Competition Tribunal Tribunal de la Concurrence Reference: Nadeau Poultry Farm Limited v. Groupe Westco Inc. et al., 2009 Comp. Trib. 03 File No.: CT-2008-004 Registry Document No.: 0455
IN THE MATTER of the Competition Act, R.S.C. 1985, c. C-34, as amended; AND IN THE MATTER of an Application by Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited for an Order pursuant to section 75 of the Competition Act;
AND IN THE MATTER of an Application by Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited for an Interim Order pursuant to section 104 of the Competition Act;
AND IN THE MATTER of a Motion by Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited for a Show Cause Order;
AND IN THE MATTER of a Motion by the Respondent Groupe Westco Inc. for an Order or Direction regarding the Tribunal’s Interim Supply Order.
B E T W E E N: Nadeau Ferme Avicole Limitée/ Nadeau Poultry Farm Limited (applicant)
and Groupe Westco Inc. and Groupe Dynaco, Coopérative Agroalimentaire, and Volailles Acadia S.E.C. and Volailles Acadia Inc./ Acadia Poultry Inc. (respondents)
Dates of hearing: 20090209 to 20090210 Presiding Judicial Member: Blanchard J. Date of Reasons and Order: February 26, 2009 Reasons and Order signed by: Justice Edmond P. Blanchard
REASONS FOR ORDER AND ORDER REGARDING APPLICANT’S MOTION FOR A SHOW CAUSE ORDER
[1] The Applicant, Nadeau Ferme Avicole Limitée/Nadeau Poultry Farms Limited (the “Applicant”), brings a motion for an Order pursuant to section 8 of the Competition Tribunal Act, R.S.C. 1985, c. 19 (2 nd Supp.) requiring the Respondents, Groupe Westco Inc. (“Westco”), Groupe Dynaco, Coopérative Agroalimentaire (“Dynaco”), Volailles Acadia S.E.C. and Volailles Acadia Inc./Acadia Poultry Inc. (collectively, “Acadia”), to show cause why they should not be held in contempt of the Tribunal’s Interim Order dated June 26, 2008 (“Interim Order”). It seeks in the alternative, the aforementioned Order against the Respondent Westco only.
[2] The test to be followed on a motion for a show cause order was set out by Justice Pratte in R. v. Perry, [1982] 2 F.C. 519 at 525 (F.C.A.), wherein he stated the following:
This decision is, in my view, ill founded. The Judge below did not have to determine whether the air controllers had displayed "an attitude of defiance and public disrespect" towards the injunction previously pronounced by Mr. Justice Walsh. He did not have, either, to try and anticipate what would be the ultimate judgment of the Court if the show cause order were issued. His duty was to determine whether the affidavit evidence filed in support of the application for a show cause order established, prima facie, that the persons or some of the persons mentioned in Schedule A to the notice of motion had breached the injunction pronounced by Mr. Justice Walsh. If the evidence established a prima facie breach of the injunction, the Judge had to issue the show cause order sought unless the evidence showed clearly that the violation of the injunction was so unimportant or had taken place in such circumstances that it be absolutely certain that it did not deserve to be punished.
(my emphasis) [3] This test articulated by Justice Pratte in Perry was subsequently adopted by the Tribunal in Canada (Director of Investigation and Research) v. Chrysler Canada Ltd. (1992), 44 C.P.R. (3d) 430, [1992] C.C.T.D. No. 9 (QL).
[4] The obligations as set out in the Interim Order are clear. The Respondents are to supply the Applicant with 271,350 live chicken per week save for any replacement supply of live chicken the Applicant may secure during the interim period.
[5] The Applicant asserts that given the wording of the Interim Order, the Respondents are collectively responsible to supply Nadeau with the weekly amount of 271,350 live chicken. In this regard, it is recognized that none of the Respondents could be fully liable under the terms of the Interim Order. And, the Tribunal in its Interim Order explicitly contemplates a prorated approach in the eventuality that the Respondents fail to agree on the apportionment of the reduction:
[59] Absent agreement between the Respondents, the reductions in supply contemplated above shall be prorated on the basis of the current level of supply of each Respondent to the Applicant.
[6] For these reasons, it is appropriate to consider the parties’ positions and obligations separately. Given the evidence provided during the hearing on the interim application, the prorating of their collective obligation would be as follows:
(a) 186,230 chickens per week from the Respondent Westco; (b) 26,450 chickens per week from the Respondent Dynaco; and (c) 58,670 chickens per week from the Respondent Acadia. [7] In the circumstances and given the Respondents’ admissions that they have not supplied the required numbers of chicken, there is prima facie, a breach of the Interim Order by all Respondents.
