STEPHANIE DIFEDERICO v. JAMESON EDMOND CASEY, 2023 FC 1156

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”" isconduct described in sections 45 and 46 of the Act. Accordingly, it is incumbent upon the Plaintiffs to plead sufficient material facts withrespect 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 174and 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 cannotcontravene

section 46. This is because an important element of the latter provision is the existence of a conspiracy, agreement orarrangement entered into outside Canada that, if entered into in Canada, would have been in contravention of

section 45. It follows that ifa Statement of Claim does not disclose a reasonable cause of action under

section 45, it will not disclose a reasonable cause of actionunder

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, (ON CA), [1977] 13 OR (2d) 32 (5 April 1976), see also: R v Gage (No2), (MB CA), 1908 CarswellMan 20 at para 88, 13 CCC 428 (MBCA).[3] Stated differently, those words contemplatea "“meeting of the minds”" with respect to one or more of the matters described in paragraphs 45(1)(a) – (c): Jensen FCA, at paras 59and 65-66; Watson v Bank of America Corporation, 2015 BCCA 362 at para 77 [Watson].

Another way of putting this is that there mustbe a conspiracy, agreement or arrangement to put into effect a common design with respect to one of those matters: The Queen v O’Brien, (SCC), [1954] SCR 666 at 668-669 and 675 [O’Brien]; see also R v Aluminum Co of Can, 1976 CarswellQue 94 atparas 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 agreementto 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, (QC CQ), [1960] QJ No.7 at para 22, 131CCC 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 TheKing, (SCC), [1942] SCR 147 at 159 [Container Materials]; Abitibi, at para 22.

An offence is committed once partiesenter into an agreement proscribed by

section 45, even if the agreement is not put into effect: O’Brien, at 669. Indeed, an offence is alsocommitted even if "“the agreement could not have been successfully carried into execution”": Howard Smith Paper Mills Ltd et al v TheQueen, (SCC), [1957] SCR 403 at 412 [Howard Smith]. In brief, "“[t]he crime is in the conspiracy,”" not in the acts thatit contemplates: Howard Smith, at 413, quoting R v Elliott, (ON CA), [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 vAttorney General of Canada, (SCC), [1980] 2 SCR 644 at 674 [Atlantic Sugar], quoting Paradis v The King, (SCC), [1934] SCR 165 at 168; see also Abitibi, at para 24. However, acts in furtherance may give rise to an inference that thealleged agreement was entered into and can provide evidence of the object(

s) of the agreement: Container Materials; Jensen FC, at para103; Regina v Northern Electric Co Ltd et al, (ON SC), [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 providematerial 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 purposecan 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 thatprovision: see the discussion at paragraphs 95-96 below. As a result of the 2010 amendments to s. 45, such effects are now relevant onlyto 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: ContainerMaterials; Mohr FCA, at para 38; Abitibi, at paras 119 and 126; R v Armco, at paras 148 and 164. See also R v Nova ScotiaPharmaceutical Society, (SCC), [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) asubjective intention to enter into the agreement and knowledge of its terms, and (ii) an objective intention to do one or more of the thingsdescribed 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 toallege that the impugned agreement was entered into knowingly and voluntarily, so long as the pleadings also provide sufficient materialfacts 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 tocompete with respect to a product in the absence of a conspiracy, agreement or arrangement,”" regarding one or more of the mattersdescribed in paragraphs 45(1) (

a) to (c). Given that each of the latter paragraphs use the term "“the product”", it is readily apparent thatthe referenced product in question is the product referred to in the "“chapeau”" or opening words of subsection 45(1). That is the productin respect of which the parties to the alleged agreement compete: Mohr National Hockey League, 2021 FC 488 at paras 35 and 42 [MohrFC]. Consequently, plaintiffs who allege an agreement contrary to

section 45 must plead sufficient material facts with respect tocompetition 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 marketplace services that Amazon provides to Third Party Sellers, and that those services are not products or services " “in respect of which [Amazon and Third Party Sellers] compete” " , as required by

