International Competition Network, Anti-Cartel Enforcement Manual (May, 2009): “Search and raid terms are terms variously used by competition agencies to refer to the process of examining and removing records from a premises.”
In Canada, the Competition Bureau has a wide range of enforcement powers available to investigate potential violations of the Competition Act, including the ability to obtain search warrants (under section 15 of the Act), document production orders, orders compelling testimony under oath (under section 11 of the Act) and wiretaps (under the Criminal Code). The execution of search warrants by the Bureau, which can be used in both civil and criminal cases, is sometimes referred to as a “dawn raid”, given that such inspections commonly begin in the morning and are unannounced.
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.”
The federal Competition Act makes it criminal offences to engage in deceptive telemarketing or to engage in telemarketing unless certain required disclosure under the Act is made. Under section 52.1, “telemarketing” is defined as “the practice of using interactive telephone communications for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest”. In its telemarketing enforcement guidelines (Telemarketing – Section 52.1 of the Competition Act), the Competition Bureau has taken the position that “interactive telephone communications” does not include fax, Internet or automated pre-recorded messages but are limited to live voice communications between two persons.
Under the Competition Act’s deceptive telemarketing provisions, it is a criminal offence to: (i) make materially false or misleading representations; (ii) operate a contest where the delivery of a prize is conditional on prior payment or certain disclosure is not made (regarding the number and value of prizes, area or areas to which they relate and odds of winning); (iii) offer free or below cost products, as consideration for supplying another product, unless disclosure is made of the fair market value of the first product (and any restrictions, terms or conditions relating to its supply); or (iv) offer products for sale grossly in excess of their fair market value where their delivery is conditional on prior payment by buyers.
The Competition Act also requires that certain disclosure be made by telemarketers both at the beginning of a call and sometime during a call. For example, the Act requires that the following information be disclosed by telemarketers at the beginning of a call: (i) the person on whose behalf the call is being made; (ii) the nature of the product or business interest; and (iii) the purpose of the call.
Like the general misleading advertising provisions of the Competition Act (sections 52 and 74.01), the general impression is relevant to determining whether a claim made by a telemarketer is materially false or misleading. Unlike misleading advertising generally, however, if misleading claims are made in the context of telemarketing, the Competition Bureau does not have the discretion to proceed civilly, given that the only deceptive marketing provisions are criminal offences under section 52.1.
Deceptive telemarketing is punishable, on indictment, by unlimited fines (i.e., in the discretion of the court), imprisonment for up to 14 years, or both (and on summary conviction, to fines of up to $200,000, imprisonment for up to one year, or both). There is also no “mens rea” (i.e., intent) required for deceptive telemarketing, in that the offences under section 52.1 are strict liability offences. As such, proof of the act, regardless of any guilty mind (or lack of), is sufficient to make out an offence. There is, however, a due diligence defence available under section 52.1.
The enforcement of the telemarketing provisions of the Competition Act has been an enforcement priority for the Competition Bureau in recent years, although for the most part aimed at companies and individuals engaged in true “scams” not legitimate marketers who may have committed technical violations of the Act. Having said that, a number of individuals have been charged, convicted and imprisoned in connection with the marketing of a broad range of products, including business directories, office supplies and credit cards.
The Competition Bureau has also issued enforcement guidelines on deceptive telemarketing: Telemarketing – Section 52.1 of the Competition Act (2009). The Competition Act is not, however, the only relevant legislation applicable to telemarketing. In this regard, provincial consumer protection legislation can also be relevant as well as the National Do Not Call List under the federal Telecommunications Act.
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.  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.”
Competition Act, section 80: “’Delivered pricing’ means the practice of refusing a customer, or a person seeking to become a customer, delivery of an article at any place in which the supplier engages in a practice of making delivery of the article to any other of the supplier’s customers on the same trade terms that would be available to the first-mentioned customer if his place of business were located in that place.” Under section 81 of the Competition Act, the Competition Tribunal may make an order prohibiting a supplier from engaging in delivered pricing where it is engaged in by a major supplier (or is widespread in a market) and a customer (or potential customer) is denied an advantage that would otherwise be available to him in the relevant market.
Competition Bureau, Enforcement Guidelines, The Abuse of Dominance Provisions: Sections 78 and 79 of the Competition Act (2012): “Demand elasticities indicate how buyers change their consumption of a product in response to a change in the product’s price (own-price elasticity) or in response to changes in the price of another identified product (cross-price elasticity). While cross-price elasticities do not directly measure the ability of a firm to increase price, they are particularly useful for determining whether differentiated products are substitutes for one another and whether such products are part of the same relevant market.”
