A-868-81
BBM Bureau of Measurement (Applicant)
v.
Director of Investigation and Research (Respond-
ent)
Court of Appeal, Urie, Hugessen JJ. and Culliton
D.J.-Toronto, November 1, 2, 3, 1983; Ottawa,
March 6, 1984.
Constitutional law - Distribution of powers - Combines
- Tied selling - Whether Combines Investigation Act s. 31.4
ultra vires Parliament as legislation re property and civil
rights - S. 31.4 valid federal legislation under Constitution
Act s. 91(2) Trade and commerce power - Combines Investi
gation Act, R.S.C. 1970, c. C-23, ss. 15(2), 31.2, 31.3, 31.4,
31.7, 31.8 (as added by S.C. 1974-75-76, c. 76, s. 12), 32(1)(c)
(as am. idem, s. 14), 46.1 (as added idem, s. 24) - Constitu
tion Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (R.S.C. 1970,
Appendix II, No. 5] (as am. by Canada Act 1982, c. 11 (U.K.),
Schedule to the Constitution Act, 1982, Item 1), ss. 91,
91(2),(27), 92(13),(14) - Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 28 - Trade Marks Act, R.S.C. 1970, c. T-10,
s. 7(e) - Criminal Code, R.S.C. 1970, c. C-34, s. 2.
Combines - Tied selling - Whether Combines Investiga
tion Act s. 31.4 ultra vires Parliament as legislation re prop
erty and civil rights - S. 31.4 valid federal legislation under
Constitution Act s. 91(2) Trade and commerce power
Combines Investigation Act, R.S.C. 1970, c. C-23, ss. 15(2),
31.2, 31.3, 31.4, 31.7, 31.8 (as added by S.C. 1974-75-76, c.
76, s. 12), 32(1)(c) (as am. idem, s. 14), 46.1 (as added idem, s.
24) - Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.)
ÏR.S.C. 1970, Appendix II, No. 5] (as am. by Canada Act
1982, c. 11 (U.K.), Schedule to the Constitution Act, 1982,
Item 1), ss. 91, 91(2),(27), 92(13),(14) - Federal Court Act,
R.S.C. 1970 (2nd Supp.), c. 10, s. 28.
The Restrictive Trade Practices Commission found that the
applicant had engaged in "tied selling" within the meaning of
section 31.4 of the Combines Investigation Act in respect of its
radio and television audience measurement services. The Com
mission found that BBM either required or induced its mem
bers, by the offer of discounts, to purchase both its radio and
television data. This is a section 28 application to review and
set aside the Commission's resulting order.
BBM argues that as a co-operative association, it has "mem-
bers", not "customers", making section 31.4 inapplicable; that
since BBM is a co-operative whose members provide the data to
themselves, there are no separate and distinct "supplier" and
"customer"; that BBM does not offer to supply either of its
products on "more favourable terms or conditions" if a custom
er agrees to acquire the other product; that section 31.4 is ultra
vires Parliament, being legislation in respect of property and
civil rights within the provinces, under head 92(13) of the
Constitution.
The Court addressed only the constitutional question, having
found that none of the first three issues had any merit.
Held, the application should be dismissed.
Section 31.4 is upheld under head 91(2) (trade and com
merce). In Citizens Insurance v. Parsons, it was said that "it
may be that [head 91(27)] would include general regulation of
trade affecting the whole dominion". To determine if that
"second branch" of the trade and commerce power applies, the
legislative provision must pass the test of "general interest
throughout the Dominion" approved by Estey J. in the Labatt
Breweries case.
Following the approach formulated by Dickson J. (as he then
was) in the Canadian National Transportation case, it is first
determined that section 31.4 is not an isolated provision but an
integral part of a discernible scheme. And that scheme meets
all of the criteria referred to therein by Dickson J. Section
31.4 is part of a complex regulatory scheme, not aimed at a
particular business or industry but at the general regulation of
trade and commerce throughout Canada for the benefit of
Canadians in general.
In this context, head 91(2) and head 92(13) are complemen
tary. Resort may be had to 91(2) to ensure that competition is
not lessened and that it remains fair, and to 92(13) to ensure
that the buyers are protected from unethical business practices
in their dealings with individual businesses or industries.
