Although Canada’s Competition Bureau (Bureau) has been focused the past year on enhancing its advocacy and competition compliance roles, the Bureau has also demonstrated its continued willingness to use formal investigative powers and litigation to effect compliance with the Competition Act, particularly in relation to the misleading advertising and abuse of dominance provisions.
This month, the Bureau reached a settlement with one of the parties in the premium text messaging case following an agreement to provide over C$5-million in refunds to current and former customers.
A lawsuit also filed this month against two rental car companies highlights the Bureau’s continued focus on price advertising as does its recent inquiry into two department stores for the making of ordinary selling price claims. None of the allegations against these companies have been proven in court.
Furthermore, following two recent high-profile mergers, the Bureau continued to investigate the merging parties for conduct allegedly in contravention of the reviewable practices provisions of the Competition Act. The follow-on investigations show that companies engaged in a merger review could face potential risks under other provisions of the Competition Act where their conduct excludes rivals or harms customers or suppliers.
The Bureau also signed a Memorandum of Understanding (MOU) with the Ontario Ministry of Government and Consumer Services (Ontario Ministry) demonstrating the Bureau’s continued prioritization of collaboration with domestic agencies.
Additional detail regarding these matters is provided below, including the first proceeding related to Canada’s Anti-Spam Legislation (CASL) under the Competition Act.
- Premium Text Messaging – Unauthorized Charges: On March 16, 2015, the Bureau announced a settlement with a wireless carrier after it agreed to refund customers approximately C$5-million for charges incurred as a result of premium text messaging services which the Bureau alleged customers did not intend to purchase. The settlement requires that the carrier refrain from imposing charges on a customer’s wireless account unless those charges have been approved through an affirmative act or statement made directly to the company from the customer. It also requires that the carrier maintain its refund policy for two years, enhance its corporate compliance program and undertake a customer awareness campaign to educate customers about the steps customers can take to avoid unwanted charges. The case against the other defendants in the premium text messaging is ongoing.
- Rental Cars – Non-Optional Fee Disclosure: On March 11, 2015, the Commissioner of Competition filed a Notice of Application against Budget and Avis for charging fees that the Commissioner alleges were not properly disclosed. The Commissioner is seeking C$30-million in administrative monetary penalties (AMPs) as well as restitution for customers. The application relates to certain fees that are presented as mandatory government fees, but are passed along voluntarily by the companies to their customers as part of the cost of the rental service. The Commissioner filed a similar claim against Leon’s and The Brick in 2013 for allegedly failing to disclose certain fees in its price advertising. That case remains ongoing and allegations of wrongdoing have not been proven in court.
- Mattresses – Ordinary Selling Price Claims: The Bureau is investigating two department stores for the making of ordinary selling price claims in relation to the supply of mattresses. The investigation will consider whether the companies have sold sufficient volumes of mattresses or offered those products for a sufficient period of time, at the regular price, before running a sale.
- Follow-on Abuse of Dominance Investigations: Following two recent high-profile mergers, the Bureau continued to investigate the merging parties for conduct in contravention of the reviewable practices provisions of the Competition Act. An agreement was reached this month with one of the companies, whereby the company undertook to amend certain warranty terms to address the Bureau’s concerns. In the other matter, the Bureau commenced an investigation into certain pricing strategies and programs and has sought production orders for information from 12 of the company’s suppliers. That investigation remains ongoing.
- MOU with Ontario Ministry: Under the MOU signed on March 10, 2015, the Ontario Ministry and the Bureau will cooperate to assist one another in the effective delivery of their respective consumer protection and competition mandates. Among other areas of cooperation, the MOU allows the agencies to notify each other and share information with respect to matters of mutual interest (subject to the confidentiality constraints of each agency), participate in knowledge transfer sessions and coordinate communications on consumer protection and competition matters.
Given the Bureau’s recent enforcement activities regarding misleading advertising, advertisers should also be mindful of CASL when advertising through e-mail campaigns. The Budget/Avis case is the Bureau’s first proceeding under the new amendments to the Competition Act that came into force with CASL for false or misleading representations relating to an electronic message.
The new amendments are notable for two reasons. First, information in the subject line of an electronic message may be an offence or reviewable practice under the Competition Act even if the false and misleading aspect of that information is not material and/or the entire electronic message considered together (e.g., the subject line and the body of the email) is accurate. Second, and even more significantly, the private right of action coming into force on July 1, 2017 under CASL applies not just to contraventions of CASL itself, but also to reviewable practices under the Competition Act relating to false and misleading representations in electronic messages. With this private right of action, not only can someone affected by an alleged reviewable practice seek damages for any actual losses or damages suffered, but they can also receive statutory damages of C$200 per breach to a maximum of C$1-million per day.
Misleading advertising will likely now be another area of focus for class action litigators and accordingly, advertisers should ensure that electronic messages in particular are not false or misleading.