Arnold Fradkin

The respondent brought an action in the Federal Court alleging the appellants formed an agreement violating the Combines Investigation Act and claiming damages under both the Act and the Civil Code of Lower Canada.

The appellants challenged the constitutionality of the provisions creating a private cause of action and conferring jurisdiction on the Federal Court, as well as the court's competence to hear the provincial law claim.

The Supreme Court of Canada held that the impugned provisions of the Combines Investigation Act are intra vires Parliament under the trade and commerce power.

The Court further held that the Federal Court has jurisdiction to hear the claim under the federal Act, but lacks jurisdiction to hear the claim based on the Civil Code.

The appellants, operators of sugar refineries in eastern Canada, were charged with conspiracy to enhance the price of sugar unreasonably and to lessen competition unduly under the Combines Investigation Act.

The trial judge acquitted them, finding that while there was a tacit agreement to maintain traditional market shares, it was not intended to lessen competition unduly but rather to avoid a price war.

The Court of Appeal reversed the acquittal on the second count.

The Supreme Court of Canada allowed the appeal and restored the acquittals, holding that the trial judge did not err in law in concluding that the Crown failed to prove an agreement to lessen competition unduly.

The Court affirmed that conscious parallelism or a tacit agreement to maintain market shares does not necessarily amount to an undue lessening of competition.