section 45 of the Act : Mohr FC , at para 35. Amazon further states that S-4 does not require Amazon to do anything in its role as a seller. [ 66 ] During their oral submissions, the plaintiffs maintained that a platform operator that is in both a vertical and a horizontal relationship with third parties who sell on its platform is not exempt from the purview of

section 45 simply because it establishes the terms of the agreements that it enters into with those third parties. [ 67 ] I agree. The potential applicability of

section 45 to any particular agreement between a platform operator and third parties who sell on the platform must be determined on the basis of the relevant facts in each case. For greater certainty, and subject to the defence set forth in subsection 45(4), [8] a platform operator cannot immunize what would otherwise be a horizontal agreement proscribed by

section 45 , by burying that agreement in a broader agreement that is largely vertical in nature. [ 68 ] For the purposes of the present Motion, the pleaded facts summarized at paragraphs 63 and 64 above " “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’” " : see paragraph 29 above. In my view, those pleaded facts are sufficient to permit the plaintiffs to prevail on this Motion with respect to requirement in

section 45 that the impugned agreements be among competitors " “with respect to a product.” " Contrary to Amazon’s contention, S-4 is not limited to governing the marketplace services that Amazon provides to Third Party Sellers. It also requires Third Party Sellers to ensure that the prices of products listed on its platform are at least as favourable to Amazon Site users as the MFN Price. [9] [ 69 ] Amazon’s position that S-4 is a purely vertical agreement would be a matter to be determined if and when this proceeding were to advance to the merits stage.

For the present purposes, it bears underscoring that Amazon acknowledges that it may be a competitor to some Third Party Sellers when it sells products as a seller of record. [ 70 ] I will pause to observe that, in 2013, the Bundeskartellamt (Germany’s antitrust regulator) concluded that the agreements entered into between Amazon and its third party sellers were not purely vertical in nature, particularly insofar as Amazon’s price parity obligation for retailers was concerned: Amazon Removes Price Parity Obligation for Retailers on its Marketplace Platform , Case Report, Bundeskartellamt, 26 November 2013. [ 71 ] The plaintiffs further allege that Amazon and Third Party Sellers are also potential competitors " “to produce and supply or supply” " Amazon Products.

In this regard, the plaintiffs assert that it is likely that Amazon or Third Party Sellers will sell the same branded or substitute products in the future, either on Amazon’s platform, on the sellers’ own websites, or on other e-commerce websites. In support of this assertion, they state the following in their Statement of Claim: 43 …Amazon regularly monitors the selling data of third-party sellers on its platform to determine for which Amazon Products it would be profitable for Amazon to produce and supply or supply in competition with the products those sellers sell.

During the Class Period, Amazon chose to compete with third-party sellers with Amazon Products for which Amazon had formerly not been the seller of record. [ 72 ] In my view, the pleaded facts quoted immediately above are not sufficient for the purposes of the present Motion. This is because they are not " “sufficient to put the defendant on notice of the essence of” " the plaintiffs’ claim as it relates to potential competition, and they do not provide enough facts or particulars to ensure that the trial of this issue would be " “both manageable and fair” " : see jurisprudence cited at paragraph 30 above.

I reach the same conclusion with respect to the plaintiffs’ allegation that Third Party Sellers who use Amazon’s platform are potential competitors of each other " “to produce and supply or supply” " Amazon Products. [ 73 ] Pursuant to subsection 45(8) of the Act , the term " “competitor” " in

section 45 " “includes 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 to do anything referred to in paragraphs (1)(

a) to (c).” " The plaintiffs have not plead any facts whatsoever to provide any reasonable basis to believe that Amazon would likely compete with any specific Third Party Seller with respect to any particular product. The same is true with respect to the plaintiffs’ allegation that Third Party Sellers are potential competitors of each other. Consequently, the plaintiffs have not provided sufficient notice to Amazon with respect to the specific products in relation to which it would have to defend the allegation of potential competition.

The plaintiffs are not entitled to rely on the possibility that new facts may turn up as the case progresses: Imperial Tobacco , at para 22. [ 74 ] Finally, the plaintiffs further allege that the Third Party Sellers are also actual competitors of each other. At paragraph 44 of their Statement of Claim, they briefly explain as follows: 44.

