Archive for the 'Marketing' Category
By William Wu (Centre for Innovation Law and Policy)
Google has announced its new privacy policy, which will take effect on March 1. Google is doing away with the over 60 different existing privacy policies for its various products and replacing them with one single shorter and simpler privacy policy.
Those who are most affected by this change are people with Google accounts. Under the new privacy policy, if a user is signed in to the Google account, Google will be able to collect and combine user information from across its various products and services. For example, Google will be able to collect and analyze your search terms on the Google search engine and suggest related videos when you next go onto YouTube. This will enable Google to form fuller and more comprehensive user profiles. As Google emphasized in its announcement, this change will allow it “to create one beautifully simple and intuitive experience across Google.”
I saw this rather fine note recently by Davies Ward Phillips & Vineberg LLP (Anita Banicevic, Erika Douglas and David Stolow). We are reprinting it with permission.
Businesses operating in Canada should be aware of a recent trend towards greater regulation and enforcement action surrounding pricing representations where additional costs are not clearly disclosed up front. Last week, the Minister of State for Transport announced that the Canada Transportation Agency is proceeding with regulations to require Canadian air carriers to include all fees, charges and taxes in advertised prices. This trend towards requiring up-front disclosure of all fees and charges in any advertised pricing is consistent with the enforcement initiatives recently undertaken by the Competition Bureau (the “Bureau”) as well as the approach taken in recent class actions involving pricing representations brought in Québec and Ontario. The Bureau’s aggressive enforcement approach combined with an increase in class actions concerning pricing representations suggests it may be prudent for businesses to consider disclosing all fees imposed by the seller and applicable to all customers up front in any advertising.
The Vancouver Sun, Montreal Gazette, Huffington Post and others have reported that Rogers has launched constitutional arguments in response to allegations by the federal Competition Bureau that it misled consumers with performance claims in relation to its Chatr cell phone brand.
In particular, according to media reports, Rogers is arguing that the civil “performance claim” provision of the Competition Act is contrary to the freedom of expression rights under the Charter and that the penalties for civil misleading advertising are unconstitutional.
In a story reported earlier today in the Toronto Star, the Star reported an announcement by Interactive Advertising Bureau of Canada (“IAB”) Vice-President Sam Parent that online marketers will soon introduce self-regulation for behavioral advertising (see: Advertisers to Police Themselves When Targeting Online Users).
The past year has been a busy and eventful one for Canadian advertising and marketing law. Recent developments since 2010 span most key areas including the application of the “general misleading advertising” provisions of the Competition Act, the use of disclaimers, social media, e-mail marketing, performance claims and telemarketing.
At the same time, new legislation has been introduced that will impact how companies market in Canada, most notably the new federal anti-spam legislation (Bill C-28), and new cross-border enforcement initiatives were announced including a new international do-not-call enforcement network co-chaired by the CRTC.
These developments mean that it remains important for companies to effectively and efficiently navigate through Canadian advertising and marketing rules. Some of the more interesting and noteworthy developments in 2010 and 2011 are discussed below.
Toronto – January 24, 2012
The Canadian Marketing Association will be holding a one-day seminar on January 24, 2012 on non-for-profit marketing: “Marketing Online Successfully”.
From the Canadian Marketing Association:
“If you’re a not-for-profit marketer who’s looking for a quick way to become more comfortable with and proficient at Internet direct marketing – this seminar is for you!
With the CMA’s Intensive One-Day Internet Marketing Seminar for Not-For-Profit marketers, you’ll save time, skip the aggravation and quickly move up your Internet marketing learning curve as you join a select group of Canadian not-for-profit marketers for a practical, interactive, hands-on session on Internet direct marketing.
Content areas will include: recap of online Canadians’ habits and usage; discussion about mobile, video and other upcoming trends; review of results tracking methodologies; in-depth look at direct response Internet media and pay per click search engine marketing as a basis for building SUCCESSFUL acquisition and advocacy based direct response campaigns; and real life examples and case studies of not for profit marketers who are doing Internet marketing right.
The seminar is led by Jay Aber, President of The Aber Group Inc., a leading Internet-based direct marketing firm whose clients include Plan Canada, WWF-Canada, Heart & Stroke, Habitat for Humanity, American Express, Sun Life & Stratford Shakespeare Festival among many others. In addition to his other accomplishments, Jay chaired the Digital Marketing Council for the CMA for six years and wrote and taught the inaugural CMA’s e-Marketing (now Digital Marketing) course.”
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For more information see:
Canadian Marketing Association – Not-For-Profit Seminar: Marketing Online Successfully
The Canadian Institute will be holding an Advertising and Marketing Law Conference on Wednesday, January 25-26, 2012 at the Four Seasons Hotel, Toronto, Ontario.
From the Canadian Institute:
“We have obtained the highest quality speakers to present you with cutting edge analysis and practical guidance on the latest issues in this constantly evolving area of law. In fact, leaders in this field have been relying on our conference year after year to hone their skills, so join us at The Canadian Institute’s 18th Annual Advertising & Marketing Law program and be equipped with the tools necessary to be completely confident in your practice. Keynote Address: Melanie Aitken, Commissioner of Competition, Competition Bureau Canada Recent Enforcement Initiatives and Future Directions of the Competition Bureau. In the past year we have already seen, and will continue to see significant developments. You will learn about them all through our stimulating and interactive mix of sessions, including:
The latest need to know enforcement trends and priorities of the Competition Bureau
An in-depth analysis of the Anti-Spam legislation – in anticipation of it being proclaimed into force
The noteworthy differences between our Anti-Spam legislation and the U.S. Can-Spam Act
A practical session on drafting disclaimers on all forms of media
The most up-to-date tips on running contests
Risk mitigation for all emerging and recently revived marketing & advertising techniques
The latest issues and trends from the U.S. and how they may affect you”
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For more information see:
The Canadian Institute – Advertising and Marketing Law Conference
We are pleased to announce the launch of our new Canadian advertising and marketing law blog: Canadian Advertising & Marketing Law.
Our new blog will include news and developments in Canadian advertising and marketing law, key resources and links and overviews of advertising law, the new anti-spam legislation (Bill C-28), comparative advertising, promotional contest law, misleading advertising, packaging and labeling laws and telemarketing.
The federal Canadian Radio-television and Telecommunications Commission (CRTC) announced today that, together with the Australian Communications and Media Authority (ACMA), it has assembled 12 international enforcement agencies to form an International Do Not Call Network.
For the CRTC’s complete news release see: CRTC announces creation of international network to facilitate cooperation on telemarketing enforcement.
