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Are there any statutory criteria under which a product must be recalled or other corrective action be taken?
There is no single government entity that regulates all products in Canada. However, most consumer products are now subject to a handful of product-specific regulators. Most Canadian regulators have the power to order that a supplier stop selling a product in Canada. In addition, an increasing number of product regulators now have statutory power to order suppliers of products to recall products which they believe pose a risk to health and safety.
The primary regulators are:
- the Canadian Food Inspection Agency (on behalf of the minister of agriculture) – which has the power to order a recall of food products;
- the Consumer Product Safety Directorate of Health Canada (on behalf of the minister of health) – which has the power to order a recall of various consumer products;
- Health Canada (on behalf of the minister of health) – which has the power to order a recall of drugs and medical devices since 2014; and
- Transport Canada (on behalf of the minister of transport) – which has the power to order recalls of motor vehicles and certain motor vehicle components (since 1 March 2018).
What rules and procedures govern notification of the product recall to government authorities and the public?
Generally, the regulators in Canada do not prescribe a specific manner in which a recall must be conducted. Similarly, regulators in Canada do not approve the manner in which a company may conduct a recall. That said, some regulators actively express their views on the manner in which a company should conduct a recall, either in communications to the company in a specific instance, or by publishing general guidelines respecting the manner in which recalls should be conducted.
Repairs, Replacements and Refunds
What rules and procedures govern repairs, replacements and refunds for a defective product?
Section 28(1) of Saskatchewan’s Consumer Protection and Business Practices Act provides that where a manufacturer or seller of a product breaches a statutory warranty or express warranty, and the breach is remediable, the manufacturer or seller is required to repair the product free of charge within a reasonable time.
Generally, there are no statutory rules governing the manner in which a company is to repair defective products, provide replacements or refunds for defective products. However, recent amendments to the Motor Vehicle Safety Act (1 March 2018) have conferred on Transport Canada (on behalf of the Minister of Transport) the power to order a supplier of motor vehicles “to correct a defect or non-compliance in accordance with any terms and conditions specified in the order”.
What penalties apply for non-compliance with the legal provisions governing product recalls?
The failure to comply with an order to conduct a recall is an offence with penal consequences.
Motor Vehicle Safety Act
Every corporation that contravenes the Motor Vehicle Safety Act is guilty of:
- an offence punishable on summary conviction and is liable to a fine of up to C$200,000; or
- an indictable offence and is liable to a fine of up to C$2 million (Section 17(1)).
According to Section 17(2), every individual who contravenes the act is guilty of:
- a summary conviction offence and is liable to a fine of up to C$4,000 and/or up to six months’ imprisonment; or
- an indictable offence and is liable to a fine of up to C$20,000 and/or up to two years’ imprisonment.
Food and Drugs Act
According to Section 31.2 of the Food and Drugs Act, failure to comply with the act, in relation to drugs (but not natural health products, which are subject to less stringent penalty provisions) and medical devices, is an offence punishable:
- on conviction by indictment, a fine of up to C$5 million per day and/or up to two years’ imprisonment;
- on summary conviction by a fine of up to C$250,000 per day and/or up to six months’ imprisonment for a first offence.
The amount of the fine may be increased where the offence involved false or misleading statements to Health Canada or the person knowingly or recklessly caused a serious risk of injury to human health.
Similarly, corporate officers, directors, agents and mandataries who direct, authorise, assent to, participate in or otherwise acquiesce in the commission of an offence relating to drugs or medical devices may themselves be liable and subject to the same punishment as described above, on the conviction of the company (Section 31.6 of the act).
Canadian Food Inspection Agency Act
According to Section 19(2) of the Canadian Food Inspection Agency Act, any person who contravenes a recall order is guilty of an offence and liable on summary conviction to a fine of up to C$50,000 and/or up to six months’ imprisonment.
Canada Consumer Product Safety Act
According to Section 41of the Canada Consumer Product Safety Act, anyone who contravenes a provision of the act (other than Sections 8, 10, 11 or 20) or an order, is guilty of an offence and is liable:
- on indictment to a fine of up to C$5 million and/or up to two years’ imprisonment; or
- on summary conviction for a first offence to a fine of up to C$250,000 and/or up to six months’ imprisonment.
Section 41 further provides that a person who contravenes Sections 8, 10, 11 or 20 or knowingly or recklessly contravenes any provision of the act, its regulations or an order is guilty of an offence and is liable:
- on indictment to a fine in an amount that is at the discretion of the court and/or up to five years’ imprisonment; or
- on summary conviction for a first offence to a fine of up to C$500,000 and/or up to 18 months’ imprisonment.
Section 42 provides that any of a corporation’s directors, officers, agents or mandatories who directed, authorised, assented to, acquiesced in or participated in the commission of the offence is a party to the offence and is liable on conviction to the abovementioned punishments.
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