In a unanimous decision yesterday, the Supreme Court of Canada refused to strike down the Quebec government's controversial ban on butter-coloured margarine.
In an oral ruling, seven high-court judges blew away the multi-pronged legal challenge of international consumer products giant Unilever to a provincial regulation that prohibits the sale of yellow margarine in the province of Quebec - the last jurisdiction in the world to do so.
Unilever said it costs the company $100,000 a month to have separate manufacturing and distribution processes for margarine designated for Quebec.
Quebec margarine, made in Toronto from Western-grown canola and Ontario soybean oil, is usually a lardish, pale cream colour because of a regulation that aims to protect Quebec's huge dairy industry by eliminating potential confusion with butter.
The top court found Quebec's position so compelling that the judges declined to call on the province's lawyers to defend the ban. It heard only from Unilever's counsel, Gerald Tremblay.
Justice Louis LeBel said the ruling affirmed the decisions of Quebec courts that the regulation containing the colour restrictions is within the province's power and does not impinge on federal jurisdiction.
The high court also rejected Unilever's argument that since the Quebec government subscribes to international and interprovincial trade agreements, such as the Agreement on Internal Trade signed by the federal government and all the provinces in 1994, it is illegal to permit a regulation that is inconsistent with those agreements.
Emerging from the courtroom, lawyers for the Quebec government and the dairy industry were jubilant.
Jean-Francois Jobin, Quebec's lead lawyer, said if the court had ruled against Quebec's law, it would have had a dramatically negative impact on the province's ability to regulate industries.
"Obviously, the court was not prepared to ... buy the arguments of (Unilever) because as a matter of fact, it put into question many, many, many rules of constitutional and administrative law. We had very clear legislation permitting the government to adopt this rule," he said.
Jean Vigneault, spokesperson for the Quebec Federation of Milk Producers, said a government loss would have had serious implications for other regulations affecting butter/margarine blends for example.
"We evaluated ... at least 3,000 jobs in Quebec and maybe
$100 million of sales per year were at stake," he said. "It was important - not only for dairy producers and the butter industry but for the country itself, because that battle was also a battle against a big multinational corporation that wanted governments to adopt regulations in line with their interpretation of treaties. It's a question of sovereignty of governments to regulate commercial practices."
Unilever Canada spokesperson Sean McPhee said the company won't give up its fight.
"Quebec consumers have clearly indicated to us by a wide margin that they would prefer to see their margarine as yellow-coloured, and it's unfortunate that their provincial government won't respond to their wishes," he said.
"We will continue to pursue our remedies under the Agreement on Internal Trade and pursue the matter to the Agreement on Internal Trade (Canadian) dispute resolution panel, where an independent arbitration panel will make a judgment. We believe that it is very clear, and with no ambiguity, that the margarine colour regulation is a barrier to trade ... and it should be repealed."
The court gave short shrift to Unilever's argument that prohibiting the company from colouring its margarine yellow was a violation of the company's commercial "freedom of expression" guaranteed by the Quebec and Canadian Charter of Rights.
"This regulation does not
affect the freedom of expression, based on the jurisprudence of our honourable court and the importance that we accord it," LeBel said.
Unilever, which has about 60 per cent of the Canadian margarine market, provoked the province into a court fight in 1997 by shipping 480 containers of pale yellow margarine from the United States into Quebec.
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Designed as consumer-protection measure, it was repealed and reinstated
The Quebec law forbidding the sale of margarine that is the same colour as butter was introduced as a consumer-protection measure back in the 1950s.
It was repealed in 1972 and reinstated in 1987 by the Liberal government of Robert Bourassa.
The agriculture ministry does not run a continuing inspection program, seeking out illegally coloured margarine; rather it relies on complaints from consumers or, presumably,
the dairy industry.
Multinational margarine-maker Unilever claims the law is a restriction on freedom of expression and also violates the North American Free Trade Agreement, World Trade Organization rules and interprovincial trade laws.
A Quebec Superior Court judge rejected Unilever's case in 1999 and the Quebec Court of Appeal upheld the ruling in 2003.
Yesterday, the Supreme Court of Canada said Quebec can continue with the ban on butter-coloured margarine.The Gazette (Montreal)
