Volkswagen and Audi settled environmental marketing claim with $15 million penalty

Vanessa Leung

On December 19, 2016, Volkswagen Group Canada Inc. (VW) and Audi Canada Inc. (Audi) entered into a consent agreement with the Commissioner of Competition to resolve the Commissioner’s concerns that VW and Audi had made false or misleading environmental marketing claims about certain of its 2.0 litre diesel vehicles. The consent agreement is one component of a broader Canadian settlement relating to VW’s and Audi’s allegedly misleading environmental claims.

The Bureau alleged that software installed in the affected VW and Audi vehicles could detect a test being conducted and alter the operation of the vehicle during the test to reduce nitrogen oxide emissions. The Bureau also alleged, however, that during normal use, the nitrogen oxide emissions would exceed the amounts at which the vehicle had been certified. The Bureau concluded that the statements, warranties and/or guaranties made about the performance or efficacy of these vehicles were false and misleading in a material respect, and were not based on adequate and proper testing, contrary to the Competition Act

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Moose Knuckles resolves misleading "Made in Canada" representations

Vanessa Leung - 

On December 7, 2016, Moose International Inc. (Moose Knuckles) reached a consent agreement with the Commissioner of Competition. The consent agreement resolves the Commissioner’s concerns about deceptive marketing practices in respect of the “Made in Canada” claims on certain Moose Knuckles parkas.

According to the Bureau, Moose Knuckles claimed that its parkas are “Made in Canada” (both on its website, and on the interior of the parkas themselves). The Bureau alleged that, in fact, the parkas were imported from Vietnam and Asia in a nearly finished form. The Bureau concluded that Moose Knuckles’ advertising was therefore inconsistent with its (non-binding) “Made in Canada” guidelines, which have three key requirements:

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Competition Bureau questions: Why don't we see more health care advertising?

William Wu and Vanessa Leung - 

Due to regulations by provincial governments and self-regulating professional bodies, Canadian health care professionals face significant restrictions on how they are permitted to advertise their services in the marketplace. For example, price advertising, where professionals advertise the prices they will charge for particular services, is often limited; comparison advertising, where a professional compares his or her services and skills to those of another professional, is generally prohibited.

On October 4, 2016, the Competition Bureau published a report assessing the effect of advertising restrictions on the health care marketplace. The report suggests that advertising restrictions, while well-intentioned, may result in unnecessarily high prices for consumers, and calls on regulatory bodies to begin collecting data to conduct further empirical studies on the effect of advertising restrictions.

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Avis and Budget reach settlement in alleged misrepresentation of fees and discounts

Vanessa Leung and Ashley Piotrowski

On June 2, 2016, the Competition Bureau reached a consent agreement with Aviscar Inc. and Budgetcar Inc. / Budgetauto Inc., over allegations of false or misleading advertising for prices and discounts on car rentals and associated products.  A Bureau investigation concluded that certain prices and discounts initially advertised were not attainable because consumers were charged additional mandatory fees that were only disclosed later when making a reservation. Pursuant to the consent agreement, the parties will pay a $3 million administrative monetary penalty, as well as $250,000 towards the Bureau’s investigative costs.  The parties have also agreed to implement a compliance program.

Background

In March 2015, the Bureau filed an application against the Aviscar Inc. and Budgetcar Inc. / Budgetauto Inc., alleging that the parties had made false or misleading representations to the public to promote the use of their rental cars and associated products, and that the parties had supplied their rental cars and associated products at a higher price than was advertised to consumer. The representations were made across a broad range of media including print, website, mobile applications, television commercials and electronic messages.

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Telus agrees to pay $7.34 million in customer rebates to resolve false and misleading advertising allegations

Jeff Brown and Margaret Kim - 

On December 30, 2015, the Competition Bureau announced that it had reached a consent agreement with Telus Communications Inc., one of Canada’s “Big Three” wireless carriers, over allegations of false or misleading advertisements for premium text messaging and rich content services, such as trivia, daily horoscopes, and ring tones. 

As part of the consent agreement, Telus will issue rebates in an aggregate amount up to $7.34 million to certain current and former wireless customers, who the Bureau alleged were unknowingly charged extra for the text message services. The Bureau noted that the amount for consumer rebates made available under the consent agreement is the most obtained by it under any consent agreement to date.  In March 2015,  Rogers Communications Inc. settled with the Bureau, agreeing to pay $5.42 million in refunds to customers for the same fees as part of the same investigation. Similar proceedings against Bell Canada and the Canadian Wireless Telecommunications Association are ongoing.

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Red Light: Competition Bureau alleges misleading advertising by car rental firms

Jennifer Rad -

The Competition Bureau has filed an application with the Competition Tribunal against Aviscar and Budgetcar, and their parent company, Avis Budget Group Inc., alleging deceptive marketing practices contrary to several provisions of the Competition Act. The Bureau’s investigation into the pricing practices of Avis and Budget, two of the largest rental car companies in Canada, uncovered price representations which the Bureau considers to be false or misleading in a material respect, dating back to 1997.

In its Notice of Application, the Bureau submits that the prices advertised to the public by Avis and Budget are “not in fact attainable,” thereby creating a false general impression about prices and discounts. The Bureau submits that actual rental costs could be up to 35% higher than advertised once “non-optional” fees imposed by both companies are included. Although these “non-optional” fees are known to Avis and Budget, the Bureau alleges that the companies choose to exclude them from advertised prices and/or discounts. The Bureau also alleges that the “non-optional” fees, once revealed to the customer, are characterized as charges being imposed on customers by governments or other third-parties, when in fact they are Avis’ and Budget’s own charges related to the cost of doing business.

