On March 1, 2012, the Ontario Superior Court of Justice found
that a network of five national and international companies and
three individuals (principals and employees of the companies)
(respondents) violated the Competition Act for making
false and misleading statements. The corporate respondents all have
names similar to the famous telephone directory provider, Yellow
Pages Group (YPG).
In January 2010, the respondents launched websites and sent
unsolicited faxes to individuals and businesses throughout Canada
and the rest of the world. The faxes and sites used features
remarkably similar to those of YPG, such as prominent display of
the words "Yellow Pages" and a logo similar to YPG's
"Walking Fingers" design. The faxes gave the impression
that they were sent on behalf of YPG to update recipients'
existing YPG records and to obtain additional Google advertising
for a fee of over $2,000. However, the fine print revealed that
recipients who returned the fax sheets were actually signing a new
two-year contract with the respondents and not with YPG.
More than 1,400 Canadians complained to the Competition Bureau,
who brought the court action against the respondents in July
The Court found that the faxes were designed to deceive and
appear as though they were sent from YPG. The fine print was
insufficiently prominent and did nothing to clarify that the faxes
had not been sent by YPG. Most of the complainants believed the
faxes were sent by YPG and stated they would not have ordered the
respondents' service if they had known they were unaffiliated
with YPG. This underscored the materiality of the false or
The Court declared null and void any contracts entered into
between the respondents and Canadians. In addition, the Court
ordered that the respondents:
publish on their websites and send to customers corrective
notices stating they are unaffiliated with YPG and they have
engaged in conduct that violates the Competition Act;
repay all payments received from Canadians (restitution);
pay over $9 million in administrative monetary penalties ($8
million by the corporate respondents and just over $1 million by
the three individual respondents).
Similar investigations and court cases involving the respondents
have been pursued in the U.S. by the Federal Trade Commissioner
(FTC) and in Australia by the Australian Competition and Consumer
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The recent decision in Overstock v. New York Taxation and Finance paved the way for an interesting conclusion on the taxing power of New York State - and by extension, the sales tax that may be applied to many online sales, including sales by Canadian online business into the US market.
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