[Abuse of dominance]: International Competition Network, Unilateral Conduct Workbook, Chapter 3: Assessment of Dominance (May, 2011): “The ability of customers to switch to rival products is generally the most direct and most effective competitive constraint and therefore the most relevant factor in defining a relevant product market.”
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.”
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.”
OECD, Policy Roundtable, Market Definition (2012): “Product differentiation usually occurs in two distinct ways. The first type of differentiation occurs with respect to the attributes of the product, including design, color, brand or any other specific feature that may appeal to the differing tastes and preferences of consumers. Products differentiated along these lines often appear densely packed over a wide range of attributes and prices without any obvious gaps in the chain of substitution. The second type of differentiation refers to the location of the product or service. This is important in cases such as retail stores, movie theatres, petrol stations or hospitals. Depending on the location of the consumer, the attribute and the price of the product, consumers can choose from different suppliers incurring different transport cost.”
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 and indirect purchasers.
Terms used in competition/antitrust class actions and in particular in reference to the level of harm (or “overcharge”) suffered by various levels of consumers in a supply chain from price-fixing conduct.
See e.g., Davies Ward Phillips & Vineberg, note, “Developments in Price-fixing Class Actions”: “’Direct purchasers’ are those who purchased the product in question directly from those involved in the alleged anti-competitive conduct. ‘Indirect purchasers’ are those who purchased the product from intermediaries in transactions subsequent to the direct purchase …”
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).
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.”
Once the Competition Bureau commences a formal inquiry, it may proceed to make an application before the Competition Tribunal (for some reviewable matters under the Act, including abuse of dominance and mergers), refer a matter to the DPP for prosecution (for criminal matters, such as criminal conspiracies under section 45) or discontinue its inquiry.
See e.g., Competition Bureau, Draft Updated Enforcement Guidelines: The Abuse of Dominance Provisions (2009): “If the Commissioner concludes that the evidence does not establish the elements of subsection 79(1), the inquiry is discontinued. The Commissioner then produces a report for the Minister of Industry, indicating the information obtained and the reason for the discontinuance. Following this, the target of the examination as well as the complainant(s) are notified in writing of the status of the inquiry.”
See also Competition Act, section 22.
Doctrine of merger.
Fournier Leasing Co. v. Mercedes-Benz Canada Inc., 2012 CarswellOnt 6068 (Ont. Sup. Ct.), citing Normart Management Ltd. v. West Hill Redevelopment Co. (1998), 17 C.P.R. (4th) 170 (Ont. C.A.): “The doctrine of merger provides that where a tort is alleged together with a prior agreement to commit the tort, the prior agreement ‘merges’ in the tort. An allegation of a prior conspiracy to commit the tort ‘adds nothing’ to a claim and is defective.”
The abuse of dominance provisions of the Competition Act (sections 78 and 79, the Canadian equivalent to monopolization under Section 2 of the U.S. Sherman Act) apply to a firm (or firms) that abuses its dominance in one or more relevant markets. The operative provision of the Act (section 79) refers to “substantial or complete control” (i.e., dominance) of a “class or species of business” (i.e., a market), which has been held to mean that a firm possesses market power.
See e.g., Competition Bureau, Enforcement Guidelines on the Abuse of Dominance Provisions (2001), citing Canada (Director of Investigation and Research) v. NutraSweet Co. , 32 C.P.R. (3d) 1 (Comp. Trib.): “Once the universe of existing competitors is delineated, it is necessary to assess the extent to which these rivals constrain any market power that the dominant firm(s) might otherwise possess. The Bureau considers control to be synonymous with market power, where the market power is the ability to profitably set prices above competitive levels for a considerable period of time. Market power may also be defined with respect to a material, non-transitory reduction in other factors of competition such as service, quality, variety, advertising and innovation. … The Bureau recognizes that it is difficult to measure market power directly; consequently, a number of indicators – both qualitative and quantitative – of market power are normally relied upon. These indicators include, but are not necessarily limited to, the following: market share, including share stability and distribution; barriers to entry, including the conduct allegedly engaged in by the dominant firm(s); and other market characteristics, including extent of technological change, extent of excess capacity, and customer or supplier countervailing power.”
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.”
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.”
Better Business Bureau: “Firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process.”
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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