On October 15, 2009, the Federal Court of Appeal allowed the Commissioner of Competition's appeal of a Competition Tribunal decision involving misleading representations by a Vancouver career-consulting business.
The principal issue in the case, The Commissioner of Competition v. Premier Career Management Group Corp. and Minto Roy, 2009 FCA 295, was "whether . representations to certain individuals, though made individually and in private, were nevertheless made 'to the public'" within the meaning of the Competition Act. The Court also addressed the issue of whether or not the representations in question were false and misleading and, if yes, whether they were false and misleading in a material respect.
In its decision, the Tribunal had identified three types of representations made by the respondents to prospective customers: a "screening representation," whereby clients were told during an initial meeting that only qualified applicants would be invited for a second meeting; a "contacts representation," whereby clients were told, for example, "that the respondents had a wide network of personal contacts with leaders and business executives at companies that were hiring" and access to a "hidden job market"; and a "90 Day/Good Job Representation" to the effect that clients "would very likely find good jobs within ninety days, should they engage [the respondents'] services." The Tribunal had found that each of these representations was false and misleading, but that only the "contacts representation" and the "90 Day/Good Job Representation" were false and misleading in a material respect (there being no evidence that the screening representation had "motivated" clients to purchase the respondents' services).
The Tribunal ultimately dismissed the Commissioner's application on the basis that the representations, which were made in the course of private meetings between the respondents and prospective clients, were not made "to the public" within the meaning of the Competition Act. The Federal Court of Appeal disagreed. Noting that the respondents had admitted in oral argument that the representations would have been made "to the public" had they been made to a group of prospective clients together, Sexton J.A., speaking for the Court, said he "[could not] accept that because the representations were made to individuals of the public in a private place, this means that they were not made to the public." While the Tribunal had stressed that "personal matters" were discussed during some of the meetings, Sexton J.A. noted that such matters would have been raised by clients, not the respondents, and that "[a]t issue in this case are representations made by the respondents to the customers" (emphasis in original). In determining whether a representation was made to the public, the important question, according to the Court, is "to whom were the representations made, and under what circumstances?" In this case, the Court answered that question as follows: "the representations were made to a significant section of the public who had been invited by advertising to attend at the offices of the respondent."
One of the interesting features of the Competition Act's misleading-advertising provisions is the fact of their presence in Canada's competition legislation, the purpose of which, as set out in section 1.1 of the Competition Act, the Court described as "not to foster competition for its own sake, but rather to promote derivative economic objectives, such as efficiency, global participation, high quality products, and competitive prices." While, unlike other provisions of the Competition Act, harm to competition is not listed as an element of the misleading-advertising provisions, the Court noted that "it is a truism that the Act always seeks to prevent harm to competition" and, that being the case, it is "presumed that whenever the elements of paragraph 74.01(1)(a) are made out, there is per se harm to competition." The Court therefore accepted the Commissioner's submission that, "when a firm feeds misinformation to potential consumers, the proper functioning of the market is necessarily harmed, and the Act is rightly engaged, given its stated goals." Thus, while focused on the consumer, the real purpose of the Competition Act's misleading advertising provisions is not to protect consumers, but rather to contribute to the "ultimate objective" of "maintaining the proper functioning of the market in order to preserve product choice and quality."
For these and other reasons, the Court allowed the Commissioner's appeal, and remitted the matter back to the Tribunal for an appropriate order to be made under section 74.1 in accordance with Court's findings.