Canadian COMPETITION LAW

May 6, 2020

On May 6, 2020, the Competition Bureau (Bureau) announced that it was increasing its enforcement of deceptive COVID-19 marketing claims (see: Competition Bureau cracking down on deceptive marketing claims about COVID-19 prevention or treatment).

In making the announcement, the Bureau said:

“As concerned Canadians take steps to protect themselves and their loved ones during the pandemic, they need accurate information so they can make informed decisions.  We urge all businesses to ensure their marketing complies with the law – including any claims made about the performance of their products – or face potential legal action by the Bureau.”

As the impacts of the COVID-19 pandemic have increased, the Bureau has been issuing periodic guidance relating to its enforcement of the Competition Act, including a Statement on March 20^th, that it would focus on deceptive marketing practices and collusion by competing businesses (see: COVID-19 (Corona Virus) Canadian Competition and Advertising Law Developments and Product Performance Claims: Increased Risk in Making Unfounded Claims During COVID-19 Outbreak).

While the Bureau has already announced its COVID-19-related enforcement priorities, and Tweeted earlier this month that it had “warned a company claiming that its UV and ozone air sterilization systems could kill coronavirus” (see: here), today’s announcement signals a growing impatience by the Bureau with companies’ efforts to comply with the misleading advertising provisions of Canada’s Competition Act. 

This, in turn, means a corresponding risk for companies and individuals that do not review their COVID-19-related advertising and marketing claims for compliance with the Competition Act and Canadian federal packaging and labelling legislation.

In this regard, the Bureau has disclosed that it has issued compliance warnings to a variety of businesses across Canada to stop potentially deceptive claims, including to a “major national retailer” and businesses in British Columbia, Alberta, Saskatchewan, Ontario, Quebec and New Brunswick.

While the Bureau often elects to enforce the misleading advertising provisions of the Competition Act with select significant enforcement matters against major companies in an effort to achieve deterrence, it also frequently brings cases against smaller entities that are engaging in more fraudulent related marketing claims.

Consistent with its previous COVID-19-related marketing guidance, the Bureau indicates that it is focused on both false or misleading COVID-19 cure claims (which can raise issues under the criminal or civil misleading advertising provisions of the Competition Act, including where the general impression of a claim is false or misleading) and product performance claims that are not supported by adequate and proper testing (as is required by section 74.01(1)(b) of the Competition Act).

The Bureau’s new announcement also includes an overview of potential penalties for violating the Competition Act (with an emphasis on criminal penalties) and checklist for companies to ensure that they are complying with Canadian competition law.

In addition, the Bureau is advising businesses to comply with the Consumer Packaging and Labelling Act and Textile Labelling Act, in addition to the misleading advertising provisions of the Competition Act.

Based on the Bureau’s new guidance, companies and individuals are well advised to review their COVID-19 related product claims for compliance with Canada’s Competition Act and consumer packaging and labelling legislation.

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