANS, at 659-660; Watson, at paras 72-76; Shah v LG Chem Ltd, 2018 ONCA 819 at para 50 [Shah], leave to appeal to SCC refused, 38440 (17 October 2019). However, at the certification stage, it may suffice for a plaintiff to allege that the impugned agreement was entered into knowingly and voluntarily, so long as the pleadings also provide sufficient material facts from which the requisite objective intention may be inferred: Watson, at paras 100-102.
[44] The term “competitor” is defined in subsection 45(8) to include “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,” regarding one or more of the matters described in paragraphs 45(1) (a) to (c). Given that each of the latter paragraphs use the term “the product”, it is readily apparent that the referenced product in question is the product referred to in the “chapeau” or opening words of subsection 45(1). That is the product in respect of which the parties to the alleged agreement compete: Mohr National Hockey League, 2021 FC 488 at paras 35 and 42 [Mohr FC]. Consequently, plaintiffs who allege an agreement contrary to section 45 must plead sufficient material facts with respect to competition between the parties to the impugned agreement, in relation to that product.
(3) Analysis of the MFN Clause in S-4 (a) Introduction [45] As noted at paragraphs 8 and 9 above, the first of the two Allegedly Anti-Competitive Agreements is S-4 in the BSA, which includes the MFN Clause.
[46] The BSA sets out the terms on which Third Party Sellers obtain services from Amazon, including the service of selling on Amazon, in order to offer their products on Amazon’s platform. [6] It also covers services provided by Amazon, including optional storage, fulfillment services for third-party sellers’ products, and advertising.
[47] Third Party Sellers agree to be bound by the BSA by virtue of registering for, or using, the services made available by Amazon on its platform.
[48] There were three versions of S-4 in effect between approximately June 1, 2020 and March 8, 2019.
[49] The initial version was in effect between approximately April 15, 2010 and July 13, 2010. The part of that provision that is in dispute stated as follows:
S-4 Parity with Your Sales Channels.
a. Subject to this Section S-4, you are free to determine the products you list for sale on the Amazon Site and the prices at which you sell [those] products [on various sales channels]. However, we are asking sellers who choose to sell products on the Amazon Site not to charge customers higher prices on the Amazon Site than they charge customers elsewhere. Accordingly[, effective [________]], you must maintain parity between the terms on which you offer or sell each of Your Products on or through the Amazon Site and the terms on which you or your affiliates offer or sell each of those products on or through any Non-Physical Sales Channel, as follows:
b. Price Terms. You will ensure that: (a) the Total Price of each of Your Products on the Amazon Site does not exceed the lowest Total Price for that product offered or sold by you or your affiliates on or through any Non-Physical Sales Channel; and (b) for any of Your Products that are not [fulfilled by us], the Item Price component of the Total Price for that product on the Amazon Site does not exceed the Item Price component of the lowest Total Price for that product offered or sold by you or your affiliates on or through any Non-Physical Sales Channel.
…[Emphasis added.]
[50] The second version of S-4 was in effect between approximately July 13, 2010 and April 30, 2014. The part of that provision that is in dispute stated as follows:
S-4 Parity with Your Sales Channels.
Subject to this Section S-4, you are free to determine which of Your Products you wish to list for sale on the Amazon Site. You will maintain parity between the products you offer through Your Sales Channels and the products you list on the Amazon Site by ensuring that at the Selling on Amazon Launch Date and thereafter: (a) the Purchase Price and every other term of offer and/or sale of Your Product (including associated shipping and handling charges, Shipment Information, any "low price" guarantee, rebate or discount, any free or discounted products or other benefit available as a result of purchasing one or more other products, and terms of applicable return and refund policies) is at least as favorable to Amazon users as the most favorable terms upon which a product is offered and/or sold via Your Sales Channels (excluding consideration of Excluded Offers);
…[Emphasis added.]
