On August 11, 2011 the Competition Bureau issued a Merger Remedies Study, summarizing its review of the effectiveness of merger remedies obtained in 23 cases under the merger provisions of the Competition Act between 1995 and 2005.
The results of the Bureau’s study are to be used to revise its Information Bulletin on Merger Remedies in Canada first issued in 2006 (see: Information Bulletin on Merger Remedies in Canada) and its consent agreement outline template.
135 interviews were conducted with merged entities (20), purchasers (28), customers (60) and third parties (27). According to the Bureau, its remedies study “has been of significant value in confirming that many of the Bureau’s existing policies and procedures relating to the design and implementation of merger remedies are effective and in identifying areas where such policies and procedures could be more effective.”
In a very interesting refusal to supply case currently before the federal Competition Tribunal the Used Car Dealers Association of Ontario (“UCDA”) is attempting to obtain leave from the Tribunal for the re-supply by the Insurance Bureau of Canada (“IBC”) of data used in one of the UCDA’s products (Auto Check – which provides used vehicle accident history searches to its dealer members).
According to the UCDA, the data previously supplied by the IBC is a “critical input” for its Auto Check product and is, as such, seeking a Tribunal order under the refusal to deal and price maintenance provisions of the Competition Act for the IBC to recommence supply (both sections 75 and 76 of the Act, refusal to deal and price maintenance, allow the Tribunal to order suppliers to re-supply where the elements of those sections are met).
Not surprisingly, the IBC argues that the UCDA’s leave application should be dismissed, including based on the 1997 Warner case. In Warner, which involved a rather rare application by the Competition Bureau under section 75 (refusal to deal) in the context of Warner Music’s refusal to grant music copyright licenses to its competitor BMG Canada for its competing Canadian mail order record club business, the Tribunal accepted Warner’s arguments that section 75 did not apply in a refusal to license context.
In particular, the Tribunal held that licenses are not a “product” for the purposes of section 75, that there cannot be an “ample supply” of legal rights over intellectual property which are “exclusive by their very nature” and that there cannot be “usual trade terms” for licenses when they may be withheld – all requirements to establish refusal to deal under the Act.
While the Tribunal went on in Warner to concede that a copyright license could be a “product” for under other sections of the Act, it relied largely on principles of statutory interpretation to decide that section 75 was not intended to encompass refusals to license intellectual property.
Since it was decided, Warner has generally been viewed as an obstacle to parties seeking to invoke section 75 in a refusal to license context. To decide otherwise has been seen by some as potentially leading to a “compulsory licensing regime” under the Competition Act. Others, however, have criticized Warner as having been wrongly decided.
We are pleased to provide this global competition law update from our friends at the leading Singapore firm Rajah & Tann (Rajah & Tann).
ASIA – PACIFIC
Asia continues to be at the forefront of competition law enforcement, with competition authorities reviewing merger and co-operation applications as well as investigating into abuses of dominance and cartels. For example, the commissions in Singapore and Australia reviewed cooperation agreements between airlines. The commissions of Korea and Japan, on the other hand, have placed heavy fines for cartel activity by oil refiners and the abuse of dominance by an internet company respectively. Antitrust enforcement in Asia has been on the rise as more and more countries implement their competition laws and introduce laws for civil actions.
Cases
Cartel Participants In the Construction Industry Ordered To Pay 756 Million Yen
On 15 April 2011, the Japan Fair Trade Commission (‘JFTC’) found that 30 companies associated with the engineering works in Enzan district, and 21 companies associated with the engineering works in Isawa district, respectively, were in violation of Article 3 (Prohibition of unreasonable restraint of trade) of the Antimonopoly Act. The companies agreed to decide, between themselves, the successful bidder (called the ‘designated successful bidder’) for various construction projects. Other companies would then support the designated successful bidder by filing bids that were not competitive and unlikely to get selected, a classic approach to bid-rigging. The JFTC conducted a ‘spot investigation’ and issued cease and desist orders for this bid-rigging exercise. The JFTC also imposed a surcharge payment of 756.82 million Yen on the bid-rigging entities in total.
Manufacturers And Distributors Of Air Separation Gases Ordered To Pay 14,104,850,000 Yen
On 26 May 2011, the JFTC found that four companies (Taiyo Nippon Sanso Corporation, Air Liquide Japan Ltd, Air Water Inc and Iwatani Corporation) had engaged in price-fixing activities in violation of Article 3 (prohibition of unreasonable restraint of trade) of the Antimonopoly Act. The four companies had reached an agreement to raise the selling price of specified air separation gases, by approximately 10% from their original prices, from at least January 2008. The JFTC issued a cease and desist order and imposed a surcharge payment in the amount of 14,104,850,000 yen. It is important to note that the JFTC also imposed a 50% increase on the total fine for those companies that had previously received a surcharge payment order in the last 10 years.
