R. v. K.C. Irving, Ltd. et al., [1978] 1 SCR 408

Supreme Court of Canada

R. v. K.C. Irving, Ltd. et al., [1978] 1 S.C.R. 408

Date: 1976-11-16

Her Majesty The Queen Appellant;

and

K.C. Irving, Limited, New Brunswick Publishing Company Limited, Moncton Publishing Company Limited, and University Press of New Brunswick Limited Respondents;

and

K.C. Irving, Limited Respondent.

1976: October 8, 9; 1976: November 16.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK, APPEAL DIVISION

Combines—Merger and monopoly—Trade offences—Restraint of trade—Onus of proof—Duty of Crown to establish “detriment”—Combines Investigation Act, R.S.C. 1970, c. C-23, ss. 2, 33—Combines Investigation Act, R.S.C. 1952, c. 314, ss. 2, 32.

Indictments were issued against the respondents under the Combines Investigation Act, R.S.C. 1952, c. 314, as amended, as it stood prior to 1960, and under the Combines Investigation Act, R.S.C. 1970, c. C-23. The charges under the 1952 Act alleged that three of the respondents were, first, parties to the formation and operation of a combine (i.e. a merger, trust or monopoly under that Act) by reason of purchasing or acquiring control over certain newspapers in New Brunswick; second, that they were parties to a combine by substantially or completely controlling the business of producing, supplying, selling or dealing in English language daily newspapers in New Brunswick; and third, that all four accused were parties to a monopoly in substantially or completely controlling throughout New Brunwick the business of producing, supplying, selling or dealing in English language newspapers in the Province. The one charge under the 1970 Act alleged that the respondent K.C. Irving, Limited, was a party to the formation of a merger by reason of purchasing or acquiring control of the business of the University Press of New Brunswick Limited in the producing, supplying, selling or dealing in English language daily newspapers, contrary to that Act. During the period covered by the charges there were five daily newspapers in the Province and the

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control of all of them was acquired by K.C. Irving, Limited. Convictions were entered against the respective accused on most of the charges laid but, on appeal, the Appeal Division acquitted all the accused on all charges. Leave to appeal was given on three questions of law viz. as to whether the Court of Appeal had erred

(1) in its interpretation of the words “to the detriment or against the interest of the public, whether consumers, producers or others…” as those words are used in the definition of “merger” and, “monopoly” in the Act and in the definition of “combine” in predecessor Acts;

(2) in holding that (a) no presumption arose of detriment or likely detriment to the public when competition has been prevented or lessened unduly and (b) even if there was such a presumption there was evidence to rebut it;

(3) in its appreciation of the meaning of “competition” as it related to the facts of the present case.

Held: The appeal should be dismissed.

It was impossible to contend in the face of the reasons for judgment at trial and on appeal that there was any proof of detriment in fact. The Irving interests had such control of the English language newspapers in New Brunswick as to satisfy the opening parts of the definition of “merger” and “monopoly” and part of the definition of “merger, trust or monopoly” but the questions remained as to whether, by reason of the acquisition of that control, competition was or was likely to be lessened to the detriment or against the interest of the public or whether the person or persons having such control had operated or were likely to operate to the detriment or against the interest of the public. In the light of the definition of “merger” in the present Act it cannot be concluded that acquisition of entire control over a business in a market area (as contrasted with the acquisition of some control) must mean not only that competition was or was likely to be lessened but that such lessening or likely lessening was to the detriment or against the interest of the public. Further, even if such an inference could be supported it could not have been drawn in this case in the face of the evidence and the findings in the courts below.

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The trial judge erred in holding that once a complete monopoly [i.e. the fact of acquisition of ownership of all the English language dailies in the Province] had been established detriment in law resulted. It was for the Crown to adduce proof of detriment or that the public interest has been adversely affected and this was not done. The only evidence was theoretical, from witnesses who spoke of the threat to newspaper independence and likely resulting public detriment without having made any study of the actual situation or addressing themselves to the facts of the operation of the newspapers involved.

[Howard Smith Paper Mills Ltd. v. The Queen, [1957] S.C.R. 403; R. v. Container Materials Ltd. (1941), 76 C.C.C. 18, affd., [1942] S.C.R. 147; R. v. Northern Electric Co. Ltd., [1955] O.R. 431; R. v. Canadian Breweries Ltd., [1960] O.R. 601; R. v. Eddy Match Co. Ltd. (1954), 109 C.C.C. 1; R. v. Morrey (1956), 19 W.W.R. 299, referred to.]

