Rakuten Kobo Inc. v. Canada (Commissioner of Competition)

Rakuten Kobo Inc. v. Canada (Commissioner of Competition)
Court (s) Database
Federal Court Decisions
Date
2018-02-01
Neutral citation
2018 FC 64
File numbers
T-219-17
Notes
A correction was made on November 1, 2018.
Reported Decision
Decision Content
Date: 20180201
Docket: T-219-17
Citation: 2018 FC 64
Ottawa, Ontario, February 1, 2018
PRESENT: THE CHIEF JUSTICE
BETWEEN:
RAKUTEN KOBO INC.
Applicant
and
THE COMMISSIONER OF COMPETITION, HACHETTE BOOK GROUP CANADA LTD., HACHETTE BOOK GROUP, INC., HACHETTE DIGITAL, INC., HOLTZBRINCK PUBLISHERS, LLC AND SIMON & SCHUSTER CANADA, A DIVISION OF CBS CANADA HOLDINGS CO.
Respondents
PUBLIC JUDGMENT AND REASONS
I. Introduction
[1] In this Application, Rakuten Kobo Inc. [Kobo] seeks various types of relief in relation to three consent agreements [CAs] that the Commissioner of Competition entered into with the other Respondents identified in the style of cause above [the Respondent Publishers] and filed with the Competition Tribunal in January 2017. Among other things, Kobo has requested a declaration that the CAs are unlawful and invalid, and an order quashing them.
[2] In support of its Application, Kobo asserts three jurisdictional grounds of review. First, it submits that the Commissioner acted without jurisdiction by entering into the CAs to remedy a conspiracy that was entered into in the U.S., not in Canada, and that was resolved by U.S. Courts and antitrust enforcers in 2012–2013. Second, Kobo asserts that the Commissioner acted without jurisdiction by entering into the CAs to remedy “an arrangement” that never existed. Third, Kobo maintains that, if such arrangement did once exist, it was no longer “existing or proposed,” as required by s. 90.1 of the Competition Act, RSC 1985, c C-34 [the Act], at the time the CAs were entered into.
[3] The Commissioner opposes Kobo’s jurisdiction challenges and further submits that this Court should decline to consider this Application because Kobo has an adequate alternative remedy under subs. 106(2) of the Act. That provision permits third parties who are directly affected by a consent agreement to apply to the Competition Tribunal [the Tribunal] to have one or more of the agreement’s terms rescinded or varied. The Commissioner maintains that Kobo should not be permitted to use the Court’s judicial review process to defeat Parliament’s clear choice to create a limited right of review of consent agreements based on grounds that a third party may raise.
[4] For the reasons that follow, this Application will be denied.
II. The Parties
[5] Kobo is a retailer of electronic books [E-books]. It is based in Toronto, Ontario, and has agreements with authors, publishers, and distributors that grant it rights to sell E-books in Canada.
[6] The Commissioner is a statutory authority who is responsible for the administration and enforcement of the Act. In carrying out those responsibilities, the Commissioner is supported by staff in the Competition Bureau.
[7] The Respondent Publishers are three of the five major publishers of general interest fiction and non-fiction E-books and hard copy books.
III. The CAs
[8] The Commissioner entered into separate, and virtually identical, CAs with each of (i) Hachette Book Group Canada Ltd and the two related Hachette affiliates identified above [collectively, Hachette], (ii) Holtzbrinck Publishers, LLC (doing business as Macmillan) [Macmillan], and (iii) Simon & Schuster Canada, a division of CBS Canada Holdings Co. [Simon & Schuster].
[9] Broadly speaking, the CAs address restrictions on price competition in the sale of E‑books in Canada that the Commissioner asserts resulted from a change by the Respondent Publishers from a wholesale distribution model to an agency distribution model.
[10] Pursuant to the wholesale model, the Respondent Publishers set a suggested retail price for E-books, and were paid a pre-determined percentage (typically 50%) of that suggested price for each book sold, regardless of the price actually charged to the consumer by the retailer. By contrast, under the agency model, retailers were appointed as the non-exclusive agent for the marketing and delivery of E-books on behalf of the publishers, who set the price at which the books must be sold. Retailers are then paid a commission (typically 30%) for each book sold.
