T-3180-90
Southam Inc., Lower Mainland Publishing Ltd.,
Rim Publishing Inc., Yellow Cedar Properties
Ltd., North Shore Free Press Ltd., Specialty Pub
lishers Inc., Elty Publications Ltd. (Plaintiffs)
v.
Attorney General of Canada, the Competition Tri
bunal and the Director of Investigation and
Research under the Competition Act (Defendants)
INDEXED AS: SOUTHAM INC. V. CANADA (ATTORNEY GENER
AL) (T.D.)
Trial Division, MacKay J. Toronto, January 24;
Ottawa, February 13, 1991.
Combines — Application to restrain proceedings before
Competition Tribunal until decisions rendered by appellate
courts on constitutionality of Competition Tribunal — Princi
ples governing interlocutory injunctions applied — Conflicting
decisions on constitutional issues indicating serious questions
raised — Likelihood of irreparable harm as applicants
exposed to potentially unnecessary proceedings and expendi
tures of time and money not compensable if successful on
constitutional issues — Potential harm to public outweighs
potential harm to applicants if stay granted and constitution
ality of Tribunal upheld.
Practice — Stay of proceedings — Same principles govern
ing applications for stay of proceedings and interlocutory
injunctions — Applicant must demonstrate serious question to
be tried, irreparable harm, and balance of convenience sup
porting stay — Where legislation governing proceedings sub
ject to constitutional challenge, public interest special factor to
be weighed in assessing balance of convenience.
Judges and courts — Judicial comity — Quebec Superior
Court holding Competition Act, s. 92 infringing Bill of Rights
and Charter, and Competition Tribunal infringing constitu
tional requirements of impartiality and independence — Com
petition Tribunal upholding own constitutionality — Both
decisions under appeal — Motion to prohibit proceedings
before Tribunal until appellate decisions resolving constitu
tional issues rendered — Federal Court respecting decision in
Quebec case but bound to exercise own discretion.
Southam Inc., which publishes two daily newspapers cir
culated in Vancouver and the Lower Mainland of British
Columbia, acquired direct and indirect interests in a number of
other publications and printing businesses in the Lower Main
land. It and other applicant companies executed hold-separate
undertakings by which they agreed to maintain the status quo
which existed at the time Southam had acquired its interests
pending decisions of the Director following his inquiry. When
Southam gave notice that it would not extend those undertak
ings, the Director applied to the Competition Tribunal for
orders requiring Southam to divest its interests in three
publications.
This was an application to restrain any proceedings pending
before the Competition Tribunal relating to an application by
the Director of Investigation and Research under section 92 of
the Competition Act. Section 92 authorizes the Tribunal to
order dissolution of a merger or that parties not proceed with a
merger. The applicants are also plaintiffs in an action seeking
declarations that Competition Act, section 92, is unconstitu
tional and that the Tribunal as constituted violates the Charter
and is contrary to Constitution Act, 1867, sections 96 and 101.
The Quebec Superior Court has held that section 92 infringes
the Bill of Rights and the Charter, and that the Tribunal
infringed constitutional requirements of impartiality and in
dependence in that its membership includes persons connected
with private and public institutions. But, in NutraSweet, the
Competition Tribunal upheld its own constitutionality. Both
decisions have been appealed. The Quebec Court of Appeal has
upheld an order staying proceedings before the Competition
Tribunal pending determination of the constitutional issues.
The applicants seek to restrain proceedings before the Tribunal
until decisions are rendered by appellate courts in those cases,
or until final determination of their action in this Court.
Held, the application should be dismissed.
The principles governing applications for stays of proceedings
in cases of this nature are the same as those governing applica
tions for interlocutory injunctions. The party seeking a stay
must demonstrate that there exists a serious question to be
tried, that it would suffer irreparable harm if a stay is not
granted and that other factors to be considered in the balance
of convenience support the grant of a stay. Where a stay is
sought on grounds that legislation governing the proceedings is
subject to constitutional challenge, the public interest must be
considered a special factor to be weighed in assessing the
balance of convenience.
The fact that there are conflicting decisions on the constitu
tional issues indicates that serious questions have been raised.
Pending resolution of the constitutional issues, there is likeli
hood of irreparable harm to the applicants if the proceedings of
the Competition Tribunal are not restrained. To proceed before
further resolution of the constitutional issues, would expose the
applicants to proceedings that may be unnecessary, and expen
ditures of time and money that are not compensable should the
constitutional issues be ultimately determined in applicants'
favour. It was judicially noted that those commitments may be
substantial. That a superior court has determined the constitu
tional issues in a manner that supports applicants' position
makes it more likely that their objections to the Tribunal
proceedings will be upheld. The concern about possible release
of confidential business information in the course of proceed
ings before the Tribunal is not a basis for finding irreparable
harm as the Tribunal is empowered to issue confidentiality
orders. The release of confidential information may be a possi
bility, but its likelihood at this stage cannot be deemed a
probable consequence of Tribunal proceedings. The outcome of
the proceedings (i.e. orders requiring Southam to divest itself of
interests in certain publications) is not a foregone conclusion.
The applicants could, moreover, apply to restrain application of
the orders until the constitutional issues are resolved.
