More than a decade ago, applEcon provided support for plaintiffs in Pro-Sys Consultants Ltd. and Neil Godfrey v. Microsoft Corporation and Microsoft Canada Co., one of the first indirect-purchaser antitrust class actions certified in Canada. Now, the landmark case is becoming the standard for antitrust class certification in British, as well as Canadian, courts.
Pro-Sys v. Microsoft centered on Microsoft’s alleged efforts to monopolize the PC operating system, word processing, and spreadsheet markets and followed similar class actions in the United States, many of which were supported by applEcon’s experts Dr. Janet Netz and Prof. Jeffrey MacKie-Mason. Dr. Netz and Prof. MacKie-Mason offered opinions on damages methods and causation, respectively, in many of the U.S. state cases. Dr. Netz also filed expert reports in Pro-Sys v. Microsoft, contributing to the Canadian Supreme Court’s 2013 decision to uphold certification of the class. Specifically, while affirming Dr. Netz’s use of a “price premium” approach to show pass-through, the Court ruled that plaintiffs need not “demonstrate actual harm” at the class certification stage,[1] nor need they “establish the actual loss to the class.”[2] Rather, the proposed methodology must “offer a realistic prospect of establishing loss on a class-wide basis” should the actual overcharge be established later.[3]
This “low threshold” quickly became the standard for class action antitrust cases in Canada, with several additional classes being certified in the past decade. In 2019, for example, the Supreme Court of Canada granted class certification in Pioneer Corp. v. Godfrey — which alleged a price-fixing conspiracy among optical disk drive (ODD) manufacturers — explicitly applying the “Microsoft standard” to the methodology of the plaintiffs’ expert.[4] In addition to holding that “umbrella purchasers” who purchased from non-conspirators had cause of action, the Court reaffirmed the ruling in Pro-Sys that the expert’s methodology at the certification stage need not show that all class members were harmed, nor need it be capable of identifying which class members were harmed. The low threshold persisted.
Now, the standard set by Pro-Sys is expanding into the United Kingdom. In 2020, the Supreme Court of the United Kingdom issued a similar landmark ruling in Mastercard Incorporated and others v. Walter Hugh Merricks CBE. In the case — which challenged Mastercard’s high multilateral interchange fees — the U.K.’s highest court found that the Competition Appeal Tribunal (CAT) had erred in denying plaintiffs a Collective Proceeding Order (CPO, similar to certifying a class in the U.S.) and explicitly cited the standards set in Pro-Sys as correct for assessing common impact.[5]
The CAT’s subsequent approval of the class on reconsideration brought a wave of new class actions in British courts. When the CAT granted certification to plaintiffs in Justin Gutmann v. First MTR South Western Trains Limited and others, the order again directly referenced the “Microsoft test” as appropriate “for the evaluation of expert evidence at the certification stage.”[6] At least nine classes have now been certified in British courts.[7]
At applEcon, we take seriously our duty to apply economic concepts to the facts at issue in a case, and to present our analyses in a clear, concise manner. As the antitrust regime in British and Canadian courts continues to develop, applEcon’s work in Pro-Sys v. Microsoft will remain foundational.
[1] Pro-Sys v. Microsoft ruling, https://scc-csc.lexum.com/scc-csc/scc-csc/en/13320/1/document.do, at ¶¶119-121.
[2] Pro-Sys v. Microsoft ruling, https://scc-csc.lexum.com/scc-csc/scc-csc/en/13320/1/document.do, at ¶115.
[3] Pro-Sys v. Microsoft ruling, https://scc-csc.lexum.com/scc-csc/scc-csc/en/13320/1/document.do, at ¶118.
[4] Pioneer Corp. v. Godfrey ruling, https://decisions.scc-csc.ca/scc-csc/scc-csc/en/17917/1/document.do, at ¶95.
[5] Mastercard v. Merricks ruling, https://www.supremecourt.uk/cases/docs/uksc-2019-0118-judgment.pdf, at ¶135.
[6] Gutmann v. South Western Trains ruling, https://www.catribunal.org.uk/sites/cat/files/2021-10/20211019_1304_5_Gutmann_Judgment_1.pdf, at ¶106.
[7] https://globalcompetitionreview.com/hub/class-actions-hub/2022/article/united-kingdom-class-actions-litigation-policy-and-latest-developments.
