Canadian COMPETITION LAW

Deceptive prize notice. 

Competition Bureau, Enforcement Guidelines, Application of the Competition Act to Representations on the Internet: “Subsection 53(1) of the [Competition Act] makes it an offence to send deceptive notices of prizes. A notice is deceptive where, among other things, there has not been adequate and fair disclosure of certain information, including facts which materially affect the chances of winning. The offence applies to sending the prize notification or causing it to be sent, whether ‘by electronic or regular mail or by any other means’. Further information on the Bureau’s policy with respect to section 53, can be found in the publication entitled Deceptive Notices of Winning a Prize – Section 53 of the Competition Act available on the Competition Bureau Web site.”

For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest FAQs, Contest Tips and Contests and Social Media.

For information about the Canadian contest/sweepstakes precedents (template rules) and checklists that we offer for sale, see: Canadian Contest Forms/Precedents.

Defamation.

Shakespeare, Othello, Act 3, Scene 3:  ”Good name in man and woman, dear my lord is the immediate jewel of their souls.  Who steals my purse steals trash; ‘tis something, nothing; ‘Twas mine, ‘tis his, and has been slave to thousands.  But he that fliches from me my good name robs me of that which not enriches him, and makes me poor indeed.”

Gatley on Libel and Slander:  “The gist of the torts of libel and slander is the publication of matter (usually words) conveying a defamatory imputation. A defamatory imputation is one to a man’s discredit, or which tends to lower him in the estimation of others, or to expose him to hatred, contempt or ridicule, or to injure his reputation in his office, trade or profession, or to injure his financial credit. The standard of opinion is that of right-thinking persons generally. To be defamatory an imputation need have no actual effect on a person’s reputation; the law looks only to its tendency. A true imputation may still be defamatory, although its truth may be a defence to an action brought on it; conversely untruth alone does not render an imputation defamatory.”

Wilson v. Switlo, 2011 BCSC 1287, per Mr. Justice R. Punnett: “The law of defamation concerns the civil wrongs of libel and slander.  At common law, libel is defamatory expression in writing or some other permanent form while slander is an oral statement or some other form of transitory expression.  Generally, expression that tends to lower a person’s reputation in the estimation of ordinary, reasonable members of society generally, or to expose a person to hatred, contempt or ridicule is defamatory… An allegation of defamation may rest on the literal meaning of a statement or on its inferential meaning, or on the claim that the statement constitutes a legal innuendo.  In this case only the literal and inferential meanings of the impugned statements are in issue.  Where the literal meaning is in issue, it is unnecessary to go beyond the words themselves.  A claim based on the inferential meaning relies on what the ordinary person will infer from the statement.  That is, it is a matter of impression.”

[Elements]:  “A plaintiff in a defamation action is required to prove three things to obtain judgment and an award of damages: (1) that the impugned words were defamatory, in the sense that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; (2) that the words in fact referred to the plaintiff; and (3) that the words were published, meaning that they were communicated to at least one person other than the plaintiff.”

P. Downard, Libel (Markham: LexisNexis, 2010): “[t]he classic statement of the law is that words are defamatory if they tend to cause the plaintiff to be regarded by reasonable persons with hatred, contempt, fear or ridicule.  Words are also defamatory if they impute improper and disreputable conduct, even though an ordinary person might not regard that conduct with hatred, contempt, fear or ridicule.” [Citing Botiuk v. Toronto Free Press Publications Ltd. [1995] 3 S.C.R. 3]

Canadian Bar Association, “Defamation: Libel and Slander” (online): “Defamation is communication about a person that tends to hurt the person’s reputation.  Defamation is a strict liability tort, which means that the intentions of the defamer are not relevant.  The communication must be made to other people, not just to the person it’s about.  The statement must be false to be classified as defamation.  If it is spoken, then defamation is termed ‘slander’.  If it is written, it is termed ‘libel’.  It can also be a gesture, which is a type of slander.  The law protects your reputation against defamation.  If someone defames you, you can sue them to pay money (called ‘damages’) for harming your reputation.  You have to sue in Supreme Court, not Provincial Court, and you have to sue within 2 years of the defamation.   It is not relevant the timing of when you discovered the defamation.   Rather, the limitation period commences on the date the defamatory statement was made or published. … The law doesn’t protect you from a personal insult or a remark that injures only your pride; it protects reputation, not feelings.  So if someone calls you a lazy slob, you might be hurt, but you probably don’t have a good reason to sue.  If he goes on to say you cheat in your business dealings, you probably do have a good reason to sue, as long as he says it to someone else, not just to you.  If he says it only to you, you can’t sue because he has not hurt your reputation.”

Denial-of-service (DoS) Attack.

CRTC: “An attacker attempts to make a computer system, typically owned by a government or corporate target, unavailable to its users. This can be done by flooding an organization’s e-mail account or bombarding its website. When, for example, a bank is targeted, customers may be prevented from accessing their online bank or credit-card accounts.”

Device IDs

A term relevant to behavioural advertising.