[11] The recitals in each of the CAs state that the Commissioner has concluded that the Respondent Publisher in question implemented in Canada an arrangement that was entered into in the United States with at least one other competing publisher, relating to the sale of E‑books in both of those countries [the Arrangement]. Those recitals also state that the Commissioner has concluded that the Arrangement includes provisions that restrict the ability of E-book retailers to discount the retail prices of E-books; and that the Arrangement prevents or lessens, or is likely to prevent or lessen, competition substantially in the retail market for E-books in Canada, within the meaning of s. 90.1 of the Act.
[12] To address those alleged anticompetitive effects of the collective shift to agency agreements, the CAs prohibit the Respondent Publishers from directly or indirectly restricting, limiting or impeding an E-book retailer’s ability to set, alter or reduce the retail price of any E‑book for sale to consumers in Canada, or to offer price discounts or any other form of promotion to encourage consumers in Canada to purchase one or more E-books. The CAs also prohibit the Respondent Publishers from entering into an agreement with any E-book retailer that has one of those effects. These prohibitions apply for nine (9) months, commencing no later than 120 days following the registration of the CAs. During the hearing of this Application, the Commissioner described these prohibitions as being the “centrepiece” of the CAs, and as having been designed to “ignite the flames of competition” in the E-book market in Canada. Kobo and other industry participants refer to these prohibitions as creating an “Agency Lite” model of distribution.
[13] Certain other terms in the CAs prohibit the Respondent Publishers from entering into agreements with E-book retailers relating to the sale of E-books to consumers in Canada that contain particular types of most-favoured nation clauses [Price MFN Clauses] for a period of three (3) years from the date of the registration of the CA.
[14] In addition, the CAs require the Respondent Publishers to take steps to terminate, and not renew or extend, existing agreements with E-book retailers that restrict price discounting or contain a Price MFN Clause. In lieu of such action, the CAs permit the Respondent Publishers to take certain alternative steps to address the Commissioner’s concerns.
[15] In March of 2017, I issued an Order, on consent, staying the implementation of the CAs until the fifth business day following this Court’s determination of this Application (Rakuten Kobo Inc v Canada (Commissioner of Competition), 2017 FC 382, at para 8 [Kobo 2017]).
[16] Kobo asserts that if the CAs are implemented, it will suffer significant financial harm, as its contractual relationships with the Respondent Publishers will be radically altered. In response, the Commissioner maintains that Kobo simply wishes to avoid competing by cutting its retail prices.
IV. Background
[17] The prohibitions in the CAs are essentially the same as the prohibitions that were contained in an earlier single consent agreement that the Commissioner entered into with the Respondent Publishers and HarperCollins Canada Limited [HarperCollins] in 2014 [the Initial CA], except that they are now of shorter duration. Those prohibitions are also similar to prohibitions that were contained in final judgments that were issued in the United States in 2012.
[18] The Initial CA was rescinded by the Tribunal after it was found to have been deficient in certain respects (Rakuten Kobo Inc v The Commissioner of Competition, 2016 Comp Trib 11 [Kobo 2016]). On their face, the CAs address those deficiencies.
[19] The Tribunal’s rescission of the Initial CA was without prejudice to the ability of the Commissioner to enter into a new consent agreement with the publishers in question, based on conclusions he may reach regarding the elements of the reviewable conduct under subs. 90.1(1) of the Act.
[20] While HarperCollins was a party to the Initial CA, it apparently declined to enter into a revised consent agreement. As a consequence, the Commissioner filed a contested application before the Tribunal against HarperCollins. HarperCollins then filed a Motion for Summary Dismissal of that application, on the basis of the first and third of the three jurisdictional grounds that Kobo has raised in this Application.
[21] In Kobo 2017, above, I stayed the hearing of this Application until the Tribunal had issued its decision on HarperCollins’ above-mentioned Motion. I did so after concluding that it was preferable for the Court to have the benefit of the Tribunal’s determinations regarding the jurisdictional issues that have been raised in both proceedings before addressing those issues itself (Kobo 2017, above, at para 39).