As to the balance of convenience, the potential of harm to the
public interest outweighs the potential of harm to the appli
cants. If a stay or restraint order were granted but the constitu
tion of the Tribunal was subsequently upheld and its legislated
jurisdiction in relation to mergers found to be valid, the public
interest would suffer harm in a variety of ways. The alleged
anti-competitive effects of the merger may not all be deterred
despite hold-separate undertakings. A stay order may have a
precedential effect in other similar proceedings, at least those
involving mergers before the Competition Tribunal. Restrain
ing proceedings before the Tribunal indefinitely until the con
stitutional issues are resolved would complicate problems of
evidence and of argument at such delayed hearings of the
Tribunal. Moreover, it would add to the uncertainty concerning
the law in relation to mergers and the operations of the
Tribunal, not only pending resolution of the constitutional
issues, but thereafter until disposition of the proceedings which
would be delayed by the stay here sought.
As to the argument advocating judicial comity — the
Quebec Court of Appeal having upheld a stay of proceedings
before the Competition Tribunal — the Court respected that
decision but had to exercise its own discretion.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canadian Bill of Rights, R.S.C., 1985, Appendix III, s.
1(c).
Canadian Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II,
No. 44], s. 2(d).
Competition Act, R.S.C., 1985, c. C-34 (as am. by
R.S.C., 1985 (2nd Supp.), c. 19, s. 19), ss. 1.1 (as
enacted idem), 10 (as am. idem, s. 23), 45 (as am.
idem, s. 30), 45.1 (as enacted idem, s. 31), 92 (as
enacted idem, s. 45), 97 (as enacted idem).
Competition Tribunal Act, R.S.C., 1985 (2nd Supp.), c.
19, ss. 8(2), 16.
Competition Tribunal Rules, SOR/87-373, RR. 15,
40(2).
Constitution Act, 1867, 30 & 31 Vict., c. 3 (U.K.) (as
am. by Canada Act 1982, 1982, c. 11 (U.K.), Schedule
to the Constitution Act, 1982, Item 1) [R.S.C., 1985,
Appendix II, No. 5], ss. 96, 101.
Federal Court Act, R.S.C., 1985, c. F-7, s. 18.
Federal Court Rules, C.R.C., c. 663, RR. 320(1) (as am.
by SOR/88-221, s. 5), 332(1).
CASES JUDICIALLY CONSIDERED
APPLIED:
Manitoba (Attorney General) v. Metropolitan Stores
Ltd., [1987] 1 S.C.R. 110; (1987), 38 D.L.R. (4th) 321;
[1987] 3 W.W.R. 1; 46 Man. R. (2d) 241; 25 Admin.
L.R. 20; 87 CLLC 14,015; 18 C.P.C. (2d) 273; 73 N.R.
341.
DISTINGUISHED:
Yri-York Ltd. v. Canada (Attorney General), [1988] 3
F.C. 186; (1988), 30 Admin. L.R. 1; 16 F.T.R. 319; 83
N.R. 195 (C.A.).
CONSIDERED:
Couture Inc. v. Canada (Attorney-General) (1990), 69
D.L.R. (4th) 635 (Que. S.C.); Canada (Director of
Investigation and Research) v. NutraSweet Co. (1990),
32 C.P.R. (3d) 1 (Comp. Trib.); Canada (Attorney-Gen
eral) v. Alex Couture Inc., [1987] R.J.Q. 1971; (1987),
14 Q.A.C. 259; 18 C.P.R. (3d) 382 (C.A.); General
Motors of Canada Ltd. v. City National Leasing, [1989]
1 S.C.R. 641; (1989), 58 D.L.R. (4th) 255; 24 C.P.R.
(3d) 417; 93 N.R. 326; 32 O.A.C. 332.
AUTHORS CITED
McKenna Christine Boersma "Hold Separate Orders in
Government Antimerger suits" (1982), 70 Georgetown
L.J. 1337.
Note "Preliminary Relief for the Government under Sec
tion 7 of the Clayton Act" (1965), 79 Harv. L.R. 391.
COUNSEL:
G. F. Leslie and R. E. Kwinter for plaintiffs.
S. Wong and L. Rhul for defendants.
SOLICITORS:
Blake, Cassels & Graydon, Toronto, for
plaintiffs.
Deputy Attorney General of Canada for
defendants.
The following are the reasons for order ren
dered in English by
MACKAY J.: This is an application, pursuant to
section 18 of the Federal Court Act,' for an order
in the nature of prohibition, restraining any pro
ceedings pending before the Competition
Tribunal 2 relating to an application by the Direc
tor of Investigation and Research pursuant to sec
tion 92 of the Competition Act,' filed with the
Tribunal November 29, 1990.
The Background
The applicants are plaintiffs in an action com
menced by statement of claim filed in this Court
December 3, 1990, by which they seek declara
tions that certain provisions of the Competition
Act, including section 92, and the Competition
Tribunal Act contravene provisions of the Canadi-
an Charter of Rights and Freedoms 4 and of the
Canadian Bill of Rights 5 and that the Tribunal as
constituted violates the Charter and is contrary to
sections 96 and 101 of the Constitution Act, 1867
[30 & 31 Vict., c. 3 (U.K.) (as am. by Canada Act
1982, 1982, c. 11 (U.K.), Schedule to the Consti
tution Act, 1982, Item 1) [R.S.C., 1985, Appendix
II, No. 5]]. The action also seeks an order prohib
iting proceedings before the Competition Tribunal
in relation to the application by the Director. The
notice of motion initiating this application for a
restraining order, originally filed December 4,
1990, was replaced by a notice of return of motion
dated December 17, 1990, essentially in the same
' R.S.C., 1985, c. F-7.
2 As established by [Competition Tribunal Act] R.S.C., 1985
(2nd Supp.), c. 19.
3 R.S.C., 1985, c. C-34, as am. [by R.S.C., 1985 (2nd
Supp.), c. 19, ss. 19, 45].
4 See Constitution Act, 1982, Part I, as enacted by the
Canada Act, 1982 (U.K.), Schedule B, (in R.S.C., 1985,
Appendix II, No. 44).
