Executive Summary: Key Legal and Evidentiary Issues

• The Commissioner of Competition sought a production order under section 11 of the Competition Act requiring Amazon to produce transaction data across four broad product categories, but failed to adequately justify the scope of the request.

• Amazon's counsel objected that the Data Request was "exceedingly broad, excessive, and unnecessarily burdensome," claiming it captured "billions of products" across the specified categories.

• Validity of the Pearson/Bell Mobility "excessive, disproportionate or unnecessarily burdensome" standard was challenged by the Commissioner as inconsistent with section 11 and section 8 of the Charter.

• Whether the Federal Court improperly relied on untested assertions in letters from Amazon's counsel during the ex parte proceeding was a contested evidentiary issue on appeal.

• The Commissioner argued that section 11 proceedings should be understood as a two-step process incorporating a subsequent Rule 399(1) hearing, which the Court of Appeal rejected.

• Section 8 Charter protections against unreasonable search or seizure and the scope of judicial discretion in authorizing investigatory production orders formed the constitutional backdrop of the dispute.

The investigation into fake reviews on Amazon's platform

The Commissioner of Competition initiated an inquiry into whether Amazon.com.ca, ULC and Amzn Mobile LLC permitted "fake reviews" purchased by product vendors to remain on their online retail platform. The Commissioner claims that this practice, if proven, could constitute deceptive marketing under paragraph 74.01(1)(a) of the Competition Act. To advance the investigation, the Commissioner applied to the Federal Court under section 11 of the Competition Act for a production order requiring Amazon to produce transaction data for products sold in Canada across four categories: Health and Personal Care, Home and Kitchen, Tools and Home Improvement, and Electronics—referred to as the "Data Request."

Pre-hearing communications and Amazon's objections

On April 17, 2024, the Commissioner informed Amazon of the intended section 11 application. Amazon's lawyers responded on May 17, 2024, objecting that the request was "exceedingly broad, excessive, and unnecessarily burdensome," claiming there were "billions of products offered in the four specified categories." The Commissioner applied to the Federal Court on June 4, 2024, and an initial ex parte hearing was held on June 7, 2024, where the Application Judge (Crampton C.J.) approved Schedules I and II of the draft order but declined to approve the Data Request contained in Schedule III. The judge adjourned and urged the Commissioner to consult the respondents to clarify the number of records that would need to be produced and to address the concerns raised in the May 17 letter. Rather than engaging further with the respondents, the Commissioner filed additional affidavit evidence with the Federal Court to substantiate the Data Request. The Commissioner also filed a second letter, dated July 19, 2024, from the respondents' counsel, which was sent in reaction to the Commissioner's supplementary application record and which maintained that the Data Request was "unreasonable."

The Federal Court's refusal to grant the Data Request

At a second ex parte hearing on July 22, 2024, the Application Judge expressed uncertainty about "the reasonableness of seeking 36 data fields for 'billions of products,' which is what the Respondent[s] said was going to be captured by the Data Request." The judge applied the standard from Pearson and Bell Mobility, which requires the court to satisfy itself that information sought by the Commissioner is relevant to the inquiry and is not "excessive, disproportionate or unnecessarily burdensome." Ultimately, the Federal Court dismissed the Commissioner's application regarding the Data Request, concluding that because the Commissioner had failed to sufficiently explain the scope of the request, the Court was unable to determine whether the request complied with the Pearson/Bell Mobility standard.

The Commissioner's grounds of appeal

The Commissioner raised three grounds of appeal before the Federal Court of Appeal. First, the Commissioner argued that the Federal Court erred by relying on the Pearson/Bell Mobility test, contending that its "excessive, disproportionate and unnecessarily burdensome" standard was inconsistent with section 11 of the Competition Act and section 8 of the Charter, and that it inappropriately imports civil litigation concepts into the investigation stage of proceedings under the Competition Act. Second, the Commissioner claimed the Federal Court erred by accepting untested assertions made by the respondents' counsel in letters to the Commissioner during the pre-issuance dialogue. Third, the Commissioner argued the Federal Court misconstrued the role of Rule 399(1) in a section 11 application, asserting that obtaining a section 11 order is a two-step process where the ex parte hearing addresses statutory requirements and a subsequent inter partes Rule 399(1) hearing shifts the onus to the respondent to vary or set aside the order.

The Court of Appeal's analysis of the Pearson/Bell Mobility standard

The Federal Court of Appeal, in reasons authored by Biringer J.A. and concurred in by LeBlanc J.A. and Goyette J.A., undertook a thorough analysis of section 11's text, context, and purpose. The Court confirmed that the application judge's discretion must be exercised consistently with the provision's dual purpose: empowering the Commissioner to investigate and enforce competition law and protecting the section 8 Charter rights of those under investigation. The Court found that the Application Judge's use of the term "disproportionate" did not mean he was applying the rulebook applicable to discovery in civil litigation; rather, the "excessive, disproportionate or unnecessarily burdensome" test in Pearson and Bell Mobility must be understood in light of the context of those decisions, which were also section 11 applications within ongoing investigations. However, the Court expressed reservations about one aspect of the test, noting that Bell Mobility "went too far" in suggesting that production orders should be limited by the "burden"—meaning "reasonable efforts" or costs—imposed on the target, as section 8 jurisprudence focuses on the privacy interests of the target of the search or seizure, not the difficulty of responding to a production order or the target's economic interests. Despite this reservation, the Court found no reversible error because the Application Judge did not reject the Data Request based on effort or cost imposed on the respondents; the decisive factors were uncertainty about the scope of the Data Request and a concern that the request was excessive to what the Commissioner reasonably needed for the inquiry.

Treatment of the respondents' counsel letters and Rule 399(1)

On the second ground of appeal, the Court of Appeal found that the letters from Amazon's counsel were properly before the Federal Court pursuant to the Commissioner's duty of disclosure and the Court was entitled to consider them. The Court noted that the Application Judge did not rely on the letters for the truth of their contents regarding how many records would be subject to the Data Request; rather, the Application Judge rejected the Data Request because of a lack of information from the Commissioner and not because he accepted untested assertions made by the respondents' counsel. On the third ground, the Court rejected the Commissioner's construct of a process entailing two steps, holding that the availability of a Rule 399(1) motion does not alter the application judge's function at the section 11 hearing: to ensure that the statutory criteria for issuing the order are satisfied and to exercise their discretion in light of section 8 of the Charter. The Court emphasized that the idea that a judge should issue an ex parte order under section 11 on the expectation of a second hearing undermines the Commissioner's burden of establishing that the proposed order is reasonable, and is antithetical to the purpose of prior authorization, which is to balance the parties' interests before the government intrusion occurs and not attempt to remedy things after the fact.

The ruling and overall outcome

The Federal Court of Appeal dismissed the appeal on all three grounds, concluding that the Federal Court did not commit an error requiring the Court's intervention. The appeal was dismissed with costs awarded in favor of the respondents, Amazon.com.ca, ULC and Amzn Mobile LLC. No specific monetary amount was determined, as the underlying dispute concerned a production order under section 11 of the Competition Act rather than a damages claim.