APPEAL from a judgment of the Supreme Court of New Brunswick, Appeal Division[1], allowing an appeal by the respondents from a judgment of Robichaud J.[2] convicting the respondents of offences under the Combines Investigation Act, R.S.C. 1952, c. 314, s. 32 and the Combines Investigation Act, R.S.C. 1970, c. C-23, s. 33. Appeal dismissed.

W.L. Hoyt, Q.C., and F.N. MacLeod, for the appellant.

J.J. Robinette, Q.C., and D.M. Gillis, Q.C., for the respondents.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—The respondents to this appeal are four companies which were charged under two indictments dated October 3, 1972 with offences (1) under the Combines Investigation Act, R.S.C. 1952, c. 314, as amended, as it stood prior to August 10, 1960 and (2) under the Combines Investigation Act, R.S.C. 1970, c. C-23, which so far as relevant for present purposes and in the form of predecessor legislation, became effective on August 10, 1960.

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The first indictment contained three counts alleging (1) that K.C. Irving, Limited, New Brunswick Publishing Company Limited, and University Press of New Brunswick Limited between September 8, 1948 and August 9, 1960 in the city of St. John, in the city of Moncton, in the city of Fredericton and elsewhere in New Brunswick were parties to the formation or operation of a combine, that is a merger, trust or monopoly, under the Combines Investigation Act, R.S.C. 1952, c. 314, as amended, by reason of purchasing or acquiring control over certain newspapers in New Brunswick; (2) that the same three companies between the same dates were parties to a combine, that is a merger, trust or monopoly, under the same Act by substantially or completely controlling throughout New Brunswick the business of producing, supplying or dealing in English language daily newspapers; and (3) that the above-named three companies and Moncton Publishing Company Limited between August 10, 1960 and November 30, 1971 in the city of St.John, in the city of Moncton and in the city of Fredericton and elsewhere in New Brunswick were parties to the formation of a monopoly in substantially or completely controlling throughout an area of Canada, namely, New Brunswick, the business of producing, supplying, selling or dealing in English language daily newspapers in New Brunswick, contrary to the Combines Investigation Act, R.S.C. 1970, c. C-23.

The second indictment, containing one count, charged K.C. Irving, Limited with being, between August 10, 1960 and November 30, 1971, in the city of St. John, in the city of Moncton, in the city of Fredericton and elsewhere in New Brunswick, a party to the formation of a merger by reasons of this accused purchasing or otherwise acquiring control over the business of University Press of New Brunswick Limited in the producing, supplying, selling or dealing in English language daily newspapers, contrary to the Combines Investigation Act, R.S.C. 1970, c. C-23.

Convictions were entered on all four charges by Robichaud J. of the New Brunswick Supreme Court, who delivered lengthy reasons for judgment

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on January 24, 1974, and incorporated in them by reference large portions of the written submissions of the Crown consisting largely of various passages of reasons for judgment in reported cases, most of them dealing with charges of conspiracy unduly to lessen competition. K.C. Irving, Limited was found guilty on all four counts in which it was charged; New Brunswick Publishing Company Limited was found guilty on the three counts in which it was charged; University Press of New Brunswick was found guilty on one only of the three counts in which it was charged, namely, the count charging it with being party to an unlawful monopoly between August 10, 1960 and November 30, 1971; and Moncton Publishing Company Limited was also found guilty on this one count, the only one directed to it.

The New Brunswick Court of Appeal, in unanimous reasons for judgment delivered on June 4, 1975 by Limerick J.A. set aside the convictions (and the sentences imposed thereon) and acquitted all the accused on all charges. Leave to appeal to this Court was given on the following three questions of law:

(1) Did the Court of Appeal of New Brunswick err in its interpretation of the words “to the detriment or against the interest of the public, whether consumers, producers or others…” as those words are used in the definition of “merger” and “monopoly” in the Combines Investigation Act, R.S.C. 1970, c. C-23 and in the definition of “combine” in predecessor Acts?

(2) Did the Court of Appeal of New Brunswick err in holding that (a) no presumption arose of detriment or likely detriment to the public when competition has been prevented or lessened unduly and, (b) even if there was such a presumption there was evidence to rebut it?

