1 million claims in price-fixing case
Overcharging consumers for goods and services is a serious offence.
The federal Competition Bureau has the power to investigate cartels, which arise when independent businesses work together to reduce competition.
There’s also a role for price-fixing class-action suits, which allow a large number of consumers with a common interest to sue as a group.
Last March, I wrote about a successful Canadian class action suit to compensate electronic device buyers for overcharging between the years 1999 to 2002.
Yes, class actions take a long time to go through the courts. And in the case of overpriced DRAM (dynamic random access memory) computer chips, the lawyers took another two years to design a distribution plan for the settlement funds.
They decided to pay a minimum $20 to anyone who purchased a computer, printer, game console or any other device with a memory chip in that time period.
There was a clever 30-second TV commercial with the tag line, “Visit TheMoneyisMine.ca to get your money back.”
No receipts were required to get a $20 slice of the $80 million settlement. You simply filled out an online claim form and waited for your cheque to arrive in the mail by the fall of 2015.
Those who bought many devices for business purposes could get a larger amount — up to several hundred dollars — but did have to submit receipts. The deadline for filing claims was June 23.
I put in my own application — easy peasy — and forgot about it. Then, I received a mysterious email Oct. 16.
NPT Ricepoint, the claims administrator, said I’d been approved to receive $20 based on my declaration of the purchase of at least one DRAM product in the time period.
“Please note we anticipate compensation will be mailed by the end of 2015 to class members who completed a Simplified Claim,” the email said. This email had none of the charm of the TV commercials. I wondered if some people deleted it, thinking it was a phishing scam. (The claims administrator can be reached at 1-866-855-5586.)
Jonathan Foreman, a lawyer at Harrison Pensa LLP in London, Ont., speaks for the four Canadian firms that won the DRAM class action lawsuit. I asked him if the campaign was a success.
“We are just delighted,” he told me. “With more than one million claims made, it was a record performance in the Canadian class action claims context.”
There were a few winning factors, he said, which will be used in designing future Canadian class action settlements.
One, the product was everywhere, showing up in all kinds of electronic products that consumers bought.
Two, the TV ads were on constantly during a four-month period, prompting journalists to do their own coverage. (My previous column, inspired by curiosity, was one of the Star’s best-read business articles last March.)
Three, the distribution plan had a clear message: The money is mine and I don’t have to do much work to get it.
“We believe this is the most successful claims process ever done for price fixing,” he says. “Now we are working our tails off to get as much money paid in 2015 as possible. I think we’re in good shape.”
There was also a DRAM class action suit in the United States. The payment was a minimum $10 per individual instead of $20 per household in Canada.
Ottawa lawyer Eric Letts challenged the Canadian distribution plan in court last July, alleging that it violated the Ontario human rights code by differentiating between class members based on family and marital status. He lost the case. The higher Canadian minimum encouraged more people to file claims, Foreman points out. The U.S. administrator had a media budget twice as large as Canada’s in a market 10 times the size and ended up with only 400,000 claims — compared to our one million.
With the largest public awareness campaign for an overcharging case in Canada, as Harrison Pensa says at its website, the DRAM class action has created a precedent. Let’s hope that other winning campaigns will follow. Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca or ellenroseman.com