OFFICIAL ENGLISH TRANSLATION
Citation: Commissioner of Competition v RONA INC., 2005 Comp Trib 9
File No: CT-2003-007
Registry Document No: 105
IN THE MATTER OF the Competition Act, RSC 1985, c C-34, and its amendments;
AND IN THE MATTER OF the acquisition of Réno-Dépôt Inc. by RONA Inc.;
AND IN THE MATTER OF an application to vary a consent agreement under subsection 106(1) of the Competition Act.
BETWEEN:
THE COMMISSIONER OF COMPETITION
(moving party)
and
RONA INC.
(responding party)
and
ERNST & YOUNG ORENDA CORPORATE FINANCE INC.
(third party)
Before: Blais J. (Chairperson)
Date of order: March 9, 2005
Order signed by: Mr. Justice Blais
REASONS FOR ORDER AND ORDER ON RONA’S MOTION TO STRIKE
[1] RONA filed a notice of motion on March 2, 2005, to strike out certain paragraphs of the Commissioner’s Response to RONA’s January 10, 2005, section 106 application.
FACTS
[2] The Commissioner’s Response to RONA’s application to rescind the consent agreement is essentially founded on the argument that there has been no real change in circumstances, given that the Sherbrooke market is no more competitive today than it was when the consent agreement was negotiated. She claims that the Home Depot was already expected to open at that time, and this did not change the Commissioner’s opinion that the purchase of Réno-Dépôt by RONA would significantly reduce competition in the Sherbrooke area. In her Response, the Commissioner also alleges that RONA delayed the divestiture process through its lack of diligence, thereby undermining the very objectives of the consent agreement process provided for in the Competition Act.
[3] In the motion to strike that was heard on February 21 and 22, 2005, the Commissioner argued that RONA’s application should be struck because it represented an abuse of process, which was further supported by RONA’s lack of diligence and its conduct throughout the implementation of the consent agreement. The Tribunal dismissed the Commissioner’s motion to strike in its order of February 24, 2005, on the basis that the application dealt with a serious and contentious issue, and that in line with the case law of the Federal Court of Canada, it should not be terminated prematurely.
[4] The paragraphs that RONA is seeking to strike out from the Response are those dealing with RONA’s alleged uncooperative attitude to completing the sale. This conduct was alleged in support of the motion to strike and is now being alleged as grounds to oppose RONA’s application to rescind the consent agreement.
ISSUE
[5] Should any paragraphs in the Commissioner’s Response be struck?
ANALYSIS
Parties’ positions
[6] RONA is arguing that certain paragraphs of the Commissioner’ Response to RONA’s application to rescind the consent agreement should be struck on the basis that the Commissioner is using them to reiterate issues that were already decided by the Tribunal in its order of February 24, 2005. RONA argues that this is a case of issue estoppel given that the matter has already been decided.
[7] The Commissioner’s objection to the motion to strike is that the impugned paragraphs contain what she claims to be evidence of delaying tactics used by RONA since the signing of the consent agreement. These facts, according to the Commissioner, constitute an important factual framework enabling the Tribunal to assess RONA’s conduct throughout the divestiture process, the conduct of a party being highly relevant. RONA is relying on the doctrine of res judicata; however, according to the Commissioner, the Tribunal has not ruled on the question of whether or not RONA acted diligently. The doctrine of issue estoppel cannot be applied here, the Commissioner argues, because its conditions for application have not been met.
Analysis and conclusion
[8] In Danyluk v Ainsworth Technologies, [2001] 2 SCR 460, the Supreme Court of Canada sets out the conditions for the application of issue estoppel:
(1) that the same question has been decided;
(2) that the judicial decision which is said to create the estoppel was final;
(3) that the parties to the judicial decision were the same as the parties to the proceedings in which the estoppel is raised. [Danyluk, p. 477]
[9] The third condition is met: they are the same parties. In the Tribunal’s view, however, the first two conditions are not met. The question of delaying tactics was not decided by the Tribunal, and the decision dismissing the motion to strike cannot be considered final, as it did not rule on the merits (Kealey v Canada, [1991] FCJ No 909 (FCA).
[10] In its order of February 24, 2005, the Tribunal dismissed the Commissioner’s motion to strike as it was unjustified. The Tribunal was of the view that the issues raised in the application warranted a hearing and a decision on the merits. RONA’s argument, which the Tribunal endorses, was that striking out an originating document is a drastic measure that should only be granted in cases where the application is clearly frivolous or an abuse of process. The Tribunal is of the opinion that this was not the case with RONA’s application.
[11] It is true that in her motion to strike, the Commissioner relied on RONA’s alleged lack of diligence to support the requested finding that the application to rescind the consent agreement was an abuse of process. It is also true that the Commissioner restates the facts in her Response.
