On October 31, 2013, the Supreme Court of Canada rendered three related decisions (Pro-Sys v. Microsoft, Sun-Rype v. Archer Daniels Midland and Infineon Technologies AG c. Option Consommateurs). The cases dealt with the rights of indirect purchasers to join direct purchasers in a class action to recover damages resulting from an alleged conspiracy by the defendant companies to inflate the prices to dynamic random-access memory (DRAM) chips. These decisions are very significant even though the cases are at a preliminary stage and deal only with the procedural aspects of the class action rather than the actual liability of the defendants. For a discussion of the Competition Actaspects of the decisions, see our colleagues' post on The Competitor.

Our focus here is on the Quebec Consumer Protection Act (QCPA) aspects of the Supreme Court decision on the Infineon case and the serious implications it has for all retailers doing business with Quebec consumers over the internet, through mail order, or in any other remote manner. Quebec bricks and mortar businesses will be quite familiar with the QCPA, which strictly regulates consumer contracts. 

The plaintiffs in Infineon were Quebec-resident individuals and other parties who had purchased products containing DRAM chips from retailers and other intermediaries which had, in turn, purchased the chips from the defendants or another intermediary in the purchasing chain. Their claims were based on the argument that they had paid too much for the end-product because of the artificially inflated DRAM price. The plaintiffs contended that their damages were directly caused by the defendants' alleged conspiracy, despite the fact that they had no direct contractual or other dealings with the defendant companies. One of the issues considered was whether a Quebec court has jurisdiction under art. 3148 of the Civil Code of Québec (CCQ) to authorize a class action in the circumstances of this case.

The Supreme Court in Infineon agreed with the Quebec Court of Appeal that the Quebec courts had jurisdiction over the claim pursuant to art. 3148(3) of the C.C.Q. This conclusion was based, in part, on the applicability of the QCPA provision that "deems" a consumer contract between a Quebec resident consumer and a business that is not in the presence of the Quebec consumer (over the internet, by mail order or by telephone for example) to be concluded in Quebec if the business has made an 'offer' to a consumer in Quebec that the Quebec consumer accepts. This provision would apply to most ordinary online purchases. 

What are the practical consequences of the Supreme Court's finding?

  • All remote parties contracts with Quebec consumers (where the business has made an 'offer' and where the consumer is in Quebec) are governed by the laws of Quebec. This aspect is not discussed by the Supreme Court, but is the effect of section 19 of the QCPA;
     
  • Such contracts will be subject to the QCPA, the Charter of the French language, and the CCQ (including its mandatory provisions such as the warranty against latent defects in sale contracts), among others; 
     
  • A consumer claim (including potential class actions) based on such a remote party contract can be brought to a Quebec court. The QCPA prohibits a clause in a consumer contract waiving a consumer's right to take a class action or imposing mandatory arbitration; and
     
  • Other important mandatory QCPA provisions that will apply to such a contract include restrictions on limitations of liability, strict regulation of contracts of credit, requirements as to posting of total price, and a variety of recourses including, in most cases, termination of the contract and the possibility of punitive damages.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.