(3) Did the Court of Appeal of New Brunswick err in its appreciation of the meaning of “competition” as it related to the facts of the present case?

The relevant statutory provisions which are involved in this case are (1) the definition of “merger, trust or monopoly” as a form of prohibited combine under the Combines Investigation Act as it stood prior to August 10, 1960 and (2)

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the definitions of “merger” and “monopoly” which were separately defined in the amendment of the Act by 1960 (Can.), c. 45 and which now appear unchanged in those definitions in the Combines Investigation Act, R.S.C. 1970, c. C-23. Section 32(1) of the Combines Investigation Act, R.S.C. 1952, c. 314, as amended, makes it an indictable offence to be a party or privy to or knowingly assist in the formation or operation of a combine. “Combine” is defined in s. 2(a) to mean, inter alia, a merger trust or monopoly which has operated or is likely to operate to the detriment or against the interest of the public, whether consumers, producers or others; and “merger, trust or monopoly” (the three terms are not distinguished each from the others) is defined in s. 2(e) to mean

…one or more persons

(i) who has or have purchased, leased or otherwise acquired any control over or interest in the whole or part of the business of another, or

(ii) who either substantially or completely control, throughout any particular area or district in Canada, or throughout Canada the class or species of business in which he is or they are engaged,

and extends and applies only to the business of manufacturing, producing, transporting, purchasing, supplying, storing or dealing in commodities which may be the subject of trade or commerce; but this paragraph shall not be construed or applied so as to limit or impair any right or interest derived under the Patent Act, or under any other statute of Canada.

Section 33 of the current Act makes it an indictable offence to be a party or privy to or knowingly assist in or in the formation of a merger or monopoly; and “merger” and “monopoly” are separately defined in s. 2 as follows:

2…

“merger” means the acquisition by one or more persons, whether by purchase or lease of shares or assets or otherwise, of any control over or interest in the whole

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or part of the business of a competitor, supplier, customer or any other person, whereby competition

(a) in a trade or industry,

(b) among the sources of supply of a trade or industry,

(c) among the outlets for sales of a trade or industry, or

(d) otherwise than in paragraphs (a), (b) and (c),

is or is likely to be lessened to the detriment or against the interest of the public, whether consumers, producers or others;

…

“monopoly” means a situation where one or more persons either substantially or completely control throughout Canada or any area thereof the class or species of business in which they are engaged and have operated such business or are likely to operate it to the detriment or against the interest of the public, whether consumers, producers or others, but a situation shall not be deemed a monopoly within the meaning of this definition by reason only of the exercise of any right or enjoyment of any interest derived under the Patent Act, or any other Act of the Parliament of Canada;

The background to the charges in this case may be briefly detailed. During the period covered by the charges there were five English language daily newspapers in New Brunswick, two morning papers and three afternoon or evening papers. New Brunswick Publishing Company Limited published in the city of St. John, a morning paper, The Telegraph Journal, and an evening paper, The Evening Times-Globe. Moncton Publishing Company Limited published in the city of Moncton a morning paper, The Moncton Times, and an evening paper, The Moncton Transcript. University Press of New Brunswick Limited published in the city of Fredericton an afternoon paper, The Daily Gleaner. In 1944, K.C. Irving, Limited acquired all the shares of New Brunswick Publishing Company Limited, and in 1948 this latter company acquired all the shares of Moncton Publishing Company Limited. This gave K.C. Irving, Limited ownership and control of four of the five English language daily newspapers in New Bruns-

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wick in the period between the indictment dates of September 10, 1948 and August 9, 1960. In 1958, that accused acquired a 25 per cent minority interest in the shares of University Press of New Brunswick Limited and it acquired another 55 per cent of the shares in 1968, giving it control of the company, and in 1971 it purchased the remaining outstanding shares.