CASES JUDICIALLY CONSIDERED
APPLIED:
Citizens Insurance Company of Canada v. Parsons
(1881), 7 App. Cas. 96 (P.C.); Attorney General of
Canada v. Canadian National Transportation, Ltd. et al.,
[1983] 2 S.C.R. 206; 49 A.R. 39; 7 C.C.C. (3d) 449;
Labatt Breweries of Canada Ltd. v. Attorney General of
Canada, [1980] 1 S.C.R. 914; R. v. Hoffman- Laroche
Limited (1980), 28 O.R. (2d) 164 (H.C.).
REFERRED TO:
Proprietary Articles Trade Association v. Attorney-Gen
eral for Canada, [1931] A.C. 310 (P.C.); MacDonald et
al. v. Vapor Canada Ltd., [1977] 2 S.C.R. 134.
COUNSEL:
Allan M. Rock for applicant.
Arnold S. Fradkin for respondent.
J. Edgar Sexton, Q.C., for intervenant A.C.
Nielsen Co. of Canada Ltd.
SOLICITORS:
Fasken & Calvin, Toronto, for applicant.
Deputy Attorney General of Canada for
respondent.
Osler, Hoskin & Harcourt, Toronto, for
intervenant A.C. Nielsen Co. of Canada Ltd.
The following are the reasons for judgment
rendered in English by
URIE J.: This is an application brought pursuant
to section 28 of the Federal Court Act [R.S.C.
1970 (2nd Supp.), c. 10] to review and set aside an
order of the Restrictive Trade Practices Commis
sion ("the Commission") made against the appli
cant (hereinafter sometimes referred to as
"BBM") on December 18, 1981 pursuant to sec
tion 31.4 of the Combines Investigation Act,
R.S.C. 1970, c. C-23 as amended ("the Act") [s.
31.4 added by S.C. 1974-75-76, c. 76, s. 12]. By its
order the Commission found that BBM had
engaged in "tied selling" within the meaning of
section 31.4 of the Act in respect of its television
audience measurement and radio audience mea
surement service. The Commission prohibited
BBM from continuing to engage in tied selling of
radio and television audience measurement ser
vices and from engaging in 11 specifically enumer
ated practices.
The relevant facts concerning BBM, its opera
tions and its competition is contained in the follow
ing excerpt from the reasons for decision of the
Commission, none of which is in dispute:
BBM has been the sole supplier of local and national radio
audience data on a regular basis in all provinces of Canada
since 1963. It also supplies television audience data on a regular
basis in all provinces.
BBM was incorporated on July 7, 1966 (its predecessor
corporation, on January 22, 1945) by Letters Patent pursuant
to Part II of the Canada Corporations Act,"... without share
capital, for the purpose of carrying on, without pecuniary gain
to its members, objects ... of a national, patriotic, religious,
philanthropic, charitable, scientific, artistic, social, professional
or sporting character, or the like objects."
BBM admits individuals, firms or corporations as members
of the corporation. Membership consists of the following
groups:
(a) advertisers;
(b) advertising agencies;
(c) persons, firms or corporations owning and/or operating
radio and/or television broadcasting stations and/or radio
and/or television networks duly licensed and radio and/or
television station representatives;
(d) as associate members, persons, firms or corporations
associated with or who supply services or materials to those
set out in (a) to (c).
The affairs of the Corporation are managed by a Board of
Directors of 28 members, seven of whom are elected from each
of groups (a) and (b) and 14 from group (c), at annual
meetings. The Board elects a chairman and two vice-chairmen
from among the Directors. Various committees appointed by
the Board are approved at the annual meeting. The Directors
and Executive, as well as members who sit on committees, serve
without pay. Members pay an annual membership fee based on
their combined billings or expenditures for radio and TV
advertising of the previous year. The annual meeting must
approve the fee structure. The President who is the full-time
day-to-day manager, and a full-time staff are located at the
BBM offices in Toronto.
Other groups of members pay a smaller annual fee which is
also based on the size of their sales or purchases. For example,
in 1981 an advertiser whose 1980 expenditures in radio and TV
combined were $5-6 million would pay a fee of $6420. Adver
tisers are not entitled to a free copy of reports. A station
representative in the $6-8 million category would receive either
TV or radio reports for a membership fee of $2730, and reports
of both for $3370.
BBM does not publish ratings of radio stations which are not
members. It publishes ratings of TV stations which are not
members only once a year.
