Canadian COMPETITION LAW

In a curious twist in the growing dispute between the Alberta and British Columbia governments, stakeholders and individuals on either side of the environmental debate, with some political seesawing by the Federal Government thrown in, a British Columbia resident has recently alleged that Enbridge promotional videos for the proposed Northern Gateway pipeline were misleading.

According to media reports, the Vancouver Island resident filed a misleading advertising complaint with the Competition Bureau alleging that Enbridge promotional videos for its proposed Northern Gateway pipeline project omitted more than 1,000 square kilometers of islands along the proposed Northern Gateway tanker route (see e.g.: BC woman files complaint against Enbridge for misleading promotional videos).  According to the complainant, Enbridge allegedly “distorted the maps in its promotional videos to erase numerous islands and twisting passages so that [the] tanker route appears much safer than it is”.

To some, it won’t be intuitively obvious why the Competition Act should apply, if true, to omissions of some BC terrain from videos for a pipeline – after all, Enbridge is not selling pipelines or tanker routes to Canadians.

The Competition Act does, however, cast a fairly wide net in terms of what may be false or misleading and a wide variety of claims have been challenged over the years under the “general misleading advertising” provisions of the Act, which prohibit not only false or misleading claims to market products (i.e., goods or services) but also “any business interest”.

In this regard, in one recent high-profile case, Commissioner of Competition v. Yellow Page Marketing, the Ontario Superior Court both reiterated that the Competition Act applies to false or misleading claims made to promote business interests and also that the phrase “business interest” should be liberally interpreted:

“Similar misrepresentations appear in the respondents’ domain names, invoices, reminder notices and letters sent by the respondents.  Although the respondents argue that collection efforts after the contract had been completed were not to increase sales, the relevant provision of the Competition Act refers to promoting ‘any business interest’ and not just sales.  The phrase ‘business interest’ must be given a wide meaning and collecting money, and threats made in relation to collection efforts, constitute promotion of the respondents’ business interests.”

One of the most colorful, if somewhat older, cases in which the misleading advertising provisions of the Act were invoked to challenge claims in relation to business interests was the Bre-X case.  Plaintiffs in Bre-X claimed that that the publication of resource calculations, other data, reports and studies relating to Bre-X Mineral’s Indonesian mining assets breached the criminal misleading advertising provisions of the Competition Act, thereby giving rise to a civil cause of action.

According to media reports, Enbridge has removed the challenged imagery from one of its videos and taken steps to make associated disclaimers more prominent (disclaimers being another area of increasing challenge by the Bureau, including in the recent and ongoing Bell, Yellow Page Marketing and Rogers cases).

In this regard, while Enbridge has been quoted as saying that its promotional videos are “meant to be for illustrative purposes only”, some of the key principles for companies using disclaimers include ensuring that primary or “headline” claims (or images) can stand on their own and aren’t false or misleading, that disclaimers add to primary claims (they cannot cure an otherwise false main claim) and that advertising effectively discloses key material information for consumers, including any additional price or performance information and any important conditions or limitations.

Of course, with the recently decided Richard v. Time case, and the ongoing Rogers case, which has again raised the issues of disclaimers, the appropriate data for performance claims and what type of consumer is relevant for the “general impression” test under the Competition Act (i.e., an “average consumer” or the rather lower standard held by the Supreme Court recently in Richard v. Time of an “average, credulous and inexperienced consumer”), several key conceptual advertising law concepts are now in a bit of a state of flux in Canada.

Having said that, as a practical matter, the Competition Bureau receives about 20,000 complaints a year and, while the majority according to Bureau officials recently are misleading advertising and deceptive marketing related, it is not clear that an alleged omission of some British Columbia islands in the challenged Enbridge videos will (or should) catch the Bureau’s attention.  This is, however, a rather interesting example (and reminder) that the misleading advertising provisions of the Competition Act are broad and that both the Bureau and Canadian courts can be keen, in the right case, to pursue false or misleading claims made in relation to business interests and not only marketing claims for products.

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