In reasons issued by the Ontario Superior Court in Canada (Commissioner of Competition) v. Chatr
Wireless Inc., the court penalized Rogers Communications
Inc./Chatr C$500,000 for failing to adequately and properly test
its "fewest dropped calls" claim prior to making those
claims in its advertising. The court issued the administrative
monetary penalty notwithstanding the fact that the claims
ultimately proved true. The decision should be taken as a caution
for companies engaging in comparative or performance-based
advertising without having undertaken adequate and proper
BRIEF SUMMARY OF THE CASE
The evidence before the court established that Rogers/Chatr
failed to conduct adequate and proper testing against certain
competitors in certain cities where Rogers and its competitors
offered wireless services. The court rejected Rogers' argument
that testing need not have been conducted pre-launch because it was
a "technological fact" that the Rogers network
out-performed the networks of its competitors.
The court also rejected Rogers' due diligence defence noting
that Rogers had an available method of testing the performance of
its network prior to the making of the impugned representations,
but chose to introduce the unsubstantiated advertisements anyway.
Indeed, the court made reference to an internal company document
that stated that "[a]t launch, the claim will be based on
results inferred from technological fact" effectively ignoring
Rogers' obligation to conduct pre-launch testing under the
Competition Act. Had Rogers taken all reasonable steps to
avoid making the impugned claims or had it operated under a
reasonable belief that it had adequately and properly tested its
claims, then no fine would have been ordered.
While the fact that the claims were ultimately substantiated
significantly mitigated the size of the penalty (indeed, the
Commissioner sought a penalty in the range of C$5 million to C$7
million), the court could not ignore Rogers' financial position
entirely. This should serve as a warning for large companies
considering engaging in comparative or performance advertising
without conducting adequate and proper testing, since even if the
claims ultimately prove true, the risk that they might not is still
actionable under the Competition Act.
Although Rogers had never before been penalized under the
deceptive marketing provisions of the Competition Act, the
court took notice of an injunction obtained against Rogers by a
competitor for similar conduct, stating that Rogers'
"previous history is a relevant consideration in this
application and it aggravates the amount of the administrative
Finally, the court declined to issue a prohibition order against
Rogers largely because Rogers had suffered reputational harm as a
result of the Commissioner's application. Even though
Rogers' claims ultimately proved true, a number of media
outlets mistakenly reported otherwise and Rogers' competitors
used the "commencement and existence of the application to try
to obtain a competitive advantage."
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