5 S.C. 1960, c. 44, Part I, as amended. (See R.S.C., 1985,
Appendix III.)
substantive terms. The applicants seek an order
restraining any proceedings before the Tribunal
until decisions and any appeals therefrom are ren
dered in two cases pending before appellate
courts, 6 in which the principal issues raised in the
applicants' statement of claim are under consider
ation, or until final determination of the action
initiated in this Court by the applicants.
At the hearing of this application, the plaintiffs,
all of whom are named as respondents in the
application by the Director of Investigation and
Research to the Competition Tribunal, were to
gether represented by counsel. The defendants, the
Attorney General of Canada and the Director of
Investigation and Research under the Competition
Act, were together represented by counsel. Counsel
did not appear on behalf of the Competition
Tribunal.
The applicant Southam, a company incorpo
rated under the laws of Canada with its head
office in Toronto, carries on business of publishing
newspapers and related businesses in various prov
inces of Canada. Through a wholly-owned subsidi
ary, incorporated in British Columbia, it owns and
publishes two daily newspapers, the Province and
the Vancouver Sun, both of which are circulated
throughout the Vancouver Metropolitan area and
the Lower Mainland. The proceedings initiated
before the Competition Tribunal arise out of steps
undertaken by Southam to extend its publishing
and printing operations by acquisition of other
enterprises in the Lower Mainland of British
Columbia.
6 Couture Inc. v. Canada (Attorney-General) (1990), 69
D.L.R. (4th) 635 (Que. S.C.), appeal pending Que. C.A.;
Canada (Director of Investigation and Research) v. Nutra-
Sweet Co. (1990), 32 C.P.R. (3d) 1 (Comp. Trib.), appeal
pending F.C.A.
By a series of transactions between and among
the plaintiffs and others on January 27, 1989 and
later on May 8, 1990, Southam acquired direct
and indirect interests in some 13 community news
papers (including The Vancouver Courier and the
North Shore News), a real estate advertising pub
lication (the Real Estate Weekly), three flyer
distribution businesses and two printing businesses,
all operating in the Lower Mainland of British
Columbia.
In advance of the first of those transactions by
which Southam acquired a minority interest in one
of the plaintiff companies, in December 1988
Southam advised the Director of Investigation and
Research about that transaction. Thereafter it pro
vided such information as the Director requested
and in March of 1989 the Director confirmed in
writing, as Southam had requested, that this initial
transaction "will not, in the opinion of the Director
of Investigation and Research, cause him to com
mence an inquiry under section 10 [as am. idem, s.
23] of the Competition Act or to make an applica
tion to the Competition Tribunal under section 92
of the Act". That opinion was said to be subject to
the provisions of section 97 [as enacted idem, s.
45] of the Act which provides that an application
may be made in respect of a merger (i.e., pursuant
to section 92) up to three years after it has been
substantially completed.
Apparently no advance information was pro
vided to the Director about the later transactions
in May 1990 which led to Southam's acquisition of
direct and indirect interests in the other applicant
companies and in a number of publications. There
after, at the request of the Director, Southam
provided information about these transactions and
on June 7, 1990 Southam and other applicant
companies executed by their officers hold-separate
undertakings by which they agreed that stipulated
steps would be undertaken, all designed to main
tain the status quo as it existed at the time South-
am had acquired its interests, without further
change in the relations or integration of the vari
ous plaintiff companies and their publications,
pending decisions of the Director following his
inquiry concerning the merger constituted by the
transactions. Those hold-separate undertakings,
made for an interim period, were extended from
time to time and were amended apparently by
exempting businesses and publications which the
Director indicated were of no further concern to
him in his enquiry. Notice was given in November
on behalf of Southam that the hold-separate
undertakings would not be further extended.
Thereafter, as noted, the Director made applica
tion to the Competition Tribunal for orders which,
if granted, would require Southam to divest its
interests in the three publications noted, that is,
The Vancouver Courier, the North Shore News
and the Real Estate Weekly.
When the application was filed with the Compe
tition Tribunal, when the action and this motion
by the applicants were commenced and when this
matter was heard, there were decisions, now pend
ing appeal, concerning the principal issues raised
in the applicants' action. Thus, in Couture Inc. v.
Canada (Attorney-General) 7 by decision of April
6, 1990, Mr. Justice Philippon of the Quebec
Superior Court held that provisions of the Compe
tition Act, including section 92, which authorizes
the Competition Tribunal to order dissolution of a
merger or that parties not proceed with a merger,
infringe the rights of association protected under
paragraph 1(c) of the Canadian Bill of Rights and
paragraph 2(d) of the Canadian Charter of Rights
and Freedoms. He also held that the Competition
Tribunal was a court with broad powers of investi
gation and decision and that it infringed constitu
tional requirements of impartiality and indepen
dence because of the inclusion of lay persons who
maintain connections with public and private insti
tutions. An appeal to the Quebec Court of Appeal
is now pending in that case. The second decision,
dated October 4, 1990, by the Competition Tri
bunal itself in NutraSweet,' reached the opposite
conclusion from that of Philippon J. in Couture
Inc. in relation to the issue of the constitutionality
of the Tribunal. That decision has been appealed,
7 Supra, note 6.
e Supra, note 6.
in accord with the Competition Tribunal Act to
the Federal Court of Appeal.