The only other supplier of television audience data in Canada
on a regular basis in all provinces is the Media Research
Division of A.C. Nielsen Company of Canada Limited. A
subsidiary of a large U.S.-based market measurement firm
which operates in several countries, Nielsen commenced radio
data compilation in 1959. It ceased to make local market radio
surveys in 1963 and national surveys in 1968 but continued
local and national TV audience measurement. Nielsen also
offers wide-ranging market assessment data for consumer prod
ucts, a much larger operation than its TV data service.
Nielsen's rate structure, like BBM's, is based on a customer's
previous year's broadcast billings or expenditures, but in Niels-
en's case, only with respect to TV advertising.
Both BBM and Nielsen publish extensive reports several
times yearly providing audience viewing data of local market
TV stations, and the three TV networks. BBM reports contain
ing local and national radio data are also published several
times yearly, in separate form.
This audience viewing information is a prime market tool of
the radio and TV advertising industry. It is indispensable to all
substantial advertisers and their advertising agencies who buy
time in the broadcast media, and to the broadcasters whose
revenues come from the sale of broadcast time, and are directly
related to their ratings. Most agencies and broadcasters who
buy and sell time in only one media also wish to have data
regarding the other media to compare relative strengths of the
two for sales purposes.
BBM and Nielsen both rely for their television measurement
on "diaries" completed by viewers in the market area surveyed.
The methodology differs somewhat. Nielsen reporters complete
a questionnaire concerning the viewing of everyone in the
household, a "household diary". BBM reporters complete a
"personal diary" which details only the viewing of the corre
spondent. Predictably BBM and Nielsen each claims that its
methodology is more statistically reliable. It appears that both
are acceptable and generally substitutable products between
which the consumer can make his choice, and some data
recipients prefer one, some the other.
Before the Commission, the respondent alleged
that:—
Advertising agencies have, during the 1979 calendar year,
the option of acquiring from the Respondent either the "radio
data" or the "television data" for the same fee, or both for a
greater fee. The Respondent induces advertising agencies to
acquire the "television data" from the Respondent by in effect
offering to supply the "radio data" on more favourable terms,
namely a discount, if the said agencies agree to acquire its
"television data".
"Station representatives" have, during the 1979 calendar
year, the option of acquiring from the Respondent either the
"radio data" or the "television data" for the same fee, or both
for a greater fee. The Respondent induces those "station
representatives" whose broadcast billings exceeded $500,000.00
in the previous year to acquire the "television data" from the
Respondent by in effect offering to supply the "radio data" on
more favourable terms, namely a discount, if the said "station
representatives" agreed to acquire its "television data".
Advertisers have no option, during the 1979 calendar year, of
separately acquiring from the Respondent the "radio data" or
the "television data". The Respondent, as a condition of supply
ing the "radio data" to advertisers, requires the said advertisers
to acquire its "television data".
As a result of the foregoing, the respondent
contended that BBM, as a major supplier, had
engaged in a "tying arrangement" which had the
effect that competition was or was likely to be
lessened substantially, because the "tie-in" raised
barriers for the entry of newcomers in the business
of broadcast audience measurement. It also imped
ed the expansion and sales of its sole competition
in the television audience measurement business in
Canada, viz. A.C. Nielsen Company of Canada
Limited ("Nielsen"). The respondent thus made
an application pursuant to both paragraphs (a)
and (b) of subsection 31.4(2) of the Act. That
subsection and the other relevant provisions of the
Act for purposes of this application, read as
follows:
31.4 (1) For the purposes of this section,
"tied selling" means
(a) any practice whereby a supplier of a product, as a
condition of supplying the product (the "tying" product) to a
customer, requires that customer to
(i) acquire some other product from the supplier or his
nominee, or
(ii) refrain from using or distributing, in conjunction with
the tying product, another product that is not of a brand or
manufacture designated by the supplier or his nominee,
and
(b) any practice whereby a supplier of a product induces a
customer to meet a condition set out in subparagraph (a)(i)
or (ii) by offering to supply the tying product to him on more
favourable terms or conditions if the customer agrees to meet
the condition set out in either of those subparagraphs.
(2) Where, on application by the Director, and after afford
ing every supplier against whom an order is sought a reasonable
opportunity to be heard, the Commission finds that ... tied
selling, because it is engaged in by a major supplier of a
product in a market or because it is widespread in a market, is
likely to
(a) impede entry into or expansion of a firm in the market,
(b) impede introduction of a product into or expansion of
sales of a product in the market, or
(c) have any other exclusionary effect in the market,
with the result that competition is or is likely to be lessened
substantially, the Commission may make an order directed to
all or any of such suppliers prohibiting them from continuing to
engage in such ... tied selling and containing any other
requirement that, in its opinion, is necessary to overcome the
effects thereof in the market or to restore or stimulate competi
tion in the market.