DeNA Co Ltd Held To Have Abused Its Dominance
On 9 June 2011, the JFTC announced its decision that DeNA Co Ltd (‘DeNA’) violated Article 19 of the Antimonopoly Act by forcing social game developers to not contract with GREE, a competing enterprise active on the market for social gaming platforms. DeNA is also an internet company that provides various services, including social media and social gaming platforms, and regularly contracts with game developers for placing their games on mobile platforms. In the event the developers did provide games through GREE, DeNA penalised them by disconnecting the website links for their games on DeNA’s own mobile systems. The JFTC issued a cease and desist order which required DeNA to adopt a resolution at its Board of Directors level to confirm that the conduct had been brought to an end and also required it to notify GREE of the remedial measures taken. With respect to the game developers, the order requires DeNA to refrain from engaging in such conduct with respect to any other game developers.
Surcharges Of KRW 434.8 Billion Imposed Against Four Refiners For Cartel Activity On ‘Gas Stations Allocation’
On May 26, 2011, the Korea Fair Trade Commission (‘KFTC’) imposed a total surcharge of KRW 434.8 billon against four oil refiners (SK Co, GS Caltex Corp, Hundai Oilbank Corp, and S-Oil Corp) for using the so-called ‘Original Distributor Control System’. Under this market sharing arrangement, the cartel participants agreed to not compete for gas stations that distribute their products. Consequently, a refiner could not supply oil to its rivals’ distributors without the consent of the relevant rival refiner. This was done to ensure a stable market share for all players. In addition to the fine, the KFTC also referred three of the players (SK, GS Caltex and Hundai Oilbank) for prosecution for criminal enforcement.
Australia Federal Court Elaborates On Essential Facilities Doctrine
On 4 May 2011, the Federal Court of Australia denied Fortescue Metals Group access to two railway lines owned by mining giant Rio Tinto for the transport of iron ore. In applying the Trade Practices Act (‘TPA’), the court held that the test for private economic feasibility was not whether it was ‘economically efficient for society as a whole for another facility to be developed’, but whether it was ‘economically feasible for a participant in the market place to develop an alternative facility’. The court explained that the TPA was meant to strike a balance between the promotion of competition and economic efficiency, and the ‘legitimate interests’ of incumbent owners of facilities. Thus, if there is any player in the market place who may feasibly develop the alternative facility, it will be inconsequential that it is more economically efficient for society to have the incumbent’s facility declared accessible. In this case, the Court found that there was no essential facility involved and, therefore, protected the incumbent’s legitimate interests. In sum, the Court held that it would favour the development of an alternative facility.
ACCC Revokes CBH’s Exclusive Dealing Notification
On 29 June 2011, the Australian Competition and Consumer Commission (‘ACCC’) issued a notice revoking Co-operative Bulk Handling Limited’s (CBH’s) exclusive dealing notification. CBH’s notified conduct allowed it to be the monopoly supplier of transport services for moving grain from up-country storage facilities to ports in Western Australia. CBH was leveraging its substantial market power in up-country storage to insulate itself from any competition in the supply of grain transport services. The ACCC notification permitted CBH to, so far, require Western Australian grain growers and marketers who use its ‘up-country’ storage facilities to also use its transport services to deliver grain to port for export. The revocation, which will take effect from 1 May 2012, will allow sufficient time for CBH and other industry participants to benefit from the upcoming competition in grain transport services and to adjust and put appropriate systems and processes in place.
Wool Scouring Companies’ Merger Authorised, But Stayed Pending Challenge
On 9 June 2011, the NZ Commerce Commission authorised an application by Cavalier Wool Holdings Limited (‘Cavalier Wool’) to acquire all of the wool scouring assets of New Zealand Wool Services International Limited (‘WSI’). As Cavalier Wool and WSI were the only remaining operators supplying wool scouring services in New Zealand, the purchase and rationalisation would leave Cavalier Wool as the nation’s sole wool scourer. The Commission determined that although the merger would substantially lessen competition, it would result in a benefit to the public. The benefits considered by the Commission included the reductions in production cost resulting from the merger. However, a major carpet-maker, Godfrey Hirst, has challenged the merger on grounds that the merger would remove a strong competitor from the market and that neither existing nor potential competitors would sufficiently constrain the merged entity. The challenge will be heard in the High Court of New Zealand on 22 August 2011. The sale of WSI to Cavalier Wool has been stayed temporarily pending outcome to the challenge.