The members of this newly created Do Not Call Network are: Australia, Canada, France, Hong Kong, Ireland, Israel, Korea, Mexico, New Zealand, Spain, the UK and the United States.
Under the new international Do Not Call Network, the CRTC and ACMA will act as the Network’s inaugural co-chairs, with the U.S. Federal Trade Commission hosting the secretariat.
In making the announcement, the CRTC said:
“Enforcement agencies face a common challenge in tracking down individuals and companies who violate telemarketing rules, but operate outside national borders,” said Konrad von Finckenstein, Q.C., Chairman of the CRTC. ‘A global problem calls for global solutions. Having a network that fosters collaboration will contribute to more effective cross-border enforcement activities and help reduce unwanted telephone calls to Canadians from foreign telemarketers.’
The International Do Not Call Network will facilitate cooperation between agencies that enforce telemarketing rules in their respective countries. Members will meet annually to establish best practices and encourage the development of robust telemarketing laws around the globe. The network will also work to harmonize telemarketing policies between countries to improve enforcement activities across different jurisdictions.”
On December 15, 2010 Canada’s new anti-spam legislation received Royal Assent, which will, when it comes into force, be one of the strictest anti-spam regimes in the world:
An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act (the “Anti-spam Act”).
Earlier this Fall, consultations on two sets of draft Regulations concluded and so the new law may come into effect later this Fall or in the Spring of 2012 (see coming into force information below).
On October 3, 2011, the Competition Bureau announced that a deceptive telemarketer has been sentenced to two years in prison in relation to a deceptive telemarketing scheme involving the sale of business directories (see: Deceptive Telemarketer Receives a 2-year Prison Sentence).
This is the most recently announced telemarketing case by the Bureau, which shows that the criminal deceptive telemarketing and misleading advertising provisions of the Competition Act remain top enforcement priorities the Bureau. The case is also a recent illustration that, while relatively uncommon for competition law offences in Canada, the Bureau will not hesitate to seek prison sentences for what in its view are clearly intentional or fraudulent marketing law offences.
The Bureau has brought and sought penalties in a number of deceptive telemarketing cases in the past several years, many of which have involved the alleged cross-border deceptive marketing of business directories (see for example: Criminal Charges Laid in a Competition Bureau Telemarketing Case, Five Alberta Individuals Sentenced in Deceptive Telemarketing Scheme, Competition Bureau Sues to Shut Down Business Directory Scam, Competition Bureau Warns Against Deceptive Business Directories and Directors of Infotel Charged With Deceptive Telemarketing).
On September 7, 2011, the federal Competition Bureau announced that it had reached a settlement with Nivea’s Canadian distributor, Beiersdorf Canada Inc., relating to allegedly false or misleading performance claims in its advertising.
In particular, the Bureau took issue with claims that suggested that the use of skin cream could lead to weight loss. Under the terms of the consent agreement negotiated with the Bureau, Beiersdorf has agreed to pay an “administrative monetary penalty” or “AMP” of Cdn. $300,000 (“AMPs” are essentially civil fines), refund Canadian customers and remove its products from Canadian shelves.
In making its announcement, the Bureau said:
“A Bureau investigation determined that Beiersdorf made a number of deceptive claims about its “My Silhouette” product. The misleading representations were displayed on the package and on Nivea’s Web site. The representations stated that:
use of the product could lead to a “reduction of up to 3 centimetres on targeted body parts, such as thighs, hips, waist and stomach”;
My Silhouette “contains a highly effective natural Bio-Slim Complex for a slimmer looking and more defined silhouette”; and
My Silhouette “combines high performance active ingredients for a dual effect of slimming & reshaping.”
Beiersdorf’s representations also created the misleading impression that use of the product could make the skin more toned and elastic.
““Beiersdorf misled consumers by claiming a person could slim down by simply applying a skin cream,”” said Melanie Aitken, Commissioner of Competition. ““Unfortunately, consumers who purchased My Silhouette learned the hard way that there was no such easy fix.””
Under the terms of the consent agreement registered with the Competition Tribunal today, Beiersdorf is also required to publish a corrective notice on Nivea’s Canadian Web site and in major Canadian newspapers, and to pay $80,000 to cover costs associated with the Bureau’s investigation.”
The U.S. Federal Trade Commission has announced that it has filed a $450 million internet fraud civil suit against an Alberta online operator.
According to the FTC, Jesse Willms, an online operator with ten marketing companies, has:
“… raked in more than $450 million from consumers in the United States, Canada, the United Kingdom, Australia, and New Zealand by luring them into ‘free’ or ‘risk-free’ offers, and then charging them for products and services they did not want or agree to purchase. … The defendants used the lure of a ‘free’ offer to open an illegal pipeline to consumers’ credit card and bank accounts.” See: FTC Charges Online Marketers with Scamming Consumers out of Hundreds of Millions of Dollars with “Free” Trial Offers.
The FTC’s complaint alleges, among other things, that Willms and the companies he controls:
- Used deceptive tactics in offering “free trials” for various online products, including acai berry weight-loss pills, teeth whiteners and health supplements.
- Obtained consumers’ credit or debit card account numbers, by enticing them with “bogus ‘free’ or ‘risk-free’ trial offers that supposedly required only small shipping and handling fees, and also promised phony ‘bonus’ offers just for signing up” (and were charged for trial and bonus products plus recurring monthly fees).
- Made false claims about the total cost of products, recurring charges and the availability of refunds.
- Made false weight loss and cancer cure claims in relation to products.
- Provided merchant banks with false or misleading information to acquire and maintain credit and debit card processing services from the banks in light of “mounting chargeback rates and consumer complaints.”
- Concealed important terms and conditions relating to product sales.
According to the FTC, it worked closely with Canadian law enforcement officials, including the federal Competition Bureau, the Royal Canadian Mounted Police, the Alberta Partnership Against Cross Border Fraud and the Edmonton Better Business Bureau.
In Canada, the federal Competition Act contains both civil and criminal provisions dealing with false or misleading representations and also governs a variety of specific forms of marketing conduct including “ordinary selling price” claims, selling above an advertised price, deceptive telemarketing, promotional contests and performance claims.
Generally speaking, the civil misleading advertising provisions of the Act prohibit representations to the public, for the purpose of promoting a product or business interest, that are false or misleading in a material respect. The criminal provisions, which are substantially similar, prohibit false or misleading representations that are made intentionally (i.e., knowingly or recklessly).