One other decision of relevance for this applica
tion was rendered by the Quebec Court of Appeal
in Canada (Attorney-General) v. Alex Couture
Inc. 9 There the Court upheld the grant by the
motions judge of the Superior Court of an order
staying proceedings before the Competition Tri
bunal until the date set for hearing of the action to
declare void and inoperative certain provisions of
the Competition Act, the action which led to the
later decision of Philippon J. Subject to undertak
ings by the companies involved to limit integration
of the operations constituting the merger there in
question, the stay order was extended pending
decision of the constitutional issues. 10
The issue and the test for its resolution
The issue raised by this application is whether
this Court should exercise its discretion under
section 18 of the Federal Court Act to restrain
proceedings of the Competition Tribunal. Jurisdic
tion to do so, and parallel jurisdiction under sec
tion 50, was settled by the Court of Appeal in
Yri-York Ltd. v. Canada (Attorney General)."
The parties are agreed that the appropriate test
governing the exercise of judicial discretion in
applications for restraints, or stays, of proceedings
on the basis of constitutional challenge is that set
out by Mr. Justice Beetz in Manitoba (Attorney
General) v. Metropolitan Stores Ltd. 12 In that
case Mr. Justice Beetz for the Court decided that
the principles governing applications for stays of
proceedings in cases of this nature were the same
as those governing applications for interlocutory
injunctions. That is, the party seeking a stay must
demonstrate that there exists a serious question to
9 [1987] R.J.Q. 1971; (1987), 18 C.P.R. (3d) 382 (C.A.).
10 Per Philippon J. in Couture Inc., supra, note 6, at p. 640.
" [1988] 3 F.C. 186 (C.A.), per Heald J.A. at pp. 195-200.
12 [1987] 1 S.C.R. 110.
be tried, that it would suffer irreparable harm if a
stay is not granted and that other factors to be
considered in the balance of convenience support
the grant of a stay. Where a stay is sought on
grounds that legislation governing the proceedings
is subject to constitutional challenge, Beetz J. held
that the public interest must be considered a spe
cial factor to be weighed in assessing the balance
of convenience.' 3
Serious issues
For the applicants it is argued, and counsel for
the respondents concedes, that the constitutional
questions raised in the action initiated by the
applicants do present serious issues to be tried. The
fact that the principal issues have been decided by
the Quebec Superior Court in favour of the sub
missions made by the applicants, though that deci
sion is pending appeal, and that some of the same
issues have been determined otherwise by the
Competition Tribunal, a decision pending appeal
in the Federal Court of Appeal, is sufficient indi
cation that serious questions have been raised.
Irreparable harm to the applicants
The second requirement to be met by the appli
cants, in accord with the test set by Metropolitan
Stores, is to persuade the Court that they will
suffer irreparable harm if proceedings before the
Competition Tribunal are not restrained pending
resolution of constitutional challenges to the gov
erning legislation. Irreparable harm is, of course,
harm not readily compensable in damages.
The irreparable harm anticipated by the appli
cants, if proceedings before the Competition Tri
bunal are continued and it is subsequently deter
mined that those are invalid, is expressed in an
13 Idem, at p. 149.
affidavit sworn by Paul Renaud, Vice-President,
Finance, of the Southam Newspaper Group, filed
in support of the application. The relevant portion
(paragraph 13) states:
I am advised by counsel and do verily believe that, if there
were a full Tribunal hearing on the merits, Southam will suffer
irreparable harm including:
a) vast amounts of management time and money will be
expended preparing for and attending the Tribunal hearings,
which could ultimately be found to be null and void;
b) Tribunal hearings would involve extensive public disclo
sure of confidential information pertaining to Southam and its
business operations in the form of productions and oral evi
dence under oath which has the potential to damage Southam's
competitive and business position. That is particularly so given
that interventions may be granted to persons who are adverse in
interest to Southam; and
c) in the event that the Director's Application is successful,
Southam may be required to divest some or all of the assets
which are the subject of the Application. These assets could
likely not be re-acquired in the event that the Tribunal proceed
ings were subsequently struck down on constitutional grounds.
Also filed on behalf of the applicants, on Janu-
ary 23, 1991, the day prior to the hearing of this
application, was an affidavit of John F. Howard, a
partner in the firm of solicitors representing the
applicants. This affidavit recounts the affiant's
experience with other protracted proceedings
before the Competition Tribunal where the Direc
tor of Investigation and Research sought a consent
order in relation to a merger. The affidavit affirms
that subparagraphs (a) and (c) of the Renaud
affidavit above describe potential harm which
"fully accords with my experience in proceedings
of this kind", and that subparagraph (b) sets out
the possibility of disclosure of confidential infor
mation which could result, though that cannot be
predicted with certainty. Indeed, in the last regard,
the only experience of the affiant, referred to in his
affidavit, was that the Tribunal had granted orders
protecting proprietary business information from
public disclosure.
Counsel for the respondents had a number of
objections to admission of this "evidence" as set
out in these affidavits. They are said to contravene
Court Rule 332(1) [Federal Court Rules, C.R.C.,
c. 663]. 14 Counsel cited several cases in which
affidavits containing hearsay statements as to
belief of the witness were not admitted because the
source of the information was not identified (here
"counsel" was said not to be identified in the
introductory portion of the paragraph from the
Renaud affidavit), or the grounds for the stated
belief were not set out. Counsel points as well to
decisions in which dissatisfaction has been
expressed about affidavits provided by solicitors.
Moreover, it is said it is not clear in the Renaud
affidavit whether "counsel", unnamed, is advising
about irreparable harm, a matter that is within the
knowledge and belief of the applicants, and for the
Howard affidavit, it is said there is no qualifica
tion of the affiant as an expert on proceedings
before the Competition Tribunal and that his
experience in another unrelated case is by no
means relevant to the situation of Southam and
other applicants here. Finally, objection is taken to
the Howard affidavit as not complying with Feder
al Court Rule 320(1) [as am. by SOR/88-221, s.