[22] A short while later, in a decision written by Justice Gascon, the Tribunal dismissed HarperCollins’ motion, after concluding that it was not plain and obvious that (i) the Tribunal did not have jurisdiction to grant the relief sought by the Commissioner in respect of the Arrangement; and (ii) the Arrangement is no longer “existing or proposed” (The Commissioner of Competition v HarperCollins Publishers LLC and HarperCollins Canada Limited, 2017 Comp Trib 10 [HarperCollins]). Subsequently, HarperCollins entered into a separate consent agreement with the Commissioner and filed a Notice of Discontinuance in relation to its appeal of Justice Gascon’s decision. This separate consent agreement has not been challenged by Kobo in this Application.
[23] Whereas HarperCollins submitted that it is the Tribunal that lacks jurisdiction to grant the relief requested by the Commissioner in the contested application that he filed against HarperCollins, Kobo asserts that it is the Commissioner who lacks the jurisdiction to enter into the CAs. Nothing turns on this, as I consider that the Commissioner’s jurisdiction under s. 90.1 is co-extensive with the Tribunal’s jurisdiction, such that if the Tribunal has no jurisdiction in respect of particular conduct, neither does the Commissioner (Kobo 2017, above, at para 41).
[24] At the time the three CAs were filed with the Tribunal, the Commissioner also filed a fourth consent agreement that he had entered into with Apple Inc. and Apple Canada Inc. [collectively, Apple]. That consent agreement has not been challenged by Kobo and therefore will not be further discussed in these reasons for judgment.
[25] Although Kobo succeeded in persuading the Tribunal to rescind the Initial CA, it was less successful in a prior reference proceeding that concerned the scope of issues that may be raised by a third party who challenges a consent agreement under subs. 106(2) of the Act (Kobo Inc v The Commissioner of Competition, 2014 Comp Trib 14 [Kobo 2014]). In particular, the Tribunal found that it was not open to Kobo to attempt to establish, whether by factual evidence or otherwise, that one or more of the substantive elements set forth in s. 90.1 of the Act are not met. This specifically included whether there is an agreement or arrangement – whether existing or proposed – between persons, two or more of whom are competitors. The Tribunal held that disputes with respect to these and other substantive elements, such as whether an agreement is likely to prevent or lessen competition substantially, are beyond the scope of subs. 106(2). That decision was upheld by the Federal Court of Appeal in Rakuten Kobo Inc v Canada (Commissioner of Competition), 2015 FCA 149, leave to appeal to SCC refused, 36554 (14 January 2016) [Kobo FCA].
[26] Notwithstanding that the Tribunal rejected Kobo’s position regarding the scope of issues that may be raised by third parties in proceedings initiated under subs. 106(2) of the Act, the Tribunal observed that “it would be potentially open to a party to raise [issues] before the Federal Court on an application for judicial review brought pursuant to s. 18.1 of the Federal Courts Act, R.S.C. 1985, c. F-7 …” (Kobo 2014, above, at para 73 (citations omitted)). A similar observation was also made by the Federal Court of Appeal (Kobo FCA, above, at para 10).
V. Relevant Legislation
[27] Section 105 of the Act provides for the entering into consent agreements and the registration of those agreements by the Tribunal. It states:
105. (1) The Commissioner and a person in respect of whom the Commissioner has applied or may apply for an order under this Part, other than an interim order under section 103.3, may sign a consent agreement.
105. (1) Le commissaire et la personne à l’égard de laquelle il a demandé ou peut demander une ordonnance en vertu de la présente partie — exception faite de l’ordonnance provisoire prévue à l’article 103.3 — peuvent signer un consentement.
(2) The consent agreement shall be based on terms that could be the subject of an order of the Tribunal against that person.
(2) Le consentement porte sur le contenu de toute ordonnance qui pourrait éventuellement être rendue contre la personne en question par le Tribunal.
(3) The consent agreement may be filed with the Tribunal for immediate registration.
(3) Le consentement est déposé auprès du Tribunal qui est tenu de l’enregistrer immédiatement.
(4) Upon registration of the consent agreement, the proceedings, if any, are terminated, and the consent agreement has the same force and effect, and proceedings may be taken, as if it were an order of the Tribunal.
(4) Une fois enregistré, le consentement met fin aux procédures qui ont pu être engagées, et il a la même valeur et produit les mêmes effets qu’une ordonnance du Tribunal, notamment quant à l’engagement des procédures.