[51] The third version of S-4 was in effect between approximately April 30, 2014 and March 8, 2019. The part of that provision that is in dispute stated as follows:
S-4 Parity with Your Sales Channels.
Subject to this Section S-4, you are free to determine which of Your Products you wish to offer on a particular Amazon Site. You will maintain parity between the products you offer through Your Sales Channels and the products you list on any Amazon Site by ensuring that : (a) the Purchase Price and every other term of offer or sale of Your Product (including associated shipping and handling charges, Shipment Information, any "low price" guarantee, rebate or discount, any free or discounted products or other benefit available as a result of purchasing one or more other products, and terms of applicable cancellation, return and refund policies) is at least as favorable to Amazon Site users as the most favorable terms upon which a product is offered or sold via Your Sales Channels (excluding consideration of Excluded Offers);
…[Emphasis added.]
[52] The second and third versions of S-4 included similar language to address the situation where shipping and handling charges associated with the sale and delivery of the Third Party Seller’s product were included in the listed purchase price.
[53] In assessing whether the plaintiffs’ Statement of Claim discloses a reasonable cause of action with respect to section 45 (and by implication 46) of the Act and the three versions of S-4 described above, it is necessary to assess each of the three principal elements of s. 45. These are the requirements that there be: (i) a “conspiracy, agreement or arrangement”, (ii) with a “competitor”, (iii) to do one of the things set forth in paragraphs 45(1)(a) – (c), respectively: see paragraphs 34-36 above. These will be discussed immediately below.
(b) The “agreement” [54] At paragraph 46 of the Statement of Claim, the plaintiffs allege that when a Third Party Seller registers with Amazon, it agrees to the terms of the BSA. This is confirmed by the following language that appears at the beginning of the BSA:
BY REGISTERING FOR OR USING THE SERVICE(S), YOU (ON BEHALF OF YOURSELF OR THE BUSINESS YOU REPRESENT) AGREE TO BE BOUND BY THE TERMS OF THIS AGREEMENT, INCLUDING THE SERVICE TERMS AND PROGRAM POLICIES THAT APPLY IN THE COUNTRY FOR WHICH YOU REGISTER…
[55] At paragraph 49 of the Statement of Claim, the plaintiffs add that this agreement between Amazon and each Third Party Seller who sells on Amazon’s platform is express and in writing.
[56] I agree. Having regard to the foregoing, I find that the plaintiffs have pled sufficient material facts to support their allegation that Amazon entered into an “agreement” with each Third Party Seller selling on its platform. That is to say, the plaintiffs have pled sufficient material facts with respect to the “express act of agreeing”, the intention to enter into the BSA and the requisite meeting of the minds to agree to the terms of the BSA, including S-4 and the MFN Clause. Amazon does not suggest otherwise. Indeed, during oral submissions, it acknowledged that the BSA constitutes an agreement between it and Third Party Sellers who register to use its services. However, Amazon maintains that S-4 is not a type of agreement contemplated by section 45, and that the plaintiffs have failed to adequately plead the mens rea of Amazon and the Third Party Sellers. Those submissions will be addressed further below.
[57] Beyond the individual agreements alleged to have been entered into between Amazon and each Third Party Seller, the plaintiffs allege an agreement among Third Party Sellers. This agreement is claimed to have been reached “by their jointly agreeing with each other through their common agreement with Amazon to limit price competition for Amazon Products on Amazon websites in accordance with the MFN”: Statement of Claim, paragraph 50.
[58] The Defendants respond that this alleged agreement among Third Party Sellers is not supported by any material facts and is contradicted by the text of the BSA. More specifically, they state that the Statement of Claim does not describe any “meeting of the minds” among Third Party Sellers, whether by two-way communications or by other facts from which some type of communication between Third Party Sellers could be inferred.
[59] I agree. The plaintiffs’ allegation of a collective agreement among Third Party Sellers is bald, and is not supported by any material facts or particulars whatsoever. It is far from sufficient for the purposes of this Motion: Jensen FCA, at para 65.