5]. 15 Counsel for the respondents did note that if
the Howard affidavit were admitted and proved to
be a major factor in the decision of this matter, his
objection to its admission would be pursued since
14 Federal Court Rule 332(1) provides:
Rule 332. (1) Affidavits shall be confined to such facts as
the witness is able of his own knowledge to prove, except
on interlocutory motions on which statements as to his
belief with the grounds thereof may be admitted.
15 Federal Court Rule 320(1) provides:
Rule 320. (1) Unless the court otherwise orders, the
motion is one to which Rule 321.1 applies or the motion is
made ex parte, a notice of motion, together with support
ing affidavits, shall be filed at least two clear days before
the day set out in the notice for the hearing of the motion.
in view of its late filing he had no opportunity for
instructions nor to consider cross-examination.
In my view, none of these technical exceptions
are sufficient for this Court to rule against admis
sion of paragraph 13 of the Renaud affidavit or
the Howard affidavit. While the former is not well
drafted and the Howard affidavit is not directly
relevant to the question of irreparable harm the
applicants here might suffer, both do go to the
background against which the applicants, through
the affidavit of Renaud, interpreted as expressing
his beliefs based on advice of counsel about the
nature of proceedings before the Tribunal, may be
said to perceive the prospect of irreparable harm if
proceedings of the Competition Tribunal are not
restrained. My conclusion is to admit this affidavit
evidence and avoid resolution of this application on
technical grounds when, at the hearing before me,
counsel for the respondents conceded that the pro
ceedings before the Competition Tribunal in this
matter are likely to involve time and commitment
by management and their solicitors and expense,
which will not be compensated in any event. I note
also that in the respondents' memorandum of fact
and law (paragraph 40), relating to another aspect
of this application, it is said that an application
under Part VIII of the Competition Act [as enact
ed idem] (which includes the proceedings in rela
tion to the applicants here) involves consideration
of complex legal and economic questions. It seems
to me there is no disagreement with the assertion
on behalf of the applicants that proceedings before
the Tribunal are likely to involve the expenditure
of time and money for which there would be no
compensation even if ultimately those proceedings,
should they go forward, are found to be invalid.
Before dealing further with this concern of the
applicants, let me say that I am not persuaded that
there is any basis for finding a likelihood of irrepa
rable harm based on the other concerns they raise.
The concern about possible release of confidential
business information in the course of proceedings
before the Tribunal, while it may be a matter of
concern to the applicants, provides no basis for
finding irreparable harm. The Tribunal is empow
ered to issue confidentiality orders, ' 6 and orders
issued in NutraSweet in relation to confidentiality
of documents were referred to in argument, as
examples, by counsel for the respondents. Counsel
for the applicants, however, points to their experi
ence in relation to the filing of the application
dealing with their agreements, when they had
argued that some of the information included in
the Director's application should be sealed in con
fidence, but that submission was not accepted at
that stage by the presiding judicial member of the
Tribunal. Despite that experience, it is my under
standing that reasoned applications for treatment
in confidence of particular documentary evidence
produced by the applicants, or even of oral tes
timony, particularly containing information that
might be of commercial value to competitors of the
applicants, will be seriously considered by the Tri
bunal. That would seem to be supported implicitly
by the affidavit of Howard. In short, the release of
confidential information may be a possibility, but
its likelihood at this stage can hardly be deemed a
probable consequence of Tribunal proceedings,
and concern about this is not a basis for finding
irreparable harm.
It is true that if proceedings continue the Com
petition Tribunal may make the orders sought by
the Director of Investigation and Research, requir
ing Southam and some other applicants to divest
interests in certain publications. No doubt orders
of this sort would have serious consequences for
the applicants. The orders would, however, only be
made after a hearing in which the applicants,
assuming they believe that their agreements do not
contravene the Competition Act, have full oppor-
16 The Competition Tribunal Act, supra, note 2, s. 8(2) vests
the Tribunal with "all such powers, rights and privileges as are
vested in a superior court of record", and s. 16 authorizes the
Tribunal to make rules for regulating its practice and proce
dure. Under the Competition Tribunal Rules, SOR/87-373, s.
15 provides for determination by the Tribunal of a request that
a document not be accessible to the public or to particular
persons; and s. 40(2) provides for the Tribunal, upon motion, to
order that proceedings not be open to the public.
tunity to persuade the Tribunal of the merits of
their case. In short, the outcome of the proceedings
cannot be assumed to be a foregone conclusion.
Moreover, if proceedings continue before the Com
petition Tribunal and orders sought by the Direc
tor are made before the constitutional issues now
raised are settled, the applicants would not be
foreclosed from applying to restrain application of
the orders until constitutional issues are resolved.
The third concern expressed in the Renaud affida
vit as a ground of likely irreparable harm is that if
divesting were to be ordered, the assets divested,
and the Tribunal's proceedings subsequently found
invalid on constitutional grounds, then acquisition
again of the assets divested would be unlikely. This
series of conditional events is, in my view, entirely
too speculative a basis for a finding of irreparable
harm.