(4) The Commission shall not make an order under this
section where, in its opinion,
(b) tied selling that is engaged in is reasonable having regard
to the technological relationship between or among the prod
ucts to which it applies, or
and no order made under this section applies in respect of
exclusive dealing, market restriction or tied selling between
or among companies, partnerships and sole proprietorships
that are affiliated.
The application resulted in the Commission's
order dated December 3, 1981 which BBM now
seeks to set aside.
In its memorandum of points of argument, BBM
defined the only issues which, in the event, he
argued on the application, in the following way:-
1. Because it is a co-operative association, rather than a
business in the traditional sense, BBM has "members" but no
"customers", and therefore is not engaged in "tied selling"
within the meaning of s. 31.4(1) CIA.
2. "Tied selling" is an activity which requires both a "supplier"
and a "customer", under s. 31.4 CIA. Because BBM is a
co-operative whose members provide audience measurement
data to themselves, no separate and distinct "supplier" and
"customer" exist in respect of its activities, and therefore an
essential element of the definition of "tied selling" under s.
31.4(1) CIA is missing.
3. BBM does not offer to supply either of its products (radio
reports or television reports) on "more favourable terms or
conditions" if a "customer" agrees to acquire the other product.
4. Part IV.1 CIA and in particular s. 31.4 thereof is ultra vires
Parliament, being legislation in respect of property and civil
rights within the provinces, under s. 92(13) of the Constitution
Acts, 1867-1982 (the "Constitution") (formerly the British
North America Act).
At the outset of their respective submissions,
counsel for the respondent and for the intervenor,
Nielsen, were advised by the Court that they need
only deal with issue numbered (4), the constitu
tional issue. We were all of the opinion that none
of the first three defined issues, supra, had any
merit. No useful purpose would be served in
reviewing the propositions advanced in respect of
any of them.
The fourth issue—the constitutional issue—is a
serious one which requires examination. Stated in
another way it poses the question—can section
31.4, which is in Part IV.1 of the Act [as added
idem], be upheld as being within the legislative
competence of the Parliament of Canada and if so,
under which head or heads of section 91 of the
Constitution Acts, 1867 to 1982? Counsel for all
three parties agreed that if federal legislative
power were to be found it would be under heads 2
(the regulation of trade and commerce), 27 (the
criminal law) and/or the "residual power" under
section 91 "to make Laws for the Peace, Order
and good Government of Canada, in relation to all
matters not coming within the Classes of Subjects
of this Act assigned exclusively to the Legislatures
of the Provinces". All three counsel agreed that
the most likely source of federal legislative author
ity would be found in the trade and commerce
head. It is the jurisprudence relating to that head
which will be examined first.
While over the years since Proprietary Articles
Trade Association v. Attorney-General for
Canada, [1931] A.C. 310 (P.C.), there has been a
series of cases holding that Canadian anti-com
bines legislation is within the criminal law power
of the Parliament of Canada, only the intervenor,
Nielsen, in this case, attempted to justify the
enactment of section 31.4 of the Act as being
empowered under the criminal law—section 91,
head 27. Even its counsel did so only as the third
of his three submissions.
Part IV.1, which as earlier stated includes sec
tion 31.4, was added to the Act in 1975. By section
31.8 [as added idem] it establishes the Restrictive
Trade Practices Commission ("the Commission")
as a court of record for the purposes of the Part. It
imposes the burden of proof upon the person
making an application, in this case, the respond
ent. The Commission, upon the application of the
Director and upon compliance with the require
ments of the Part, is empowered to review the
following practices and to issue orders granting
relief therefrom:
(1) refusal to deal (section 31.2 [as added idem]);
(2) consignment selling (section 31.3 [as added
idem]);
(3) exclusive dealing (section 31.4);
(4) tied selling (section 31.4);
(5) refusal to supply by a foreign seller (section
31.7 [as added idem]).
Section 46.1 of the Act [as added idem, s. 24]
provides for the imposition of penalties upon any
person who contravenes or fails to comply with an
order of the Commission.
