In a speech last week, the Senior Deputy Commissioner of
Competition (the "SDC") indicated that the digital
economy is squarely on the Competition Bureau's (the
"Bureau") radar and that the agency will be vigilant in
terms of ensuring that digital and mobile advertisements comply
with the Competition Act.
Truth in Online Advertising
Recognizing that the rapid growth in e-commerce is being driven
in large part by increased consumer use of apps and greater
reliance on mobile payments, the SDC stated that the Bureau's
position is that "innovation in digital advertising must not
compromise a consumer's right to truth in
In other words, the rules regarding misleading advertising apply
equally to online promotional activities. In this regard, the
Bureau is focussed on misrepresentations that create a general
impression to consumers that is false or misleading because the
advertiser has hidden key terms that affect the price ultimately
paid by consumers.
The SDC identified three types of advertising techniques that
will likely draw increased scrutiny by the Bureau:
Advertising that is designed not to look like a promotional
message, but rather like a legitimate news story (commonly referred
to as "native advertising") or a legitimate
consumer-written review (commonly referred as
Advertising where consumers are presented with a price for a
product or service, but not the full price until later (commonly
referred as "drip pricing"); and
Advertising where material terms and conditions are buried in
the fine print or disclaimers.
Interestingly, the SDC also briefly spoke on Canada's
Anti-spam Law ("CASL") which came into force earlier this
year. He noted that CASL allows the Bureau to target false or
misleading representations and deceptive marketing practices in the
electronic marketplace, including social media, promotional emails,
text messages and instant messages.
While the digital economy provides businesses (small and large)
with the opportunity to effectively target cusomers, businesses
must be careful how they design and implement their advertising
campaigns. In particular, they must ensure compliance with not only
competition law, but also privacy, anti-spam and consumer
For example, many apps now collect important quantities of
personal information and use that information in to develop
targeted advertising (e.g., geo-location driven advertising)
– which raises potential issues under both privacy laws and
CASL (i.e., has the consumer consented to receiving targeted
Based on the Bureau's stated enforcement position, it is
clear that participants in the digital economy take a holistic
approach when assessing compliance applicable Canadian laws (i.e.,
Competition Act, CASL, privacy laws, consumer protection). Further,
foreign companies need to be aware that Canadian law applies
equally to digital advertising directed to Canadian consumers,
notwithstanding the fact that the advertising may have originated
outside of Canada.
For a copy of the SDC's speech, please click here.
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