We are left then with the applicants' concern
about participation in proceedings which may ulti
mately be found to be a nullity as a basis for
finding irreparable harm. Recognizing that time
and money will be expended by the applicants in
connection with proceedings before the Competi
tion Tribunal, in all probability before final resolu
tion of the constitutional issues they have raised,
the respondents urge there is no factual or opinion
evidence of whether that expenditure will be sig
nificant. Yet, in a sense any opinion about prospec
tive irreparable harm, a future contingency, is
inevitably a matter of belief and the only real
question can be whether the harm anticipated is
reasonably based. At this stage no one could pre
dict with accuracy commitments that may be
required for proceedings that in all probability will
be contested by the applicants. In my view, the
Court in the circumstances of this case, can take
judicial notice that it is reasonable to anticipate
those commitments may be substantial before the
constitutional issues are finally resolved. Even if
this be so, the question is whether that constitutes
irreparable harm. It is not surprising that the
parties differ on this issue.
In Metropolitan Stores where a stay was sought
in proceedings before the Manitoba Labour Rela
tions Board, the object of which was to impose a
first collective agreement, and where the validity
of legislation vesting that authority in the Board
was questioned, the motions judge found that
imposition of a first collective agreement would in
itself constitute irreparable harm if it later were
found that legislation providing for its imposition
was a constitutional nullity. That finding was not
questioned on appeal.' 7
In Yri-York Ltd. 18 the Federal Court of Appeal
allowed an appeal from the motions judge and
granted an order restraining proceedings before
the Restrictive Practices Commission under legis
lation which was the predecessor to the current
Competition Act. In that case the Court of Appeal
found irreparable harm in that, under the legisla
tion applicable, records or documents produced in
proceedings might provide a basis for subsequent
criminal prosecution against those who were
ordered to produce them in investigatory hearings
that the restraining order was sought to stay. That
basis for a finding of irreparable harm does not
appear to exist in this case for there is no possibili
ty of criminal prosecution of Southam and other
applicants, arising out of their agreements, in rela
tion to the offence of conspiracy, the offence to
which the agreements might give rise, since pro
' 7 Supra, note 12, at p. 151.
18 Supra, note 11.
ceedings under section 92 of the Competition Act
have been initiated. 19
In the Alex Couture Inc. proceedings relating to
the appeal from the grant of a stay of proceedings
before the Competition Tribunal, the Quebec
Court of Appeal discusses briefly the matter of
irreparable harm, in the following terms: 20
With respect to the second test, known as irreparable harm,
it is found in the fact that if proceedings are not stayed the
respondents must participate in proceedings before a tribunal
the constitutionality and composition of which they dispute.
For the applicants it is urged that this Court
should follow the Quebec Court of Appeal in this
regard; for the respondents it is urged that the
Court not do so.
The applicants' concern about irreparable harm
can be summed up as the requirement to partici
pate in proceedings before a tribunal when they
question the constitutionality both of its formation
and of its authority to deal with matters before it,
and that participation is anticipated to require the
commitment of time, effort and expense which will
not be compensated even if the constitutional
issues are finally resolved in their favour. In a
generic sense that concern is not unique; it would
be shared by any party involved in proceedings
before any administrator, board or tribunal whose
authority is questioned on constitutional grounds.
Yet there will be few cases where an applicant to
restrain proceedings of a tribunal will be able to
point to a decision of a superior court which has
already determined the constitutional issues, raised
by the applicant, in a manner that supports the
position of the applicant. It seems to me this
19 The Competition Act, supra, note 3, provides in s. 45(1)
[as am. idem, s. 30] for the indictable offence of conspiracy
where there is agreement unduly lessening competition, the
basis on which orders under section 92 are now sought from the
Competition Tribunal. S. 45.1 of the Act as enacted idem,
s. 31, provides:
45.1 No proceedings may be commenced under subsec
tion 45(1) against a person whom an order is sought under
section 79 or 92 on the basis of the same or substantially
the same facts as would be alleged in proceedings under
that subsection.
20 Supra, note 9, at p. 387 C.P.R.
circumstance makes this case somewhat unusual.
In my view, it is now more likely that the appli
cants' objections to the Tribunal proceedings will
be upheld, than it was before those objections were
answered by the Quebec Superior Court in Cou-
ture Inc. To proceed before further resolution of
the constitutional issues, raised not only by the
applicants, but already pending consideration in
two courts of appeal from other cases, exposes the
applicants to proceedings that may be unneces
sary, and expenditures of time and money that are
not compensable if the constitutional issues are
ultimately determined in accord with the appli
cants' submissions. In these circumstances con
fronting the applicants I find that, pending resolu
tion of the constitutional issues, there is a
likelihood of irreparable harm to the applicants if
the proceedings of the Competition Tribunal are
not restrained.
Weighing the balance of convenience
This, of course, does not dispose of the matter,
for it is essential to consider the balance of conve
nience. Thus, the likelihood of irreparable harm to
the applicants if a restraining order is not issued,
must be weighed against the likelihood of harm to
public interests if an order of this sort is issued. In
Metropolitan Stores, Beetz J. comments that
where an injunction or stay is sought against
public authorities, courts "have correctly held it is
erroneous to deal with these authorities as if they
have any interest distinct from that of the public to
which they owe the duties imposed upon them by
statute." 21 Further, with reference to assessing the
balance of convenience in cases of this sort, Mr.
Justice Beetz said: 22
While respect for the Constitution must remain paramount,
the question then arises whether it is equitable and just to
deprive the public, or important sectors thereof, from the
protection and advantages of impugned legislation, the invalidi
ty of which is merely uncertain, unless the public interest is
taken into consideration in the balance of convenience and is
given the weight it deserves.