[28] Pursuant to subs. 106(2), third parties may apply to the Tribunal to vary or rescind a consent agreement. That provision states:
(2) A person directly affected by a consent agreement, other than a party to that agreement, may apply to the Tribunal within 60 days after the registration of the agreement to have one or more of its terms rescinded or varied. The Tribunal may grant the application if it finds that the person has established that the terms could not be the subject of an order of the Tribunal.
(2) Toute personne directement touchée par le consentement — à l’exclusion d’une partie à celui-ci — peut, dans les soixante jours suivant l’enregistrement, demander au Tribunal d’en annuler ou d’en modifier une ou plusieurs modalités. Le Tribunal peut accueillir la demande s’il conclut que la personne a établi que les modalités ne pourraient faire l’objet d’une ordonnance du Tribunal.
[29] Section 90.1 gives the Tribunal the jurisdiction to issue two types of orders in respect of certain agreements or arrangements between competitors. That provision states:
90.1 (1) If, on application by the Commissioner, the Tribunal finds that an agreement or arrangement — whether existing or proposed — between persons two or more of whom are competitors prevents or lessens, or is likely to prevent or lessen, competition substantially in a market, the Tribunal may make an order
90.1 (1) Dans le cas où, à la suite d’une demande du commissaire, il conclut qu’un accord ou un arrangement — conclu ou proposé — entre des personnes dont au moins deux sont des concurrents empêche ou diminue sensiblement la concurrence dans un marché, ou aura vraisemblablement cet effet, le Tribunal peut rendre une ordonnance :
(a) prohibiting any person — whether or not a party to the agreement or arrangement — from doing anything under the agreement or arrangement; or
a) interdisant à toute personne — qu’elle soit ou non partie à l’accord ou à l’arrangement — d’accomplir tout acte au titre de l’accord ou de l’arrangement;
(b) requiring any person — whether or not a party to the agreement or arrangement — with the consent of that person and the Commissioner, to take any other action.
b) enjoignant à toute personne — qu’elle soit ou non partie à l’accord ou à l’arrangement — de prendre toute autre mesure, si le commissaire et elle y consentent.
VI. Preliminary Issue
[30] The Commissioner submits that this Court should decline to consider this Application because Kobo has an adequate alternative remedy and forum under subs. 106(2) of the Act. The Commissioner maintains that Kobo should not be permitted to use the Court’s judicial review process to do an “end run” around the limited right of review of consent agreements that Parliament created for the Tribunal on applications brought by third parties in subs. 106(2) of the Act.
[31] I agree. However, I do so primarily for reasons other than the adequacy of the remedies available to Kobo under that provision.
[32] In Strickland v Canada (Attorney General), 2015 SCC 37 [Strickland], the Supreme Court of Canada recalibrated the framework applicable to a court’s determination of whether to exercise discretion to hear an application for judicial review. That decision was issued shortly after the Federal Court of Appeal agreed with the Tribunal’s observation that judicial review would be potentially available to third parties such as Kobo who may seek to challenge a consent agreement filed by the Commissioner (Kobo FCA, above).
[33] The central issue in Strickland was whether the Federal Court erred in exercising its discretion to decline to hear an application for a declaration that the Federal Child Support Guidelines, SOR/97-175, are unlawful. In reaching that conclusion, Justice Gleason (as she then was) emphasized the minor role played by this Court in issues under the Divorce Act, RSC, 1985, c 3 (2nd Supp), and the broader jurisdiction and expertise of the provincial superior courts in matters related to divorce and child support.
[34] In its assessment of the issue, the Supreme Court identified a number of considerations that are relevant to a court’s determination of whether to exercise its discretion to refuse to hear a judicial review application. Those considerations are:
i. The purposes and policy considerations underpinning the legislative scheme in issue;
ii. The nature of the other forum which could deal with the issue, including its remedial capacity;
iii. The relative expertise of the alternative decision-maker;
iv. The nature of the error alleged;
v. The existence of adequate and effective recourse in the forum in which litigation is already taking place;
vi. Expeditiousness;
vii. The convenience of the alternative remedy;
viii. The economic use of judicial resources; and
ix. Cost.