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What's old is new - dusting off the OSP rules

Jennifer Rad -

It has been almost a decade since the Competition Bureau sunk its teeth into the enforcement of ordinary price claims, pursuant to the Competition Act’s deceptive marketing practices provisions. But what is old may be new again as recent signals from the Competition Bureau point towards increased enforcement focus on these types of claims in the future. As such, Canadian businesses should ensure that their corporate compliance programs and pricing practices are in-line with the OSP rules of the Act and the Bureau’s Ordinary Price Claims Guidelines which the Tribunal relied on heavily when analyzing past cases.In particular, Subsections 74.01(2) and (3) of the Act set out specific requirements for the calculation of the ordinary selling or reference price on which savings claims are based, known as the “volume test” and the “time test”:

Volume Test In order to meet the volume test, the reference price must be one at which a substantial volume of product has been sold at that price (or a higher price), within the relevant geographic market, within a reasonable period before or after the savings claim is made.

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Competition Bureau's Fair Business Practices Branch provides insight into key policies and enforcement issues

As advertising and marketing, both traditional and online, continue to be a large part of our economy, it is important to keep up to date with what the Competition Bureau considers to be fair advertising and marketing business practices. Senior Deputy Commissioner of Competition Lisa Campbell and Major Case Director and Strategic Policy Advisor Brendon Ross attended a breakfast seminar at Stikeman Elliott to speak to clients and answer questions regarding priorities of the Fair Business Practices Branch and recent enforcement issues in misleading advertising and marketing.

Quebec telemarketing scheme leads to imprisonment

Marisa Muchnik -

On December 4, 2013, the Competition Bureau announced that Gilles Tremblay, a Quebec telemarketer, pleaded guilty to deceptive telemarketing under the Competition Act and fraud under the Criminal Code. As a result, Tremblay was sentenced to nine months imprisonment.
 

The guilty pleas arose out of Tremblay’s investment in a telemarketing scheme involving two operations in Montreal. Tremblay invested somewhere between $50,000 and $75,000 in the scheme and was involved in the financial management of some of the telemarketing activities. The scheme promoted “government grants” to American citizens and the sale of office supplies and medical kits to Canadian and American businesses utilizing allegedly misleading or fraudulent practices. The 2006 investigation was conducted by the Bureau in partnership with the Centre of Operations Linked to Telemarketing Fraud.
 

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Charges laid in Montréal telemarketing case

Robert Mysicka and Graeme Deuchars -

On December 7, 2012, the Competition Bureau announced that charges have been laid against five individuals for violations of the Criminal Code of Canada and of the Competition Act, in relation to tactics used in two Montréal-based telemarketing operations.

The charges arose out of a 2006 investigation by the Competition Bureau in partnership with the Centre of Operations Linked to Telemarketing Fraud (COLT), a joint forces operation between a number of Canadian and American law enforcement authorities. The investigation revealed two telemarketing operations in Montréal promoting the sale of office supplies and medical kits to Canadian and American businesses that allegedly utilized misleading or fraudulent tactics, including implying that the caller represented a business that had an existing relationship with the victim’s company, indicating that certain products or services were required under government rules, or implying that the call was being made on behalf of a government agency Five individuals were charged with defrauding the public in excess of $5,000 contrary to section 380(1) of the Criminal Code. In addition, four of these individuals were charged under the Competition Act with making false or misleading representations during telemarketing calls.

Section 52.1(3) of the Competition Act is a criminal provision that prohibits making materially false or misleading representations in promoting the supply or use of a product or business interest during interactive telephone communications (telemarketing). Contraventions of the Competition Act’s telemarketing provisions carry a maximum penalty on indictment of a fine in the discretion of the court, and/or up to 14 years imprisonment.

Private member's bill would prohibit commercial advertising to children under 13

Michael Laskey -

On June 6, 2012, NDP MP Peter Julian introduced Bill C-430, An Act to Amend the Competition Act and the Food and Drugs Act (Child Protection Against Advertising Exploitation). The private member’s bill would amend the civil misleading advertising section of the Competition Act to prohibit the direction of any advertising or promotion, for commercial purposes, at persons under 13 years of age. The proposed test for such advertising would take into account the manner, time and place of the ad and the nature and intended purpose of the product or business being promoted. The bill also clarifies that advertising may be found to be directed at persons under 13 even though it is presented in printed material intended for people 13 and older, in broadcast during air time intended for persons 13 and older, or in any manner intended for persons both over and under 13. Finally, the criminal misleading advertising section of the Act would be amended to deem all such advertising to be a “recklessly made representation that is false or misleading in a material respect”, and so child-directed advertising would also violate the criminal misleading advertising law.

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Supreme Court of Canada: average consumer is "credulous and inexperienced" for misleading advertisement purposes

Ashley Weber -

In February 2012, the SCC released its decision in Richard v. Time Inc., a case brought forward from the Quebec Court of Appeal, which considered the “general impression” test in relation to the misleading advertising provisions of the Quebec Consumer Protection Act (CPA). Given the recently increased enforcement activity of the Competition Bureau with respect to deceptive marketing practices, companies that advertise to consumers anywhere in Canada should take heed of the SCC decision. The misleading advertising provisions of the Quebec CPA are based, to a large extent, on what is now the federal Competition Act, and similar types of consumer protection laws exist in the other Canadian provinces. Accordingly, the impact of the SCC decision will go beyond the CPA, affecting enforcement of deceptive marketing practices under both federal and provincial consumer protection laws in Canada. 