The third-party sellers who use Amazon’s platform are competitors for the production and supply or supply of Amazon Products because within these product categories, these sellers are competing with each other to sell those products to consumers, whether on or off Amazon’s platform. [ 75 ] Given my conclusion that the plaintiffs have not pled sufficient material facts to support their allegation that the Third Party Sellers entered into a separate agreement among themselves, it is unnecessary to address the above allegation that the Third Party Sellers are actual competitors of each other, within the meaning of

section 45 : see paragraphs 58-62 above. [ 76 ] In

summary, I conclude that the plaintiffs have pled sufficient material facts to support their allegation that Amazon is an actual competitor of at least some Third Party Sellers, within the meaning of subsection 45(1) of the Act . However, the plaintiffs have not plead sufficient material facts to support their allegation that Amazon and the Third Party Sellers are potential competitors. The same is

true with respect to their allegation that the Third Party Sellers are potential competitors of each other. It is unnecessary to address theplaintiffs’ separate allegation that the Third Party Sellers are actual competitors of each other. (

d) The object and subject matter of S-4 [77] At paragraphs 5 and 9 of their Statement of Claim, the plaintiffs broadly allege that Amazon and the Third Party Sellers entered intoanticompetitive agreements contemplated by each of paragraphs 45(1)(a), (

b) and (c). In this regard, the plaintiffs’ allegations inparagraph 9 initially closely track the language of those provisions, without more. It would appear that the broad allegations apply toboth S-4 and the Fair Pricing Policy. The plaintiffs then elaborate, as discussed at paragraphs 116- 161 below. [78] For the reasons set forth below, I find that the plaintiffs’ allegations with respect to S-4 of the BSA do not disclose a reasonablecause of action under sections 45 or 46 of the Act.

In brief, even reading those allegations generously, holistically and practically, they donot have a reasonable prospect of success. (i) Subsection 45(1) and the scheme of the Act [79] It is trite law that "“the words of a statute must be read ‘in their entire context and in their grammatical and ordinary senseharmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament’”": Canada (Minister of Citizenship andImmigration) v Vavilov, 2019 SCC 65 at para 117, quoting Rizzo & Rizzo Shoes Ltd (Re), (SCC), [1998] 1 SCR 27 atpara 21 [Rizzo]; and Bell ExpressVu Limited Partnership v Rex, 2002 SCC 42 at para 26, both quoting E.

Driedger, Construction ofStatutes, 2nd ed (Toronto: Butterworths, 1983) at 87. [80] For convenience, subsection 45(1) is reproduced below: "Conspiracies, agreements or arrangementsbetween competitors " "Complot, accord ouarrangement entre concurrents" 45

(1) Every person commits anoffence who, with a competitor ofthat person with respect to aproduct, conspires, agrees orarranges" " 45

(1) Commet une infractionquiconque, avec une personne quiest son concurrent à l’égard d’unproduit, complote ou conclut unaccord ou un arrangement:" " (

a) to fix, maintain, increase orcontrol the price for the supply ofthe product;

a) soit pour fixer, maintenir,augmenter ou contrôler le prix dela fourniture du produit; (

b) to allocate sales, territories,customers or markets for theproduction or supply of theproduct; or

b) soit pour attribuer des ventes,des territoires, des clients ou desmarchés pour la production ou lafourniture du produit; (

c) to fix, maintain, control,prevent, lessen or eliminate theproduction or supply of theproduct.

c) soit pour fixer, maintenir,contrôler, empêcher, réduire ouéliminer la production ou lafourniture du produit. [81] The presence of the word "“or”" at the end of paragraph 45(1)(

b) makes it clear that paragraphs 45(1)(a) – (

c) are disjunctive. Thatis to say, they create three separate offences. [82] Interpreting subsection 45(1) by reference to the scheme and purposes of the Act strongly suggests that its scope is confined toagreements that are unambiguously harmful to competition. Those agreements are also known as "“hard-core cartels.”" [83] With respect to the scheme of the Act, it is important to note that the Act adopts a bifurcated approach to horizontal agreementsbetween competitors. In addition to the criminal prohibition in

section 45, the Act contains a civil provision in

section 90.1, whichprovides as follows: "Agreements or Arrangements that Preventor Lessen Competition Substantially " "Accords ou arrangements empêchant oudiminuant sensiblement la concurrence ""Order " "Ordonnance ""90.1

