COVID-19 protective equipment makers ask Ottawa for more than $5 billion in damages

OTTAWA – Canadian makers of masks and other COVID-19 protective equipment are seeking more than $5 billion in damages from the federal government, saying Ottawa misled them about buying and helping sell their products.

In a statement of claim filed in Federal Court, the companies and their industry association allege that the government made “negligent misrepresentations” that led them to invest in innovations, manufacturing and production of personal protective equipment.

The companies and the Canadian PPE Manufacturers Association say the government made misleading statements about markets, direct assistance, flexible procurement and long-term support over a three-year period that began in March 2020.

The federal government will have the opportunity to present a defense to the unproven allegations as the court case progresses.

The emergence of COVID-19 in early 2020 prompted governments and public health officials to implement extraordinary measures (including lockdowns, vaccine requirements, and mask mandates) to prevent the spread of the disease.

The companies and their association say they formed a “special relationship” with the government that resulted in a duty of care to small and medium-sized businesses that quickly restructured to make protective equipment for Canadians.

“This promise came from the very top of our Canadian government and was supported and propagated throughout all departments that dealt with the plaintiffs,” the statement of claim says.

The lawsuit alleges that Canada’s misrepresentations resulted in about $88 million in investment losses and another $5.4 billion in projected lost market opportunities over a 10-year period.

The government communicated to companies through an initiative known as Canada Plan to mobilize industry to fight COVID-19 that there would be new measures to directly support companies to rapidly increase production or renew their manufacturing lines, it says claim.

However, even though the government identified masks and respirators as vital items in an airborne pandemic beginning in May 2020, invoking a national security exception for the procurement, it “did not enter into contracts” with the Canadian companies, the claim says.

Additionally, it alleges that the government told the companies in June 2021 that it would agree to a 10-year contract with the industry association and the companies to compensate for the fact that it had been purchasing protective equipment from foreign companies.

Similarly, the complaint says that last September a federal official indicated the government would support Canadian companies when procurement was made to replenish the Strategic National Emergency Stockpile of protective items.

However, another official would later tell the companies that the government “would not buy them masks or respirators” for the strategic stockpile, the claim says.

He maintains that despite promises to support domestic industry, the government rejected local companies “and instead supported foreign competition.” In turn, the government’s actions denied Canadian companies “fair and equitable access” to the Ontario and Quebec markets, as well as the Canadian hospital market.

The lawsuit also claims that the government, through guidance provided by the Public Health Agency of Canada, “inappropriately diverted” Canadians from purchasing and using N95 and other manufactured masks in favor of “manufacturing, purchasing and using cloth for at least the first two.” -years of the pandemic.”

This report by The Canadian Press was first published Feb. 14, 2024.