No issue was raised by the respondents in this appeal as to whether the newspapers controlled by K.C. Irving, Limited through wholly owned subsidiaries were “commodities which may be the subject of trade and commerce” for the purpose of the offences charged as “merger, trust or monopoly”, nor did the respondents put in issue the question whether the newspapers were a “business” for the purposes of the charges of merger and monopoly under the current Combines Investigation Act. Limerick J.A. made a point, however, of separating the newspaper as a physical object, consisting of pages of newsprint, from the expression of ideas therein, its editorial comment and the editing of news; and he held that although as a physical object a newspaper was caught by the combines legislation as being an article of trade or commerce, the legislation would not cover the contents as such. This is not a question that I need decide here and I leave it open, especially in view of the fact, established by the evidence, that editorial control of the five newspapers was left in the hands of their respective publishers and editors without any attempt at central or other combined direction. At first blush, it seems incongruous that a prohibited merger or monopoly should not include newspapers in respect of their editorial direction but, as I have said, I leave the point open.

I do not overlook the Crown’s submission, made more fully in its factum than in oral argument, that because newspapers are important channels of communication in support of an informed public opinion and are important disseminators of ideas, and hence significant for a working democracy, they are so different from other commercial ventures as to require the courts to view any alleged merger or monopoly in the newspaper field with

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greater concern for maintenance of freedom in the communication or dissemination of news and ideas. This view contrasts sharply with that taken by Limerick J.A. and since, so far as it was articulated, it was reflected in the Crown’s main submission on proof of the elements of the offences charged herein, it will be more convenient to deal with it when I come to consider that submission.

Before turning to the contentions of the Crown and the respondents on the three questions on which leave to appeal was given, I wish to refer briefly to the findings of fact made by the trial judge and by the Court of Appeal. There is no appeal here on questions of fact and, absent any argument on complete absence of evidence or on complete disregard of admissible evidence touching any of the issues in this case, this Court must accept the facts as they were found below and must accept the findings of fact in the Court of Appeal where they differ from those of the trial judge.

It was common ground that New Brunswick was the proper market area within which to assess the existence of a prohibited merger or monopoly. There was no significant circulation of any of the New Brunswick newspapers outside the Province and, correlatively, there was no significant circulation within New Brunswick of newspapers published elsewhere; the latter constituted about three per cent of newspaper circulation in the Province. Again, it was not disputed that the two evening newspapers published in St. John and in Moncton respectively circulate almost entirely within their respective publication areas, and the overlap of circulation which is most marked is in the North Shore area where both the St. John Telegraph-Journal and the Moncton Times compete for circulation. To a lesser degree there is circulation competition in Fredericton and surrounding areas between the Daily Gleaner and the Telegraph-Journal.

The acquisition of ownership by K.C. Irving, Limited of all five English language daily newspapers did not, on the evidence, result in any change in the market areas served by the newspapers

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before their acquisition. There is no suggestion of any attempt to eliminate competition for circulation so as to limit the public’s access to any of the newspapers; indeed, circulation improved substantially for each of the newspapers over the period covered by the indictments. Whatever be the reasons for the increase, it was not suggested that there was any action by the parent company or any subsidiary that sought to slow it down with respect to any one paper to give an advantage to any other.

The Crown’s case against the respondents included an allegation that they had attempted to put the only French language daily newspaper in New Brunswick, L’Évangeline, out of business. It is unnecessary to go into the details of this allegation because the trial judge found that the allegation had not been substantiated and, as a finding of fact not altered on appeal, it is not challengeable here.

I adverted earlier to the finding of the trial judge that the acquisition of the newspapers by the K.C. Irving interests did not result in any attempt to influence the respective publishers and editors in the gathering or publication of news or in the editorial direction. He found as a fact that there was complete editorial autonomy and that the owners had retained and in some instances increased the staff of each of the newspapers. He also concluded that there was no actual detriment to the public by reason of the Irving acquisitions (a matter to which I will return later in these reasons from the standpoint of the applicable law) either in respect of circulation rates, advertising content and rates, and improvement of quality and quantity of news. Other findings of fact were summarized by the trial judge when determining sentence after he entered convictions on the basis of his view of what the governing law required. These findings were as follows:

(1) There has been an increase in circulation of all five daily newspapers;

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(2) There has been a continuation in the publication of the two morning papers despite both are in a loss position;

(3) There has been a continuation of the publication of the monthly Atlantic Advocate and also the printing plant in Fredericton despite the fact these two operations have been in a loss position for many years;

(4) There has been a substantial improvement in the facilities and plant of the publishing companies and all have achieved financial stability;

(5) The Provincial economy and industry have benefited since all profits have been re‑invested in New Brunswick enterprises.

All the above facts have been substantiated, beyond all reasonable doubt, by the evidence before me at the hearing.