(1) If, on application by theCommissioner, the Tribunal finds that anagreement or arrangement — whether existingor proposed — between persons two or moreof whom are competitors prevents or lessens,or is likely to prevent or lessen, competitionsubstantially in a market, the Tribunal maymake an order " "90.1 (1) ""Dans le cas où, à la suite d’unedemande du commissaire, il conclut qu’unaccord ou un arrangement — conclu ouproposé — entre des personnes dont au moinsdeux sont des concurrents empêche oudiminue sensiblement la concurrence dans unmarché, 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. " [ 84 ] Parliament inserted

section 90.1 into the Act in 2010, at the same time it amended subsection 45(1) to its current form. This strongly suggests that Parliament intended some types of agreements between competitors to be within the purview of

section 45 , and others to be contemplated by

section 90.1. To avoid the possibility of such agreements being pursued under both of those provisions, Parliament amended

section 45.1 and introduced subsection 90.1(10). Together,

section 45.1 and subsection 90.1(10) prevent proceedings being brought under both provisions on the basis of essentially the same facts. The full texts of both provisions are included in Annex 2 to these reasons. [ 85 ] Additional important indications of the scope of sections 45 and 90.1, respectively, are provided by their position in the overall architecture of the Act , as well as by the potential penalties for contravening

section 45, and the potential remedy that may be imposed under

section 90.1. [ 86 ]

Section 45 is situated in

Part VI of the Act , which deals with criminal offences in relation to competition. By contrast,

section 90.1 is in

Part VIII of the Act, which addresses matters reviewable by the Competition Tribunal. [ 87 ] Pursuant to subsection 45(2), persons who commit an offence under subsection 45(1) are guilty of an indictable offence and liable on conviction to imprisonment for a term not exceeding 14 years or to a fine in the discretion of the Court, or to both. At the time of the 2010 amendments to the Act , these sanctions were increased from five years and a fine not exceeding $10 million to 14 years and a fine not exceeding $25 million.

The sanctions were again increased in 2019, with the limit on the maximum fine amount being removed: see the current and previous versions of subsection 45(1), at Annexes 2, 3 and 4 below. [ 88 ] The significant increases in the potential penalties for contravening subsection 45(1) that were made in 2010, together with the removal of the limit on potential fines altogether in 2022, suggests that this provision was intended to apply to agreements that require high degrees of deterrence and denunciation.

It is reasonable to infer that such agreements are those that are generally unambiguously harmful to competition and that merit the full force of the criminal law. Another way of describing such agreements are those that represent " “the very antithesis of the Competition Act ’s objective” " : Pioneer Corp. v Godfrey , 2019 SCC 42 at para 65 [ Godfrey ], quoting Shah , at para 38 . [ 89 ] To the extent that other types of agreements among competitors can have pro-competitive or other benign effects, interpreting

section 45 in a way that includes them within its purview would undermine the stated purpose of the Act , as set forth in

section 1.1 . That purpose is " “to maintain and encourage competition in Canada” " , in order to achieve the various benefits listed in that provision. Interpreting

section 45 in a manner that would be incompatible with this purpose should be avoided: Rizzo , at para 27 . Insofar as such an incompatibility would result from the substantial chilling effect that

section 45 would likely have on pro-competitive or other benign types of agreements,

section 45 should be interpreted in a manner as to avoid such potential consequences. [ 90 ] Interpreting

section 45 in the manner described above would avoid this incompatibility. In other words, interpreting