Subsection 31.4(2), supra, provides that with
respect to tied selling the Commission must first
find, on the particular facts of the case, that the
tied selling is likely to impede entry into or expan
sion of a firm in the market with the result that
competition is or is likely to be lessened substan
tially, before it may issue an order directed to all
or any suppliers:
(a) prohibiting them from continuing to engage
in tied selling, and
(b) containing any other requirements that, in
its opinion, are necessary to overcome the effects
thereof on the market or to restore or stimulate
competition in the market.
The foregoing provides an outline of the scheme
of the Part. In particular, the objective of the tied
selling provision, section 31.4, is to utilize the
expertise of the Commission to determine whether
the trade practices which are the subject of an
application by the respondent are detrimental to
the public interest for the reasons contemplated by
the section, i.e., they will be if they are found to
have the effect of reducing or eliminating competi
tors in the supply of goods and services or if they
impede or are likely to impede entry of competi
tors into the market.
The starting point in any review of the trade and
commerce head of section 91 is the decision of the
Privy Council in the case of Citizens Insurance
Company of Canada v. Parsons (1881), 7 App.
Cas. 96 (P.C.). In that case the Citizens Insur
ance Company challenged the constitutionality of
an Ontario statute prescribing terms for fire insur
ance policies, on the basis that only the federal
Parliament could regulate trade and commerce.
Having found that, in their context, the words
"trade and commerce" had reference to general
trade and commerce nationally, at page 113 of the
report, Sir Montague Smith concluded:
Construing therefore the words "regulation of trade and
commerce" by the various aids to their interpretation above
suggested, they would include political arrangements in regard
to trade requiring the sanction of parliament, regulation of
trade in matters of interprovincial concern, and it may be that
they would include general regulation of trade affecting the
whole dominion. Their Lordships abstain on the present occa
sion from any attempt to define the limits of the authority of
the dominion parliament in this direction. It is enough for the
decision of the present case to say that, in their view, its
authority to legislate for the regulation of trade and commerce
does not comprehend the power to regulate by legislation the
contracts of a particular business or trade, such as the business
of fire insurance in a single province, and therefore that its
legislative authority does not in the present case conflict or
compete with the power over property and civil rights assigned
to the legislature of Ontario by No. 13 of sect. 92. [Emphasis
added.]
In the intervening years that passage has been
referred to many times. It, together with a preced
ing passage on page 112 as to the limitation to be
attributed to the words in their context, was the
subject of the following observation by Mr. Justice
Dickson [as he then was] in the latest Supreme
Court of Canada decision dealing with subsection
91(2) of the Constitution Act, 1867 [30 & 31
Vict., c. 3 (U.K.) [R.S.C. 1970, Appendix II,
No. 5] (as am. by Canada Act 1982, c. 11 (U.K.),
Schedule to the Constitution Act, 1982, Item 1)]
in Attorney General of Canada v. Canadian Na
tional Transportation, Ltd. et al., [1983] 2 S.C.R.
206, pronounced on October 13, 1983 [at page
258]:
These passages from Parsons establish three important
propositions with regard to the federal trade and commerce
power: (i) it does not correspond to the literal meaning of the
words "regulation of trade and commerce"; (ii) it includes not
only arrangements with regard to international and interprovin-
cial trade but "it may be that ... [it] would include general
regulation of trade affecting the whole dominion"; (iii) it does
not extend to regulating the contracts of a particular business
or trade. Subsequent jurisprudence on the meaning and extent
of s. 91(2) is to a large extent an expansion and an explication
of these three interrelated propositions.
In a decision of the Supreme Court in Labatt
Breweries of Canada Ltd. v. Attorney General of
Canada, [1980] 1 S.C.R. 914, Mr. Justice Estey at
pages 936-937 put the existence of the two
branches of the Parsons decision in this way:
Reverting to the Parsons case, supra, the trade and com
merce head was there described as consisting of two branches.
The first in the words of the judgment includes "political
arrangements in regard to trade requiring the sanction of
Parliament, regulation of trade in matters of interprovincial
concern ...". The second branch is said to "... include gener
al regulation of trade affecting the whole Dominion." The first
branch is illustrated in the succession of cases dealing with the
marketing of natural products commencing with R. v. Eastern
Terminal Elevator Co. and continuing to the recent egg mar
keting judgment in Reference Re Agricultural Products Mar
keting Act.