Turning now to the three questions on which leave to appeal was granted, Crown counsel submitted (in dealing with them in different order) that the Court of Appeal erred in holding that subsidiaries of a parent corporation may be in competition with each other and, consequently, erred in holding that pre-existing competition had not been lessened by the acquisition of previously competing and independently-owned newspapers. The Crown submitted further that acquisitions or control of a class of business within a market area may be “to the detriment or against the interest of the public” by reason of the prevention or lessening of competition, and that if there is an undue prevention or lessening of competition (to be established as a fact) there is a rebuttable presumption that detriment occurred. Finally, it was submitted that the presumption was not only not rebutted but that detriment had in fact been proved.

It is, in my view, impossible to contend in the face of the reasons for judgment at trial and on appeal that there was any proof of detriment in fact. Both sets of reasons are to the contrary. The trial judge noted that the only allegation of actual detriment concerned the French language daily L’Évangeline, and this allegation, as I have already noted, was not substantiated. The trial judge found detriment, however, as a matter of law, saying in his reasons:

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In my view, once a complete monopoly has been established such as the evidence clearly discloses, inasmuch as the post-1960 charges are concerned, detriment, in law, resulted.

Of course, the trial judge in speaking of “monopoly” in this passage could only be referring to the fact of acquisition of ownership or control of all the English language dailies. Since the definition of “monopoly” involves an element of detriment in the operation or likely operation of a class of business of which substantial or complete control has been acquired, and since the same element is present in the specification of “merger, trust or monopoly” under the pre‑August 10, 1960 legislation, can it be said that such detriment is immanent in the acquisition of control without more?

In the present definition of “merger” the reference to control is not to substantial or complete control as in the definition of “monopoly”, but to any acquisition of control over or interest in the whole or part of a business whereby competition is or is likely to be lessened to the detriment or against the interest of the public. Competition is not a separate issue that arises in relation to monopoly because, on proof of substantial or complete control of a business in a market area, competition is taken to be either materially lessened or eliminated, and the element that remains to be proved to establish the offence of being party to or knowingly assisting in the formation of a monopoly is that the business has been or is likely to be operated to the detriment or against the interest of the public, and I emphasize the term “operated”.

There is no doubt in this case that the Irving interests have such control of the English language newspapers in New Brunswick as to satisfy the opening parts of the definition of “merger” and “monopoly” and part of the definition of “merger, trust or monopoly”. The question that remains in relation to the meaning of “merger” is whether, by reason of the acquisition of that control, “competition is or is likely to be lessened to the detriment or

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against the interest of the public”; and in relation to the meaning of “monopoly” and of “merger, trust or monopoly” whether the person or persons having such control “have operated or are likely to operate [the controlled business] to the detriment or against the interest of the public”. It is in order to meet these questions that the Crown contends (1) that there can be no competition among subsidiaries of a parent company, all engaged in the same business over which control has been acquired, or that it is likely, as a matter of necessary inference, that competition will be lessened as a result of the acquisition of such control; (2) that detriment results from the prevention or lessening of competition; (3) that the interference with competition in the present case was “undue” so as to raise a presumption of detriment or likely detriment and that, moreover, such detriment had been proved apart from any presumption.

I have already noted that there was no proof of detriment in fact. The other points taken by the Crown are based on what, in my view, is a mistaken application to the present case of the law governing unlawful conspiracies or agreements unduly to prevent or lessen competition. There is no charge against the respondents or any one of them of being parties or a party to an unlawful conspiracy under the Combines Investigation Act. On such a charge, as now covered by s. 32 of the present Act, it is the prohibited agreement or arrangement that is the gist of the offence and, as leading counsel for the respondents, Mr. Robinette, asserted the approach of the cases is to consider such a charge in terms of the probable execution of the agreement or arrangement, looking to its purpose and effect in that light. This was the view taken by this Court in Howard Smith Paper Mills Ltd. v. The Queen[3], and I refer particularly to the reasons of Taschereau J. (as he then was), of Kellock J. and of Cartwright J. (as he then was) in that case.