The SCC decision provides clear guidance on how to assess an advertisement’s target audience for purposes of the “general impression” test, and clarifies that both the layout of the advertisement and the meaning of the words, taken in their entirety, form the general impression of an advertisement. As such, regulators and companies now have a firmer understanding of what test to consider when determining whether an advertisement is misleading in a material respect.

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Canadian court comes down hard on misleading business directory scam

Ashley Weber -

On March 1, 2012, the Ontario Superior Court put an end to a deceptive marketing scam that had resulted in thousands of Canadians falling victim to false and misleading representations, to the tune of an estimated $7 million. In response to an application filed by the Commissioner of Competition, the court held that representations made to the public about a business directory service with a similar name and website to the well-established Yellow Pages business directory were false or misleading in a material respect, contrary to Section 74.01(1)(a) of the Competition Act. The court imposed an administrative monetary penalty (AMP) of $8 million on the related companies, and AMPs of $500,000 on each of the companies’ two principals. The court also ordered that restitution be paid to the individuals that had been victimized by the scam.

Playing on Canadians’ familiarity with the Yellow Pages business directory operated by the real Yellow Pages Group, the respondents had been marketing themselves under a similar name and offering online business directory services to Canadians since January 2010, leading many Canadians to believe that they were receiving communications from the established Yellow Pages Group. Through those communications, recipients were asked to “update” their existing records in order to obtain an additional free Google advertisement. A review of the fine print, however, revealed that it was actually an agreement to sign a new two-year contract for a fee of $2,856. If recipients did not respond and/or pay the requested fee, they were subsequently sent as many as three additional invoices, reminder notices or letters. The communications contained a logo similar to that of the real Yellow Pages Group, and referenced “Yellow Page” (no “s”) in large font.  In reality, the communications were coming from companies and individuals that were in no way related to Yellow Pages Group or its business directory service.

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Internet Predators bill would expand investigative powers in the Competition Act

Michael Laskey -

On February 14, 2012, the Minister of Public Safety tabled Bill C-30, the government’s most recent proposal for so-called “lawful access” legislation which would enhance its online surveillance powers. Titled the Protecting Children from Internet Predators Act, the bill has faced considerable criticism from privacy advocates and legal scholars, and the government announced on February 24 that it would delay consideration of the bill while it contemplated changes to address privacy concerns.

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Rogers Communications claims misleading advertising case, AMPs violate Canadian Constitution

Susan M. Hutton and Marisa Berswick -

Rogers Communications Inc. will appear before the Ontario Superior Court in June, claiming that two aspects of the Competition Act dealing with civilly reviewable misleading advertising are unconstitutional: AMPs (administrative monetary penalties) in the millions of dollars, and the “adequate and proper” testing requirements. If they are ruled unconstitutional, the case stands to gut the Competition Bureau’s ability to seek multi-million dollar penalties under the civil misleading advertising provisions of the Competition Act, and may have implications for its ability to do so in abuse of dominance provisions as well.

The Competition Bureau’s legal proceedings against Rogers began in September, 2010 when Wind Mobile filed a formal complaint with the Competition Bureau regarding Roger’s new discount cell phone service, Chatr Wireless. In November 2010, the Commissioner started legal proceedings against Rogers to stop the allegedly misleading advertising of Chatr, based on claims that it had fewer dropped calls than competitors.

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CRTC goes global on telemarketing: will co-chair new international Do Not Call enforcement network

David Elder and Lindsay Gwyer  -

Life is about to get more difficult for foreign telemarketers that flout domestic Do Not Call rules, as twelve global regulators have joined forces to create an international enforcement network.

On October 28, 2011 the CRTC announced the creation of an International Do Not Call Network to facilitate international cooperation on telemarketing enforcement and hopefully reduce the amount of unauthorized telemarketing calls Canadians receive from abroad. 

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Superior Court issues partial sealing order in Commissioner's case against Chatr Wireless

D. Jeffrey Brown and Robert Mysicka - 

In a recent ruling, Ontario’s Superior Court of Justice explored the principles underlying the law respecting sealing orders and its application to reviewable matters under Part VII.1 of the Competition Act.  On a motion by the Commissioner of Competition, the Court issued a partial confidentiality (or sealing) order with respect to certain information used by the Commissioner in her application against Rogers Communications Inc. and its wholly owned subsidiary, Chatr Wireless Inc., for alleged misleading advertising. Information about “dropped call” rates, which the Court characterized as being at the “very heart” of the Commissioner’s application, was excluded from the sealing order after the Court determined that it was essential for that aspect of the proceedings to remain transparent. 

Investigation into Misleading Advertising

The application to which the confidentiality order relates originated in November, 2010, when the Competition Bureau commenced legal proceedings against Rogers and Chatr. The Bureau’s application came after complaints were made by competing discount wireless carriers, Wind Mobile and Mobilicity, alleging that Rogers’ Chatr discount brand was misleading consumers into believing that its network was more reliable and had fewer “dropped calls” than those of other discount carriers.

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Criminal charges laid in Canada for international telemarketing fraud

Michael Laskey -

On September 22, 2011, the Competition Bureau (the Bureau) announced that charges had been laid against five individuals and four Montreal-based companies involved in an allegedly fraudulent telemarketing operation. According to the Bureau’s Backgrounder, the companies hired telemarketers to contact businesses and falsely suggest (i) that the telemarketers were regular suppliers of the businesses looking to obtain renewals for services; (ii) that purchases of medical kits were required to comply with new legislation; (iii) that an order had already been pre-authorized by someone else in the business; or (iv) that the purpose of the telemarketer’s call was to verify an address when in fact it was to obtain an order confirmation. The companies allegedly sold products which were inflated up to ten times the market value, and threatened collection actions against businesses when they refused to pay.