Since counsel for the respondent conceded that
it is only the second branch of that test which
could have any application in the case at bar, it is
with respect to that proposition that the words of
Estey J. at pages 939 and 940 of the report are
apposite:—
The first successful attempt to breathe life into the second
branch of the Parsons trade and commerce description, supra,
is found in John Deere Plow Co. v. Wharton. The provincial
legislature had attempted to establish regulation in a limited
sense of federally incorporated companies within the provincial
boundaries. The Court determined that such provincial action
was ultra vires as being an invasion of the power of Parliament
to regulate the exercise by federal companies of their powers
throughout the Dominion. This subject should not be left
without adding that the Court there found the constitutional
basis for legislation authorizing the establishment of federal
incorporations in the peace, order and good government clause
while the regulation of their activities fell into the trade and
commerce category. Viscount Haldane, speaking in the Whar-
ton case, supra, stated at p. 340:
... the power to regulate trade and commerce at all events
enables the Parliament of Canada to prescribe to what extent
the powers of companies the objects of which extend to the
entire Dominion should be exercisable, and what limitations
should be placed on such powers. For if it be established that
the Dominion Parliament can create such companies, then it
becomes a question of general interest throughout the
Dominion in what fashion they should be permitted to trade.
(Emphasis added.)
To this date this is still the test in determining whether the
second branch of the trade and commerce power applies; vide
Laskin C.J. in Reference re the Anti-Inflation Act, at p. 426.
What clearly is not of general national concern is the regula
tion of a single trade or industry. Vide In Re Insurance Act,
1910, at pp. 308-9; Eastern Terminal Elevator Co., supra.
Dickson J. in the Canadian National Transpor
tation case, supra, agreed with Estey J. that this
was the correct test in determining whether the
second branch of the trade and commerce power
applies. But, he said [at page 2631:
. I am also of the view—as Estey J.'s treatment of the issue
in Labatt confirms—that the same considerations which led Sir
Montague Smith to limit the scope of the words "regulation of
trade and commerce" in Parsons' case also necessitate a restric
tive reading of the Wharton test of "general interest throughout
the Dominion". The question, of course, is how much is to be
subtracted from these words, and on what basis?
Since the Canadian National Transportation
case is pivotal, in my opinion, to the disposition of
this application, its factual difference should be
pointed out at this juncture. Briefly, the facts are
these. As the result of an information laid by the
Director, the respondents in that case and numer
ous other corporations and individuals, were
charged with having unlawfully conspired to pre
vent or lessen unduly competition in the interpro-
vincial transportation of merchandise in shipments
weighing up to 10,000 pounds from points in Brit-
ish Columbia, Saskatchewan and Manitoba con
trary to paragraph 32(1)(c) of the Combines
Investigation Act [as am. by S.C. 1974-75-76, c.
76, s. 14]. Orders for prohibition were sought to
preclude the prosecutions from being conducted by
or on behalf of the Attorney General of Canada.
The applicants contended that paragraph 32(1) (c)
of the Act was criminal law and that pursuant to
subsection 92(14) of the British North America
Act, 1867 (now the Constitution Acts, 1867 to
1982) only a provincial Attorney General could
prosecute. If that were so, subsection 15(2) of the
Act and section 2(2) of the Criminal Code, which
authorize the federal Attorney General to order
indictments and to conduct proceedings under the
Act, were ultra vires the Parliament of Canada.
The Alberta Court of Appeal allowed an appeal
from the Trial Division in Alberta (which had
dismissed the applications) and granted the prohi
bition order.
Two questions were propounded for the decision
of the Supreme Court which, briefly stated, were:
(1) Does the constitutional validity of paragraph
32(1)(c) of the Act depend upon subsection
91(27) of the British North America Act?
Three members of the Court, Ritchie, Estey
and McIntyre JJ., concurred with the Chief
Justice in answering the question in the
affirmative.
Dickson J. answered "yes" in that it was
supportable under subsection (27) and also
supportable under subsection 91(2).
Beetz and Lamer JJ. answered "no".
(2) If so, were section 2 of the Criminal Code and
subsection 15(2) of the Combines Investiga-
tion Act within the competence of Parliament
to enact?
The Chief Justice and Ritchie, Estey and
McIntyre JJ. answered "yes". Dickson J.
answered "yes" but held subsection 2(2) of
the Code ultra vires insofar as it authorized
the Attorney General of Canada to initiate
and conduct prosecutions resting on offences
created under federal legislation enacted
solely under subsection 91(27) of the Consti
tution Act. Beetz and Lamer JJ. did not find
it necessary to answer the second question
having answered the first question in the
negative.
