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July 1, 2013

In a recent case announced by the Australian ACCC, Australia’s antitrust agency said that supermarket chain Coles has paid six infringement notices totaling $61,200 for allegedly misleading country of origin claims contrary to the Australian Competition and Consumer Act (see: Coles pays infringement notices for alleged misleading country of origin claims).

According to the ACCC, Coles had displayed some imported naval oranges and kiwi fruit beneath price boards that read “Helping Australia Grow” that included the triangular “Australian Grown” symbol.  While the same signage was also being used to advertise imported asparagus and almonds, the ACCC alleged that the signage created the false impression that the imported produce was Australian grown (when it was not and correctly identified by stickers on the produce itself).  The ACCC took the position that the relatively small sized stickers or statements of actual country of origin were insufficient to overcome the overall impression that the produce was Australian.

While the allegations were not proven in court, and Coles has been reported as denying liability, I thought the case illustrated some key general misleading advertising principles relevant also in Canada.

First, while there is no positive requirement under the Competition Act (or Consumer Packaging and Labelling Act) to make country of origin claims, false or misleading country of origin claims can violate their misleading advertising provisions (e.g., the criminal or civil misleading advertising provisions of the Competition Act – sections 52 or 74.01).

Second, like advertising claims generally, claims can potentially violate the Competition Act (or other legislation, such as the Consumer Packaging and Labeling Act) where a claim is literally false or misleading.  In the latter case, a claim may be offside where its “general impression” is false or misleading – for example, through a headline claim that is contradicted by a disclaimer or fine print; where two true claims are made, but by being made together create an overall false general impression; where significant conditions or limitations are not adequately disclosed; or where a picture or illustration creates, for example, a false general impression that a product is Canadian.

Third, it is also worth noting that the Canadian Competition Bureau has enforcement guidelines for Canadian product claims (see: “Product of Canada” and “Made in Canada” Claims), which apply when businesses make “Made in Canada” claims for non-food products.  The Bureau’s Made in Canada guidelines were first introduced in the 1980s to identify Canadian content and reduce the likelihood that Canadian country of origin claims violated Canadian misleading advertising laws.

Under the Bureau’s guidelines, “Product of Canada” claims require a fairly significant threshold of at least 98% Canadian content (i.e., 98% of the total direct costs of producing / manufacturing the good have been incurred in Canada).  “Made in Canada” claims on the other hand only require that at least 51% of the content is Canadian (i.e., 51% of the total direct costs of producing / manufacturing the good have been incurred in Canada) and a qualifying statement that the product contains imported content.  In both cases, the last substantial transformation of the product must also have occurred in Canada.

Also importantly, the Bureau points out that, as in the Coles challenge by the ACCC, made in Canada claims may be made not only in words but also through the use of logos, pictures or symbols (e.g., the Canadian flag, maple leaf, etc.).  As such, the Bureau recommends that any qualifying text be “sufficiently prominent to ensure that consumers notice it and understand the significance”, a principle that is, of course, the same for disclaimers or other qualifying claims generally.

In addition to the Bureau’s Made in Canada guidelines, the Canadian Food Inspection Agency (CFIA) also has its own guidelines for “Made in Canada” and “Product of Canada” claims for food products sold in Canada (see: Product of Canada and Made in Canada Labelling).  In general, the CFIA’s guidelines require that, if “Product of Canada” claims are made, that all or virtually all of the ingredients, processing and labour are Canadian; and, for “Made in Canada” claims, that the last substantial transformation of the product occurred in Canada (regardless of whether the ingredients are Canadian or imported).  “Made in Canada” claims for food, if used, must also include a qualifying statement disclosing the origin of ingredients.

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