Bottom Line: Earlier this year, the Ontario Superior
Court of Justice imposed a healthy $9 million penalty and
restitution package against the companies and individuals involved
in the "Yellow Pages look-a-like" online directory scam.
What was so interesting? That the case was brought under the civil,
as opposed to the criminal, provisions of theCompetition Act("Act"). This shows that hefty new civil
penalties may provide the Competition Bureau with a juicy
alternative to going the harder criminal route.
THE INFAMOUS SCHEME
To recap, the respondents had been sending out solicitations in
which they falsely associated themselves with the Yellow Pages
Group, a company well known for its print and online directories.
Believing they were communicating with the Yellow Pages Group, the
targeted individuals, organizations and businesses consented to
update existing profiles and obtain free advertising. The fine
print revealed that the targets had actually signed up for a
two-year contract for services, and were sent invoices from the
LAST TIME, THE BUREAU WENT CRIMINAL
Similar conduct was successfully prosecuted in 2004 under the
criminal provisions of the Act and the convicted individuals were
jailed and fined. Notably, all fines in these previous cases were
under $100,000, making the leap to $9 million a pretty significant
Like the past directory cases, the respondents this time around
deliberately misrepresented an affiliation with the Yellow Pages
Group to defraud their targets. This type of intentional behavior
is the main difference between the criminal and civil false
advertising provisions in the Act. Nonetheless, in this round of
enforcement, the Commissioner of Competition chose to file an
application under the civil provisions, presumably feeling its ends
would be achieved in landing a huge penalty and restitution. The
bad guys don't end up in jail, but the Bureau still sends
sending a hard-hitting message, freeing itself up more readily to
continue its work.
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