The following is a synopsis of a presentation given at BLG’s Marketing Law News Flashes Conference held on February 28, 2013:
2012 was characterised by a high level of activity with respect to the interpretation and enforcement of the misleading advertising provisions of the Federal Competition Act. As a result of the Supreme Court of Canada’s 2012 decision in Richard v. Time, misleading advertising claims brought under the Competition Actwill almost certainly be judged from the perspective of the “credulous and inexperienced consumer” and will be based on the general impression first created by the text and layout of an advertisement. As described by the Supreme Court, the credulous and inexperienced consumer is not particularly experienced at detecting the falsehoods or subtleties found in commercial representations, has less than average intelligence, scepticism and curiosity and is not reasonably prudent, nor diligent, nor well-informed. The Commissioner of Competition has expressed the view that Richard v. Time is directly relevant to the application of the Competition Act, with the result that companies looking to avoid a run-in with the Competition Bureau should exercise additional caution when preparing marketing material. This is especially the case given the Competition Bureau’s aggressive approach to enforcement; an approach that continues to include the pursuit of administrative monetary penalties of up to $10 million. The risk of these penalties is real – in 2012 the Commissioner successfully obtained the highest administrative monetary penalty awarded to date in a contested misleading advertising proceeding (being an award of over $9 million against both defendant companies and individuals). The Competition Bureau has communicated its intent to continue in 2013 to actively monitor and enforce the misleading advertising provisions of the Competition Act, with particular focus on e-commerce, as well as performance and pricing claims.