Based in Montreal, the telemarketing operation had allegedly targeted businesses in Canada, the United States, Europe and Central America since at least 2001. The accused individuals and companies are charged with deceptive telemarketing and misleading representations (both criminal offences) under the Competition Act, and fraud under the Criminal Code. Last year, in remarks made to the International Consumer Protection and Enforcement Network, the Commissioner of Competition remarked that “[i]t is now clear that victims do not need to be Canadian in order for [the Bureau] to take action. This is an important step forward in the international fight against fraud.”

Competition Bureau finds slimming creams not as effective as advertised

Ashley Weber -

The Competition Bureau announced last week that it has entered into a Consent Agreement with Beiersdorf Canada Inc., the Canadian distributor of Nivea, regarding misleading claims associated with Nivea's "My Silhouette" product. According to the Competition Bureau, certain claims about the product, including that it can slim and reshape the body and cause a reduction of up to three centimetres on targeted areas, were false or misleading, and not based on adequate and proper testing. As part of the settlement, Beiersdorf has agreed to pay an administrative penalty of $300,000 plus $80,000 in costs, in addition to providing refunds to consumers.

The settlement follows on the heels of another high profile misleading advertising decision by the Commissioner of Competition pertaining to Bell Canada, which we described in a post of July 29. In that decision, the Commissioner concluded that Bell had misled consumers in its advertising regarding the prices consumers are required to pay for its TV, internet, home phone and wireless services. Bell Canada agreed to pay an administrative monetary penalty of $10 million, as well as revise its current and future advertising to ensure that consumers are no longer misled by the prices advertised and the fine-print disclaimers that accompany the advertising.

Given the recent activity by the Commissioner to exercise her powers under the Competition Act to crack down on misleading advertising, and further, given the steep penalties that can be imposed under the Act on companies found to have engaged in deceptive marketing ($10 million initially for a corporation and $15 million for repeat offenders), companies should take the time to carefully review their advertising and disclaimers prior to going to print, in order to ensure representations made to the public do not run afoul of the Act.

If you have any questions about the misleading advertising or other provisions of the Competition Act, I invite you to contact me or any other member of our Competition & Foreign Investment Group.

Canada leads international effort to stop business directory scam

Jennifer Rad -

The Competition Bureau announced on July 28, 2011 that it had filed an action against five companies (Yellow Business Marketing Ltd. in Canada; Yellow Publishing Ltd. and Yellow Data Services Ltd. in the UK; Yellow Page Marketing B.V. in the Netherlands, and Backoffice Support SL in Spain) and three individuals (Brandon Marsh, manager of Yellow Business Marketing Ltd. and Jan Marks and Steve Green, Spanish residents) with the Ontario Superior Court of Justice in connection with a deceptive marketing scheme targeting businesses in Canada.

"We are committed to cracking down on fraud that victimizes consumers and businesses. Significantly, the action we are taking today underscores the importance of working with our international partners to frustrate these types of multi-jurisdictional scams." said Melanie Aitken, Commissioner of Competition.

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Bell Canada to pay $10-million penalty for misleading advertising

Ashley Weber and Jennifer Rad -

On June 28, 2011, Bell Canada entered into a Consent Agreement with the Commissioner of Competition that will require Bell to pay a $10-million administrative monetary penalty for making false or misleading representations in its advertising regarding the prices consumers are required to pay for its Home Phone, Internet, Television, and Wireless services. 

Upon completion of its investigation, the Competition Bureau concluded that Bell has, since December 2007, advertised monthly prices which were lower than the actual price it charges consumers for its services. Section 74.01 of the Competition Act prohibits any representation to the public, for the purposes of promoting a product, that is false or misleading in a material respect, and takes into account both the general impression conveyed by a representation as well as its literal meaning.

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Canadian Competition Bureau updates handbook for binding written opinions

Susan M. Hutton and Edwin Mok -

On May 18, 2011, the Competition Bureau released a new Fee and Service Standards Handbook for Written Opinions with updated guidance on required information, service times, and fees for binding written opinions. Section 124.1 of Canada’s Competition Act, which was added in 2002, gives the Commissioner the ability to issue a written opinion as to whether particular provisions of the Act would apply to the facts described in the application.  These opinions are binding upon the Commissioner provided that all material facts have been disclosed.

The Bureau’s new Handbook aims to assist applicants in determining what material facts need to be disclosed.  It provides non-exhaustive lists of required information for some of the most frequently reviewed provisions, including: s. 76 (price maintenance), ss. 77 to 79 (other civil reviewable practices including abuse of dominance), s. 90.1 (non-criminal agreements with competitors that substantially lessen or prevent competition), s. 45 (cartels, i.e., criminal competitor agreements), s.52 (misleading advertising), s. 52.1 (deceptive telemarketing), s. 53 (deceptive notice of winning a prize), and ss. 74.01 to 74.06 (civil deceptive marketing practices). The new Handbook reflects some recent changes to the Act, such as the addition of s. 90.1 and the corresponding “per se” nature of the cartel offence.  It also makes some changes to the information required for certain provisions.  For example, requests for written opinion for s. 45 and ss. 77 to 79 now require the submission of “any relevant agreement(s)”, a requirement not stipulated in the previous Handbook.