In contending that subsidiaries which are in the same business do not or cannot be said to compete, the Crown appears to be putting them in the position of parties to an agreement or arrangement to lessen competition, which agreement or

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arrangement is proved by reason of the interwoven corporate structure of which they are part, the parent company being the ultimate beneficiary of the profits flowing from the business. It is on this basis, as it appears to me, that the Crown relies on the conspiracy cases, cases such as R. v. Container Materials Ltd.[4], and R. v. Northern Electric Company Limited[5], and seeks to draw from the decisions therein on undue lessening of competition support for its contention that undueness, if shown in respect of a merger, carries with it detriment, at least by way of a rebuttable presumption.

The Crown carries its contention further by (1) relying on the judgment of McRuer C.J.H.C. in R. v. Canadian Breweries Ltd.[6], a “merger, trust or monopoly” prosecution, as an illustration of the application of “unduly”, as used in the conspiracy cases, to the required proof that the “merger, trust or monopoly” has operated or is likely to operate to the detriment or against the interest of the public; and (2) relying on R. v. Eddy Match Company Limited[7] a judgment of the Quebec Court of Appeal (leave to appeal to the Supreme Court of Canada refused), as supporting its contention that a presumption arises of operation or likely operation to the detriment of the public upon proof of control of a business that excluded the possibility of any competition.

In the Canadian Breweries case, McRuer C.J.H.C. accepted the contention of the Crown that for the purpose of the prosecution in that case the words “have operated or are likely to operate to the detriment or against the interest of the public” have substantially the same meaning as the word “unduly” in the criminal conspiracy cases: see 126 C.C.C. at p. 139. If he meant this as a literal application of the law in the conspiracy cases to the law governing “merger, trust or monopoly” under the pre-August 10, 1960 legislation and “monopoly” under the post-August 10,

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1960 legislation, his view is contrary to that expressed by Kellock J. speaking for himself, Rand and Fauteux JJ. in the Howard Smith case. There the reverse submission was made by the accused, namely, that “unduly” in a conspiracy charge should be interpreted by reference to the words “has operated or is likely to operate to the detriment or against the interest of the public”. In rejecting this contention, Kellock J. said this (at p. 409 of [1957] S.C.R.):

…If there is a difference between the offences described in the two statutes [the Criminal Code and the Combines Investigation Act] Parliament has deliberately so intended. It will be seen however that s. 498(1)(d) [of the Criminal Code, dealing with conspiracy to unduly prevent or lessen competition] does have in view injury to the public but injury to the public of a character expressly specified by the section itself.

The Eddy Match case is invoked by the Crown in respect of the following statement therein by Casey J.A., speaking for a unanimous Quebec Court of Appeal, at p. 21 of 109 C.C.C.:

What we have here is the activity envisaged by s. 2(4)(b)—the control of a class of business; a control that, as revealed by the evidence, excluded for all practical purposes, the possibility of any competition. Such a condition creates a presumption that the public is being deprived of all the benefits of free competition and this deprivation, being the negation of the public right, is necessarily to the detriment or against the interest of the public.

This presumption however may be rebutted and it does not seem unreasonable to suggest that some “control” might in exceptional circumstances be more advantageous to the public than if the business had been left free. But when faced with facts which disclose the systematic elimination of competition, the presumption of detriment becomes violent. In these circumstances, the burden of showing absence of detriment must surly (sic) rest on the shoulders of those against whom the presumption plays. Appellants made no defence and there is nothing in the record which comes to their aid.

I point out that in the Canadian Breweries case there was an acquittal because, inter alia, substantial or complete control of the beer business had not been established, and that in the Eddy Match

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case there was proof of actual detriment or likely detriment. Casey J.A. put the matter as follows, at p. 22 of 109 C.C.C.:

…Thus even if one cannot infer from the fact of complete control that there existed the likelihood of detriment to the public, this inference can and must be drawn from the acts that were done during the acquisition, development and exercise of that control.

The issue raised by the Crown’s contention was also met by the majority of the British Columbia Court of Appeal in R. v. Morrey[8]. The matter arose in a curious way because on charges of participation in a combine by way of an arrangement designed (1) to fix a common price for gasoline, (2) to enhance the price thereof and (3) to prevent or lessen competition, it was the position of the Crown that it was an essential element of each of these charges that there be proof of “operation or likely operation to the detriment of the public”. As was pointed out in the majority reasons, this was doubtful as a matter of grammatical construction since the quoted words appeared to relate only to a combine “otherwise restraining or injuring trade or commerce or a merger, trust or monopoly”. But taking them on the Crown’s view, the majority of the Court of Appeal found misdirection in the trial judge’s failure to charge the jury that there must be evidence of detriment or likely detriment (no oral evidence was adduced as to detriment) and in telling them that if they found any lessening of competition they could regard that as operating to the detriment of the public.

