In an unprecedented move, the Federal Government has included as
part of its 2009 Budget Implementation Act (Bill C-10) a radical
overhaul of the Competition Act and a number of important
amendments to the Investment Canada Act. Budget bills are enacted
quickly and with few revisions. A new era in Canadian competition
law is on the horizon.
This McMillan Bulletin discusses the proposed amendments
relating to Advertising and Marketing and their implications for
business. The proposed amendments related to Competitor Agreements,
Mergers, and Pricing Practices are dealt with in separate
Bill C-10 significantly increases the consequences for violating
the advertising and marketing provisions of the Competition Act
("Marketing Provisions") and expands the reach of the
Marketing Provisions to various areas not currently covered.
The amendments will make violations of the Marketing Provisions
a much more expensive proposition. Bill C-10 increases the
potential monetary consequences of non-criminal violations by 10-15
times for individuals and 75-100 times for businesses sentenced as
well as raising criminal penalties:
In the past, many civil track cases (especially cases involving
alleged violation of the ordinary selling price provisions of the
Act) were resolved before a Tribunal hearing. However, businesses
that settled cases typically agreed to pay more than the statutory
maximum, because the commission could allege multicount violations.
It remains to be seen whether the Bureau will use the increase in
maximum penalties to justify a demand for even higher consent
Restitution / Asset Freeze Added as Further Consequence
Bill C-10 empowers the Competition Tribunal to require
businesses to pay restitution to victims of deceptive marketing
practices. Depending on the harm the Tribunal determines was caused
to consumers, the repayments could be larger than potential maximum
penalties set out above. Amounts paid for restitution are to be
taken into account by the Tribunal when it establishes the amount
of the penalties that will be imposed. As a result, where
restitution is not feasible, we expect that the Bureau will seek
and the Tribunal may impose relatively high monetary penalties.
The Tribunal also will be authorized to freeze assets and
prevent the disposal of property pending determination of whether
misleading representations have been made, in order to ensure
assets are available to satisfy restitution orders. We expect that
the Bureau will use this type of interim remedy in cases where the
respondent is not a sizeable and reputable business.
Substantive Amendments Make it Easier to Prove an
Bill C-10 amends the Marketing Provisions by expressly providing
in both the criminal and reviewable practice provisions that it is
not necessary to establish that:
any person was deceived or mislead – this codifies
existing case law in which courts have held that a representation
can be misleading even if no one is actually misled; " any
member of the public to whom the representation was made was within
Canada – this overturns case law which found that the
Marketing Provisions did not apply to representations made by
Canadians outside of Canada (although that case recently was
overturned on appeal); or
the representation was made in a place to which the public had
access – this amendment clarifies uncertainty in the law
to ensure that businesses cannot ignore the Marketing Provisions
merely because they are making a representation in a place where
the public does not have access.
Implications for Business
The new advertising and marketing regime will make it easier for
offences to be proven and will make noncompliance more costly.
Businesses should review and update their marketing law compliance
programs to ensure that these risks are avoided.
The foregoing provides only an overview. Readers are
cautioned against making any decisions based on this material
alone. Rather, a qualified lawyer should be consulted.
The Commissioner of Competition addressed innovation, enforcement and policy initiatives at the Competition Bureau in his keynote speech, "Strengthening Competition: Innovation, Collaboration and Transparency."
Used car listing website operator CarGurus Inc.'s attempt to force rival Trader Corporation to supply it with vehicle listing data has encountered a dead end as the Competition Tribunal denied it leave to commence a private application under several provisions of the Competition Act.
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