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Truth in Tweeting: Competition Bureau advertising rules apply to sponsored tweets

This past weekend, the UK's Guardian published an interesting article on the practice of celebrity endorsements on social networking sites like Twitter. As described by the Guardian, the Office of Fair Trading, the UK's consumer and competition authority, investigated a media company last year that engaged in remunerating individuals that published online content promoting the company's clients. At issue was the fact that the content was published "without sufficient disclosures in place to make it clearly identifiable to consumers that the promotions had been paid for." In the United States, the Federal Trade Commission suggested last year that the disclosure of sponsored tweets be made using a hashtag like #paid or #ad.

At home, meanwhile, the Financial Post recently reported on the Competition Bureau's response to the issue.

In Canada, a spokesman for The Competition Bureau said that promoted tweets in Canada must conform to existing Canadian advertising legislation.

Anyone endorsing a product must actually use the product and their opinion of the product must not have changed, he said. However, Canadian law does not have any specific laws governing the use of promoted tweets on Twitter.

Thus, Canadian companies (and social media users) should be reminded that even in the Twitterverse, the Deceptive Marketing Practices provisions of the Competition Act continue to apply.

Reading the fine print: advertising, anti-spam and class action update

Some of the most rapidly-evolving issues facing Canadian businesses concern the increasingly-complex labyrinth of advertising regulations, anti-spam legislation, privacy issues and the rise of competition law-related class action lawsuits. Companies must remain on top of the latest developments in these areas in order to effectively manage their risk.  The webcast of a recent seminar hosted by Stikeman Elliott LLP, which featured panellists from the Competition Bureau and members of the firm's Competition/Antitrust Group, is now available on-line. Printed materials are also available.

Competition Bureau gets new powers to combat online deception

David Elder -

With the passage this week of anti-spam legislation in Canada, a number of related amendments to the Competition Act aimed at combating misleading and deceptive practices online should be in force by next summer.

Bill C-28, the Fighting Internet and Wireless Spam Act (FISA), received Royal Assent this week, and is expected to come into force within 6 to 8 months. FISA contains a number of important amendments to the Competition Act which give the Commissioner and the Bureau a role in investigating and enforcing the new legislation. Industry Canada officials have indicated that the Bureau will be receiving additional budget resources and personnel to meet these new responsibilities.

The amendments clarify that offences under the Competition Act relating to false or misleading electronic messages or telemarketing are committed by those who permit messages to be sent, in addition to those who actually send them. The definition of “telemarketing’ is also expanded to cover not only “interactive telephone communications”, but to extend to “any means of telecommunication,” so would include not just voice communications, but text messages, instant messages, and social networking messages through applications such as Facebook and Twitter. Similar amendments are made to other key definitions in the Act to better capture online practices and technologies.

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Savings cards enforcement action

On June 29, 2010, the Competition Bureau announced that Zellers Inc. agreed to take steps to address the Bureau's position that a Zellers' savings card promotion violated the Competition Act.  The Bureau stated that Zellers promoted the savings cards, valued at $10, with the purchase of the movie Avatar on DVD or Blu-Ray and that one of the conditions associated with the savings card was a $50 minimum purchase in order to redeem the savings card. The Bureau claimed that this condition was omitted from the advertising for the promotion and only disclosed after consumers made their initial purchase.

The steps to be taken by Zellers to resolve the Bureau's concerns are as follows:

  • Customers who present a $10 savings card, or a sales receipt for the movie Avatar purchased between April 22 and 24, 2010, will receive a $10 credit with no minimum purchase required;
     
  • The redemption period will be extended to August 6, 2010;
     
  •  Zellers will bring these changes to the attention of consumers through in-store signage and a notice posted on their Web site; and
     
  • Two corrective notices will be published in major Canadian newspapers, and Zellers will advertise the details of the redemption in flyers.

Court declines to interfere in telecom advertising war

On May 27, 2010, the Ontario Superior Court dismissed a motion brought by Bell Canada  (“Bell”) for an interlocutory injunction restraining Rogers Communications Inc. and Rogers Cable Communications Inc. (“Rogers”) from advertising that Rogers’ internet service is the "fastest" and/or the "most reliable."  Among other things, Bell alleged that the advertising in question breached the misleading advertising provisions of the Competition Act.

The court held that irreparable harm was not established because similar advertising claims had been made by Rogers since 2008, and because Bell and Rogers had litigated other advertising disputes in the past. The court also found that Bell had not factually established that it had suffered actual losses in the market or damage to its reputation as a result of the ads.

On the question of the "balance of convenience," the court concluded that the parties were "aggressive advertisers" and that it would not be justified to interfere in the "advertising war" between two large corporations.

Competition Bureau confirms enforcement approach to new Guidelines on "Made in Canada" and "Product of Canada" claims

The Competition Bureau today clarified its enforcement approach with respect to the Bureau's revised Enforcement Guidelines for "Product of Canada" and "Made in Canada" Claims released in December 2009. The Guidelines will be an important resource for businesses who need to understand the Bureau's approach in assessing "Product of Canada" and "Made in Canada" claims for non-food products under the false or misleading representations provisions of the Competition Act, the Consumer Packaging and Labelling Act and the Textile Labelling Act. The Guidelines will take effect on July 1, 2010 and a six-month transitional period will follow. During this period, the Bureau states that it will only consider enforcement action in circumstances of bad faith.  In other cases, the Bureau will limit its response to apparent non-compliance to education and warning letters.