[8] However, it does not necessarily follow that a show cause order will issue against all the Respondents. I have concluded that Acadia and Dynaco should not be the subject of such an order because their failure to comply is largely explained by the reduction in quota. The Tribunal is of the opinion that both parties would have been in compliance with its Interim Order but for the reduction. The Tribunal has thus concluded that the violation took place in circumstances in which it is “absolutely certain that it did not deserve to be punished.”
[9] That said, I must note that neither party made any effort to come into compliance with the Interim Order after quotas were reduced. Reasonable simple steps could have been taken to avoid being in contempt such as seeking a variation in the Interim Order or relief from quota obligations. Tribunal orders are important and should not be ignored. Concerns regarding a party’s ability to comply with the terms of an order should be addressed to the Tribunal as soon as they arise.
[10] The Respondent Westco has asserted, during the hearing of the show cause motion, that quota reductions are not the only reason why it cannot comply with the Interim Order:
LE PRÉSIDENT: Alors, essentiellement, ce que vous avancez, Maître Lefebvre, c’est que c’est les quotas. On ne peut se conformer à l’ordonnance telle qu’elle est écrite en raison des ajustements de quotas, si je comprends bien? Me LEFEBVRE: Pas en ce qui concerne Westco, de deux choses: l’une, le quota fait en
sorte qu’on doit inévitablement réduire la production et Westco doit -- Nadeau doit accepter, comme par le passé, que quand la production est réduite, elle va recevoir moins de poulets. Deuxième volet, Westco -- et c’est clairement indiqué dans notre mémoire -- ne peut pas, comme l’a suggéré Nadeau, tout simplement élever plus de poulets et les sortir plus tôt pour qu’ils aient un poids moyen plus petit et ça en raison du fait que le
type génétique de poulet que Westco élève fait en sorte qu’elle doit être vaccinée à un moment précis et, après le vaccin, le poulet doit passer un certain nombre de jours avant
d’être abattu.
There is important evidence to suggest that Westco is the only party to significantly change its supply of chicken to the Applicant in relation to its historic practices. Westco has been involved in increasing the size of chicken since September of 2008 thereby significantly reducing the
numbers of chicken delivered to Nadeau. The increase in size is problematic for Nadeau because of its customers’ specifications. Nadeau contends that Westco has had ample time to adjust its production size to meet the terms of the Interim Order. It is recognized and acknowledged by Nadeau that both Acadia and Dynaco have continued to supply chicken in acceptable sizes and in accordance with past practice.
[11] I find that the Applicant has established, prima facie, that Westco has breached the Interim Order and that it is not “absolutely certain that it did not deserve to be punished”. Whether Westco is indeed in contempt of the stated order or whether it can justify their activities are issues which would be better left for determination at a contempt hearing with a fulsome record.
FOR THESE REASONS, THE TRIBUNAL ORDERS THAT: [12] The motion is dismissed with respect to Acadia and Dynaco without costs. [13] The motion is granted with respect to Westco and a show cause hearing is hereby ordered.
[14] The Respondent Westco shall appear before the Tribunal on a date to be subsequently determined to hear proof of the act with which it is charged (to use the wording of Rule 467(1)(b) of the Federal Courts Rules, SOR/98-106), namely:
That commencing on or about September 15, 2008 and continuously thereafter, it has failed to supply live chicken to the Applicant in the numbers stipulated in the Tribunal’s Interim Order, dated June 26, 2008.
[15] The Respondent Westco shall be prepared to present any defence that it may have at the contempt hearing.
[16] A case management conference will be held at a time and place to be determined in order to set a date for the contempt hearing.
DATED at Vancouver, this 26 th day of February, 2009. SIGNED on behalf of the Tribunal by the presiding judicial member. (s) Edmond P. Blanchard
COUNSEL: For the applicant Nadeau Ferme Avicole Limitée/Nadeau Poultry Farm Limited Leah Price Joshua Freeman
For the respondents Groupe Westco Inc. Éric C. Lefebvre Geoffrey Conrad Martha Healey
Groupe Dynaco, Coopérative Agroalimentaire Olivier Tousignant Volailles Acadia S.E.C. and Volailles Acadia Inc./Acadia Poultry Inc. Valérie Belle-Isle