[12] It should be noted, however, that the Tribunal did not rule on the issue of RONA’s lack of diligence. It is therefore incorrect to suggest, as RONA does in paragraph 13 of its memorandum, that the Tribunal considered and rejected the Commissioner’s allegations of lack of diligence on the part of RONA. The motion to strike was dismissed solely because it was premature. While the parties raised arguments on the merits during the hearing on the motion, the Tribunal did not address those arguments in its reasons. Some of the points may have been repeated in the decision, but only to illustrate that the dispute between the parties was too important to be resolved peremptorily. The following paragraphs from the February 24, 2005, order summarize the Tribunal’s view:
[translation]
[40] Here, it must be noted that RONA is relying on a provision of the Act and on a clause in the consent agreement to support its notice of application. The consent agreement expressly provides at paragraph 21 that the parties agree to the jurisdiction of the Tribunal for any application by either party to rescind or vary the consent . . .
[41] The section 106 application is neither vexatious, scandalous, frivolous, immaterial or redundant, nor is it devoid of merit in law. ...
[42] As discussed above, in respect of the section 106 application, by discussing substantive issues, the parties have moved outside the scope of the motion to strike.
[43] Although the Commissioner has demonstrated the seriousness of her arguments with respect to RONA’s section 106 application, I find that it is premature to draw conclusions on the merits. However, the relevance of these arguments leads me to believe that the process should be accelerated to ensure that the rights of all parties are safeguarded and the remedies don’t become nugatory.
[13] The Tribunal did not rule on the merits. The motion to strike was dismissed because the application itself was not an abuse of process. The Tribunal avoided ruling on the Commissioner’s allegations that RONA was delaying the divestiture process. The facts alleged by the Commissioner are important to understanding the Commissioner’s view of the course of events. RONA is free to dispute them. It remains for the Tribunal to decide on the relevance of these facts to determining whether there has been a change in circumstances that justifies rescinding the consent agreement. The Tribunal sees no valid reason to strike the disputed paragraphs from the Commissioner’s Response.
RONA’s motion to add to the schedule a reply from RONA to the Commissioner’s Response
[14] RONA has also moved to obtain an order for filing a reply to the Commissioner’s Response, also in the context of RONA’s section 106 application.
[15] The following provisions apply:
Competition Tribunal Rules, SOR/94-290, section 49 (SOR/2000-198, s. 6) and subsection 6(1) (SOR/2000-198, s. 9).
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49. Unless the Tribunal orders otherwise, the provisions of these Rules that relate to an application for an order apply to an application made under section 74.13 or 106 of the Act to rescind or vary an order, with such modifications as the circumstances require.
6. (1) Within 14 days after being served with the answer, the Commissioner may serve a reply on the person who filed the answer and on the other parties.
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49. À moins que le Tribunal n'en ordonne autrement, les dispositions des présentes règles qui régissent les demandes d'ordonnance s'appliquent, avec les adaptations nécessaires, aux demandes présentées au titre des articles 74.13 ou 106 de la Loi en vue de faire annuler ou modifier une ordonnance.
6. (1) Dans les 14 jours après avoir reçu signification de la réponse, le commissaire peut signifier une réplique à la personne qui a déposé la réponse et aux autres parties.(...).
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[16] The Competition Tribunal Rules give applicants a right of reply. Given that the applicant before the Tribunal is generally the Commissioner, the reply rule refers to the Commissioner. However, section 49 of the Rules, which concerns section 106 applications, provides that the provisions governing applications apply where a party to an order or consent agreement seeks to vary the order or consent agreement. The Commissioner conceded at the hearing that RONA did have a right of reply.
[17] The Commissioner’s Response was served on February 25, 2005. RONA had 14 days to reply. RONA filed the application to strike out paragraphs of the Response, and argued that its reply would depend on whether that motion was granted or denied. The fact is that RONA had time to consider the reply, and chose to base its reply on the outcome of the motion to strike. Given the date on which this order is rendered, and in an effort to ensure that this proceeding is as fair as possible, the Tribunal grants RONA until March 18, 2005, to file and serve its reply.
SCHEDULE
[18] The Tribunal heard three motions in Rona v Commissioner of Competition on March 7, 2005. This order is in response to two of those motions, which were presented in the context of the application filed by RONA on January 10, 2005, to rescind the consent agreement registered on September 4, 2003, pursuant to section 106 of the Competition Act. This order includes a schedule for the hearing of the section 106 application.
FOR THESE REASONS, THE TRIBUNAL ORDERS THAT:
[19] The motion to strike out certain paragraphs of the Commissioner’s Response to the section 106 application is denied.
[20] RONA will file and serve its reply to the Commissioner’s Response by no later than March 18, 2005.
[21] For the purposes of the hearing on RONA’s section 106 application, the schedule is as follows:
Filing of RONA’s reply by no later than March 18, 2005.
Pre-hearing conference on March 22, 2005.
Exchange of witness names and contact information by no later than March 29, 2005.
Commencement of the hearing of the application pursuant to section 106 of the Competition Act on April 4, 2005.
[22] Costs in the cause.
Dated at Toronto, this 9th day of March 2005.
Signed on behalf of the Tribunal by the presiding judicial member
(s) Pierre Blais
Certified true translation
Johanna Kratz
REPRESENTATIVES:
For the moving party:
The Commissioner of Competition
Diane Pelletier
For the responding party:
RONA
William McNamara
Martha Healey
For the third party:
Ernst & Young Orenda Corporate Finance Inc.
Louis-Martin O’Neill