Reitmans agrees to revise Smart Set promotion

Today,the Competition Bureau announced that Reitmans (Canada) Limited, a major Canadian clothing retailer, will modify a promotion, alleged to be misleading, offered by Smart Set, a division of Reitmans. The promotion in question consisted of a "Savings Pass" offered to customers of Smart Set. There were conditions associated with the redemption of the "Savings Pass" that the Bureau viewed as not being disclosed in Smart Set's in-store signage or Smart Set's Web site. The Bureau considered this to be contrary to the false or misleading representations provisions of the Competition Act.

Bamboo labelling and advertising

The Competition Bureau announced today that more than 450,000 textile articles have been re-labelled and over 250 Web pages corrected as a result of the Bureau's efforts to ensure that textile articles derived from bamboo are accurately labelled and advertised. The Bureau took this initiative because of concerns over potentially misleading labelling and advertising in the marketplace with respect to textile articles labelled "bamboo".

Federal Court of Appeal clarifies misleading advertising provisions

Jeffrey Brown and Susan M. Hutton


On October 15, 2009, the Federal Court of Appeal allowed the Commissioner of Competition's appeal of a Competition Tribunal decision involving misleading representations by a Vancouver career-consulting business.

The principal issue in the case, The Commissioner of Competition v. Premier Career Management Group Corp. and Minto Roy, 2009 FCA 295, was "whether . representations to certain individuals, though made individually and in private, were nevertheless made 'to the public'" within the meaning of the Competition Act. The Court also addressed the issue of whether or not the representations in question were false and misleading and, if yes, whether they were false and misleading in a material respect.

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New legislation to improve protection and efficiency in electronic commerce

Ashley M. Weber

On December 1, 2009, Bill C-27, also known as the Electronic Commerce Protection Act, passed through first reading in the Senate. Its objective is to regulate certain activities that discourage reliance on electronic means of carrying out commercial activities, such as spam, spyware and internet fraud, in order to promote efficiency and adaptability in the Canadian economy. More specifically, it will prohibit the sending of commercial electronic messages without the prior consent of the recipient, as well as provide rules governing the sending of those types of messages and a mechanism for withdrawing consent. It will also prohibit practices relating to the alteration of data transmission and the unauthorized installation of computer programs. When implemented, Bill C-27 will amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act.

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Competition Bureau Reaches Agreements with Hot Tub Retailers on ENERGY STAR Claims


The Competition Bureau announced today that it has entered into consent agreements with two Canadian hot tub retailers, Polar Spas (Edmonton) Ltd. and Sleepwise Inc., regarding claims that certain hot tub products were associated with the ENERGY STAR Program.

Bureau Guidelines focus on consumer rebate promotions

Kim D.G. Alexander-Cook


On September 21, 2009, the Competition Bureau released its Enforcement Guidelines on Consumer Rebate Promotions. These Guidelines set out the Bureau's (non-binding) interpretation of both the criminal and the civil provisions relating to false or misleading representations under the Competition Act, the Consumer Packaging and Labelling Act, and the Textile Labelling Act as applied to consumer rebate promotions, and include examples of recommended best practices.
 

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Primer on amendments to Canada's Competition Act and Investment Canada Act

Susan M. Hutton and Kevin Rushton

On March 12, 2009, the Canadian government enacted the most significant amendments in over 20 years to Canada's competition and foreign investment regimes, as part of Bill C-10, the Budget Implementation Act, 2009. The amendments to the Competition Act result in fundamental changes to the way that business operates in Canada, and provide the Competition Bureau with unprecedented enforcement tools and/or penalties in all areas. Fewer foreign investments in Canada will meet the increased thresholds for Ministerial review and approval under the changed Investment Canada Act, but all such investments will face potential scrutiny under a new "national security" test. The most significant amendments to both these laws are discussed below.

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Bill C-10 Competition Act and Investment Canada Act amendments enacted

Jeffrey Brown and Kevin Rushton

On March 12, 2009, the most significant amendments to Canada's competition and foreign investment regimes in more than 20 years were enacted when Bill C-10, the Budget Implementation Act, 2009, received Royal Assent. The amendments were described in detail in the February 20, 2009 edition of The Competitor.
 

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Massive amendments to Competition Act and Investment Canada Act tabled today

Susan M. Hutton

The Canadian Competition Bureau will be pleased today, as significant and far-reaching amendments to the Competition Act and the Investment Canada Act were included in the Budget Implementation, 2009 bill (C-10), which was tabled today in the House of Commons by the Canadian government (see Parts XII and XIII).

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Throne speech promises big changes to Canada's competition and foreign investment regimes

Susan M. Hutton

Canada's 40th Parliament opened on Wednesday, November 19, 2008 with the traditional Speech from the Throne, outlining the government's legislative priorities. In keeping with the turbulent economic times and with calls for greater supervision of business, the throne speech promised to "proceed with legislation to modernize our competition and investment laws, implementing many of the recommendations of the Competition Policy Review Panel."

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Appeal underway in travel industry misleading advertising case

Kim D.G. Alexander-Cook

The parties in Maritime Travel Inc. v. Go Travel Direct.com Inc.,1 a misleading advertising private action decided earlier this year, have recently filed their initial appeal and cross-appeal submissions.2

At trial, Maritime Travel, an established Canadian east-coast travel agency, alleged that upstart tour operator Go Travel Direct.com Inc. ran materially misleading newspaper advertisements. Maritime Travel claimed damages based on section 36 of the Competition Act, which provides a civil remedy for damages suffered as a result of a breach of a criminal provision of the Act. In this case, Maritime Travel alleged that Go Travel had knowingly or recklessly made representations to the public that were false or misleading in a material respect, contrary to section 52 of the Act. Developments in the law around sections 36 and 52 of the Act are important, because these sections provide the only basis for private damages for misleading advertising under the Act.