Alliance Agreement Between Singapore Airlines Limited And Virgin Airlines Pty Ltd Notified To The Competition Commission Of Singapore
On 22 June 2011, Singapore Airlines Limited (‘SIA’) and Virgin Australia Airlines Pty Ltd (‘Virgin Australia’) applied to the Competition Commission of Singapore for a decision to clear their Proposed Alliance (‘PA’). Under this PA, SIA and Virgin Australia will codeshare international and domestic flights, provide frequent-flyer and lounge benefits to each other’s customers, conduct joint sales, marketing and distribution and co-ordinate flight schedules between Singapore and Australia. SIA and Virgin Australia have argued that the PA does not breach the Competition Act as it will increase competition for air passenger services from Singapore and various Australian, Pacific and trans-Tasman destinations. The proposed alliance is intended to be implemented in 2011, and its purpose is to ensure mutual benefit to the parties involved, as well as to benefit passengers. It should be noted that an application for this Proposed Alliance Agreement has also been filed in Australia and is awaiting decision from both regulators
Competition Commission Of India (‘CCI’) Fines The National Stock Exchange Rs 555 Million For Abusing Its Dominance
On 23 June 2011, the CCI handed down a 170 page decision that imposed a record fine of Rupees 555 million on India’s National Stock Exchange. This is the first decision by the CCI that relates to abuse of dominance. According to the CCI decision, NSE had abused its dominant position in various ways including predatory pricing and exclusionary conduct. The crux of the decision was based on the cross subsidisation of the NSE’s currency derivatives segment by revenues generated in other segments where NSE enjoyed virtual monopoly. NSE was found to have engaged in a ‘zero price policy’ for its currency derivatives segment, making it nearly impossible for smaller newer entrants to effectively compete. As part of the cease and desist order, NSE is required to stop this conduct immediately and to maintain separate accounts for each segment to avoid similar cross-subsidisation in the future. The monetary penalty imposed (Rupees 555 million) was 5% of the total turnover of NSE, averaged over the last three years, and was not limited to the turnover in the relevant market.
Legislation / Regulation
Recent Draft Regulation For Civil Antitrust Cases By China’s Supreme People’s Court (‘SPC’)
On 25 April 2011, the SPC issued draft regulations titled ‘Relevant Issues Concerning the Application of Law in the Trial of Civil Monopoly Dispute Cases’ (‘Draft Regulation’) to deal with civil actions for breaches of the Anti-Monopoly Law (‘AML’). The Draft Regulation provides that the SPC shall designate various Intermediate People’s Courts, which are located in provincial capitals and other designated cities, as having first instance jurisdiction for civil anti-monopoly disputes. The Draft Regulations consider all civil disputes, including counterclaims, which rely upon the AML, as civil anti-monopoly disputes. Under these Draft Regulations the plaintiff need not wait for a formal finding of violation of the AML before initiating a civil claim and may file his civil claim with the People’s Court as soon as the cause of action arose. The Draft Regulation also provides guidance on collection of evidence and the burden of proof that will apply in such civil actions.
Policies Concerning Procedures Of Review Of Business Combination
In response to the need for greater swiftness and transparency in the review of business combination procedures, the JFTC has introduced the Policies Concerning Procedures of Review of Business Combination (‘the Policies’). These Policies came into effect on 1 July 2011 and require a corporation, which plans to engage in a business combination, to consult with the JFTC prior to notification. Second, the Policies also provide detailed procedures that need to be undertaken once the combination has been notified. One of the changes is that merging parties are prohibited from implementing their merger until the expiration of a 30-days waiting period from date of notification. These new Policies only apply to combinations notified after they come into force. Any consultations requested from the JFTC before these new Policies come into force will continue to be reviewed under the old policies.
Australian Price Signalling Bill Passed
On 7 July 2011, following amendments brought about by negotiation with the opposition party, the Competition and Consumer Amendment Bill (No. 1) 2011 (‘Bill’) was passed by the House of Representatives. It will now be reviewed by the Australian Senate before it can be implemented. The Bill amends the Competition and Consumer Act 2010 (‘CC Act’) and addresses anti-competitive price signalling and information disclosures. The Bill, as it now stands, prohibits disclosure of pricing information between competitors regardless of whether such disclosures are made in private or in public. It also prohibits disclosures of non-price information if they are made to substantially lessening competition. Though the Bill currently only applies to the Banking Sector, its scope may be expanded to other industries in the future.