(Strickland, above, at para 42)
[35] The Court emphasized that the categories of relevant factors are not limited, and that it is for the courts to identify and balance the relevant factors in the context of a particular case. Elaborating, the Court stated:
The court should consider not only the available alternative, but also the suitability and appropriateness of judicial review in the circumstances. In short, the question is not simply whether some other remedy is adequate, but also whether judicial review is appropriate. Ultimately, this calls for a type of balance of convenience analysis.
(Strickland, above, at para 43)
[36] In the result, the Court relied upon considerations that were “appropriately concerned more with the unsuitability of judicial review in the Federal Court in this case than with the narrower question of whether a remedy comparable to that sought by the appellants is available elsewhere” (Strickland, above, at para 46). In this regard, the Court found that the appellants’ judicial review proceedings in the Federal Court were “deeply inconsistent with fundamental parliamentary choices about where important family law issues will be determined” (Strickland, above, at para 51).
[37] A similar result was reached in the subsequent case of 797175 Alberta Ltd v Calgary (City), 2017 ABQB 18 [797175]. There, the issue was whether the Court should hear an application for judicial review of a decision of the Calgary Composite Assessment Review Board regarding a property assessment. The parties were in agreement that the application concerned issues of fact and mixed fact and law which were not appealable under the relevant section of the Municipal Government Act, RSA 2000, c M-26. In deciding to dismiss the application without assessing those issues, the Court held as follows:
[35] There are strong policy reasons for the Court to not usurp the intention of the legislature by reviewing the factual merits of assessment board decisions. Section 470 provides an important gate-keeping function by regulating access to the appeal process, partly for reasons of efficiency and judicial economy. The City and the Board emphasize this represents a real "flood-gates" concern because of: the number of assessment complaint hearings each year; the substantial volume of evidence and materials that are often filed in these hearings; and, since tax-payers can challenge assessments for each and every year.
[36] Having regard to the foregoing, the discretion of the Court should be exercised against the granting of judicial review where the questions raised are those of fact or mixed fact and law, except in extraordinary circumstances, which were not argued in this instance and are not before this Court.
[37] In my view, the right to constitutionally protected review of administrative decision-making is discretionary and is not absolute and must be balanced against important legislative and policy considerations, as was set out in Strickland.
[38] In reaching the foregoing conclusion, the Court was guided by the following comments of the Alberta Court of Appeal in Real Estate Council of Alberta v Henderson, 2007 ABCA 303 [Henderson]:
[26] […] Judicial review should not generally be used as an end run around statutory restrictions on appeal rights. Thus, we would be disinclined to grant judicial review even if it appeared to us that the conclusion reached by the hearing panel was wrong if its decision was made in the course of a process that had been conducted according to law. Otherwise, an application for judicial review could be used to do indirectly what cannot be directly done – obtain an appeal not intended by the Legislature. […]
[39] In my view, the reasoning adopted in Strickland, 797175 and Henderson leads to a similar result in the case at bar. Stated differently, an assessment of the factors that were identified and given particular emphasis in those cases leads to the conclusion that I should exercise my discretion to decline to consider the present Application on its merits.
[40] Based on the particular circumstances surrounding this Application, the most relevant of the factors identified in Strickland are the first three in the list set forth at paragraph 34 above. However, I will briefly assess all of the factors in that list below. The parties did not identify additional factors that warrant consideration. In my view, one such factor could be said to be the Commissioner’s broad discretion to settle matters by way of consent agreements (Kobo 2014, above, at paras 3, 32 and 95). I consider that this factor can be taken into account in an assessment of the purpose and objectives underpinning ss. 105 and 106 of the Act.
i. The purposes and policy considerations underpinning the legislative scheme in issue
[41] This factor was exhaustively canvassed in Kobo 2014, above, at paras 35-79. For the present purposes, the most relevant information is set forth in the following passages:
[50] It is common ground between the parties that the “mischief” which Parliament sought to address in 2002 in establishing the consent agreement process that is now enshrined in sections 105 and 106 included the significant cost, delay and uncertainty associated with the former consent order process. Those problems arose primarily because that process “created too many incentives, too many ways for third parties to get involved and to lengthen the process …” (Kobo’s oral submissions, Transcript, at pp. 101-2, and 166).