Some of the types of claims that have been of concern for Canadian courts and the Competition Bureau in the past include literally false claims, omitting key information relating to the price or terms of sale of products and false claims regarding the performance of products (product performance claims must be supported by “adequate and proper” tests before any claim is made).
As with the FTC claims, the Competition Bureau has also pursued companies for inaccurate use of the term “free” in connection with marketing claims (see: False or Misleading Representations and Deceptive Marketing Practices and Misleading Advertising Guidelines) and has also issued specific guidelines setting out its enforcement position for online marketing and advertising (see: Application of the Competition Act to Representations on the Internet).
As a result of amendments to the Act in 2009, it is also not necessary to show that a misleading claim was made to Canadian consumers or was made in a publicly accessible place. These changes were recently made to address perceived gaps in the Act and to specifically address misleading claims made in Canada targeting foreign consumers (as is alleged in this FTC case, albeit from a U.S. enforcement perspective) and claims originating in places without direct consumer contact (e.g., in the context of online marketing operations).
For copies of the FTC’s complaint and motion for injunction see:
Complaint for Permanent Injunction and Other Equitable Relief
Motion for Preliminary Injunction and Memorandum of Points and Authorities in Support
For Jessie Willms’ news release in reply to the FTC’s allegations see:
For more information about Canadian misleading advertising law see:
The Competition Bureau announced earlier today that it has commenced legal proceedings against Rogers to stop what, according to the Bureau, constitutes misleading advertising in connection with Rogers’ Chatr discount cell phone service.
In making the announcement, the Bureau said:
“Rogers’ Canada-wide advertising campaign claims that consumers subscribing to Rogers’ Chatr brand would experience “fewer dropped calls than new wireless carriers” and have “no worries about dropped calls”.
The Bureau’s investigation, which involved an extensive review of technical data, obtained from a number of sources, led the Bureau to conclude that there is no discernible difference in dropped call rates between Rogers/Chatr and new entrants.
“We take misleading advertising very seriously,” said Melanie Aitken, Commissioner of Competition. “Consumers deserve accurate information when making purchasing decisions and need to have confidence they are not being misled by false advertising campaigns.”
The Government of Canada opened up the domestic cell phone market in 2008 with a spectrum auction that made additional frequencies available to new wireless service providers.”
The legal proceedings begun by the Bureau are being brought in the Ontario Superior Court of Justice. In its claim, the Bureau is seeking an order that Rogers: (i) stop its advertising campaign, (ii) pay an administrative monetary penalty of $10 million, (iii) pay restitution to affected customers and (iv) issue a corrective notice.
The Bureau’s announcement follows a series of competition law related disputes in the telecom sector that have included an abuse of dominance complaint by Mobilicity against Rogers apparently alleging that Rogers is abusing its dominant position in the use of “fighting” or “flanking” brands (see: Mobilicity Files Competition Bureau Complaint Against Rogers) and recent novel proceedings in which the Supreme Court of British Columbia struck out Novus Entertainment’s claims against Shaw Cablesystems based on the abuse of dominance provisions of the Competition Act (and in particular predatory pricing related claims) (see: British Columbia Supreme Court Rejects Novus’ Section 79 Predatory Pricing Claim Against Shaw).
The proceedings commenced against Rogers appear to be based on complaints made by Wind Mobile about Rogers advertising claims for its Chatr brand. For example, the Globe and Mail reported that Wind Mobile had filed a complaint with the Bureau and quoted Wind Mobile’s Chairman Anthony Lacavera as saying that “there is absolutely no solid or objective technical basis for Chatr’s claim to have more network reliability and fewer dropped calls than Wind.” See: Wind Mobile Files Competition Bureau Complaint Against Rogers.
In this regard, the Commissioner of Competition, Melanie Aitken, stated:
“The spectrum auction was intended to enhance competition in the wireless sector,” Ms. Aitken said. “New entrants attempting to gain a foothold in the market should not be discredited by misleading claims made by their competitors.”
The Bureau’s recent announcement, with allegations against Rogers that have not been proven, is a sober reminder of the new penalties for misleading advertising under the Competition Act, which were enacted as part of sweeping amendments to the Act in 2009. As a result of the amendments, significantly increased penalties for civil false or misleading representations were introduced including “administrative monetary penalties” (essentially civil fines) of up to $750,000 for individuals ($1 million for subsequent orders) and $10 million for corporations ($15 million for subsequent orders), which are more than ten times the previous penalties.
Misleading Advertising Law in Canada
The federal Competition Act contains both criminal and civil provisions that prohibit false or misleading representations. The general civil misleading advertising provision of the Act prohibits representations to the public, to promote a product or any business interest, that are false or misleading in a material respect. For a representation to be false or misleading under the civil misleading advertising provision, it must be established on the civil burden of proof (i.e., on a balance of probabilities) that: (i) a representation has been made, (ii) to the public, (iii) to promote a product (including services) or any business interest, (iv) the representation is false or misleading and (v) that it is false or misleading in a “material” respect. The criminal misleading advertising provision of the Act is substantially similar, except that in order to establish criminal misleading advertising, it must also be established on the criminal burden of proof (i.e., beyond a reasonable doubt) that a representation was intentionally made (i.e., was made “knowingly or recklessly”).
Performance Claims under the Competition Act
In addition to the “general misleading advertising” provisions, the Competition Act also prohibits false performance claims, and in particular prohibits representations to the public about the “performance, efficacy or length of life of a product” that is not based on an “adequate and proper test.” While performance claims themselves are not prohibited, any testing or verification of a performance claim must be performed before the claim is made and the onus is on the person making the representation to prove that the claim is based on an adequate and proper test. As such, while performance claims can be a legitimate and effective way to distinguish goods or services from competitors, it is important that adequate and proper testing is performed (or appropriate statistics or support are obtained) before performance claims are made. (the federal Competition Tribunal has also recently held that there a non-exhaustive list of factors are relevant in considering whether testing is “adequate and proper”).
Promotional contests can be a fun, entertaining and commercially effective way to market an existing or new product. They are also common and straightforward right? Well, not quite.
One recent online contest that we saw looked great at first blush, but on closer review revealed a number of key legal defects. While in this case the contest rules were literally less than a half page in length, there were a number of issues that could result in the organizers facing competition, contract or regulatory law liability.
The following are ten things we saw in the contest that were either unlawful or could have been improved to reduce potential liability for the contest organizers.
Number of prizes
The Competition Act sets out certain required disclosure for promotional contests. This includes “adequate and fair disclosure” of the number and approximate value of the prizes. The online contest we recently saw disclosed neither.
