On November 19th, 2010, after a two month investigation, the Competition Bureau announced it was starting court proceedings against Rogers Communication Inc. for making misleading claims in advertising Rogers' "Chatr" discount cell phone and text service. The Competition Bureau also announced it would be seeking the stiffest penalties available under law, including a $10 million fine.
The Competition Bureau's investigation focused on the Rogers' claim that subscribers to Rogers' "Chatr" brand would experience "fewer dropped calls than new wireless carriers" and have "no worries about dropped calls." Any representation that could influence a consumer to buy or use the advertised product or service is subject to the deceptive marketing provisions (Part VII.1) of the Competition Act (the "Act"), which was recently amended to increase penalties for those found to have engaged in deceptive marketing practices. After reviewing technical data the Bureau found no discernable difference between Rogers' "Chatr" and the new carriers, and launched court proceedings.
In March 2009 amendments to the Act substantially increased the penalties for deceptive advertising; raising the fine for a corporation's first offence from $100,000 to $10 million. In addition to the one-time monetary penalty, a corporation found to have made a false or misleading representation in a material respect may also be required to pay restitution to any affected customers and/or post a notice to the public detailing the findings against them. The Competition Bureau has announced it will be seeking all of these remedies against Rogers, in addition to a court order stopping the advertising campaign at issue and allowing contract term/cancellation to any customer claiming the ad gave them incentive to purchase a "Chatr" phone.
Deceptive marketing practices include a wide variety of offences, such as: conducting a contest without fully and fairly disclosing material facts that affect the chances of winning; advertising products at a bargain price when they're not reasonably available; making misleading or confusing environmental claims; or making any other material misrepresentations which are likely to influence a consumer's behaviour or purchasing decision. Both private parties and the Commissioner of Competition may apply to the court to seek a remedy for false or misleading advertising claims.
This time last year, TELUS Communications Company successfully sought an injunction against Rogers preventing Rogers from using the phrase "Canada's most reliable network" in its advertising campaigns. When the B.C. Supreme Court considered the general impression and literal meaning of Rogers' advertising claim it found that there was a strong case to be made that Rogers had breached section 52(1) of the Act, which prohibits false or misleading advertising. This finding was upheld by the B.C. Court of Appeal. Under section 36(1) of the Act, a party who has suffered a loss or damage as a result of false or misleading representations is able to sue to recover damages. Although there was some question as to whether or not this provision included injunctive relief, TELUS was able to use it to scuttle many aspects of Rogers' 2009 holiday campaign.
How the Competition Act May Impact You
If you have a trade name, trade-mark, logo or any other advertising claim related to your products, services or business, you will be expected to comply with specific principles related to the substantiation of advertising claims and marketing practices contained in the Act. In addition to the Act, there a number of other guidelines administered and enforced by the Competition Bureau which are meant to provide assistance to industry and advertisers in complying with the Act. This includes the Environmental Claims: A Guide for Industry and Advertisers which sets out the appropriate verification and substantiation standards of any environmental claim made to the public such as "green," "environmentally friendly" or "recyclable;" and the recently revised Enforcement Guidelines for "Product of Canada" and "Made in Canada" Claims, which describe the Competition Bureau's approach to assessing "Product of Canada" and "Made in Canada" claims for non-food products under the false or misleading representations provisions of the Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