[60] Moreover, on its face, the “agreement” contemplated by each BSA is a single agreement between Amazon and each individual Third Party Seller. This is clear from the following sentence that appears immediately following the passage quoted at paragraph 54 above:
As used in this Agreement, "we," "us," and "Amazon" means the Amazon Contracting Party or any of its affiliates, and "you" means the applicant (if registering as an individual), or the business employing the applicant (if registering as a business).
[Emphasis added.]
[61] In support of their allegation of an agreement among Third Party Sellers, the plaintiffs rely on Sainsbury’s Supermarkets Ltd v Visa Europe Services LLC & Ors, [2020] UKSC 24 at para 93 [Sainsbury’s], where the agreement in question was characterized as “a collective agreement between undertakings.” Those undertakings were banks that had entered into agreements to provide Visa or Mastercard services to merchants: Sainsbury’s, at para 52. However, that case is distinguishable. This is because the banks agreed upon specific “multilateral interchange fees” (“MIFs”) to be paid by merchants, unless the merchant entered into a bilateral agreement with its bank. In contrast to the evidence of bilateral agreements between Amazon and Third Party Sellers in the present proceeding, the evidence in Sainsbury’s was that no such bilateral agreements had been entered into: Sainsbury’s, at paras 43-44. Moreover, it appears that there was no dispute that the agreement with respect to MIFs was an agreement between the banks: Sainsbury’s, at para 42. I will simply add in passing that the explicit focus of that case was on the effects of the impugned MIF agreements, rather than upon the object of those agreements: Sainsbury’s, at paras 42, 88, 90 and 99. As discussed at paragraphs 41-42 above, the prohibitions contained in subsection 45(1) of the Act focus solely on the object of the proscribed conspiracies, agreements or arrangements. Once the illegal object is established, anti-competitive effects are presumed: Mohr FCA, at paras 2 and 38.
[62] In summary, for the reasons set forth above, I find that the plaintiffs have pled sufficient material facts to support their allegation that Amazon entered into an “agreement” with each Third Party Seller selling on its platform. However, they have not pled sufficient material facts to support their allegation that the Third Party Sellers entered into a separate, collective, agreement among themselves.
(c) Among “competitors” [63] The plaintiffs allege that Amazon and Third Party Sellers are direct competitors with respect to the supply or production and supply of Amazon Products, both on the Amazon platform and beyond that platform. In this regard, the plaintiffs allege that Amazon supplies various products, as the seller of record, that Third Party Sellers also supply, either on Amazon’s platform, or on their own e-commerce websites, or on other e-commerce platforms. These products allegedly include “more than 80 private-label brands across its product categories”: Statement of Claim, paragraph 32. The plaintiffs add that, from 2010 to the present, Amazon’s sales as the seller of record have accounted for between approximately 40 and 66 percent of the sales on the Amazon platform. They further claim that Amazon and Third Party sellers directly or potentially compete in the sale of Amazon Products in each of the 23 product categories displayed on Amazon.ca and in each of the 25 categories displayed on Amazon.com.
[64] In support of these allegations, the plaintiffs state that Jeff Bezos (at the relevant time CEO of Amazon),[7] agreed that Amazon competes with third-party sellers on and off Amazon’s platforms. The Plaintiffs claim that Mr. Bezos acknowledged this in his testimony before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on July 29, 2020.
[65] Amazon acknowledges that it may be a competitor of some Third Party Sellers when it sells products as a seller of record. However, it maintains that S-4 and the Fair Pricing Policy are not horizontal agreements between competitors. Instead, Amazon states that the agreements it enters into with Third Party Sellers are vertical agreements, because they are made in Amazon’s capacity as an online store operator. In support of this position, Amazon states that, as the operator of its stores, it unilaterally sets the terms of the BSA, including S-4. Amazon adds that S-4 governs the m