Moreover, the majority of the Court of Appeal also rejected the contention of the Crown that detriment could be assumed, depending on the degree to which competition had been prevented. Sidney Smith J.A. (Bird J.A. concurring) speaking for the majority, and rejecting the suggestion that

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the Criminal Code conspiracy cases could be applied, said (at p. 341):

…Here the [Combines Investigation] Act speaks for itself; preventing or lessening competition is not enough. The Crown must go further with its proof and show the activities complained of had operated or are likely to operate to the detriment or against the interest of the public…

Two further comments on the Morrey case. The jury therein had convicted on the first two charges above mentioned but had acquitted on the charge of a combination designed to prevent or lessen competition. The misdirection related to the other charges (there was no cross-appeal by the Crown) on the basis that the jury must have applied a presumption of the specified detriment in bringing in verdicts of guilty thereon. The second comment relates to the dissent of Davey J.A. which was founded on his view that the Crown did not have to prove the specified detriment to support the convictions that were entered. In his view that was not an element of the particular charges.

In making its submission on a presumption as to detriment, the Crown appeared to contend not that the presumption arose upon proof of substantial control (in the case of a “monopoly” as defined under present legislation) or on proof of some control (which would satisfy part of the definition of “merger” under the present Act) but, rather, that it arose upon a showing of complete control in each situation, that being equivalent to undueness in the conspiracy cases. This was, in effect, an adaptation of the argument that was advanced by the Crown in the Morrey case and, in my opinion, rightly rejected.

In using the term “presumption”, the Crown did not use it as connoting an inference that may but need not be drawn from the evidence, but rather as pointing to an inference that must be drawn as to the presumed fact—here the required detriment—on proof of a basic fact—here the acquisition of a complete control of a business in a market area.

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I do not think that it is open to a court in a criminal case to raise a presumption such as is contended for by the Crown in this case in the absence of legislative direction. Inference as part of the logical process of deduction from proved facts is one thing; a rebuttable presumption of law has the effect of altering the burden of proof which, if there is no legislative prescription to the contrary, rests on the Crown with respect to every element of an offence charged against an accused.

In the light of the definition of “merger” in the present Combines Investigation Act it is impossible to say that acquisition of entire control over a business in a market area (as contrasted with acquisition of some control) must mean without more not only that competition therein was or was likely to be lessened but that by reason of such control the lessening or likely lessening is to the detriment or against the interest of the public. Even if the acquisition of entire control would be enough to support an inference of lessening or likely lessening of competition, that inference cannot be drawn here, in the face of the evidence and the findings thereon by the trial judge and by the Court of Appeal that the pre-existing competition where it existed, remained and was to some degree intensified by the take-over of the newspapers.

This is sufficient to dispose of the charges alleging an unlawful merger under the present Act. The charges involving “merger, trust or monopoly” under the previous legislation and involving “monopoly” under the present Act bring up the question of operation or likely operation of a completely controlled class of business in a market area to the detriment or against the interest of the public. In my opinion, the same conclusion must follow, namely, that proof must be adduced of this element and it cannot be presumed, as the Crown would have it, merely by showing complete control of a business let alone substantial control only. The evidence must go beyond that and it was not adduced in the present case. True enough, there was testimony taken from witnesses, referred to as

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expert witnesses by the trial judge, who spoke of the threat to newspaper independence (and likely resulting public detriment) where there was centralized ownership of a number of newspapers with a right to control their policies in both editorial views and news reporting. They spoke theoretically, without having made any study of the situation in New Brunswick, nor did they address themselves to the facts relating to the operation of the newspapers involved in the present case.

I would dismiss the Crown’s appeal. It is, consequently, unnecessary to decide whether, under the principle of Kienapple v. The Queen[9], a conviction on the first count of the first indictment would oblige the Court to acquit on the other counts and to acquit of the charge in the second indictment because of allegedly identical facts underlying all the charges.

Appeal dismissed.

Solicitor for the appellant: D.S. Thorson, Ottawa.

Solicitors for the respondents: McCarthy & McCarthy, Toronto.