On July 19th, the Competition Bureau announced that a Montreal company, Les Entreprises Promécanic Ltée, has pleaded guilty to three charges of bid-rigging and was fined $425,000 for its alleged role in rigging bids in relation to residential highrise building ventilation contracts in Montreal.
According to the Bureau, the Montreal company admitted that it was involved in coordinating with competitors to pre-determine the outcome of bids. Interestingly, this case also included an internal compensation arrangement between the parties to ensure that contracts were awarded to the pre-arranged company.
In making the announcement, the Commissioner Melanie Aitken said:
“Bid-rigging deprives Canadians of the benefits of a competitive market, including lower prices and product choice. … The Competition Bureau will continue to vigorously seek prosecution against those who thwart the forces of competition.”
The Bureau also reiterated that criminal cartels and bid-rigging remain enforcement priorities, stating that “attacking cartels, including bid-rigging offences, is one of the Bureau’s top priorities.”
In Canada, bid-rigging is a criminal offence under section 47 of the federal Competition Act, under which it is an offence to enter into an agreement, in response to a call or request for bids or tenders, to not submit a bid or tender, withdraw a bid or tender already made or submit bids or tenders that are arrived at by agreement.
Like criminal conspiracy agreements under section 45 of the Act, bid-rigging is a per se criminal offence, in that it is not necessary to establish any adverse market effects (though all elements of the offence must be proven on the criminal burden of proof – i.e., beyond a reasonable doubt).
Parties violating the bid-rigging provisions of the Act are liable to unlimited fines (i.e., a fine in the discretion of the court), imprisonment for up to 14 years, or both. It is also common for the Bureau to seek prohibition orders in bid-rigging cases, as the Bureau also did in this case, to prohibit the continuation of an offence.
Private parties that have suffered loss or damage as a result of a breach of the criminal provisions of the Act, including the bid-rigging offences under section 47, may also commence private civil actions.
For the complete Bureau news release see:
Guilty Plea and $425,000 Fine for Bid-rigging in Montreal
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On July 7, 2011, the Competition Bureau filed an Amended Notice of Application in its abuse of dominance case against The Toronto Real Estate Board (“TREB”).
The Bureau’s Amended Notice of Application follows TREB’s issuance of a proposed policy and rule amendments to allow its broker members to operate “virtual office websites” (“VOWs”) (secure, password-protected websites operated by real estate brokers allowing customers to perform their own MLS searches over the Internet).
The Bureau first challenged TREB in May (see: Commissioner of Competition and The Toronto Real Estate Board – Notice of Application and Competition Bureau Sues Canada’s Largest Real Estate Board for Denying Services Over the Internet).
The Bureau has taken the position that TREB and its members control the market for residential real estate brokerage services in the Greater Toronto Area, that TREB has engaged in a practice of anti-competitive acts (board rules and policies preventing members from operating VOWs) and that its rules have resulted in a substantial lessening of competition in the residential real estate brokerage services market in the GTA (in particular, blocking real estate firms from offering innovative Internet-based services, including VOWs).
The essence of the Bureau’s abuse of dominance argument was (and remains) that TREB has used its control of its MLS system (each local real estate board in Canada operates its own MLS system) to pass rules that discipline and exclude real estate firms that want to offer VOWs.
In its amended Application, the Bureau reinforces its earlier abuse of dominance arguments against TREB by arguing that TREB’s new VOW rules are a further anti-competitive act that would continue to discriminate against brokers wishing to offer VOWs (conduct must be predatory, disciplinary or exclusionary toward a competitor to constitute an anti-competitive act under section 79 of the Act).
In particular, the Bureau argues that by imposing limitations on the types of information available on VOWs that are not in place for traditional brokerages, including historical sales information, which can currently be provided by traditional means (e.g., hand, e-mail or fax), TREB is discriminating against brokers that want to operate VOWs.
In addition to proving that TREB engaged in a practice of anti-competitive acts, the Bureau will also need to show that as a result of TREB’s conduct, competition has been (or will likely be) prevented or substantially lessened, which involves considering whether a target’s market position will likely be maintained or enhanced as a result of its actions.
In this regard, the Bureau makes a number of new arguments including that TREB’s VOW rules would continue to require customers to contact a member broker personally for key information including historical sales data and that TREB’s VOW rules are “vague and ambiguous” so would “impede the entry of innovative real estate models”.