Odds of winning
The Competition Act also requires the disclosure of “any fact within the knowledge of the person that affects materially the chance of winning” (i.e., requires that the odds of winning be disclosed). The online contest didn’t disclose any odds of winning and, in fact, was unclear as to how exactly an entrant could win the contest (which also raises misleading advertising issues).
Regional allocation of prizes
Where there is a regional allocation of prizes (e.g., one prize per province, etc.), this must also be disclosed. While the online contest we saw said that the contest was open to residents of Canada and the United States, it was not clear whether or not there was any regional allocation of prizes.
Open to Quebec residents?
Another important element for contest organizers to consider is whether a contest is to be open to all of Canada or Canada excluding Quebec. The reason this is important is because Quebec has distinct and standalone regulatory requirements for promotional contests that can, if adequately complied with raise the cost of designing a contest and, if not complied with, potentially lead to liability. The online contest we recently saw was unclear whether Quebec contest requirements had been complied with (despite the fact that the contest stated that it was open to residents of “Canada” and the United States). As a practical matter, contest organizers that wish to avoid the additional regulatory expense of complying with Quebec’s requirements typically exclude Quebec (e.g., “Contest is open to Canadian residents excluding Quebec”).
Open to minors?
The online contest we recently saw also did not address minors. Contest organizers will often specify that a contest is only open to contestants that are of age of majority. This is because, as contests have been held to be contracts, minors cannot contract (and may have the right, depending on the jurisdiction, to avoid a contract if entered). While in some cases it may not matter much whether a legally binding contract is achieved with a contestant, in others ensuring that there is an enforceable contract may be very important (e.g., in the case of a significant prize or a contest that could lead to significant liability for the organizer if the contest goes wrong – a water drinking contest where a contestant died comes to mind).
Intellectual property issues
It is also sometimes important to give some consideration to intellectual property issues (i.e., copyright and trade-mark issues), particularly if another company’s trade-marks, images or products may be mentioned or awarded as prizes. In the contest we recently saw online, Apple iPads were to be given away as prizes and images of iPads were included in the promotional materials (though it was not clear if, for example, the Apple product images were being reproduced with permission or if consent from Apple had been obtained).
Delay awarding prizes
The online contest we recently saw also stated that prizes would be awarded within 60 days. While this may not necessarily be a problem, the Competition Act requires that distribution of prizes in a promotional contest not be “unduly delayed”. As such, it is prudent for contest organizers to ensure that prizes are awarded according to the contest’s rules and awarded promptly. In this regard, the 60 day time-frame for award of prizes made us a little uneasy.
Open to U.S. residents
The online contest also stated that it was “open to residents of Canada and the United States”. This is a risky proposition, unless the contest has been vetted in the various U.S. states. While in Canada, the regulation of contests is generally at the federal level (governed for the most part, though not exclusively, by the Competition Act and Criminal Code), both in Canada and the U.S. other local laws apply. As such, prudent contest organizers will frequently either have a contest vetted in all the jurisdictions in which it is open, or exclude those in which it has not (e.g., “Contest is only open to residents of Canada, excluding Quebec”).
No long rules
Finally, the online contest we recently saw indicated that the “short rules” on the bottom of the promotional materials were the rules, the whole rules and nothing but the rules. This is also a potential source of risk, given that contest organizers commonly include short rules (for marketing and point-of-purchase materials), long rules (to attempt to cover off as many potential liability and contractual issues as possible) and winner release forms. In this particular case, shorter is not necessarily better.
For more about Canadian contest law see: Promotional Contest Law in Canada.
Our Services
We practice in all areas of Canadian competition law including mergers, criminal conspiracies and competitor collaborations (e.g., joint ventures and strategic alliances), Competition Bureau investigations, misleading advertising and competition law compliance. We also regularly counsel marketing clients on the preparation of promotional contests to comply with Canadian laws and reduce the potential pitfalls and liability that can result from a poorly designed contest.
On August 31st, the Bureau announced that a U.S. paint products company had agreed to stop engaging in allegedly misleading made in Canada and environmental claims. According to the Bureau, the claims on its painting kits raised issues under the false or misleading representations and deceptive marketing practices provisions of the Competition Act, as well as potential issues under the Consumer Packaging and Labelling Act. In particular, the company claimed that its product was composed of biodegradable material. The company also displayed maple leaves on product labels that, according to the Bureau, created a false impression that the product was manufactured in Canada. Under the terms of the settlement with the Bureau, the company has agreed to instruct its Canadian retailer to remove the product from Canadian store shelves, replace it with new kits that do not make the allegedly false environmental or “made in Canada” claims and remove the allegedly false claims from products sold in Canada. The company was also able, evidently, to negotiate confidentiality with the Bureau, which did not disclose the company’s name in its news release.
The false or misleading representations provisions of the Competition Act (generally known as the “misleading advertising provisions”) prohibit representations to the public to promote a product or any business interest that are false or misleading in a material respect. In addition to the general misleading advertising provisions, the Act also contains other criminal and civil provisions prohibiting or regulating specific types of marketing practices including deceptive telemarketing, deceptive prize notices, double ticketing, multi-level marketing, pyramid selling schemes, representations that are not based on an adequate and proper test, bait and switch selling and promotional contests. While a variety of resolutions are possible where the misleading advertising provisions of the Competition Act have been violated, the potential penalties can be severe and include fines of up to $750,000 (for individuals) and $10 million (for corporations).
For more see the Bureau’s News Release: Paint Products Company Agrees to End Alleged Misleading Environmental and Made in Canada Claims and CB in Brief: CB in Brief: The Competition Bureau’s Month in Review, August 2010. For more on Canadian advertising and marketing law, see: Advertising and Marketing Law.
CANADIAN COMPETITION LAW LINKS
For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages.
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What is “Misleading Advertising”?
The federal Competition Act contains criminal and civil provisions that prohibit false or misleading representations and deceptive marketing practices. These are frequently referred to as the “misleading advertising” provisions of the Act.
The general civil misleading advertising provision of the Act (subparagraph 74.01(1)(a)) prohibits any person from making a representation to the public, to promote a product or any business interest, that is false or misleading in a material respect.
Is misleading advertising a criminal offence or a civil matter?
Misleading advertising may also be pursued by the Competition Bureau as a civil or criminal matter. In this regard, the Bureau has issued an Information Bulletin (Misleading Representations and Deceptive Marketing Practices – Choice of Criminal or Civil Track under the Competition Act) that sets out when it is likely to proceed on the criminal as opposed to the civil track for misleading representations and deceptive marketing practices.