For the applicants it is urged that the balance of
convenience favours an order restraining proceed
ings of the Tribunal. They are prepared to main
tain the hold-separate agreement or undertakings,
even one with variations, intended to maintain the
status quo without implementing steps to integrate
the publications which the Director seeks to have
divested, even though they do not concede that
their agreements lessen competition. They do not
seek suspension of the Competition Act or its
application, except in relation to themselves and
only pending definitive resolution of constitutional
issues. Thus, in the terms set out by Mr. Justice
Beetz in Metropolitan Stores, 23 the applicants
urge that this is an exemption case, that the grant
of a stay of Tribunal proceedings here would have
little significance as a precedent except pending
resolution of constitutional issues, where parties
are prepared to give undertakings to maintain the
status quo and avoid steps which are seen by the
Director as contravening the Competition Act. In
this way it is said the public interest in maintain
ing the policy of the Act and its application is
preserved, pending settlement of serious constitu
tional issues.
That reasoning may underlie the decision of the
Quebec Court of Appeal upholding the stay grant
ed in Alex Couture Inc. There the Court noted
that, although the applicants believed their merger
21 Supra, note 12, at p. 136.
22 Idem, at p. 135.
23 Idem, at pp. 135, 146.
was entirely lawful and did not fall under the
Competition Act, they were agreed to arrange
ments preserving the status quo. In these circum
stances the Court found it was not required in the
public interest that the order staying the proceed
ings be revoked. 24 It was not prepared to overrule
the exercise of discretion by the motions judge in
his inherent jurisdiction, apparently on the ground
that the public interest did not clearly outweigh
that of the corporate parties to whom the stay had
been granted.
There is no doubt that the situation before this
Court is generally comparable to that facing the
Quebec courts in proceedings concerning a stay
order in Alex Couture Inc. except that the juris
diction of this Court to restrain proceedings of the
Tribunal is statutory rather than inherent, that
there are now decisions on the constitutional issues
by the Superior Court of Quebec and by the
Competition Tribunal, both now pending appeals,
and, it may be, that arguments of the respondents
are here different than were presented on behalf of
the Attorney General of Canada in the Couture
cases. These differences are sufficient, in my view,
to require consideration of the issue of the balance
of convenience in light of all arguments addressed
to this Court, including argument about the prece-
dential value to be accorded to the decisions ren
dered by the Quebec courts in the Couture cases.
I summarize the respondents' extensive argu
ments about the balance of convenience as follows:
First, the respondents emphasize the important
public interests promoted by the Competition
24 Supra, note 9 at p. 388 C.P.R.
Act 25 and implicitly recognized by Dickson C.J.
when discussing its predecessor legislation, the
Combines Investigation Act, in General Motors of
Canada Ltd. v. City National Leasing: 26
... the purpose of the Act is to ensure the existence of a
healthy level of competition in the Canadian economy. The
deleterious effects of anti-competitive practices transcend pro
vincial boundaries. Competition is not an issue of purely local
concern but one of crucial importance for the national
economy.
Second, counsel submits that those important
public interests promoted by the Act which the
Director seeks to encourage and protect through
the application to the Tribunal would be harmed if
a stay is granted. The undertakings given by the
applicants were intended simply to prevent imple
mentation of the completed merger transactions
pending review to assess whether an application
should be made to the Tribunal under section 92 of
the Act and they are not perceived to preserve the
public interest in maintaining and encouraging
competition in the affected markets. Hold-separate
undertakings, it is said, cannot restore the degree
of competition existing before the merger transac
tions or prevent the occurrence of all anti-competi
tive effects before final disposition of proceedings
challenging the merger. 27 Whether interim meas
ures, such as hold-separate undertakings, ade
quately serve the public interest in maintaining
competition may require a preliminary determina
tion of the merits of the application now before the
Competition Tribunal, a determination not appro
priate for this Court but one particularly suited to
25 Supra, note 2, s. 1.1 [as enacted idem, s. 19] which
provides:
1.1 The purpose of this Act is to maintain and encour
age competition in Canada in order to promote the effi
ciency and adaptability of the Canadian economy, in order
to expand opportunities for Canadian participation in
world markets while at the same time recognizing the role
of foreign competition in Canada, in order to ensure that
small and medium-sized enterprises have an equitable
opportunity to participate in the Canadian economy and in
order to provide consumers with competitive prices and
product choices.
26 [1989] 1 S.C.R. 641, at p. 678.
27 Respondents refer to McKenna, Hold Separate Orders in
Government Antimerger Suits (1982), 70 Georgetown L.J.
1337, at p. 1357, and Note, "Preliminary Relief for the
Government under Section 7 of the Clayton Act" (1965), 79
Harv. L. Rev. 391, at p. 395.
the Competition Tribunal's specialized jurisdiction
and functions.
Third, counsel argues that if a stay is granted its
precedential effect could lead to harm to the gen
eral public interests in maintaining and encourag
ing competition in relation to similar proceedings
in other cases relating to mergers, and more seri
ously in relation to other proceedings within Part
VIII of the Competition Act, or preliminary proce
dures leading up to those, for consideration of the
Competition Tribunal.
The first of those possibilities is acknowledged
by counsel for the applicants but only where the
parties concerned can bring themselves within the
exemption classification outlined by Mr. Justice
Beetz by giving undertakings to maintain the
status quo, as the applicants are prepared to do
and as the parties concerned in Alex Couture Inc.
apparently had done. For the respondents that
raises the prospect of exemption cases becoming
suspension cases, so that pending resolution of the
constitutional questions finally by the Supreme
Court of Canada, proceedings under Part VIII
would be effectively suspended. In the words of
Beetz J. in Metropolitan Stores: 28
The reason why exemption cases are assimilated to suspen
sion cases is the precedential value and exemplary effect of
exemption cases. Depending on the nature of the cases, to grant
an exemption in the form of a stay to one litigant is often to
make it difficult to refuse the same remedy to other litigants
who find themselves in essentially the same situation, and to
risk provoking a cascade of stays and exemptions, the sum of
which make them tantamount to a suspension case.