Dickson J. exhaustively analyzed the jurispru
dence relating to subsection 91(2) of the Constitu
tion Act. It is the reasoning which he followed in
concluding that paragraph 32(1)(c) of the Act was
ultra vires the Parliament of Canada which, in my
view, is equally applicable in the case at bar.
Counsel for the applicant sought to distinguish
the Canadian National case on the basis that Part
V of the Act, in which paragraph 32(1)(c)
appears, is a legitimate regulation of trade author
ized not by subsection 91(2) but by subsection
91(27) of the Constitution Act, as the majority of
the Supreme Court found. Part IV.1 on the other
hand cannot be supported as an exercise of the
criminal law power nor is it authorized as a matter
of trade and commerce under subsection 91(2). It
is, in counsel's submission, purely a matter of
property and civil rights within the competence of
the provincial legislatures. He pointed to various
provincial business practices and business protec
tion acts as examples of at least some of the
provinces occupying the field. However, he had to
concede that the remedies available were usually
as between the customer and his supplier by rescis
sion of contract or the right to disavow the con
tract within a "cooling off' period, for example,
rather than the imposition of prohibition orders or
penalties of general application. In his submission,
if Dickson J. had had to consider Part IV.1 he
would, for these reasons, have reached a different
conclusion than that which he reached in dealing
with Part V of the Act.
I do not agree. In so saying I utilize the
approach to the determination whether the author
ization for the enactment of the provision can be
found in subsection 91(2), formulated by Mr. Jus
tice Dickson after his most thorough analysis of
the applicable case law. It must first be remem
bered that it is only section 31.4 of the Act which
is here being attacked, not the whole of Part IV.1.
That being so, what Dickson J. said at pages 270
and 271 of his reasons is applicable:—
The correct approach, where there is some doubt that the
impugned provision has the same constitutional characteriza
tion as the Act in which it is found, is to start with the
challenged section rather than with a demonstration of the
validity of the statute as a whole. I do not think, however, this
means that the section in question must be read in isolation. If
the claim to constitutional validity is based on the contention
that the impugned provision is part of a regulatory scheme it
would seem necessary to read it in its context. If it can in fact
be seen as part of such a scheme, attention will then shift to the
constitutionality of the scheme as a whole. This is essentially
the approach suggested by the Chief Justice in his examination
of the constitutionality of the then s. 7(e) of the Trade Marks
Act in MacDonald v. Vapor Canada Ltd., supra at p. 159:
Since s. 7(e) is not a trade mark provision, its inclusion in the
Trade Marks Act does not stamp it with validity merely
because that Act in its main provisions is quantitatively
unchallenged. I come back to the question whether s. 7, and
particularly s. 7(e), can stand as part of the scheme of the
Trade Marks Act and other related federal legislation. If it
can stand alone, it needs no other support; if not, it may take
on a valid constitutional cast by the context and association
in which it is fixed as complementary provision serving to
reinforce other admittedly valid provisions. [Emphasis
added.]
He then proceeded to find that paragraph
32(1)(c) was not an isolated provision dependent
for its enforcement by private redress without
monitoring by a regulatory agency—as was neces
sary in the case of paragraph 7(e) of the Trade
Marks Act which was the subject of scrutiny in the
MacDonald et al. v. Vapor Canada Ltd., [1977] 2
S.C.R. 134 case. It was, rather, part of an enact-
ment—the Act—which provides complex adminis
trative and regulatory machinery. He pointed out
at pages 275 and 276 that:—
Part I of the Act provides for a system of investigation and
research under which inquiries can be made by the Director of
Investigations and Research. Part II supplements the investiga-
tory procedure by provisions which allow the Director to pre
pare a report to be submitted to the Restrictive Trade Practices
Commission, which in turn reports to the Minister of Consumer
and Corporate Affairs assessing the effect on the public interest
of the arrangements and practices in question and making
recommendations as to the application of remedies to these
arrangements and practices. These provisions are of relevance
to an assessment of s. 32(1)(c) because they indicate the
existence of a process by which a policy is evolved to give
substance to the offence of "unduly" restricting competition.
[Emphasis added.]