section 45 such that it applies solely to unambiguously harmful types of agreements between competitors that involve the matters described in paragraphs 45(1)(a) – (c), would be consistent with the scheme and purpose of the Act . This would produce the harmonious outcome that other types of agreements between competitors, including those that may directly or indirectly involve one or more of those matters, would be understood as being within the purview of

section 90.1. [ 91 ] In

summary, the scheme and purposes of the Act support interpreting

section 45 in a manner as to apply solely to unambiguously harmful types of agreements between competitors that involve the matters described in paragraphs 45(1)(a) – (c). The scheme and purpose of the Act also supports the view that other types of agreements between competitors that may or may not have anti-competitive effects, depending on the particular facts and circumstances, were intended to be reviewed under

section 90.1 . (ii) The jurisprudence [ 92 ] The foregoing

interpretation of

section 45 is supported by the jurisprudence. [ 93 ] To begin with, in PANS , at 649, the SCC observed that the predecessor of subsection 45(1) is " “at the core of the criminal part of the Act ” " and " “definitely rests on a substratum of values.” " [10] [ 94 ] Consistent with these observations, this Court has observed that " “price fixing agreements, like other forms of hard-core cartel agreements, are analogous to fraud and theft” " : R v Maxzone Auto Parts (Canada) Corp. , 2012 FC 1117 at para 54 [ Maxzone ].

This Court has also characterized the penalties available under sections 45 and 46 of the Act as being such as to clearly communicate society’s " “abhorrence” " of the crimes they proscribe: Maxzone , at para 51. [ 95 ] In Jensen FC , this Court interpreted

section 45 as applying to " “three categories of agreements that are so likely to harm competition and to have no pro-competitive benefits that they are deserving of sanction without a detailed inquiry into their actual competitive effects” " : Jensen FC , at para 96; see also para 287. Later in its decision, the Court described

section 45 as " “prohibiting hard-core cartels” " : Jensen FC , at para 289. Elsewhere, the Court observed that the existing scheme of the Act establishes a " “criminal enforcement regime for the most egregious forms of cartel agreements between competitors, while at the same time removing the threat of criminal sanctions for legitimate collaborations to avoid discouraging competitors from engaging in potentially beneficial alliances” "

[emphasis added]: Jensen FC , at para 95. Elsewhere in its decision, the Court also distinguished the conduct proscribed by the criminal prohibitions in the Act from " “other types of conduct [that] are considered only potentially anti-competitive” " : Jensen FC , at para 90. The Court further noted that those types of conduct " “are not treated as crimes and are instead subject to civil review and potential forward-looking prohibition once the impugned conduct has been established to have had, have or be likely to have anti-competitive effects” " : Jensen FC , at para 90. [ 96 ] The view that

section 45 is limited to a narrow range of conduct that " “constitute naked restraints that can only have negative effects” " was also adopted in Mohr FC , at para 57 [11] and by the Supreme Court of British Columbia in Williams v Audible Inc , 2022 BCSC 834 at para 101 [ Williams ]. The Court in the latter case also adopted the view that " “the conduct prohibited by s. 45 is per se unlawful because it is conduct that is unambiguously harmful to competition and, therefore, deserving of prosecution without a detailed inquiry into its anti-competitive effects” " : Williams , at para 102 . [ 97 ] In addition to the foregoing, the Court in Shah observed that " “

Section 45 limits the reach of liability to those who, at a minimum, specifically intend to agree upon anti-competitive conduct” " : Shah, at para 51 . This statement was quoted with approval in Godfrey , at para 75 . However, the statement must be viewed in the light of the following, preceding, passage in Shah , at para 50 : The mens rea contained in s. 45 has both subjective and objective components. The subjective component requires that the defendant intend to agree, with knowledge of the terms of that agreement.

The objective component requires that the defendant objectively intend to achieve the prohibited end, in this case, increasing the price of LIBs and lessening, unduly, competition. [Emphasis added. Citations omitted.] [ 98 ] It must also be kept in mind that Godfrey concerned the mens rea elements of s. 45 as it was prior to the 2010 amendments.