The applicants suggest that there has been no
flood of cases where a stay has been sought follow
ing the grant of a stay in Alex Couture Inc. in
1987 but that may be a factor of the relatively few
cases dealing with mergers that have been brought
before the Competition Tribunal, a comparatively
28 Supra, note 12, at p. 146.
new body with new jurisdiction to deal with merg
ers. In any event that consideration does not
detract from the precedential value of a stay, if
here granted, for similar cases which I understand
the applicants' submissions to concede.
The second possible precedential effect of a stay
if granted which the respondents raise, that
extending to other proceedings before the Compe
tition Tribunal and even to other preliminary pro
ceedings by the Director, for example, in investiga
tions leading to possible action by him under Part
VIII, goes too far in logical extension. It fails to
take account of the fact that each application to
restrain proceedings before the Competition Tri
bunal will of necessity be considered on its own
merits and the significance of other decisions will
be weighed by the court concerned. Thus, for
example, I agree with the respondents that the
grant of a restraining order by the Federal Court
of Appeal in Yri-York Ltd. is distinguishable and
has little precedential value in considering the
balance of convenience in these proceedings, for
there the legislation in question, section 17 of the
Combines Investigation Act [R.S.C. 1970, c.
C-23], had been repealed and few others would
have been in the position of the applicants there to
claim a stay pending resolution of constitutional
issues. 29 In effect there was no precedential value
of any stay there granted. That is not the case
here.
Finally, the respondents raised some other matters,
which I do not attempt to classify. The first sug
gests a basis for distinguishing Couture Ltd. from
this situation by suggesting that if a stay is here
granted and that should be upheld by the Court of
Appeal, that would more effectively bind the Com
petition Tribunal, for the Federal Court of Appeal
is itself the appellate body for appeals from the
Tribunal. That is true, as it would be if the Court
29 Supra, note 11, at pp. 215-216.
of Appeal granted a stay after this Court declined
to do so, but this does not assist in assessing
whether discretion should be exercised to grant the
relief sought by the applicants. As a counterpoint
to this suggestion the applicants raise the matter of
judicial comity, the recognition of the persuasive
value of the Quebec courts' dealings with the
application for a stay in Alex Couture Ltd., urging
that in a federal state the same relief as granted
there in relation to a federal statute and constitu
tional questions should be available without regard
to the court in which relief is sought. While I
acknowledge with great respect the rulings of the
Quebec courts in that case, I am bound to consider
the exercise of this Court's discretion in the cir
cumstances, so far as they can be perceived in
interlocutory proceedings, of the case before me.
The second matter raised by the respondents
concerns the time that may be required for final
resolution of constitutional issues and the adverse
effect that "suspension" of Part VIII of the Act
will have, for a long time, uncertain at this stage,
pending that resolution. While I do not agree that
grant of a stay in this case will in itself effectively
suspend Part VIII of the Act, the uncertain time,
probably long, for final resolution of the constitu
tional issues, in all likelihood requiring decision by
the Supreme Court of Canada, will have, even for
this case treated as an exemption case, does raise
the prospect of harm to the public interest if the
final resolution upholds the validity of the Tri
bunal and of its statutory jurisdiction in regard to
mergers. The passage of time inevitably will create
difficulties in terms of presentation of evidence, for
both the applicants and the Director. In my view,
that is likely to complicate full and fair presenta
tion of evidence and argument to the Tribunal if
proceedings are postponed until after the constitu
tional issues here raised are resolved. That prob
lem might be addressed by limiting the period of a
stay, unless application to extend it were granted,
which the applicants rightly point out was a solu
tion incorporated in the grant of a stay by the
Court of Appeal in Yri-York Ltd. In my view, a
stay limited in time might more appropriately be
considered by the Competition Tribunal itself, on
application by the applicants if no restraint order
were granted by this Court.
In sum, it is my assessment that if a stay or
restraint order be granted in this matter and the
constitutional issues are resolved so that the consti
tution of the Competition Tribunal is upheld and
its legislated jurisdiction in relation to mergers is
valid, the public interest will suffer harm in a
variety of ways. There is danger that the alleged
anti-competitive effects of the merger here, in the
print media and print advertising markets in the
Lower Mainland of British Columbia, will not all
be deterred despite hold-separate undertakings.
There is the precedential effect of any stay order
in other similar proceedings, at least those involv
ing mergers, before the Competition Tribunal.
There is also the uncertain time that may be
required for resolution of the constitutional issues.
Restraining proceedings before the Tribunal until
then will complicate problems of evidence and of
argument at any delayed hearings of the Tribunal.
Moreover, it will add to the uncertainty concerning
the law in relation to mergers and the operations
of the Tribunal, not only pending resolution of the
constitutional issues, but thereafter until disposi
tion of the proceedings which would be delayed by
the stay here sought.
That harm to the public interest, if a stay be
granted and ultimately the Tribunal is found con
stitutionally valid and its legislated jurisdiction
confirmed, must be weighed against the prospect
of harm to the applicants, the expenditure of
uncertain but probably considerable time, energy
and expense which will not be compensated in
proceedings which may ultimately be found to be
unconstitutional. In the balance of convenience, or
as it is sometimes more aptly described, the bal
ance of inconvenience, it is my view that the
potential of harm to the public interest outweighs
the potential of harm to the applicants.
Conclusion
In the result, I decline to exercise discretion to
grant the restraining order here sought. An order
goes dismissing the application with costs to the
respondents in any event of the cause.
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