U.S. Federal Trade Commission, FTC Staff Report, Mobile Apps for Kids: Disclosures Still Not Making the Grade (December, 2012): “Device IDs are short strings of letters and/or numbers that uniquely identify specific mobile devices.  Today’s smartphones typically have multiple device IDs, each used for a different purpose.  Some device IDs are used to enable services like Wi-Fi and Bluetooth, or to uniquely identify specific devices operating on the carriers’ networks.  Other device IDs, like Apple’s ‘UDID’ or Android’s ‘Android ID,’ are used by apps, developers, and other companies to identify, track, and analyze devices and their users across various mobile services.  Companies can receive a wide variety of information about users through mobile apps, including data about the device (like a user’s device model, carrier, operating system version, and language settings) and personal data (like a user’s name, phone number, email address, friends list, and geolocation).  If this information is collected with a unique device ID, it can be associated with previously collected data with the same unique device ID.   The extent to which the collection of device IDs raises privacy concerns depends in part on how it is used.  Because device IDs are difficult or impossible to change, they can be used by apps, developers, and other companies to compile rich sets of data or ‘profiles’ about individuals.  However, the use of device IDs when necessary for specific internal operations, such as protecting against fraud and theft, site maintenance, maintaining user preferences, or authenticating users, would not raise the same concerns.  Concerns about the creation of detailed profiles based on device IDs become especially important where, as staff found, a small number of companies (like ad networks and analytics providers) collect device IDs and other user information through a vast network of mobile apps.  This practice can allow information gleaned about a user through one app to be linked to information gleaned about the same user through other apps.”

Dictionary attack.

Government of Canada, Canada’s Anti-Spam Legislation (www.fightspam.gc.ca), FAQs: “… a computer program guesses live email addresses by methodically trying multiple name variations within a particular group of common email domains, such as Hotmail or Gmail.”

Director and officer liability (CASL).

In general, Canada’s federal anti-spam legislation (CASL) requires that senders have express or implied consent (as defined by the legislation) to send unsolicited commercial electronic messages (CEMs) to Canadians, unless an exemption under CASL applies. Under CASL, directors and officers of companies can also be liable for violations of CASL in addition to the senders of CEMs. In this regard, CASL contains a director and officer liability section, which provides that “an officer, director, agent or mandatory of a corporation that commits a violation is liable for the violation if they directed, authorized, assented to, acquiesced in or participated in the commission of the violation, whether or not the corporation is proceeded against”. Section 54 of CASL, however, also provides a due diligence defence.

For more information about CASL, see: CASL (Anti-Spam Law), CASL Compliance, CASL Compliance Tips, CASL Compliance Errors, CASL FAQs, Contests and CASL.

For more information about the CASL compliance checklists and precedents that we offer for sale, see: CASL Compliance Checklists and Precedents.

Direct-to-consumer marketing.

OECD, Competition Assessment Toolkit (2011): “Increasingly, countries are imposing bans or introducing significant regulations on direct-to-consumer marketing of products via email, fax and telephone. In general, both large and small companies and self-employed individuals rely on this channel to advertise their products and services. One factor that has been driving this type of advertising is the relatively lower cost – in comparison to say advertising on television and specialty magazines. This type of direct advertising may also be preferred by many companies as they are better able to reach their target audience. One of the significant downsides of this type of marketing relates to intrusion of privacy.”

Direct sales contracts.

Consumer Protection BC: “When you enter into a contract in person, but at a place other than the supplier’s permanent place of business, you are entering into a direct sales contract.”

Some Canadian provincial consumer protection legislation regulates direct sales contracts, including governing contractual requirements and giving consumers “cooling off” (i.e., cancellation of contract rights).

Disclaimer.

Purolator Courier Ltd. v. United Parcel Service Canada Ltd., 1995 CarswellOnt 335 (Ont. Gen. Div.): “A disclaimer does not automatically nullify a misleading impression created by an ad.  Its effect will depend on several factors, including the degree to which a representation misleads the public without the disclaimer, the prominence which it is given in the context of the entire advertisement, the degree of sophistication that the public to whom the advertisement is directed exhibits, and the likelihood that the audience would recognize the disclaimer.  It is a question of fact whether, in the circumstances, a disclaimer is sufficient to ensure that the representation is not otherwise misleading”.

Competition Bureau, “Use of Disclaimers”, Misleading Advertising Bulletin No. 2 (1986): “A disclaimer may properly clarify any possible ambiguity or provide any reasonable qualification provided the general impression conveyed by the ad is not misleading.  However, the main body of the advertisement, apart from the disclaimer, should be capable of standing alone.  In most cases, it seems unlikely that a single disclaimer statement is capable of having a significant effect on the general impression conveyed to an average purchaser by a false or misleading advertisement.”

Competition Bureau, Corporate Compliance Programs Bulletin (2010): “Ensure that fine-print disclaimers are avoided.  If used, ensure that the overall general impression created by an advertisement and a disclaimer are not false or misleading. … Ensure that information that may alter the principal representation when promoting a product or service is not placed in the disclaimer.”