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New Canadian standards for industry and advertisers: Bureau releases Environmental Claims Guide

Kim D.G. Alexander-Cook

On June 25, 2008 Canada's Competition Bureau (Bureau) released Environmental Claims: A guide for industry and advertisers (Environmental Claims Guide or Guide), its new environmental claims guidance document produced in partnership with the Canadian Standards Association (CSA).

The Environmental Claims Guide is meant to provide industry and advertisers with best-practices guidance for compliance with the prohibitions against false or misleading advertising in Canada's Competition Act, Consumer Packaging and Labelling Act and Textile Labelling Act, in addition to providing industry with a guide to the application of the CAN/CSA-ISO 14021, Environmental labels and declarations - Self-declared environmental claims (Type 11 environmental labelling) regulations.1

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Something old, something new: Private member's Bill moves forward with potential for big changes to Canada's Competition Act

Susan M. Hutton

Nearly six years after the Standing Committee on Industry, Science and Technology released its report "A Plan to Modernize Canada's Competition Act," and more than two years after the death of Bill C-19 on the parliamentary order paper, Parliament is once again considering a proposal to make significant amendments to the Competition Act.

A private member's bill, introduced by Bloc Québécois MP Roger Gaudet last October, has received second reading in Parliament, and will now move to Committee for debate. If passed in its current form, it would entail such significant - and controversial - changes as:

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New draft guidance on multi-level marketing and pyramid selling

Kim D.G. Alexander-Cook

On March 31, 2008 the Commissioner of Competition (the Commissioner) issued a draft Information Bulletin entitled Multi-level Marketing and Scheme of Pyramid Selling, Sections 55 and 55.1 of the Competition Act.  Once finalized, this bulletin will replace existing 1996 guidance on the same topic.  Written comments on the draft Bulletin will be accepted by the Competition Bureau until June 30, 2008.
 

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Recent marketing and advertising enforcement actions

Kim D.G. Alexander-Cook

Premier Fitness hit by $200,000 AMP and ten-year agreement

On November 27, 2007, the Competition Bureau announced that it filed with the Competition Tribunal a ten-year consent agreement with Premier Fitness Clubs, resolving concerns that membership advertising from 1999 to 2004 did not adequately disclose additional fees that consumers were obligated to pay to enjoy membership. Premier Fitness owns and operates thirty-five clubs in Ontario. Under the terms of the consent agreement, Premier Fitness must pay an administrative monetary penalty of $200,000; publish a corrective notice in certain newspapers; display a corrective notice in its clubs and on its Web site; implement a compliance policy to cover its marketing practices; and not make false or misleading representations in future promotional materials.

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Amended gift card legislation in Ontario

As we approach the holiday season, recent changes to the laws in Ontario around gift cards should be borne in mind.  In particular, since October 1, 2007 gift cards can no longer be issued in Ontario with an expiry date, with very limited exceptions.  In most cases, if gift cards are issued with an expiry date, the law now requires that the expiry date be ignored.

Additionally, as a result of the amendments, gift cards must be issued for the full value of the payment by the consumer - no charge can be levied for the issuance of the card. Furthermore, any permitted fees and all restrictions, limitations and conditions that the supplier imposes must be set out in writing.

Click here to view the amended regulations to the Consumer Protection Act.

Revised rules for Canada's Competition Tribunal

Canada's Competition Tribunal hears and disposes of all matters under the "deceptive marketing practices" and "reviewable matters" provisions of Canada's Competition Act, most notably applications by the Commissioner of Competition to challenge mergers, abuse of dominance, anti-competitive distribution practices and misleading advertising, and private applications related to refusal to deal and anti-competitive distribution or pricing practices.

On May 26, 2007, revised rules of practice for Canada's Competition Tribunal were published for a sixty-day consultation period. The stated objectives of the (extensive) revisions to the rules were to integrate existing Tribunal practice directions, establish a comprehensive case management procedure, adopt a single procedure for all applications to the Tribunal, reinstate the relevance standard for documentary discovery, establish procedures to make the hearings more efficient, and provide a more logical structure for the rules. The Tribunal's revision to its rules was undertaken in cooperation with a committee comprised of Tribunal members and staff, representatives of the Competition Bureau, Justice Canada and the National Competition Law Section of the Canadian Bar Association. Extensive consultations within and among each of these groups of Committee members were undertaken over several drafts of the revised rules. The final draft of the revised rules were presented to, and revised by, the judicial members of the Tribunal.

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Update on Bill C-299

Susan M. Huttonand Ian Disend

Bill C-299 is an Act to amend the Criminal Code, the Canada Evidence Act and the Competition Act (personal information obtained by fraud) and was introduced in Parliament as a Private Member's Bill.

Bill C-299 was introduced in Parliament by The Honourable James Rajotte on May 17, 2006, and was referred to the Standing Committee on Justice and Human Rights after it had received Second Reading on November 1, 2006.

The bill proposes amendments to the three statutes in its title, designed to penalize the fraudulent collection of personal information. In both the Code and the Competition Act, a definition of "personal information" is created, consistent with that of federal privacy legislation (Personal Information Protection and Electronic Documents Act), while the "false pretences" section of the Code is expanded to criminalize its fraudulent collection and related actions. The amendment to the Canada Evidence Act would also render fraudulently obtained information inadmissible as evidence.