In general, the Bureau’s Information Bulletin states that in most instances the civil track will be followed unless certain criteria are satisfied as follows: (i) there is clear and compelling evidence suggesting that the accused knowingly or recklessly made a false or misleading representation to the public and (ii) a criminal prosecution would be in the public interest.
In making the public interest determination, the Bureau sets out a number of factors that include: (i) whether there was substantial harm to consumers that could not adequately be dealt with by civil remedies, (ii) whether the deceptive practices targeted vulnerable groups, (iii) whether timely attempts were made to remedy the adverse effects of the conduct and (iv) any evidence of similar conduct in the past. The Bureau also sets out several mitigating factors: (i) whether a prosecution or conviction would be disproportionately harsh or oppressive and (ii) the existence of an effective compliance program.
What other marketing practices are regulated by the Competition Act?
In addition to the “general” misleading advertising provisions, the Act also contains a number of other criminal and civil provisions prohibiting and regulating specific types of marketing practices.
These include provisions relating to deceptive telemarketing (section 52.1), deceptive prize notices (section 53), double ticketing (section 54), multi-level marketing (section 55), pyramid selling schemes (section 55.1), representations that are not based on adequate and proper tests (subparagraph 74.01(1)(b)), false or misleading ordinary selling price representations (subsections 74.01(2), (3)), misleading or unauthorized use of tests and testimonials (section 74.02), bait and switch selling (section 74.04), the sale of a product above its advertised price (section 74.05) and promotional contests (section 74.06).
What has to be proven for misleading advertising?
For a representation to be false or misleading under subparagraph 74.01(1)(a) (the civil misleading advertising section), it must be established on the civil burden of proof (i.e., balance of probabilities) that: (i) a representation has been made, (ii) to the public, (iii) to promote a product or business interest, (iv) the representation is false or misleading and (v) the representation is false or misleading in a “material” respect.
The criminal misleading advertising provision of the Act (subsection 52(1)) is substantially the same, except that in order to establish criminal misleading advertising, it must also be proven that a representation was made “knowingly or recklessly” (i.e., subjective intent) and the burden of proof is the criminal standard (i.e., beyond a reasonable doubt).
What is a representation?
The first element of misleading advertising is that a “representation” (i.e., advertising claim) must be made. This element is typically easily met and is broader than mere advertising. A representation may encompass printed, oral, broadcast and visual representations or claims. The Bureau’s position is also that all representations, regardless of form, are subject to the Act.
It is also worth noting that online representations fall well within the scope of “representation” and the Bureau has issued enforcement guidelines addressing misleading advertising in the online environment (Application of the Competition Act to Representations on the Internet). As a practical matter, the Bureau also periodically conducts online “sweeps” of Internet advertising as part of its misleading advertising and deceptive marketing enforcement efforts.
What does “to the public” mean?
The second element of misleading advertising is that a representation must be made to the “public”. Canadian courts have, with a few exceptions, had little difficulty in finding that advertising and marketing claims have been made “to the public” and have interpreted the phrase broadly.
A claim may be made to a single person and be considered to have been made to the public. In addition, as a result of recent amendments, a representation does not need to be made in a place where the public has access (e.g., telemarketing) or to the Canadian public (and so cross-border marketing to non-Canadians can be caught). The Act also contains provisions that deem certain types of conduct to be a representation to the public.
What does “promote a product or business interest” mean?
The third element of misleading advertising is that a representation must be made to promote either a product, including professional or other services, or any business interest, which may be merely a subsidiary or indirect intention of a representation.
A “Business interest” must be the business interest of the person making the representation, but has been interpreted broadly and may include any business interest and not necessarily an interest with the persons who might be misled by the representation.
What does “false or misleading” mean?
The fourth element for misleading advertising is that a representation must be literally false or misleading. In this regard, both the literal meaning and the general impression conveyed by the representation are relevant.
Also, in determining whether a representation is false or misleading, the entire context of the representation, including illustrations, photographs and the association of different words and phrases, must be considered.
What does “material” mean?
Finally, to contravene both the civil and criminal misleading advertising provisions, a representation must be false or misleading in a “material respect.” For the materiality requirement, is not necessary to show that anyone has actually been deceived or misled and the monetary amount involved is irrelevant.
The relevant question, though Canadian courts have been inconsistent in articulating the standard, has in many cases been held to be whether an “average consumer” (or equivalent) interested in using the relevant product would be influenced in deciding whether or not to purchase the product being offered (or to otherwise alter their conduct).
As to what may be considered “material”, many Canadian courts have found that false or misleading representations in relation to price and essential or fundamental terms are material. In addition, the omission of important information, conditions or limitations can also be considered to be material.
Does a misleading claim need to be made intentionally?
To establish criminal misleading advertising, it must also be shown, in addition to all of the other necessary elements for misleading advertising, that a representation was made intentionally (i.e., “knowingly or recklessly”).
Are performance claims prohibited?
No. However, in addition to the “general misleading advertising” provisions of the Act, paragraph 74.01(1)(b) prohibits any person from making any representation to the public about the performance, efficacy or length of life of a product that is not based on an “adequate and proper test”.
The testing or verification of any performance claims must be made before a claim is made and the onus is on the person making the representation to prove that the performance claim is based on an adequate and proper test.
While performance claims can be a legitimate means to distinguish goods or services from competitors, it is important that adequate and proper testing is performed (or appropriate statistics or support are obtained) before a claim is made.
The federal Competition Tribunal has recently held that there is a non-exhaustive list of factors to consider whether a test is “adequate and proper” and that the testing does not need to be 100% reliable or the best scientific testing that could have been performed (i.e., the testing does not need to meet a test of certainty).
Is comparative advertising prohibited?
No. Comparative advertising can lead to price and other competition by allowing prospective clients to compare prices and service offerings.
While comparative advertising is not itself prohibited under the Act, and while accurate and truthful comparisons can be highly pro-competitive, comparative advertising can in some instances raise issues (e.g., where unfounded performance claims are made).
As such, when making comparative advertising claims, it is prudent to ensure that, as is the case with general advertising, claims be accurate, that any important information or conditions are clearly disclosed and, if performance claims form part of the comparative advertising, that the claims are substantiated before the claims are made.
What are the penalties for misleading advertising?
The potential penalties for contravening the criminal or civil misleading advertising provisions can be severe. Under the criminal misleading advertising provision (section 52) the potential penalties are, on indictment, a fine in the discretion of the court, imprisonment for up to fourteen years, or both. On summary conviction, the penalties are a fine of up to $200,000, imprisonment for up to one year, or both.