Competition Bureau, “Recognize It!”, Fraud Prevention Resource (December, 2011): “Fraudsters are professional criminals that know what they are doing.  Fraudsters rely on some basic techniques to be successful.  These include … hiding the true details in the fine print.”

Competition Bureau, Enforcement Guidelines, Application of the Competition Act to Representations on the Internet (October 16, 2011): “If qualifying information is necessary to prevent a representation from being false or misleading when read on its own, businesses should present that information clearly and conspicuously.  Businesses frequently use disclaimers, often signaled by an asterisk, to qualify the general impression of the principal representation when referring to their products or services. … The Bureau takes the position that disclaimers which expand upon and add information to the principal representation do not raise issues under the Act.  A disclaimer can only qualify a representation; it cannot cure or retract a false or misleading representation.”

Do Not Call List.

Canadian Radio-television and Telecommunications Commission (“CRTC”):  “The National Do Not Call List (DNCL) gives consumers a choice about whether to receive telemarketing calls. The National DNCL Rules introduce new responsibilities for Canada’s telemarketers.  If you are a consumer you can choose to reduce the number of telemarketing calls you receive by registering your residential, wireless, fax or VoIP telephone number on the National DNCL. You can also check your registration, find out how to remove your number from the National DNCL, and file a complaint about telemarketing calls. The DNCL introduces new responsibilities for Canada’s telemarketers.”

Double ticketing.

Competition Bureau, Ensuring Truth in Advertising: “Section 54 of the Competition Act is a criminal provision.  It prohibits the supply of a product at a price that exceeds the lowest of two or more prices clearly expressed in respect of the product.  Any person who contravenes section 54, is guilty of an offence and liable to a fine of up to $10,000 and/or imprisonment up to one year on summary conviction.”

Drip pricing.

On June 23, 2022, Bill C-19 (the Budget Implementation Act, 2022, No.1) received royal assent, introducing sweeping amendments to Canada’s federal Competition Act. These amendments include significant increases to the civil and criminal penalties under the Competition Act, new wage fixing and no poach conspiracy offences and expanding the civil abuse of dominance provisions to include more types of anti-competitive acts and increasing the potential penalties for abuse of dominance. They also include new civil and criminal prohibitions on drip pricing (i.e., failing to disclose the full price of a product or service until later in the purchase process or product checkout) to the criminal and civil provisions on false and misleading advertising under sections 52 and 74.01. Drip pricing has been one of the Competition Bureau’s (Bureau) deceptive marketing enforcement priorities over the past several years, together with other top enforcement priorities including false or misleading performance claims, ordinary sale price (OSP) claims and misleading endorsements and testimonials. In its recommendations for Competition Act reform, the Bureau had cited evidential challenges associated with the enforcement of drip pricing practices given the lack of specific prohibitions under the Competition Act. In this regard, before the amendments in June 2022, drip pricing was only reviewable under the general criminal and civil misleading advertising provisions of the Competition Act (sections 52 and 74.01) if a pricing claim was either literally false or misleading (e.g., a portion of the total price was omitted in a headline marketing claim or the claim suggested that the stated price was the complete price with no other charges or fees). The Bureau had commenced drip pricing enforcement in a number of industry sectors, including online event tickets and online car rentals. For some examples of the Bureau’s past drip pricing related enforcement, see: here, here and here. For more information about the 2022 amendments to the Competition Act, see: Sweeping Canadian Competition Act Amendments Passed.

Due diligence defence.

The Competition Act contains pure criminal offences (i.e., requiring subjective intent, such as the criminal misleading advertising provision, section 52) and strict liability offences (i.e., where proof of carrying out the mere actus reus, or act elements, is sufficient to constitute an offence subject to a due diligence defense).  In this regard, due dligence defenses are available under the deceptive telemarketing (section 52.1), deceptive prize notice (section 53(1)) and multi-level marketing (section 55(1)) provisions of the Competition Act.

See also Competition Bureau, Bulletin, Corporate Compliance Programs (2010): “For certain false or misleading representations and deceptive marketing practices provisions under the Competition Act and certain provisions of the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act, a company may argue that it had exercised due diligence to prevent the conduct.  Although the pre-existence of a program is not, in and of itself, a defence to allegations of wrongdoing under any of the Acts, a credible and effective program may enable a business to demonstrate that it took reasonable steps to avoid contravening the law. In this regard, such a program may support a claim of due diligence. Documented evidence of corporate compliance will assist a company in advancing a defence of due diligence, where available.” … “The existence of a program does not immunize businesses or individuals from enforcement action by the Commissioner or from prosecution by the DPP.20 However, in determining the most appropriate means to resolve cases involving offences where the exercise of due diligence is a defence, the Commissioner may give weight to the pre-existence of a credible and effective program in making sentencing recommendations to the DPP. A program will be considered credible and effective where it can be demonstrated that it was reasonably designed, implemented and enforced in the circumstances.”

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