Under the Competition Act, obtaining personal information under false pretences would be added to the criminal provisions contained in s. 50 (price discrimination and predatory pricing) as an illegal trade practice, and the promotion of a fraudulently provided service would be deemed a false or misleading representation under both the criminal (s. 52) and the civil ( s.74.01) misleading advertising provisions. Recovery of damages by those suffering loss from any of these violations would also be made easier by allowing the victim to sue the Canadian affiliate of an international corporation that has committed the offense, regardless of whether the Canadian affiliate was involved.

Amendments to Canada's Competition Act Could Pass this Spring

Susan M. Hutton and Patricia Martino

As reported in the March, 2005 edition of this newsletter, the House of Commons Standing Committee on Industry, Natural Resources, Science and Technology resumed consideration of Bill C-19 on March 9, 2005, after a hiatus of several months due to political skirmishing between opposition parties and the minority government members of the Committee. Further witnesses appeared on March 23, 2005. Although more witnesses may appear, it is still possible that Bill C-19 may become law this spring. So far, the Bill appears to have general all-party support, despite the opposition of some witnesses to certain aspects of the Bill.

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Bureau Cracks Down on Consumer Fraud

Susan M. Hutton and Patricia Martino

Three separate announcements in March alone of criminal charges and/or guilty pleas under the consumer fraud provisions of the Competition Act (the "Act") high-light the increased resources available to the Fair Business Practices Division of the Competition Bureau, and the increased vigour with which offenders are being pursued. The stepped-up vigilance comes in the wake of international criticism that Canada had become a haven for fraudulent telemarketers and other scam artists.

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Bill C-19: Off Again-On Again

On March 9, 2005 The House of Commons Standing Committee on Industry, Science and Technology resumed consideration of Bill C-19, which proposes to amend the Competition Act by creating, among other things, stiff fines for abuse of dominance and misleading advertising practices.

A Landmark Decision in Sears ''Ordinary Price'' Case

On January 24, 2005 the Competition Tribunal (the Tribunal) released its reasons (dated January 11, 2005) in The Commissioner of Competition v. Sears Canada Inc. The Tribunal found that Sears Canada Inc. (Sears) had violated section 74.01(3) of the Competition Act, which prohibits the making of materially misleading representations to the public about the ordinary selling price of a product. The Commissioner of Competition (the Commissioner) specifically alleged that, in 1999, Sears deceived consumers by inflating the "regular" price of certain tires while advertising those tires at "sale" prices. In reaching its conclusions, the Tribunal essentially adopted the analytical approach set out in the Competition Bureau's Information Bulletin - Ordinary Price Claims: Subsections 74.01(2) and 74.01(3) (the Bulletin).

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Parliamentary Hearings Suspended on Canada's Competition Act Amendments (Bill C-19)

Susan M. Hutton

In a surprising turn of events, the House of Commons Standing Committee on Industry, Science and Technology voted on December 2, 2004 to suspend further discussion of Bill C-19, An Act to Amend the Competition Act and to Make Consequential Amendments to Other Acts, for an indefinite period. The Committee had only recently commenced hearings concerning Bill C-19, the Government bill proposing important changes to the abuse of dominance, pricing and misleading advertising provisions of the Act, among others (see the November, 2004 issue of The Competitor for details).

The Committee had already heard from several witnesses, including the Commissioner of Competition, Sheridan Scott, as well as representatives from various business and lawyers' groups including the Canadian Council of Chief Executives, the Competition Law Section of the Canadian Bar Association, and the Canadian Chamber of Commerce. Several other witnesses were scheduled to be heard, but their appearance has been postponed, along with further discussion of the bill.

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Competition Act Amendments:One Step Closer to Reality with Bill C-19

Kevin Rushton

On November 2, 2004, by tabling Bill C-19, the Canadian government took the first step toward implementing some of the long-debated amendments to Canada's Competition Act (the Act). If Bill C-19 manages to weave its way successfully through Canada's minority Parliament, it will implement the most wide-ranging changes in decades to Canada's competition legislation. Likely the most significant of these is the introduction of the additional remedy of fines ("administrative monetary penalties") for abuse of dominance, which should cause leading Canadian businesses to re-evaluate the way in which they operate.

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Suzy Shier and Competition Bureau reach $1 million settlement over pricing practices

''When is a bargain really a bargain?'' Ordinary price claims case ends with $1 million settlement.
The Competition Bureau has reached a $1 million settlement with Suzy Shier Inc., over marketing practices the Bureau considered to be misleading. In a June 13, 2003 press release, the Bureau stated that Suzy Shier had placed price tags on garments indicating a "regular" and "sale" price even though the garments were not sold at the "regular" price in any significant quantity or for any reasonable period of time.

Raymond Pierce, Deputy Commissioner of Competition, explained in the release: "The issue boils down to one question: When is a bargain really a bargain? The Bureau is committed to ensuring that consumers have accurate information regarding the regular price of clothing so that they may determine the true value of their savings when deciding to purchase items on sale."

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Other Developments

Bureau Will Apply Identical Standards to Online Representations and Traditional Media

On February 18, 2003, the Competition Bureau (the "Bureau") released its Information Bulletin on the Application of the Competition Act to Representations on the Internet (the "Bulletin"). The Bulletin is designed to ensure that businesses that are making online representations understand their responsibilities under the misleading representation and deceptive marketing provisions of the Competition Act (the "Act"). The Bulletin, which followed a consultation process with stakeholders, details the Bureau's approach to the application of the Act to online representations. The Bureau's position is that the Act applies equally to false or misleading representations, regardless of the medium used, and that the same basic principles that govern truthfulness in traditional advertising and marketing practices apply to their online counterparts. The Bureau does not believe that the enforcement of the Act will bias business activity either toward or away from the Internet.

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