On June 8, 2011, the UK Advertising Standards Authority (ASA)
found that online coupon provider Groupon, Inc.
had misrepresented the ordinary selling price of a third party
service that was advertised to Groupon's online
subscribers, and ordered Groupon to remove the advertisement from
circulation. The ASA also ordered Groupon to ensure its compliance
with proper advertising policies, so as to prevent similar events
in the future. The decision is one of several regulatory decisions
by the ASA in recent months, illustrating that – despite
"deal-a-day" online websites offering
"red flag" or "last minute" for
third party products and services may not be immune to scrutiny for
representations made in online advertising in the UK, and possibly
elsewhere. Whether such services could rely upon the exception in
Canada's Competition Act for
those who "print, publish or otherwise
disseminate" an advertisement has not been tested.
The ASA decision came in response to a complaint that Groupon
had overstated the savings for a third party salon treatment that
was offered to Groupon subscribers at "£24 instead
of £90". The ASA found that Groupon did not have
adequate evidence to substantiate the ordinary selling price of
£90 in order to make the savings claim (Groupon had relied on
an e-mail price list provided by the third party salon which quoted
the regular price of the treatment). The ASA ruled that the
advertisement could not appear again in its current form, and
informed Groupon that it would need to obtain documentary evidence
of its suppliers' pre-discount prices for future
In Canada, Advertising Standards Canada (ASC) is a similar
independent, self-regulated advertising body to the ASA in the UK,
with a mandate to protect the integrity and viability of
advertising in Canada by monitoring and enforcing compliance with
the Canadian Code of Advertising
Standards. The ASC works along side regulators,
such as the Competition Bureau in Canada, to enforce compliance
with misleading advertising laws.
Under Canada's Competition Act and the
ASC's Code, claims and representations made by advertisers
must be supportable, and advertisements may not include exaggerated
claims as to the worth or value of an advertised product or
service, with the result that exaggerated savings claims or
"sales" claims can and do attract consequences
under Canadian misleading advertising laws. As in the U.K.,
evidence in support of these claims would likely be required. At
the same time, there is an exception under section 74.07 of the
Competition Act for companies that "print,
publish or otherwise disseminate representations to the public in
the ordinary course of their businesses", such as
newspapers and other media outlets selling advertising space, which
may arguably apply to online coupon websites.
Whether the U.K.'s decision will raise "red
flags" in Canada for "deal-a-day"
websites such as Groupon, LivingSocial, Yipit and Dealbot, remains
to be seen.
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guide to the subject matter. Specialist advice should be sought
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The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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