In essence, the Bureau argues that TREB’s proposed VOW rules would operate as a further barrier to entry for real estate brokerages wishing to operate VOWs using TREB’s MLS data, reinforcing the market position of traditional brokerage firms.
Interesting aspects of this case include whether the Bureau will be able to prove that TREB is dominant in the market for residential real estate services in the GTA (given that TREB, as a trade association, does not actually provide residential real estate brokerage services), whether TREB’s MLS system is indeed the essential facility the Bureau argues it is (the Bureau’s case turns in large part on the argument that TREB’s MLS system is an essential input into the provision of real estate services in the GTA, though there has not yet been a decided essential facilities case in Canada) and whether TREB’s rules constitute an anti-competitive act for section 79 of the Act (given the limited case law to date under the modern abuse of dominance provisions, and no direct precedent for the Bureau’s position on anti-competitive acts).
For a copy of the Bureau’s amended Notice of Application see:
Commissioner of Competition and The Toronto Real Estate Board – Amended Notice of Application
For a copy of the Bureau’s Notice of Application see:
Commissioner of Competition and The Toronto Real Estate Board – Notice of Application
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On June 27th, the Competition Bureau announced that would seek to block a proposed joint venture between Air Canada and United Continental which, according to the Bureau, would “monopolize ten important Canada/United States routes, and substantially reduce competition on nine additional routes.”
In making the announcement, the Bureau said:
“The proposed joint venture is effectively a merger between Air Canada and United Continental on all of their Canadian and US operations. It would allow the parties to jointly set prices, capacity and schedules. If allowed to proceed, it will result in:
a monopoly on ten transborder routes;
substantially reduced competition on an additional nine transborder routes; and
significantly higher prices.
In addition to challenging the joint venture, the Commissioner is challenging three existing “coordination agreements” between Air Canada and United Continental. These agreements allow Air Canada and United Continental to coordinate key aspects of competition including, but not limited to, joint pricing and scheduling, as well as revenue sharing. Through these existing agreements, the companies currently have the power to charge passengers inflated fares. Moreover, if these anti-competitive provisions are further implemented, with or without the joint venture, Canadians will pay even more for less choice and higher fares.”
The Bureau has now filed its application in this case (see: Competition Tribunal).
The Bureau’s application, which is only the second contested merger since 2005, has a number of interesting aspects. These include:
Parties’ press releases. The Bureau became aware of the proposed Air Canada/United JV from press releases issued by the parties. In the past, it was thought rather uncommon for the Bureau to become aware of mergers through the media (i.e., as opposed to parties notifying transactions to the Bureau under the pre-merger notification provisions of the Act). This may signal an increasing effort by the Bureau to challenge mergers discovered through media sweeps, either on the basis that they were notifiable or non-notifiable transactions that nevertheless potentially raise substantive competition issues (the Bureau has jurisdiction under the Act to challenge any “merger” as broadly defined in the Act, whether or not it is notifiable, i.e., exceeds the Act’s pre-notification thresholds).
Joint venture challenged as a merger. This case is also interesting as a challenge of a JV as a merger. While joint ventures can in theory be reviewed under four provisions of the Act (as a criminal conspiracy, under the civil agreements provision, as a merger or under the abuse of dominance provisions), challenges of JVs in Canada on merger grounds are relatively rare. Having said that, the definition of “merger” under the Act is very broad, encompassing not only conventional asset and share acquisitions, but also the acquisition of a “significant interest” in a business. While the Bureau has taken the position in its Merger Enforcement Guidelines (MEGs) that acquiring a “significant interest” could include where an acquirer obtained an “ability to materially influence the economic behavior of the business” (such as through control of pricing, purchasing, distribution and marketing decisions), what JVs might in reality be considered a merger has generally been more the subject of speculation than certainty for merging parties and their counsel. In this regard, the Bureau takes the position in its recently filed Application that the proposed merger will, if allowed to proceed, lead to the parties “acquiring or establishing … a significant interest” in each other’s operations, and in particular the ability to make decisions on “all aspects of competitive behavior” that would be “indistinguishable … from common ownership.” As such, if this application proceeds, it may shed needed light on what types of de facto acquisitions may trigger the merger provisions of the Act.
