Canada's Competition Bureau has
taken action against Moose International, Inc., the makers of the
Moose Knuckles brand of premium winter parkas, priced between $595
to over $1000. The Bureau's application (LINK) before the Competition Tribunal seeks $4
million in administrative monetary penalties and restitution for
consumers for false or misleading "Made in Canada"
The Bureau alleges that although
the parkas are marketed as "Made in Canada", they are
imported from Vietnam and elsewhere in Asia in a nearly finished
form comprised of materials (textiles, down and fur) sourced from
outside Canada, with only finishing touches (trim, zippers, snaps
and labels) being added in Canada. Hangtags for the parkas
included the statement "Fox fur trimmed. Down filled",
and the Bureau alleges that positioning the statement above the
"Made in Canada" claim implies that these components were
sourced from Canada.
In 2009, the Bureau set guidelines
for "Made in Canada" and "Product of Canada" in
response to concerns expressed by Canadians over such claims being
misleading. A 'Made in Canada' claim is unlikely to raise
concerns under the false or misleading representations provisions
of the Competition Act if: (1) the last substantial
transformation of the good occurred in Canada; (2) at least 51% of
the total direct costs of producing or manufacturing the good have
been incurred in Canada; and (3) the 'Made in Canada'
representation is accompanied by a qualifying statement, such as
"Made in Canada with % Canadian content and % imported
content." ("Product of Canada" has an even
The Bureau alleges that the above
criteria have not been met: the parkas are not substantially
transformed in Canada and the total direct costs to manufacture the
parkas in Canada were less than 51%. Moose Knuckles
"finishing" the parkas in Canada does not, in the
Bureau's opinion, constitute a substantial transformation -
"prior to the (finishing) work done in Winnipeg, they were
parkas, just incomplete parkas".
While care labels on at least some
of the parkas state "Made in Canada with imported
textiles", the Bureau did not find that these labels cure the
overall impression left by express and implied claims:
"the application of a single "Made in Canada with
imported textiles" label on the care labels in a sleeve does
not change the false or misleading impression that the parkas are
"Made in Canada".
The 2009 guidelines caution that
pictorial representations (e.g., logos, pictures, or symbols such
as the Canadian flag or maple leaf) may by themselves be just as
forceful as an explicit "Made in Canada" written
representation. Thus, there is a risk of misleading consumers
if a reasonable conclusion from the use of a pictorial
representation is that the goods are made in Canada, when that is
not the case.
The above caution was certainly
true of the case here. The Bureau alleges that both text and
pictorial representations combine to create the strong general
impression the parkas are made in Canada from Canadian
materials. By way of examples, the express "Made in
Canada" claim is "reinforced by the use of the red maple
leaf on the moose, as well as the hockey player dressed in red with
a maple leaf on his jersey"; and the Moose Knuckles website
displayed a red maple leaf next to the "Made in Canada"
claim at the top of a page advertising the jacket, which would be
viewed by a consumer looking to purchase the jackets online.
The Bureau notes that in 2009,
Moose Knuckles parkas were made entirely at factories in Winnipeg,
and in 2012, the company started having its parkas produced
overseas. Notably, this is not mentioned as an aggravating factor,
and the Bureau contends that the deceptive conduct is aggravated by
Moose Knuckles having made the same or similar representations
frequently and over an extended period of time. It appears that
past manufacturing practices may not be argued to influence how
consumers will interpret current claims.
In response to the Bureau's
application, Toronto Star quotes Moose Knuckles CEO as saying
"We make some of our parkas in Canada and some in other
countries ...The coats are clearly marked. One coat would say
'made-in-Canada' on the content label if it was made in
Canada and another would say 'made in Vietnam' if it was
made in Vietnam. I believe we are very clear on where our goods are
made by putting in a country of origin tags on our coats, and
listing them on our website. Many Canadian companies are proud to
be Canadian and advertise that fact even if they do not make their
goods in Canada." According to the Globe and Mail, Moose
Knuckles contends that "it had on several occasions
"pro-actively" contacted the bureau for clarification on
its guidelines to ensure compliance".
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In less than nine months, on July 1, 2017, persons affected by a contravention of Canada's anti-spam legislation will be able to invoke a private right of action to sue for compensation and potentially substantial statutory damages.
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