Under the general civil misleading advertising provision, penalties include judicial orders to: (i) cease the conduct, (ii) publish a corrective notice, and/or (iii) pay an “administrative monetary penalty” (essentially a civil fine) on the first occurrence of up to $750,000 for individuals ($1 million for each subsequent order) or $10 million for corporations ($15 million for each subsequent order) or (iv) make restitution to compensate consumers that have purchased a product.
In reality, the vast majority of misleading advertising matters are resolved by way of negotiated settlement, either by way of a consent agreement, in the case of civil reviewable matters, or a prohibition order, in the case of criminal matters. In some cases, a misleading advertising matter may also be resolved voluntarily without formal proceedings being initiated.
Are private actions possible?
Yes. Private parties may commence civil damages actions for contravention of the criminal provisions of the Act (including section 52 – the criminal misleading advertising provision). The necessary elements to be proved are all of the elements of misleading advertising (under 52 of the Act) and that the conduct has caused actual loss or damage (under section 36 of the Act). Private actions are increasingly common, particularly in the context of performance and comparative advertising claims made by competitors (for example the perennial “telecom wars”).
MISLEADING ADVERTISING LINKS AND RESOURCES
Application of the Competition Act to Representations on the Internet (Enforcement Guidelines)
Bait and Switch Selling (Pamphlet)
Consumer Packaging and Labelling Act
Consumer Rebate Promotions (Enforcement Guidelines)
Deceptive Notices of Winning a Prize (Enforcement Guidelines)
Deceptive Prize Notices (Pamphlet)
Enforcement Guidelines for “Product of Canada” and “Made in Canada” Claims
False or Misleading Representations and Deceptive Marketing Practices (Pamphlet)
Guidance on Labelling Textile Articles Derived From Bamboo (Enforcement Guidelines)
Guide for the Labelling and Advertising of Pet Foods
Guide to the Consumer Packaging and Labelling Act
Guide to the Textile Labelling and Advertising Regulations
Misleading Representations (Pamphlet)
Multi-level Marketing Plans and Schemes of Pyramid Selling (Enforcement Guidelines)
Multi-level Marketing and Pyramid Selling (Pamphlet)
Multi-level Marketing and the Competition Act (Multi-media)
Ordinary Price Claims: Subsections 74.01(2) and 74.01(3) (Enforcement Guidelines)
The Ordinary Selling Provisions of the Competition Act (Bulletin)
Promotional Contests (Pamphlet)
Promotional Contests – Section 74.06 (Enforcement Guidelines)
Telemarketing: Section 52.1 of the Competition Act (Enforcement Guidelines)
Understanding How the Ordinary Selling Provisions of the Competition Act Apply to Your Business
What You Should Know About Telemarketing (Pamphlet)
CANADIAN COMPETITION LAW LINKS
For more information about Canadian competition law or our competition law services visit our: Abuse of Dominance, Advertising and Marketing Law, Bid Rigging, Canadian Competition Law, Canadian Competition Law Compliance, Canadian Competition Law Home, Competition Act Amendments, Competition Bureau Investigations, Competition Law Courses and Conferences, Competition Law Litigation, Competition Law Publications, Competition Law Resources, Competition Law Services, Conferences, Conspiracy and Competitor Collaborations, Conspiracy – FAQs, Global Competition / Antitrust Law Resources, Global Competition Law Updates, Investment Canada Act, Merger Control, Merger Control FAQs, Private Actions, Promotional Contests, Publications, Refusal to Deal, Team, Trade Associations or Trade Association Cases pages.
CONTACT US
We provide a full range of Canadian competition/antitrust law and consulting services to domestic and international clients. Contact Us
RECENT MISLEADING ADVERTISING NEWS
Competition Bureau Confirms Enforcement Approach to New Guidelines on “Made in Canada” and “Product of Canada” Claims
Enforcement Guidelines for “Product of Canada” and “Made in Canada” Claims
Competition Bureau Warns Against Deceptive Business Directories
Deceptive Business Directories Warning
Reitmans Agrees to Correct Misleading Smart Set Promotion
The Competition Bureau announced that Reitmans, one of Canada’s largest clothing retailers, has agreed to correct a misleading promotion by its division Smart Set. According to the Bureau, Smart Set had offered its customers a $25 “Savings Pass” for each $50 spent, with conditions that included an additional minimum purchase requirement of $50 and a limited redemption period. The Bureau stated that neither of these conditions had been disclosed in Smart Set’s in-store signage or on its website, contrary to the general misleading advertising provisions of the Competition Act. Reitmans has agreed to waive its additional purchase requirement to redeem a Savings Pass and extend the expiry date for its promotion. This recent case emphasizes that the general misleading provisions of the Competition Act prohibit not only literally false advertising claims, but can also potentially catch claims where the “general impression” of a representation is misleading (e.g., where material conditions, limitations or exclusions are not clearly disclosed). For more see: Reitmans Agrees to Correct Misleading Smart Set Promotion.
Infotel Directors Charged With Deceptive Telemarketing – April 12, 2010
Infotel Alleged Deceptive Telemarketing Case
DataCom Marketing Receives Record $15 Million Fine
Record $15 Million Fine for Business Directory Scam
OVERVIEW OF MISLEADING ADVERTISING IN CANADA
The federal Competition Act (the “Act”) contains both civil and criminal provisions dealing with false or misleading representations (commonly referred to generally as “misleading advertising”). In addition, the Act also governs a number of specific forms of marketing conduct including “ordinary selling price” claims (claims made in relation to sales), performance claims, selling above an advertised price, deceptive telemarketing and promotional contests.
False or Misleading Representations
As the Act contains both criminal and civil misleading representations provisions, the Competition Bureau (the “Bureau”) may pursue misleading representations on either a civil or criminal track. While in most instances the Bureau will proceed civilly, it may commence an investigation or inquiry on the criminal track in some cases – for example, where there is evidence that an accused has engaged in intentional or fraudulent conduct.
The civil misleading representations provisions prohibit representations to the public, for the purpose of promoting a product or business interest, that are false or misleading in a material respect. The criminal provisions, which are substantially similar, prohibit false or misleading representations that are made intentionally (i.e., knowingly or recklessly).
It is worth noting that a representation to a single person may be caught, both the literal meaning as well as the “general impression” of a claim are relevant in determining whether a representation is false or misleading (i.e., a representation that is literally true may, nevertheless, be false or misleading if the “general impression” of the representation is false or misleading) and that it is not necessary to show that any person has actually been deceived or misled as a result of the claim.