In PANS , above, the SCC characterized the subjective and objective fault elements in the following terms: To satisfy the subjective element, the Crown must prove that the accused had the intention to enter into the agreement and had knowledge of the terms of that agreement. Once that is established, it would ordinarily be reasonable to draw the inference that the accused intended to carry out the terms in the agreement, unless there was evidence that the accused did not intend to carry out the terms of the agreement.

In order to satisfy the objective element of the offence, the Crown must establish that on an objective view of the evidence adduced the accused intended to lessen competition unduly […] Once again, it would be a logical inference to draw that a reasonable business person who can be presumed to be familiar with the business in which he or she engages would or should have known that the likely effect of such an agreement would be to unduly lessen competition.

PANS , at 659-660. [ 99 ] Given that subsection 45(1) was amended to remove the requirement to demonstrate a conspiracy, agreement or arrangement to prevent or lessen competition " “unduly,” " the SCC’s teachings in PANS must be modified to reflect the current wording of paragraphs 45(1)(a) – (c). Pursuant to that wording, the subjective fault element would remain the same, namely, an intention to enter into the agreement and knowledge of its terms. Accused persons remain free to adduce evidence that they did not intend to carry out the agreement.

The objective fault element would be an objective intention to do one of the things proscribed in paragraphs 45(1)(a) – (c): Watson , at para 76 ; Shah , at paras 50-51 . That objective intention is to be assessed in terms of whether a reasonable business person who is familiar with the business in question would or should know that the impugned agreement had as its object or purpose one of the prohibited types of conduct prescribed in paragraphs 45(1)(a), (

b) or (c). [ 100 ] In

summary, the jurisprudence discussed above supports the conclusions of the interpretative analysis provided at paragraphs 84- 91 of these reasons. That is to say, the jurisprudence supports the view that Parliament intended

section 45 to apply only to conspiracies, agreements and arrangements that have unambiguously harmful effects on competition. Such agreements are also known as " “hard- core” " or " “naked” " cartel agreements. This unambiguously harmful conduct must be objectively intended, in the sense that a reasonable business person who is familiar with the business in question would or should know that the impugned agreement had as its object or purpose one of the prohibited types of conduct prescribed in paragraphs 45(1)(a), (

b) or (c). Other types of conduct that are only potentially anti-competitive were intended to be assessed under

section 90.1 of the Act , in order to remove the threat of criminal sanctions for potentially legitimate collaborations. (iii) The legislative history of s. 45 [ 101 ] Legislative history can also be helpful in informing the purpose and scope of a statutory provision: Atlantic Lottery , at paras 41 and 44-6; Imperial Tobacco , at paras 127-128. However, care must be taken to distinguish between, on the one hand, committee proceedings or other history that shed light on the evolution and legislative history of

section 45 , and on the other hand evidence provided by academics and public servants which may be aspirational, disputable or of arguable relevance: Mohr FCA , at para 63. For greater certainty, statements by those " “directly responsible” " for an amendment is relevant evidence of legislative purpose: Atlantic Lottery , at para 46; Godfrey , at para 68 . [ 102 ] In 1986, the maximum fine set forth in what is now

section 45 of the Act was increased from $1 million to $10 million.

In explaining the government’s initial proposal to increase the fine to $5 million the Minister responsible for the amendments explained, shortly before the amendments were introduced for First Reading, that this change would " “send a clear signal to the courts that Parliament considers conspiracy to be a very serious criminal offence and that offenders should be dealt with by a firm hand” " : Consumer and Corporate Affairs Canada, Competition Law Amendments, A Guide (Ottawa: December 1985) at 27. [12] Ultimately, the level of the fine was increased to $10 million following an amendment at the Legislative Committee stage. [ 103 ] 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 , (adopted April 9, 2002, tabled April 23, 2002,), at xvi. [ 104 ] 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. [ 105 ] 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 “hardcore” 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.] [ 106 ] Having regard to the foregoing, the panel recommended that the government " “repeal the existing conspiracy provisions and replace them with a per se criminal offence to address hard-core cartels and 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]. [ 107 ] The following year, Bill C-10, a budget implementation bill that included amendments to