[51] It is not disputed that these problems deterred businesses from participating in the consent order process, led to a practice of negotiating “undertakings” with the Commissioner that may not have been enforceable, and gave rise to a widespread consensus that the consent order process was “broken and needed to be fixed.”
[…]
[70] In my view, it is very clear from the legislative history, including Mr. von Finckenstein’s testimony, that Parliament did not intend to confer upon the Tribunal the jurisdiction to hear and adjudicate upon factual disputes with respect to the basis for the conclusions reached by the Commissioner regarding either the substantive elements of reviewable trade practices, or the defences and exceptions set forth in the Act in respect of those trade practices.
[71] As Kobo recognizes, the 2002 amendments to sections 105 and 106 were designed to, among other things, streamline the settlement process and make it faster and more predictable (Rona Inc. v Commissioner of Competition, 2005 Comp. Trib. 18, at para 77).
[…]
[74] The effect of the two amendments proposed by Mr. von Finckenstein, and accepted by the Committee, was to remove the ability of the Commissioner to include in consent agreements terms that could not be imposed by the Tribunal, and to add a very limited ability for third parties to apply to the Tribunal to have one or more terms of the agreement rescinded or varied. The Tribunal’s jurisdiction under subsection 106(2) to grant the application was confined to circumstances where the applicant “has established that the terms could not be the subject of an order of the Tribunal.”
[75] The best evidence of what was meant by the latter language is Mr. von Finckenstein’s testimony, as it was he who proposed that language, and indeed the initially proposed text of sections 105 and 106, when Bill C-23 was introduced at First Reading.
[76] In my view, it is clear from that testimony of Mr. von Finckenstein that the words “has established that the terms could not be the subject of an order of the Tribunal” were intended to mean “has established that the terms of the consent agreement are not within the scope of the type of order(s) that the Tribunal is permitted to issue in respect of the reviewable trade practice in question.” In other words, when Parliament enacted Mr. von Finckenstein’s proposals word for word after hearing his very specific testimony, it appears to have simply intended that terms which are not within the purview of one or more specific types of orders in respect of a particular reviewable trade practice can not be the subject of an order of Tribunal, within the meaning of subsection 106(2). In my view, the legislative record does not support the more expansive interpretation of that provision that has been advanced by Kobo.
(Emphasis in original.)
[42] In summary, the purposes and policy considerations underpinning the consent agreement scheme that is now included in ss. 105 and 106 of the Act were to “streamline the settlement process and make it faster and more predictable.” This was achieved by eliminating the Tribunal’s prior ability to hear and adjudicate upon factual disputes raised by third parties such as those that are at the root of the second and third “jurisdictional” challenges that have been raised by Kobo in the present Application. Parliament ultimately decided to confine the rights of third parties to solely raising issues with respect to whether the terms of a consent agreement “are not within the scope of the type of order(s) that the Tribunal is permitted to issue in respect of the reviewable trade practice in question.”
[43] In my view, the foregoing purposes and policy considerations weigh strongly in favour of declining to hear the present Application.
ii. The nature of the other forum which could deal with the issue, including its remedial capacity
[44] The Tribunal is a specialized administrative body that has been recognized as being “especially well suited to the task of overseeing a complex statutory scheme whose objectives are peculiarly economic” (Canada (Director of Investigation and Research) v Southam Inc, [1997] 1 SCR 748, at para 49; Canada (Commissioner of Competition) v Superior Propane, 2001 FCA 104, at para 57 [Superior Propane]).
[45] Pursuant to subs. 8(2) of the Competition Tribunal Act, RSC 1985, c 19, the Tribunal “has, with respect to the attendance, swearing and examination of witnesses, the production and inspection of documents, the enforcement of its orders and other matters necessary or proper for the due exercise of its jurisdiction, all such powers, rights and privileges as are vested in a superior court of record.”