The relevant test to determine whether a representation is false or misleading is an objective test, which considers whether consumers are likely to be misled by the representation (or otherwise alter their conduct).
In addition, it is not necessary to show that a representation was made to persons in Canada or was made in a publicly accessible place (i.e., companies in Canada targeting foreign consumers with misleading advertising can, as a result of recent amendments, now be potentially exposed to liability as well as companies making claims in places not accessible to the public – for example, through catalogue or direct sales).
Promotional Contests
Promotional contests in Canada are primarily governed by the Act and the federal Criminal Code (the “Code”). In addition, Quebec has separate legislation that applies to promotional contests (the Act respecting lotteries, publicity contests and amusement machines).
Given that the improper operation of a promotional contest can lead to civil and/or criminal liability under Canadian federal legislation (e.g., a Manitoba company recently paid more than $150,000 for making claims in relation to real estate investments that allegedly violated the promotional contest provisions of the Act), it is prudent to have promotional contests reviewed for compliance with the Act and the Code.
Competition Act
The Act for the most part requires that certain disclosure be made when conducting “any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit …” Some of the key requirements for promotional contests under the Act include: (i) disclosing the number and approximate value of prizes, (ii) disclosing the area (or areas) to which they relate and (iii) any fact that may materially affect the odds of winning. In addition, the Act provides that the distribution of prizes cannot be unduly delayed.
As a result of the disclosure requirements set out in the Act, most contest organizers provide a short version of a contest’s terms at the point of sale, with a full version of rules available on request, on the organizer’s website, etc. Point of sale disclosure often includes the number and approximate value of prizes, regional allocation (if any), the skill testing question requirement, information relating to the odds of winning, the closing date for the contest and information relating to the odds of winning.
In addition to specific rules relating to promotional contests, the “general” misleading advertising provisions of the Act also apply to the operation of promotional contests. As such, it is important that the terms of promotional contests not be false or misleading in a material respect.
The potential penalties for contravening the promotional contest or general misleading advertising provisions include a court order to cease the conduct, civil or criminal fines, an order to publish a “corrective notice” and/or imprisonment.
Criminal Code
In addition to the promotional contest provisions in the Act, the Code also governs promotional contests in Canada (sections 206 and 207 of the Code). In particular, the Code makes it a criminal offence to operate an illegal lottery.
While the relevant provisions of the Code are complex and somewhat archaic, in short an illegal lottery consists of: (i) a prize, (ii) chance and (iii) consideration (i.e., something of value provided by contestants as a condition for eligibility to participate in the contest). For this reason, promotional contest organizers often remove either the consideration and/or chance elements (i.e., including a sufficiently skill testing question) in order to remove a contest from the scope of the illegal lottery provisions of the Code. It is worth noting, however, that the determination of what constitutes “consideration” and “chance” can be challenging and complex.
Common Law
It is also worth noting that in addition to the regulatory requirements set out in the Act and Code, promotional contests have been held to be contracts (and, as such, are also governed by the common law of contract in Canada). As such, in addition to ensuring compliance with the Act (including the general misleading advertising provisions), the Code and Quebec legislation, if applicable, it is also important that the terms and conditions of a promotional contest be reviewed with care to avoid potential contractual liability.
Performance Claims
The Act also prohibits performance claims that are not based on an adequate and proper test. In particular, the Act prohibits representations made to the public, in the form of a statement, warranty or guarantee, of the performance, efficacy or length of life of a product that is not based on an adequate and proper test.
Some of the types of performance claims that may be caught by this provision include claims relating to the performance of a product, comparative advertising and claims relating to preferences or perceptions. Importantly, any test that is carried out must be performed before the claim is made and be appropriate for the claim (i.e., support the claims being made and be based on appropriate test methodology).
Sale Above Advertised Price
The Act also prohibits selling (or renting) products at a higher price than advertised. As such, it is the responsibility of sellers to ensure that the prices that are charged correspond to the advertised prices. There are, however, a number of exceptions to this prohibition, including where an advertisement is immediately followed by a correction, sales of products by persons that are not in the business of selling such products (i.e., private sellers) and catalogue advertisements where it is clearly stated that the advertised prices are subject to error, providing the person advertising the product establishes that there has in fact been an error.
Deceptive Telemarketing
The Act makes it a criminal offence to engage in telemarketing for the purpose of making false or misleading representations in promoting the supply of a product. Telemarketing is defined under the Act as “interactive telephone communications.” In addition to prohibiting telemarketers from making false or misleading representations, the Act also prohibits telemarketers from engaging in a number of other activities including: (i) requiring advance payments in order to receive a prize, (ii) offering gifts as inducements to purchase other products (without fairly disclosing the value of gifts), (iii) not providing adequate and fair disclosure of the number and value of prizes and (iv) requiring advance payments for products offered at inflated prices. In addition, telemarketers are required to make up-front disclosure of the identity of the person for whom the communication is being made, the purpose of the call, nature of the product and disclosure of the price and other material terms. In this regard, the Act sets out specific disclosure to be included at the beginning of a call (and other mandatory disclosure to be made at some point during a call).
The enforcement of the telemarketing provisions of the Act has been aimed for the most part at companies engaged in true “scams” not legitimate marketers who may have committed technical violations. Having said that, a number of individuals have been either charged or imprisoned in connection with the marketing of a broad range of products including business directories, office supplies and credit cards.
Ordinary Selling Price Claims
The ordinary selling price (“OSP”) provisions of the Act are intended to prevent inflated “regular” prices in relation to sales. In short, these provisions make it a reviewable practice to mislead consumers about the “ordinary” selling price of a product. Claims relating to the ordinary or regular price of a product cannot be made unless one of two alternative tests is met: (i) a “substantial volume” of the product has been sold at the stated “regular” price (or higher) within a “reasonable period” of time before or after the claim (the “volume test”) or (ii) the product has been offered for sale in good faith at that price (or higher) for a “substantial period of time” before or after the claim (the “time test”).
With respect to the volume test, the Bureau has taken the position that a substantial volume means more than 50% of sales at (or above) the reference price and that a reasonable period of time means twelve months before (or after) the claim (though this period may be shorter depending on the nature of the product). With respect to the time test, the Bureau has taken the position that whether a product has been offered for sale in good faith will depend on a number of factors and that a substantial period of time means more than 50% of the six months before (or after) the claim is made (which may again be shorter depending on the nature of the product). Since the OSP provisions were enacted in 1999, several prominent retailers have paid civil penalties ranging from $100,000 to $1.7 million for contravention of the OSP provisions of the Act.
