Canada: Reviewing Regulator Action

Last Updated: April 22 2014
Article by Jennifer McKenzie and Tamarah Luk

As well as civil remedies, complainants in Canada can also turn to a regulator and request that it investigate and pursue available remedies.

If a competitor considers that an advertising claim is false or unsubstantiated, unfairly discredits its product or business, depreciates the goodwill attaching to its trademark or is otherwise misleading, civil remedies are available under statutes including the Trademarks Act. However, a competitor may also complain to a regulator and request that it investigate and pursue available remedies.

The Competition Act is the principal statute in Canada regulating marketing activity such as promotional contests and advertising. Most deceptive marketing practices are regulated as 'reviewable conduct' or conduct that is subject to review by a court or the Competition Tribunal on application by the commissioner.

Section 74.01(1)(a) of the act makes it reviewable conduct to make a representation to the public for the purpose of promoting – directly or indirectly – the supply or use of a product or any business interest that is false or misleading in a material respect. To establish that an advertiser has acted contrary to this provision, the commissioner must prove all elements of the reviewable conduct on a balance of probabilities. First, the representation must be false or misleading. The general impression conveyed by the representation and the literal meaning will be taken into account. It is not necessary to prove that anyone was actually misled by the representation.

Second, the representation must be false or misleading "in a material respect", which is interpreted as meaning that the representation leads a person to a course of conduct that, on the basis of the representation, he or she believes to be advantageous. Materiality is likely not an issue with most comparative advertisements, since the claims are designed to influence consumer preference towards one product or service over another.

Third, the representation must be to the public. Advertisements distributed through the media are obviously considered to be public representations. Other representations deemed to be made to the public include representations expressed on a product or its wrapper, container or insert, expressed at the point of sale or expressed during in-store, door-to-door or telephone solicitations.

Under the act, false or misleading advertising can also be prosecuted as a criminal offence if the representations are made "knowingly or recklessly". In its guidelines the Fair Business Practices Branch of the Competition Bureau sets out some of the factors that the commissioner will take into consideration in deciding whether to initiate criminal prosecution or to pursue a matter as reviewable conduct. These include:

  • whether there is clear and compelling evidence that the representations were made knowingly or recklessly;
  • the seriousness of the representation (as measured by such factors as the vulnerability of the intended audience of the representation and the advertiser's failure to make timely and effective attempts to remedy the adverse effects of the representations); and
  • whether criminal prosecution is in the public interest.

The commissioner has stated that he will initiate criminal prosecutions only in the most egregious cases of misleading advertising.

Section 74.01(1)(b) of the act makes it reviewable conduct to make a representation to the public in the form of a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test thereof. The burden of proof rests with the person making the misrepresentation.

The act does not define what constitutes an 'adequate and proper' test. Rather, this is determined on a case-by-case basis, considering such factors as the scope and nature of the claim, and whether the relevant industry provides any guidance on the manner of testing a particular product. However, the act does make it clear that testing must be completed before the representation is made, and that the burden of proving the tests' adequacy and propriety rests with the advertiser.

The Competition Bureau has stated that most performance claims raising an issue under the act fall into two broad categories: those that are inappropriate in the context of the actual tests that were conducted and those that are based on poorly designed test methodologies.

There are cases where advertisers have failed to substantiate comparative claims because the testing was found to be inappropriate for the claim made. For example, in R v Bristol-Myers of Canada Limited ((1979), 45 CPR (2d) 228), the court concluded that the claim "Fleecy in the rinse softens right through the wash for three times more softness than any dryer product" was not supported by an adequate and proper test. Bristol-Myers relied on panels of consumers who were asked to compare the softness of fabrics washed with varying amounts of fabric softener. Consumers reported that fabrics washed with the recommended amount of the Fleecy fabric softener were softer than fabrics treated with three times the recommended amount of the competing fabric softeners. The court acknowledged that although the qualitative consumer testing was the only means of measuring softness, it could not be used to support a quantitative claim. A more appropriate claim would have been that fabric treated with Fleecy fabric softener 'feels softer' than other brands.

Under the act, the commissioner may bring an application to the Competition Tribunal, the superior court of a province or the Canadian Federal Court (Trial Division) for a determination that an advertiser has engaged in reviewable conduct and an order requiring the advertiser to do one or more of the following:

  • cease engaging in reviewable conduct;
  • publish a corrective notice, usually with the same penetration as the false or misleading representation or unsubstantiated product claim; or
  • pay an administrative monetary penalty. In the case of an individual, the penalty may be up to C$750,000 for a first offence and up to C$1 million for subsequent offences. In the case of a corporation, the penalty may be up to C$10 million for a first offence and up to C$15 million for every subsequent offence.

If the advertiser can demonstrate that it exercised due diligence to prevent the reviewable conduct from occurring, it may be ordered only to cease the reviewable conduct. Once the commissioner has filed an application, it is possible for an advertiser to consent to an order that may require it to do one or more of the above. Once filed with the court, the consent order will have the same force and effect as if it had been issued by a court.

In July 2010 one of Canada's largest telecommunication companies, Rogers Communications Inc, and its wholly owned subsidiary Chatr Wireless Inc launched a national campaign, in which they claimed that the discount Chatr carrier had "fewer dropped calls than the new wireless carrier", and later that new subscribers would have "no worries about dropped calls". One of the new wireless carriers – WIND Mobile – filed a complaint with the Competition Bureau alleging that the claims were false and misleading.

Given that there were significant competition issues between a senior player and a new market entrant, the Competition Bureau investigated and, in November 2010, the commissioner commenced legal proceedings against Rogers and Chatr seeking an administrative monetary penalty of C$10 million and a corrective notice, among other things, on the basis that the claims were false and misleading. In March 2011 the commissioner amended his pleading to include an allegation that the claims were not based on adequate and proper testing and sought a prohibition on Rogers from making any claims about dropped calls for 10 years. The commissioner alleged that the claims were:

  • false, because in certain cities Chatr's dropped call rate was higher than that of any other carrier;
  • misleading, because they created the general impression that there was an appreciable difference in dropped calls between carriers when there was not; and
  • supported by automobile-based drive tests, which were inappropriate to support the claims for many reasons, including the fact that the tests were not performed in all major cities.

On August 19 2013 the Ontario Superior Court of Justice released its decision with a partial victory for Rogers and Chatr. In The Commissioner of Competition v Chatr Wireless Inc the court used the test of the credulous and technologically inexperienced consumer of wireless services to determine the general impression of the claims, concluding that the claims were not false or misleading, and that drive tests were in fact adequate and proper testing for the claims made. The court did not accept that the difference in the number of dropped calls must be discernible. Nevertheless, it recognised that there are circumstances where differences are still important to consumers even though they are not discernible, and that dropped calls can have a significance to consumers that is not quantifiable.

Although Rogers and Chatr failed to conduct adequate and proper testing against competitors in certain cities before making the claims, the court concluded that they had engaged in reviewable conduct contrary to Section 74.01(1)(b) of the act. A further hearing will be held to determine the remedies against Rogers and Chatr.

Rogers is one such example of how the commissioner of competition will pursue allegations of false and misleading advertising, especially on the complaint of a competitor which is presumed to have special knowledge of the industry. In Rogers the court noted that the act is intended to maintain and encourage competition in Canada to "provide consumers with competitive prices and product choices".

Originally published in World Trademark Review magazine issue 48, by The IP Media Group.

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.

Jennifer McKenzie
Tamarah Luk
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
Check to state you have read and
agree to our Terms and Conditions

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.

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 by clicking here .

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.


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.