Expanding the focus even wider, the criminal remedies in
Part V are not the only means of enforcing the Act and its
regulatory policies. Sections 28-31 contain additional remedies
enforceable by various judicial and governmental authorities in
a variety of forums. Without passing on the wisdom or the
constitutionality of any of these provisions, it is clear their
purpose is to provide a flexible repertoire of remedial responses
to enforce the policies underlying the Act. And the existence of
ss. 28-31 is yet another indication that s. 32(1) is part of a
regulatory scheme. [Emphasis added.]
It is my opinion that the assessments as to the
characterization of paragraph 32(1)(c) in the con
text of the scheme of the Act in each of the above
passages apply with equal force to section 31.4. It
is unnecessary to amplify them to show why that is
the case. Even a cursory analysis of Parts IV, IV.1
and V shows that section 31.4 is not an isolated
provision standing on its own but is rather an
integral part of a discernible scheme.
As Dickson J. pointed out having found that the
impugned provision—in this case section 31.4—is
not an isolated provision but rather forms part of a
regulatory scheme, it must next be determined
whether the scheme is valid under the second
branch of the test in respect of the applicability of
subsection 91(2) as set forth in the Parsons case.
He said [at page 276]: "The fact of forming part
of such a scheme is but one indicium of validity
and not in itself determinative." The test—is the
legislation concerned with matters of general inter
est throughout Canada—has spawned various
other indicia in the cases to ascertain whether the
legislation meets the test. Dickson J. referred to
some of them at pages 267 and 268:
(a) The presence of a national regulatory scheme;
(b) the oversight of a regulatory agency;
(c) a concern with trade in general rather than
with an aspect of a particular business;
(d) the provinces jointly and severally would be
constitutionally incapable of passing such an
enactment; and
(e) the failure to include one or more provinces or
localities would jeopardize successful opera
tion in other parts of the country.
The list is neither exhaustive nor is the presence
of any or all of them necessarily decisive. Linden J.
in the High Court of Ontario in R. v. Hoffman-
Laroche Limited (1980), 28 O.R. (2d) 164, at
pages 191-192, put the position in a way which I
adopt:
... I am of the view that s. 34(1)(c) can also be constitutionally
supported on the basis of s. 91(2). It is part of a legislative
scheme aimed at deterring a wide range of unfair competitive
practices that affect trade and commerce generally across
Canada, and is not limited to a single industry, commodity or
area. The conduct being prohibited is generally of national and
of international scope. The presence or absence of healthy
competition may affect the welfare of the economy of the entire
nation. It is, therefore, within the sphere of the federal Parlia
ment to seek to regulate such competition in the interest of all
Canadians. (It would likely be otherwise, however, if the com
petition being regulated were merely of a local nature, in which
case, the matter might not fall within the federal trade and
commerce power.)
I am of the opinion that section 31.4 meets all of
the criteria above referred to and is, without more,
valid federal legislation under subsection 91(2) of
the Constitution Act, 1867. Read in context with
the other provisions of the Act, it is clearly part of
a complex regulatory scheme, not aimed at a
particular business or industry but at the general
regulation of trade and commerce throughout
Canada for the benefit of Canadians in general.
Inevitably individual businesses will be affected
and touched by its application. But, if that were to
be determinative of its validity and meant that it
was invalid the obvious necessity for its existence
for the betterment of Canadians generally would
be meaningless—it would be a toothless tiger. By
the same token, its valid existence does not
encroach upon the authority of the provinces to
enact legislation (as many have done) to regulate
the business practices of those very businesses, for
the protection of the citizens of those provinces as
matters of property and civil rights. The authority
provided by subsection 91(2) and by subsection
92(13) are, as I see them in this context, comple
mentary. One does not erode the other. Resort
may be had to each for the purpose of ensuring
that (a) competition remains fair and keeps open
for buyers throughout the county adequate, real
options, on the one hand, and (b) on the other, that
those buyers are protected from sharp, unethical
business practices in their dealings with individual
businesses or industries.
In keeping with the practice in constitutional
cases, having found section 31.4 to be valid under
the trade and commerce power, it is unnecessary
and undesirable for me to decide whether or not it
could also be supported under either or both the
criminal law power and the general authority pro
vided by the residual power to make laws for the
peace, order and good government of Canada.
For all of the foregoing reasons, I would dismiss
the section 28 application.
HUGESSEN J.: I agree.
CULLITON D.J.: I concur.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.