First challenge under section 90.1 (civil agreements provision). The case is also the first challenge by the Bureau under the civil agreements provision (section 90.1) of the Act, which came into force in March, 2010 as part of Canada’s new two-track conspiracy regime. Under section 90.1, the Bureau may make applications to the Competition Tribunal for Tribunal orders where an agreement between actual or potential competitors prevents or lessens competition substantially in one or more markets (or is likely to do so). While it is generally thought that this new civil provision has many parallels to the existing merger provisions of the Act, including the required competitive effects test, evaluative factors for market impacts and an efficiencies defence, this will be the first case to potentially test the meaning and boundaries of this new section. If the case proceeds before the Tribunal, it may clarify key elements of section 90.1 including the meaning of “agreement” and “competitors”, the evaluation of the required competitive effects test and how, if at all, a review under section 90.1 differs in substance from merger review under the merger provisions of the Act.
Attempt to block the transaction. Finally, the case is somewhat noteworthy in that the Bureau is seeking to block the Air Canada/United JV altogether. In Canada, unlike some other jurisdictions, it is relatively unusual for regulators to seek to block a transaction altogether, rather than to negotiate a remedy.
For the Bureau’s news release see:
Competition Bureau Seeks to Block Joint Venture between Air Canada and United Continental
For the Bureau’s Backgrounder see:
For the Bureau’s Tribunal Application see:
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On June 27th, the Competition Bureau issued updated draft Merger Enforcement Guidelines for public comment.
The Bureau’s Merger Enforcement Guidelines, which govern the Bureau’s approach to substantive merger review, have been revised by the Bureau following national roundtable consultations in 2010 and 2011.
For the full news release see:
Competition Bureau Issues Draft Revised Merger Enforcement Guidelines for Comment
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On June 28th, the Competition Bureau announced that Bell Canada has agreed to stop making allegedly misleading claims relating to the prices for its services and to pay an administrative monetary penalty of $10 million.
In making the announcement, the Bureau said:
“The Bureau determined that, since December 2007, Bell has charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless. The advertised prices were not in fact available, as additional mandatory fees, such as those related to TouchTone, modem rental and digital television services, were hidden from consumers in fine-print disclaimers.
…
As an example, Bell’s Web site had been advertising a bundle for home phone, Internet and television services starting as low as $69.90 per month. However, it was impossible for customers to buy the bundle for the advertised price. In fact, the lowest possible price, including the mandatory fees, was $80.27—approximately 15% higher than advertised. Customers purchasing any of the services individually were also faced with the same misleading information, as additional fees were excluded from those advertised prices as well.”
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 “general” 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).
The maximum penalties under the civil misleading advertising provisions of the Act were also dramatically increased in 2009, as a result of sweeping amendments to the Competition Act (up to $10 million for corporations). Parties can, however, and in a number of past cases have agreed to, settle misleading advertising cases for amounts exceeding the statutory maximum fines provided under the Act – for example, to avoid potential criminal liability (as misleading advertising can be reviewed by the Bureau as either a civil matter or criminal offence).
In this case, the Bureau challenged the accuracy of price claims made by Bell, as well as hidden fees and fine-print disclaimers. According to the Bureau, its concerns were based primarily on allegedly literally false claims (i.e., services that were not available at all at the advertised prices, including for Bell’s home phone, Internet, satellite TV and wireless services).
Advertising and marketing claims can violate the misleading advertising provisions of the Act where they are either literally false or merely misleading (e.g., true claims can also violate the Act in some cases where they fail to disclose essential information).
Not surprisingly, courts and the Bureau have, as in this case, for the most part raised concerns with either literally false or misleading claims that relate to price, performance or other essential product aspects, which are the most likely to be found to be “material” for the purposes of the misleading advertising provisions of the Act (to constitute misleading advertising under the Act a claim must be shown to be not only false or misleading but also “material” – i.e., likely to cause an average consumer to purchase the product).
This most recent case involving Bell follows other recent enforcement efforts by the Bureau against high profile companies including its $10 million misleading advertising claim against Rogers (see: Competition Bureau Takes Action Against Rogers Over Misleading Advertising).
Misleading advertising and other deceptive marketing also continues to be an enforcement priority for the Bureau. For example, in a recent speech, the Commissioner of Competition Melanie Aitken said:
“We are also on the watch for misleading and fraudulent representations in areas that hit close to home for Canadians. Our goal is to address and redress such unlawful conduct and, at the same time, to build confidence in the marketplace and demonstrate the relevance of the Bureau’s work to Canadians in their everyday lives.”
See: Remarks by Melanie Aitken, Commissioner of Competition to the CBA Spring Conference: Focus on Civil.
For the complete Bureau news release in the Bell case see:
For a copy of the consent agreement filed with the Competition Tribunal see:
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Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