Misleading Advertising Penalties
The potential penalties for contravening the civil misleading representations provisions include Competition Tribunal or court orders to cease the conduct, publish a corrective notice, pay restitution and/or pay “administrative monetary penalties” (essentially civil fines) of up to $750,000 for individuals ($1 million for subsequent violations) and $10 million for corporations ($15 million for subsequent violations). The potential penalties for contravening the criminal misleading representations provisions (and deceptive marketing provisions) include up to 14 years imprisonment and/or an unlimited fine (i.e., in the discretion of the court).
OUR SERVICES
We practice federal competition law, have provided Canadian competition law advice to clients across Canada and internationally and provide a full range of competition law and foreign investment law services including in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act. Our advertising and marketing law services include advice in relation to:
- The general misleading advertising provisions of the Competition Act.
- “Ordinary selling price” provisions (sales).
- Promotional contests.
- Multi-level marketing plans.
- Pyramid selling.
- Telemarketing.
- Deceptive prize notices.
- Double ticketing & bait and switch advertising.
- Performance claims & comparative advertising.
- Application of the recent Competition Act amendments.
- Consumer packaging and labelling legislation.
CONTACT US
We provide a full range of Canadian competition/antitrust law and consulting services to domestic and international clients. Contact Us.
Overview
Effective advertising is important for most companies and will prove its effectiveness in many ways including building goodwill, instilling consumer trust and, ultimately, resulting in increased sales.
However, when a company markets its products or services in a misleading manner, consumers may be deprived of accurate information which can adversely affect a company’s goodwill and reputation. Misleading advertising can also attract legal liability and sanctions under both federal and provincial laws.
On the federal level, the Competition Act (the “Act”) sets guidelines on advertising and marketing practices including in relation to misleading advertising generally and specific forms of marketing conduct including sales (under the Act’s “ordinary selling price” provisions), deceptive telemarketing and promotional contests.
Misleading Advertising
The Act contains both criminal and civil misleading advertising provisions. As such, the Competition Bureau (the “Bureau”) may pursue misleading advertising either as a civil matter or, alternatively, as a criminal matter.
While in most instances the Bureau will follow the civil track, it may proceed on the criminal track in some cases – for example, where there is clear and compelling evidence that an accused intentionally made false or misleading representations.
The civil misleading advertising provision, under the “deceptive marketing practices” part of the Act, prohibits representations to the public to promote products or business interests that are materially false or misleading. The criminal provision, which is substantially similar, provides that a misleading representation may be criminal if it is made with intent (i.e., made knowingly or recklessly).
It is worth noting that representations made to as few as a single person may be caught, the Act catches both literally false representations as well as claims that may be literally true where the “general impression” of the representation is misleading and that no person needs to be actually deceived or misled.
In addition, it is not necessary to prove that a representation was made to persons in Canada or that a representation was made in a publicly accessible place (i.e., companies in Canada targeting foreign consumers with misleading advertising can be potentially exposed to liability as can companies making claims in places not accessible to the public – e.g., through catalogue or direct sales).
The Act also governs a broad range of specific forms of marketing conduct including “ordinary selling price” claims (e.g., in relation to sales), deceptive telemarketing, contests, performance claims for products and bait-and-switch selling.
The potential penalties for contravening the civil misleading advertising provisions include a Competition Tribunal or court order to cease the conduct, an order to publish a corrective notice, a restitution order, a “freezing order” preventing the disposition of property and/or an order to pay an “administrative monetary penalty” (essentially a civil fine, referred to as an “AMP”) of up to CDN $750,000 for individuals (CDN $1 million for subsequent violations) and CDN $10 million for corporations (CDN $15 million for subsequent violations).
Potential penalties for contravening the criminal misleading advertising provisions (and the deceptive telemarketing and deceptive prize notice provisions) include up to 14 years imprisonment and/or an unlimited fine (i.e., a fine in the discretion of the court).
Ordinary Selling Price Claims
The “ordinary selling price” (“OSP”) provisions of the Act are intended to prevent inflated “regular” prices in relation to sales.
Claims relating to the ordinary or regular price of a product cannot be made unless either a “substantial volume” of the product has been sold at the stated “regular” price (or higher) within a reasonable period before or after the claim (referred to as the “volume test”) or the product has been offered for sale in good faith at that price (or higher) for a “substantial period of time” (referred to as the “time test”).
Since the OSP provisions were enacted in 1999, several well-known retailers have paid penalties ranging from $100,000 to $1.7 million.
Deceptive Telemarketing
The deceptive telemarketing provisions of the Act require, among other things, that telemarketers make certain disclosure at the beginning of calls (e.g., caller identity, purpose of the call, etc.) and that other disclosure be made in a “fair, reasonable and timely manner” (e.g., the product’s price and any material delivery restrictions).
The enforcement of the telemarketing provisions of the Act has been aimed for the most part at companies engaged in true “scams” rather than legitimate marketers who may have committed technical violations.
Individuals have been charged or imprisoned in a number of cases in connection with marketing a broad variety of products including business directories, office supplies and credit cards where the marketing was not in compliance with the Act.
Promotional Contests
Promotional contests are a common and popular way to promote products and may take a variety of forms (e.g., scratch-and-win contests, promotional draws, etc.). Promotional contests are, however, governed by both the Act and the Criminal Code and can raise a number of potential issues (and attract civil and criminal sanctions) if they are not property structured.
OUR MISLEADING ADVERTISING & MARKETING LAW SERVICES
We practice federal competition law, have provided competition law and compliance advice to clients across Canada and internationally and provide a full range of competition law services in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act. Our misleading advertising and marketing law services include advice in relation to:
- The general misleading advertising provisions of the Competition Act.
- “Ordinary selling price” provisions (sales).
- Promotional contests.
- Multi-level marketing plans.
- Pyramid selling.
- Telemarketing.
- Deceptive prize notices.
- Double ticketing & bait and switch advertising.
- Performance claims & comparative advertising.
- Scope of the recent Competition Act amendments.
- Consumer packaging and labeling legislation.
CANADIAN COMPETITION LAW LINKS
For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy, Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal, Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.
CONTACT US
We provide Canadian competition law services to Canadian and international clients. For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.
OUR BOOKS
The Competition Law Guide for Trade Associations in Canada is a practical and concise summary of Canadian competition law as it applies to trade, professional and other associations.
OUR COURSES
Competition Law and REALTORS®: What You Say and Do Matters was designed by ACRE with the assistance of CREA to help Canadian REALTORS® understand and comply with Canadian competition law.
This course is available
to members of Canadian
real estate boards.
For more information see ACRE