[46] The Tribunal also has the remedial capacity under subs. 106(2) of the Act to rescind or vary consent agreements. However, as Kobo emphasized during the hearing of this Application, the Tribunal may not do so based on grounds such as the second and third “jurisdictional challenges” that it is now raising. Although Kobo and the Commissioner interpret my decision in Kobo 2014 as also precluding Kobo from advancing the first jurisdictional issue that it has raised in the present Application, I disagree. In my view, the issue of whether anticompetitive agreements entered into outside Canada are within the purview of s. 90.1 is an issue that raises a question with respect to whether the consent agreement is “something [that] the Tribunal couldn’t have done,” or that is “outside the purview of the Tribunal” (Kobo 2014, above, at para 77). Accordingly, this is an issue that could legitimately be raised before the Tribunal by a third party under subs. 106(2) of the Act. However, Kobo failed to do so in respect of either the Initial CA or the CAs.
[47] Nevertheless, given that Kobo is precluded by the terms of subs. 106(2), as interpreted in Kobo 2014 and Kobo FCA, above, from raising before the Tribunal the other two “jurisdictional” issues that it has raised in this Application, I consider that this factor weighs in favour of hearing this Application on its merits.
iii. The relative expertise of the alternative decision-maker
[48] Kobo submits that because the judges of this Court who are also members of the Tribunal tend to be assigned to hear matters brought before this Court that involve issues under the Act, this factor should be considered to be neutral. Although that may be true at the present time, it has not always been so, and it may not be so in the future.
[49] Judges of this Court who are also members of the Tribunal “can be expected to have a level of expertise or experience in this area of the law over and above that acquired by a judge in the ordinary course of judicial work” (Superior Propane, above, at para 56). This is in part because, when sitting as a judicial member of the Tribunal, they have the assistance of lay members.
[50] Given the foregoing, I consider that this factor weighs in favour of declining to hear the present Application.
iv. The nature of the error alleged
[51] The three grounds upon which Kobo has based the present Application have each been characterized as being “jurisdictional” challenges. However, as further discussed in Part VIII of these reasons below, I consider that only the first of those challenges raises a true question of jurisdiction. As noted above, that question concerns the issue of whether anticompetitive agreements entered into outside Canada fall within the purview of s. 90.1 of the Act. The other two “jurisdictional” challenges that Kobo has raised are rooted largely in factual disputes about (i) whether the shift from the wholesale model of E-book distribution to the agency model of distribution in Canada occurred as result of the implementation of the U.S. Arrangement that is described in the recitals of the CAs, and (ii) whether the Arrangement was “existing or proposed” at the time the CAs were executed and filed with the Tribunal.
[52] In my view, the fact that one of the issues that Kobo has raised is a true jurisdictional issue ordinarily should weigh in favour of this Court exercising its jurisdiction to hear the present Application. However, given my view that this issue may also be raised before the Tribunal, I consider that this factor weighs in favour of not granting discretion to hear the present Application (Alberta (Information and Privacy Commissioner) v Alberta Teachers’ Association, 2011 SCC 61, at paras 24-25 [Alberta Teachers]; Alberta (Education) v Access Copyright, 2010 FCA 198, at para 70 [Access Copyright], rev’d on other grounds 2012 SCC 37, at paras 10-11 and 59-60). This is particularly so given that this issue has been the subject of active debate for many years, both here and abroad, such that it could benefit from the Tribunal’s recognized expertise.
[53] The fact that the other two “jurisdictional” challenges that Kobo has raised are rooted largely in factual disputes also weighs in favour of not exercising my discretion to hear the present Application.
v. The existence of adequate and effective recourse in the forum in which litigation is already taking place
[54] As I have noted previously, the first and third of the three issues that Kobo has raised in this Application have been litigated before the Tribunal in HarperCollins, above. However, the CAs are not being challenged in that proceeding, or in any other proceeding of which I am aware. Accordingly, this factor weighs in favour of exercising my discretion to hear the present Application on its merits.
vi. Expeditiousness
[55] In my view, this factor has no independent relevance in the present context because Kobo’s inability to raise two of the three “jurisdictional” challenges that it is advancing in this Application has already been considered and weighed above. There is no separate issue as to whether the relief that Kobo is seeking could be more expeditiously obtained in this forum, relative to another forum. The fact that judicial review proceedings may be more expeditious than a subs. 106(2) proceeding before the Tribunal is considered separately below.
