The parties in Maritime Travel Inc. v. Go Travel Direct.com
Inc.,1 a misleading advertising private action
decided earlier this year, have recently filed their initial appeal
and cross-appeal submissions.2
At trial, Maritime Travel, an established Canadian east-coast
travel agency, alleged that upstart tour operator Go Travel
Direct.com Inc. ran materially misleading newspaper advertisements.
Maritime Travel claimed damages based on section 36 of the
Competition Act, which provides a civil remedy for damages
suffered as a result of a breach of a criminal provision of the
Act. In this case, Maritime Travel alleged that Go Travel
had knowingly or recklessly made representations to the
public that were false or misleading in a material
respect, contrary to section 52 of the Act.
Developments in the law around sections 36 and 52 of the Act are
important, because these sections provide the only basis for
private damages for misleading advertising under the
Go Travel was found liable at trial for one price comparison ad.
Go Travel had lowered its price on a travel package for up to a
four-day period and had advertised on one of those days both a
price comparison with the Maritime Travel posted price on the same
package, and a claim that ". Go Travel offers vacations for
less by eliminating the travel agent middleman .". There was
no question that the posted price of Maritime Travel had been
higher than the advertised price of Go Travel during the period,
and Go Travel had made it clear that the price comparison was made
only for a particular date (albeit in small print). But the
evidence also showed that, at some point prior to advertising, Go
Travel had become aware that Maritime Travel agents had the
discretion to match Go Travel's prices.
The trial judge was not prepared to conclude that the ad was
false, because the single-day price comparison was not incorrect as
regards posted prices and because it was not clear that Maritime
Travel always matched Go Travel prices. However, in the judge's
view, the ad was misleading because it left the reader with the
"overall impression" that Maritime Travel was always more
expensive that Go Travel Direct, because commissions increased the
Maritime Travel package price. The judge also concluded that Go
Travel had "knowingly" created the misleading impression,
due to its prior knowledge of discretionary price matching by its
In its appeal, Go Travel argues that the trial judge erred in
finding that the overall impression was misleading when the
specific price comparison was technically correct. It further
argues that even if its ad was misleading, Go Travel did not make
the misrepresentation "knowingly or recklessly," and also
that Maritime Travel did not prove any damages.
Of particular importance for Canadian jurisprudence will be the
appeal court's determination as to whether Go Travel
knowingly created a false overall impression, apparently
without direct evidence of actual intent in this regard.
The question of just what the plaintiff must show in terms of
damages is also a significant question in this case. In connection
with an ad that ran for a single day, the trial judge was willing
to award estimated lost profits for a period of weeks, based on an
estimate of lost sales which was itself based on a year-over-year
comparison of broad market data.
If the trial judge's decision is upheld on appeal, it could
establish a relatively low threshold for plaintiffs to obtain
significant damages in respect of misleading advertising under the
1. 2008 NSSC 163
2. Nova Scotia Court of Appeal, 2008, C.A. No.
3. The Competition Act also contains civil
prohibitions against misleading advertising, but private parties
can only sue for damages incurred as a result of allegedly criminal
violations of the Act. Unless the misrepresentations are made
knowingly or recklessly, therefore, private parties harmed
by a competitor's misleading advertising have no access to
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.
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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.
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