section 45 and several other provisions of the Act , was introduced in 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 changes and entered into force in March 2010. [ 108 ] The legislative history discussed above helps to inform the Court’s

interpretation of

section 45. As with the scheme and purposes of the Act , as well as the jurisprudence, it strongly suggests that the application of

section 45 , as currently worded, was intended to be limited to conspiracies, agreements and arrangements that are unambiguously harmful to competition. Such agreements are also known as " “hard-core” " or " “naked” " cartel agreements. Other agreements between competitors were intended to be reviewed under the non- criminal provision in

section 90.1 of the Act , in part to provide clearer standards to the business community. [ 109 ] I will pause to note that, at the time of the 2010 amendments to the Act , Parliament also included a defence in subsection 45(4) , which stated 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 raisonnablement 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. " [ 110 ] Given the presence of the words " “that would otherwise contravene [subsection 45(1)],” " this provision does not assist to discern the scope of subsection 45(1). (iv) Conclusion regarding the

interpretation and scope of

section 45 [ 111 ] Based on my analysis of the scheme and purposes of the Act , as well as the jurisprudence and the legislative history discussed above, I conclude that Parliament intended to confine the application of

section 45 to unambiguously harmful types of agreements between competitors that involve the matters described in paragraphs 45(1)(a) – (c). [ 112 ] This unambiguously harmful conduct must be objectively intended, in the sense that a reasonable business person who is familiar with the business in question would or should know that the impugned agreement had as its object or purpose one of the prohibited types of conduct prescribed in paragraphs 45(1)(a), (

b) or (c). [ 113 ] I also conclude that o ther types of conduct that are only potentially anti-competitive were intended to be reviewed under

section 90.1 of the Act , in order to remove the threat of criminal sanctions for potentially legitimate collaborations. (

v) Application of the

interpretation of

section 45 to the plaintiffs’ allegations regarding S-4 [ 114 ] As noted at paragraph 77 above, the plaintiffs’ claims regarding S-4 begin with the broad allegation that Amazon and the Third Party Sellers entered into anticompetitive agreements contemplated by each of paragraphs 45(1)(a), (

b) and (c). In this regard, the plaintiffs’ allegations closely track the language of those provisions, without more. The plaintiffs then proceed to " “particularize” " their allegations as described below. Paragraph 45(1)(a) [ 115 ] As previously noted, paragraph 45(1) (

a) of the Act makes it an offence to conspire, agree or arrange, with a competitor, " “to fix, maintain, increase or control the price for the supply of the product” " in respect of which the alleged conspirators are competitors. [ 116 ] Beyond the broad allegations mentioned immediately above, the plaintiffs more specifically allege that, by agreeing to the MFN Clause in S-4 of the BSA, Amazon and Third Party Sellers agreed, expressly and in writing, to limit price competition.

These alleged " “co-conspirators” " are claimed to have done so by setting a floor price for Amazon Products sold by Third Party Sellers on non- Amazon websites , based on the price at which Third Party Sellers sold Amazon Products on the Amazon platform.

In this regard, the plaintiffs note that, pursuant to S-4, the Third Party Sellers agreed to: … maintain parity between the products you [the third-party seller] offer through Your Sales Channels and the products you list on any Amazon Site by ensuring that . . . the purchase price and every other term of sale . . . is at least as favorable to Amazon Site users as the most favorable terms via Your Sales Channels (excluding consideration of Excluded Offers). [Emphasis added.] [ 117 ] The plaintiffs maintain that Amazon and the Third Party Sellers mutually understood that by this agreement the Third Party Sellers would set prices for Amazon Products on non-Amazon websites at prices that did not reflect competition between them but instead were collusively imposed prices derived from the prices they set for their products on Amazon’s websites.

The plaintiffs add that Amazon and Third Party Sellers shared the common goal or common object that Third Party Sellers that sell on both Amazon and other websites ( " “Multi-Homing Sellers” " ) would not charge a higher retail price for Amazon Products on Amazon’s websites , relative to the prices they charge for those products on other e-commerce websites. The Plaintiffs assert that this agreement is a " “price restraint” " on its face because Multi-Homing Sellers are not free to charge prices of their own choosing, but must instead set them to satisfy the price constraint established by the MFN Clause in S-4.

