Canada: What's FaceApp And Facebook Got To Do With Competition Compliance In Canada?

While summer can sometimes be a quieter time for antitrust enforcement, the debate about the role of antitrust in the tech sector is hotter than ever with a number of significant developments over the past few weeks.

Among these developments, the U.S. Federal Trade Commission (FTC) recently announced a US$5-billion settlement with Facebook to resolve issues regarding its data practices and initiated proceedings against Cambridge Analytica for deceptive representations regarding its use of personal data. The use and collection of personal data is also a hot topic in Canada and, as discussed below, the Competition Bureau may be looking to take enforcement action in this area.

Can Data/Privacy Policies Be Pursued as Misleading Representations?

Taking inspiration from the FTC's approach to pursuing privacy representations as deceptive practices, the Competition Bureau has taken the view that it may use the Competition Act to challenge representations regarding the use and collection of data that are "false or misleading in a material respect." This approach would allow the Bureau to seek, among other things, the imposition of administrative monetary penalties of up to $10 million against corporations whose representations are found to be false or misleading in a material respect.

According to the Bureau, "companies are putting themselves at risk when they collect information that consumers would not expect to be collected in the normal course of business and only disclose this material information in terms and conditions that are likely to be overlooked by consumers." The Bureau has also taken the view that "the collection and use of data that go beyond what consumers would reasonably expect increases the likelihood of deception."

Although the Bureau is clearly drawing inspiration from the U.S. enforcement approach, this approach may not work as well in Canada, where the collection of personal information without appropriate consent is already, and arguably more directly, within the mandate of the Office of the Privacy Commissioner (OPC) under Canada's federal privacy legislation (Personal Information Protection and Electronic Documents Act, or PIPEDA). While it remains to be seen how the Competition Bureau would work with the OPC in respect of such investigations, the Commissioner of Competition (the head of the Bureau) has made it clear that enforcement in the digital sector remains a key priority.

As one of the first steps to increasing its enforcement capabilities in the digital sector, the Bureau recently appointed a Chief Digital Enforcement Officer (CDE Officer). The Commissioner has explained that the role of the CDE Officer is to provide the Bureau with "advice and expertise on a wide range of matters, including tools and skills development, in order to strengthen [the Bureau's] investigations in the digital economy." In the short time since he has assumed his position, the CDE Officer has used social media to draw attention to the approach to collecting and using personal data by app developers such as FaceApp. In fact, in a recent social media post, the CDE Officer referred to FaceApp as "an example of trading your #privacy for convenience or for a cool service...likely without your knowledge" and he included the hashtag "deceptive" in reference to FaceApp's terms and conditions. This is despite the fact that the terms highlighted in the post appear to disclose the intended collection and use of personal data by FaceApp. In another recent post, referring to the recent Facebook settlement with the U.S. FTC, the CDE Officer explained that he had "posted about Facebook having poor #data governance and #dataprivacy practices in the past." While these social media posts do not describe a specific legal basis for concerns, the fact these statements are being made by a Competition Bureau official in a public forum suggests that enforcement in this area may be expected.

That said, should the Bureau seek to challenge the use and collection of data as potentially "false or misleading," it is likely to face a number of hurdles. For example, the misleading representation provisions of the Competition Act require that the representation in question be false or misleading in "a material respect." To date, the jurisprudence on materiality has focused on whether the representation at issue would influence a consumer's purchasing decision. As a result, the Bureau would presumably need to show that the specific data collection representations are, in fact, material to the consumers who are being targeted. However, recent research suggests that consumers' approach to privacy considerations varies widely (and thus may not be "material" to many consumers).

Furthermore, if a company's disclosure about its use and collection of personal data meets the statutory requirements of PIPEDA for obtaining informed consent, it may be difficult for the Bureau to persuade a court that the representations at issue are nonetheless false or misleading in a material respect. That said, the Bureau might attempt to do so on the basis, for example, that other aspects of a company's representations or marketing materials convey a general impression about its data collection practices that is contradicted by the disclosure in its terms and conditions. To take a hypothetical example, if a company's marketing materials were to state "We protect your personal data," but then permitted an unlimited collection and sharing of an individual's personal data in the terms and conditions, the Bureau may take the view that the company's representations are false or misleading in a material respect.

Finally, and perhaps most important from a compliance perspective, the misleading representation provisions of the Competition Act allow for the application of a due diligence defence. If a company can show that it exercised due diligence to prevent the false or misleading representations from occurring, then no administrative monetary penalties may be imposed. In particular, the Bureau has acknowledged in its Corporate Compliance Bulletin that "documented evidence of a credible and effective corporate compliance program will assist a company in advancing a defence of due diligence, where available."

Implications

Although any attempt by the Competition Bureau to challenge privacy or data practices and policies under the Competition Act may be met with significant hurdles, companies operating in Canada should consider taking the following steps to help avoid the costs of investigation and possible challenge:

  • Maintain a credible and effective compliance policy that addresses the company's data and privacy practices . Having such a policy is more important than ever and may allow a company to rely upon the due diligence defence if the Competition Bureau were to raise concerns.
  • As part of any effective compliance policy, ensure that the personnel who are most directly involved with the collection and use of data (e.g., systems or software engineers and marketing personnel) are both aware of the various uses and collection of personal data by the company and regularly trained in respect of the appropriate use and collection of personal data.
  • Regularly review and update the company's data and privacy policies to make sure that the policies reflect the way that the company is using and collecting data (and is not false or misleading).
  • Regularly review marketing representations to make sure that they are not contradicted by the detailed terms and conditions governing the collection and use of personal data.
  • If doing business with third-party app developers or providing data to third parties, consider reviewing or auditing the use and collection of such data by such third parties.
  • Have an appropriate process in place for raising and responding to complaints or concerns (internal or external) regarding the use and collection of personal data.

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.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions