As the prospect of a trade war looms, an increasing number of Canadians are opting to avoid American goods, gravitating instead toward domestic products. In response to this growing movement to "buy Canadian", businesses are increasingly highlighting their Canadian origins through the use of Canadian symbols like the maple leaf, Canadian flag or other labels like "Made in Canada" or "Product of Canada". However, this surge in patriotic consumerism presents a timely reminder for businesses to ensure that they comply with Canadian marketing regulations. Inappropriately draping wares with the Canadian flag creates potentially significant reputational, legal and financial repercussions for businesses operating in Canada.
The Canadian Competition Bureau (the "Bureau") has published guidelines and taken enforcement action to prevent the misuse of Canadian symbols to promote the sale of products. Representing a product as Canadian to attract buyers is not a new practice, but the prevalence of the use of these symbols since the change in the US administration suggests that there may cases where the claims cannot withstand scrutiny. Call it maple glazing, or maple draping, promoting a product as "Canadian" requires adherence to Canada's Competition Act, Consumer Packaging and Labelling Act and Textile Labelling Act (collectively, the "Acts"). While none of the Acts require that the country of origin of a product be identified, they do contain provisions that prohibit false or misleading representations; including false or misleading country of origin representations. Understanding and complying with these guidelines is essential for businesses to maintain consumer trust and avoid penalties. Failure to comply with these laws can result in public enforcement by the Bureau or Canadian Food Inspection Agency, or your very own Made in Canada class action lawsuit.
1. The Legislative Framework
(A) The Competition Act
The Competition Act sets out two tracks to deal with deceptive marketing: the criminal and civil tracks. The conduct covered by both tracks is identical; however, the criminal provisions address more egregious forms of this conduct and require an intent to deceive. Specifically:
- The criminal provisions prohibit anyone, for the purpose of promoting the supply or use of a product or business interest, from knowingly or recklessly making a materially false or misleading representation to the public. Any person who contravenes this provision is guilty of an offence and liable to a fine and/or imprisonment and can be ordered to pay restitution pursuant to the Criminal Code.
- A person's conduct is reviewable under the civil provisions where, to advance a business interest, they make a representation to the public that is false or misleading in a material respect. Violations of the civil provisions could result in significant reputational and financial consequences, including injunctions and administrative monetary penalties of up to 3% of worldwide revenues.
Country of origin claims could attract scrutiny under these provisions, with the civil provisions being the more likely to apply.
(B) The Consumer and Packaging and Labelling Act
The Consumer Packaging and Labelling Act (the "CPLA") requires that consumer products are labelled accurately. The CPLA also prohibits false or misleading representations on pre-packaged products, including country of origin claims made by businesses. The Bureau enforces the CPLA for non-food products, while the Canadian Food Inspection Agency handles enforcement for food products.
(C) The Textile Labelling Act
The Textile Labelling Act (the "TLA") sets out the labelling requirements for textile articles, including information on fibre content and dealer identification. The TLA also prohibits false or misleading representations regarding textile articles, including false or misleading country of origin claims.
2. Enforcement Guidelines: "Product of Canada" and "Made in Canada" Claims
In 2009, the Bureau published Enforcement Guidelines Relating to "Product of Canada" and "Made in Canada" Claims (the "Enforcement Guidelines"). The Enforcement Guidelines were reiterated in Volume 4 of its Deceptive Marketing Digest, released in 2018, and are the most current articulation of the Bureau's enforcement approach with respect to country of origin claims.
The Enforcement Guidelines make clear that the Bureau will assess the general impression conveyed by a country of origin representation (as with any representations made to the public for the purposes of advancing business interests). That is, when determining whether a "Product of Canada" or "Made in Canada" declaration has been made that is false or misleading, the Bureau will consider the general impression conveyed through a combination of words, visual elements, illustrations and overall layout that may alter the plain meaning of a representation. Any country of origin claim or representation, including any pictorial representation (e.g., a picture of a maple leaf), will be evaluated in its entirety to establish whether the representation creates the general impression that the product was made in Canada.
The Bureau will adopt distinct assessment frameworks depending on whether the representation at issue is a "Product of Canada" claim or a "Made in Canada" claim.
The Enforcement Guidelines state that the Bureau will generally not challenge a "Product of Canada" claims under the false or misleading representations provisions of the Acts, if these two conditions are met:
- The last substantial transformation of the good occurred in Canada: The Bureau considers any goods "wholly obtained or produced in Canada" (for e.g., mineral goods extracted in Canada or goods harvested in Canada) will satisfy this condition; and
- All or virtually all (at least 98%) of the total direct costs of producing or manufacturing the good have been incurred in Canada: This captures expenditures on materials incurred by the producer/manufacturer in the production or manufacturing of the goods, including expenditures on labour.
Somewhat similar conditions apply to "Made in Canada" claims, although with a lower threshold for the direct costs figure. In particular, the Bureau will generally not challenge a "Made in Canada" claim under the false or misleading representation provisions of the Acts, provided these three conditions are met:
- The last substantial transformation of the good occurred in Canada;
- At least 51% of the total direct costs of producing or manufacturing the good have been incurred in Canada; and
- The "Made in Canada" representation is accompanied by an appropriate qualifying statement: For example, "Made in Canada with imported parts" or "Made in Canada with domestic and imported parts". This could also include more specific information such as "Made in Canada with 60% Canadian content and 40% imported content".
For other country of origin claims, the Bureau recommends the use of specific terms that more accurately reflect the limited production or manufacturing activity that took place in Canada. For instance, "assembled in Canada with foreign parts" or "sewn in Canada with imported fabric." According to the Enforcement Guidelines, general phrases such as "produced", or "manufactured" in Canada, are likely to be understood by consumers as synonymous with a "Made in Canada" claim and should therefore comply with the requirements for "Made in Canada" claims.
3. Prior Enforcement Activity
To date, there has been limited enforcement activity with respect to country of origin claims. However, in April 2016, the Bureau filed an application with the Competition Tribunal, alleging that Moose Knuckles, a manufacturer of premium winter jackets, falsely marketed their parkas as "Made in Canada" when they were mostly manufactured in Vietnam and elsewhere in Asia. In its application, the Bureau claimed that only the finishing touches to the jackets, such as adding the trim, zippers and snaps, were done in Canada.
In late 2016, the Bureau announced that it had reached an agreement with Moose Knuckles, bringing an end to its legal proceedings. As part of the settlement, Moose Knuckles agreed to donate $750,000 over five years to charities in Canada. In addition, the company agreed to make it clearer that certain parkas are in fact made with Canadian and imported components. Moose Knuckles also agreed to add operations at its Canadian factories, and implement an internal compliance program to ensure that it abides advertising and labelling regulations.
4. Will "Maple Glazing" become an enforcement priority?
Given the current political climate, we have seen a marked uptick in the use of "Made in Canada" and "Product of Canada" claims. As global supply chains become more complex, businesses must be careful when making any representations that products are made or produced in Canada. Any non-compliance with the Acts and the Enforcement Guidelines may very well attract scrutiny from the Bureau or private enforcement by way of class actions and, as of June 2025, private applications to the Competition Tribunal.
To view the original article click here
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.