Moreover, the plaintiffs claim that, by agreeing to S-4, Third Party Sellers agreed not to compete on other e-commerce websites in a manner that would cause Amazon to reduce its platform fees to a competitive level. [ 118 ] It is plain and obvious that the foregoing allegations do not plead a reasonable cause of action in respect of paragraph 45(1) (a). [ 119 ] Paragraph 45(1)(

a) can be contravened in one of four ways, namely, by agreeing to " “fix,” " , " “maintain” " , " “increase” " or " “control” " the price for the product in respect of which the parties to the impugned agreement compete. I will begin by assessing whether the pleadings disclose a reasonable cause of action in relation to the " “fixing” " , " “maintaining” " or " “increasing” " of the price of any Amazon Product.

I will then do the same with respect to the " “controlling” " of the prices of Amazon Products. [ 120 ] With respect to an agreement to " “fix” " , " “maintain” " or " “increase” " the price for the supply of Amazon Products, the plaintiffs simply make bald allegations that track the language of the Act : See paragraphs 77 and 114 above. They do not provide any meaningful material facts or particulars.

This is not sufficient to state a reasonable cause of action: Jensen FCA , at paras 38, 63-64 and 70. [ 121 ] Turning to the more particularized pleadings discussed at paragraphs 116 and 117 above, the plaintiffs do not allege any agreement to " “fix” " , " “maintain” " or " “increase” " the price of any Amazon Product. Instead, they allege an agreement to " limit price competition " by setting a floor price (through the MFN Clause) that did not reflect competition between Amazon and Third Parties.

That alleged floor price is claimed to have been a " “collusively imposed” " price derived from the prices that Third Party Sellers establish for their products on Amazon’s websites. The plaintiffs assert that the MFN Clause is a " “price restraint” " on its face, because Multi-Homing Sellers were not free to charge prices of their own choosing, but instead were required to set them to satisfy the terms of the MFN Clause. [ 122 ] Prior to the 2010 amendments to subsection 45(1) , the word " “limit” " was included paragraphs 45(1) (

a) and (b), and the word

" “restrain” " appeared in paragraph 45(1) (d). [13] Had Parliament intended to capture agreements to " “limit” " or " “restrain” " prices in the manner alleged by the plaintiffs, it could easily have left those words in the amended version of subsection 45(1) .

It may be inferred from the removal of those words that Parliament did not intend for such agreements to be within the purview of the amended provision, unless such agreements also constitute agreements to " “fix” " , " “maintain” " , " “increase” " or " “control” " prices. [ 123 ] The plaintiffs do not plead any particular price or range of prices that Amazon and Third Party Sellers agreed to " “fix” " , " “maintain” " or " “increase” " .

They also do not plead any amount or range of any " “increase” " in the price of any Amazon Product. [ 124 ] Given that the plaintiffs specifically reference the MFN Clause in S-4 throughout their Statement of Claim, and indeed quote from it at paragraph 48 of their Statement of Claim, it is permissible for this Court to consider S-4 in its entirety in considering whether it states what the plaintiffs allege it states: see paragraph 32 above. [ 125 ] On a plain reading of the three versions of S-4 reproduced at paragraphs 49-51 above, there is nothing explicit or implicit therein that contemplated any " “fixing” " , " “maintaining” " or " “increasing” " of the price of any Amazon Product.

At all times, and subject to the MFN Clause that was explicitly intended to be favourable to Amazon’s customers, Amazon and Third Party Sellers remained entirely free to set their own prices for Amazon Products on Amazon’s Platform as they individually saw fit. Indeed, S-4 does not address whatsoever the prices that Amazon could charge, whether on its platform or elsewhere. For greater certainty, the MFN Clause did not in any way " “fix” " , " “maintain” " or " “increase” " prices on Amazon’s website in any commonly understood manner.

As explicitly stated in the Fair Pricing Policy, " “Sellers are responsible for setting their

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