Shell corporation cannot bring application, Tribunal rule

Symbol Technologies Canada ULC v. Barcode Systems Inc.[1]

A corporation that is no longer a going concern cannot maintain a private application under s. 75, the Tribunal held in October 2005.

In early 2004, the Tribunal granted Winnipeg bar code equipment seller Barcode Systems Inc.leave to commence a private application to force Symbol Technologies Canada ULC to resume supplying it with bar code equipment.[2] Barcode claimed that Symbol cut off its supply in March 2003 in order to “bury” it after Barcode sued Symbol. According to Barcode, Symbol products accounted for 75% of its business.

Symbol appealed the order granting leave and lost. The Federal Court of Appeal disagreed with the test applied by the Tribunal. In determining whether to grant leave, the Tribunal must consider all the elements that must be proven in the application, including whether there is an adverse effect on competition, the court held. However, the court found evidence that Symbol’s refusal to deal with Barcode could have an adverse effect on competition.[3]

The victory was a hollow one for Barcode: it went into receivership and all of its assets were sold to qdata inc., leaving only a shell corporation. Symbol is supplying qdata.

Symbol then brought an application under s. 106 to rescind the Tribunal’s order granting leave, and then a motion for summary disposition of its s. 106 application. Barcode did not file any responding material.

The Tribunal granted Symbol’s motion for summary disposition and rescinded the order granting leave on the basis that Barcode was no longer a going concern. The circumstances that prevailed at the time Barcode had been granted leave had changed. In the absence of Barcode as a going concern, there would have been no business to supply, and no way to supply Barcode on usual trade terms.

Published November 2, 2005