vii. The convenience of the alternative remedy
[56] Kobo submits that this factor weighs in favour of exercising my jurisdiction to hear its Application, because it is unlikely to succeed in raising these issues before the Tribunal, and the Commissioner has stated that he will oppose any attempt that Kobo may make to raise those issues in that forum. I agree. However, given that I have already weighed in Kobo’s favour its inability to raise before the Tribunal two of the three “jurisdictional” issues that it is advancing in this Application, this factor does not merit any significant additional weighting in my assessment.
viii. The economic use of judicial resources
[57] The nature of judicial review proceedings is such that they can often be determined more expeditiously, and with fewer judicial resources, than proceedings before the Tribunal, which frequently involve two judicial members. In any event, given that judicial review proceedings in this Court are heard by a single judge, whereas a proceeding under subs. 106(2) of the Act would require a panel of three members of the Tribunal, I consider that this factor weighs in favour of hearing this Application on its merits.
ix. Cost
[58] As noted in Kobo 2014, above, at para 50, the “mischief” that Parliament sought to address when it established the current consent agreement framework in ss. 105 and 106 of the Act included the significant cost that was associated with the former consent order process. (See quote reproduced at paragraph 41 above.) As also noted in Kobo 2014, above, at para 42: “[i]f one or more of the Commissioner’s conclusions with respect to the elements of the relevant restrictive trade practice were subject to dispute under subs. 106(2), this would open up a potentially far broader range of complex issues in the average proceeding under that provision than was ever in dispute under the former consent order process.” The same would be true if those same types of issues were subject to dispute in judicial review proceedings before this Court, as Kobo now requests. Stated differently, the public and private costs associated with judicial review proceedings in this Court would be potentially very significant, including for private parties who enter into settlements with the Commissioner, by way of consent agreements.
[59] Accordingly, I consider that this factor weighs in favour of declining to hear the present Application.
x. Summary
[60] In summary, the factors that weigh in favour of declining to hear the present Application are: (i) the purposes and policy considerations underpinning the consent agreement scheme that is set forth in the Act, (ii) the expertise of the Tribunal, relative to that of the Court, (iii) the nature of the errors that the Commissioner is alleged to have made, and (iv) the public and private costs that would likely be associated with permitting third parties to seek judicial review of conclusions reached by the Commissioner with respect to either the substantive elements of reviewable trade practices, or the defences and exceptions set forth in the Act in respect of those trade practices.
[61] By comparison, the factors that weigh in favour of hearing this Application on its merits are (i) the nature of the other forum which could deal with the issue, including its remedial capacity, (ii) the existence of adequate and effective recourse in the forum in which litigation is already taking place, and (iii) the economic use of judicial resources.
[62] To avoid double counting, the factors that do not merit any additional weight in the particular circumstances of this case are the convenience of the alternative remedy and expeditiousness.
[63] Balancing the various considerations discussed above, I consider that it would not be appropriate for me to exercise my discretion to hear Kobo’s Application on the merits. This is particularly so given that the contrary conclusion would be “deeply inconsistent with fundamental parliamentary choices” about the scope of third party rights with respect to consent agreements filed by the Commissioner with the Tribunal (Strickland, above, at para 51; see also 797175, above, at paras 35-37, and Henderson, above, at para 26).
[64] Based on the foregoing assessment, I consider that judicial review applications brought by third parties in respect of consent agreements filed with the Tribunal should only be heard in exceptional cases. Although it is always difficult to identify such cases in advance, they would include those where the grounds for review concern (i) constitutional issues, (ii) issues that are of central importance to the legal system as a whole and outside the Tribunal’s specialized area of expertise (such as alleged bias or bad faith on the part of the Commissioner), (iii) true questions of jurisdiction or vires, or (iv) issues relating to the jurisdictional lines between the Commissioner (or the Tribunal) and another specialized tribunal. I note that these grounds are so important that they are reviewable by courts on a “correctness” standard, when decisions in respect of them are made by administrative tribunals or other decision-makers (Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd, 2016 SCC 47, at para 24 [Edmonton East]).
[65] For the reasons I have provided, while the first of the three jurisdictional issues that have been raised by Kobo in this Application may properly be characterized as a true question of jurisdiction or vires, I consider that this issue wo