Canada: Hold the Phone: Ontario Court Imposes Significant Penalties Against Phone Directory Fraudsters

Last Updated: March 14 2012
Article by Derek J. Bell

Three years ago, the Conservative government increased – by a factor of 100 – the administrative monetary penalties (AMPs) payable for deceptive marketing practices in Canada. This was a significant increase from the prior regime and caused practitioners and their clients to take notice. But until March 2, 2012, those new powers had yet to be tested in a contested proceeding.

In what is now the leading decision on AMPs in Canada, Commissioner of Competition v. Yellow Page Marketing B.V., the Ontario Superior Court of Justice found that the respondents violated the deceptive marketing provisions in the Competition Act. In addition to awarding restitution against the offending parties, the Court also awarded $8 million in AMPs against the corporations and $500,000 each against the two ringleaders personally.

This was the first decision in a contested proceeding where the new penalty regime was tested, and the court gave the regime full effect in its decision. Perhaps as significant as the judgment was the speed with which it was obtained: the Commissioner of Competition obtained this judgment within seven months of commencing the proceeding.

If in-house counsel and practitioners have not yet noticed this new legal regime, now is the time to pay attention.


In 2009, the Conservative government passed amendments to the Competition Act, which increased the maximum AMPs payable for deceptive marketing practices to $10 million for corporations and $750,000 for individuals. This was a hundredfold increase from the prior regime, which capped AMPs at $100,000 for corporations. The AMPs payable for deceptive marketing were in addition to a number of other new remedies available, including a requirement to pay restitution to the victims.

The new regime applies to the false and deceptive marketing practices provisions of the Act. Those provisions prohibit persons from making representations to the public that are false or misleading in a material respect in connection with the promotion of a product or business interests. The Commissioner of Competition can commence proceedings against such persons in provincial superior courts, the Federal Court, or the Competition Tribunal.

Until recently, the new remedy provisions had largely been untested in Canada. In 2011, the Commissioner obtained a $10-million AMP against Bell Canada – but that was on consent. Also in 2011, the Commissioner obtained a $300,000 AMP against Nivea's Canadian distributor and a $130,000 AMP against certain spa retailers, but again those were on consent. The question left unanswered was: how would a court deal with those new powers in a contested proceeding?

The Yellow Page Case

On July 28, 2011, the Commissioner commenced an application in the Ontario Superior Court of Justice against Yellow Page Marketing, B.V. (YPMBV) and a number of affiliates, along with YPMBV's ringleaders and their Canadian representative. The application was commenced after the Competition Bureau had received almost a thousand complaints from Canadians who alleged that they had been deceived by YPMBV's practices.

YPMBV has a name that looks a lot like the provider of Yellow Pages in Canada since 1908, which is the Yellow Pages Group (YPG). And, YPMBV's website looked a lot like Yellow Pages' website – at times going so far as using the iconic "Walking Fingers" design on the website. After setting up the website, YPMBV then obtained a fax phone list on the market, and proceeded to spam fax persons on the list. The fax, bearing the Walking Fingers and dominant Yellow Page (singular) name, stated that the service was "now with free submission to". The personal information obtained from the fax list was reproduced on the fax. The recipient was asked to update their personal information from their "record" (along with adding search terms for the Google advertising "now" being offered), and then return it to YPMBV. Many Canadians did just that, thinking that they were just updating their information with Yellow Pages.

But what they did not see was the fine print at the bottom of the fax, which indicated that in fact, by sending the fax back, the person was really entering into a new two-year contract with YPMBV, at a price of $1,428 per year. Upon sending the fax back, YPMBV would send an invoice, and if that was not paid, would hound the person by threatening collection action and legal proceedings.

All told, until the Commissioner got involved, the scheme netted YPMBV at least $7 million and growing.

Early Injunctions

The 2009 amendments to the Act also contained new interlocutory injunction powers, which the Commissioner made use of at the first return date at the Ontario Superior Court. In an ex parte hearing held on July 28, 2011, Justice Eva Frank found that the Commissioner had a strong prima facie case against the respondents and issued injunctive relief to prevent any further cheques from being delivered to YPMBV and to prevent the assets then in Canada from leaving the country.

With that injunction in hand, the Commissioner then negotiated a further injunction with the YPMBV respondents, issued by Justice Hainey, which required YPMBV to cease certain practices and to provide financial disclosure. That injunction was continued by a further injunction on October 31, 2011.

The Final Order Hearing

On January 10, 2012, roughly five months after commencing the proceeding, the Commissioner's case was heard by Justice S. Lederman of the Ontario Superior Court of Justice. Relying largely on evidence filed in a separate trademark expungement proceeding with YPG in the Federal Courts, YPMBV argued that its business was not a scam, and that 50 percent of Canadians no longer identified the term Yellow Pages with its owner. It argued that the term Yellow Pages is in the public domain in the U.S. Finally, it argued that the fax made it clear that it was not the Canadian entity, YPG. On remedies, YPMBV argued that the individual respondents should not be subjected to AMPs in the amount claimed, if at all.

Justice Lederman found that YPMBV and the other respondents had made material misrepresentations, in that the representations were of "much consequence or [is] important or pertinent or germane or essential to the matter." He found that the faxes "were designed to appear to have been sent from YPG". The fact that the terms of the contract were disclosed in the fine print was "insufficiently prominent" and "does not reduce its false or misleading nature."

The Court further stated that misrepresentations made during collection efforts constituted the promotion of a business interest, and that term is not limited to just sales. The Court also found the fact of ongoing Federal Court expungement proceedings was irrelevant: "the respondents have traded on the reputation of YPG and have falsely represented that they had a pre-existing relationship with the consumers... who believed were merely updating information."

The court issued declaratory relief and issued a prohibition order for 10 years. It also ordered YPMBV to post corrective notices on their websites. The Court also granted restitutionary relief, requiring the respondents to refund by means of certified cheque any amounts paid by Canadians. The Court declared any such contracts to be null and void.

And, the Court issued significant AMPs. The Court disagreed with the individual respondents' claim that they had exercised due diligence and had a genuine belief that the marks were generic, finding that "the due diligence must go to prevention and that is not the case here". In other words, to have an AMP reduced for an individual based on due diligence, the individual must lead evidence to show that they exercised due diligence to prevent such conduct from occurring.

The Court awarded AMPs in the amount of $8 million payable jointly and severally by the corporate respondents, $500,000 for Jan Marks, $500,000 for Steve Green, and $35,000 for the Canadian representative. Weighing heavily in favour of these AMPs was the fact that the YPMBVs were found to have been in breach of Justice Hainey's earlier injunction order, and that the respondents had engaged in similar conduct in other countries.


It was once thought that administrative remedies for breaches of the deceptive marketing provisions of the Competition Act were largely slaps on the wrist, and most of the time they were. With a maximum AMP of $100,000 payable, the courts were largely incapable of remedying major frauds using this provision of the Competition Act. Moreover, contested proceedings either in the Federal Court or the Competition Tribunal could get significantly bogged down with significant delays, making it even less worthwhile to commence proceedings in the first place.

That is no longer the case today. The Commissioner has now obtained one AMP for $10 million on consent, and further AMPs in the Yellow Page case totalling more than $9 million – the highest award ever awarded in contested deceptive marketing proceedings in Canada. And, the Commissioner obtained that AMP and got to a final hearing in roughly seven months, and that included three interlocutory injunction hearings.

Significant penalties obtained in a very short period of time. Hold the phone, it is time to take deceptive marketing provisions in the Competition Act seriously.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Derek J. Bell
In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions