Last week, the Ontario Superior Court of Justice (the
"Court") dismissed the false and misleading advertising
allegations in the case brought by the Commissioner of Competition
(the "Commissioner") against Rogers Communications Inc.
("Rogers") and Chatr Wireless Inc. ("Chatr").
The Court also found that although Rogers/Chatr had conducted
"adequate and proper" testing in several Canadian cities,
the required testing had not been completed in every city where the
service was offered prior to the use of the "fewer dropped
calls" claims in a national advertising campaign.
In 2010, following a complaint by competitor Wind Mobile, the
Commissioner brought proceedings against Rogers/Chatr in respect of
its national advertising campaign promoting its Chatr service as
having a more reliable network resulting in fewer dropped calls
than any of the new wireless carriers.
The Commissioner argued that the Chatr claims created a false or
misleading general impression regarding the quality of the Chatr
wireless network as compared to the other new wireless carriers.
The Commissioner further alleged that, in some instances, the Chatr
claims were not supported by "adequate and proper"
testing and sought remedies including a $10 million administrative
monetary penalty ("AMP"), restitution payment to affected
customers, and issuance of a corrective public notice.
False and Misleading Claims
The Court found that the claims made by Rogers/Chatr were
not false or misleading. In other words, the Court found
that evidence supported the Rogers/Chatr statements that their
network did in fact have fewer dropped calls than those of the new
Credulous and Inexperienced Consumer
The Court relied on the general impression standard that the
Supreme Court of Canada recently articulated in Richard v. Time
Inc. It found, for the purposes of the enforcement of the
Competition Act, that the applicable standard can be
modified based on the characteristics of the target audience for
the advertisement. In this case, the Court held that the
appropriate standard in this case was that of the "credulous
and technically inexperienced consumer".
Adequate and Proper Testing
As the claims at issue were found to have been valid, the Court
focussed on the issue of whether Rogers/Chatr began its national
"fewer dropped calls" advertising campaign prior
to conducting adequate and proper testing. On this issue, the Court
concluded that the "fewer dropped calls" claims were made
to consumers in some cities where adequate and proper testing had
not yet been conducted. This is relevant because, under the
Competition Act, performance claims must be substantiated
by testing conducted prior to the making of the claim –
regardless of the accuracy of the claim.
Rogers/Chatr had argued that the civil false and misleading
advertising provision of the Competition Act is
inconsistent with the company's right under subsection 2(b) the
Canadian Charter of Rights and Freedoms (the
"Charter") to the "freedom of thought,
belief, opinion, expression, [...]".The Court held that the
provision of the Competition Act only minimally impairs
the fundamental freedom guaranteed by the Charter.
Rogers/Chatr also challenged the constitutionality of AMPs on
the grounds that, given their magnitude, they are penal in nature.
On this issue, the Court concluded that the AMPs at issue were not
"true penal consequences" and therefore not contrary to
section 11 of the Charter. In addition to affirming the
constitutionality of AMPs in the context of deceptive marketing
practices, this decision also supports the use of AMPs under the
other civil provisions of the Competition Act (e.g., abuse
of dominance provisions).
The key takeaways for businesses are:
While the general impression standard under the Competition
Act is a relatively low one, it may be modified depending on
the sophistication of the intended audience, as well as the nature
of the claims and product at issue;
Performance claims must be substantiated by adequate and proper
testing prior to being made to the public; and
In industries such as telecommunications where technical
testing results may vary from one region to another, care must be
taken to ensure that (a) testing is done in all relevant regions or
(b) that the test results apply equally to all of the regions in
which the claims are made.
For a copy of the Ontario Superior Court of Justice's
decision, please click here.
For a copy of the Competition Bureau's press release, please
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