The use of disclaimers in advertising raises unique competition
law issues. While they are designed to clarify or limit the
message, the size and location of the information is such that they
often do not have the intended effect. A disclaimer which adds
information to the main message will not generally offend the
misleading advertising provisions of the Competition Act.
However, where a disclaimer is used to contradict, restrict or
negate the main message, the potential to mislead consumers
increases, according to the Bureau.
The Competition Act therefore mandates that both the
general impression conveyed by a representation, as well as its
literal meaning, must be considered.
The Comwave consent agreement is not the first time this year
that representations masking non-optional fees, or
"drip-pricing", have been caught in the
Commissioner's net. A
consent agreement entered into by car rental
companies Avis and Budget in June 2016 included a $3
million administrative penalty for advertising prices
and percentage-off discounts that were not in fact
attainable because of non-optional fees that were not included in
the advertised price. The Commissioner concluded that the
non-optional fees were described to consumers in such a way as to
suggest that they were taxes, when in reality they were not
imposed by any government, but were imposed by
Budget to to recoup from consumers their own costs of doing
business. As a result, Bureau concluded that the
representations created a false impression in the mind of the
consumer that was contrary to the Competition Act's
civil misleading advertising provisions.
Similarly, in 2011, Bell Canada agreed to pay $10 million to settle the
Bureau's allegations that it advertised prices for bundled
phone, TV, internet, and mobile services that were not, in fact,
The general impression test is not limited to determining
whether the advertised price or quality of a product or service is
misleading. In a
consent agreement reached with Bell Canada in October 2015, the
Bureau found that positive online reviews of a free Bell product
posted by Bell employees in an online app store offended the
misleading advertising provisions. The Bureau concluded that
the endorsements created the general impression that they were made
by unbiased members of the public, when in fact they were posted on
behalf of Bell to boost downloads.
The upward trend in misleading advertising investigations
highlights the Bureau's growing concern with developing
consumer trust in the digital marketplace. The Bureau's
recently updated statement on disclaimers emphasizes the
new difficulties facing businesses in the rapidly changing world of
online advertising. As well, the International Consumer Protection
and Enforcement Network issued guidance in June 2016 on online reviews and
With the proliferation of online sharing, modern businesses must
consider how their message will be understood and processed by the
consumer on a variety of platforms, including those on which
they had no intention to distribute. As the form and
distribution of consumer messages continues to evolve, and the
ability to control the general impression of a message becomes more
and more difficult, we will likely see an increase in misleading
advertising claims in the future.
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Canadian Competition Bureau issued a template document for use as a form of Consent Agreement, to be filed with the Competition Tribunal to resolve concerns the Bureau may have with proposed mergers.
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).