On November 19, 2010, the Competition Bureau (the Bureau) launched legal proceedings against Rogers Communications Inc. before the Ontario Superior Court of Justice for misleading advertising under the Competition Act (the Act). The Bureau is seeking the maximum administrative monetary penalty for a corporation, $10 million.
Wind Mobile, a new entrant to the wireless market, filed a formal complaint with the Bureau over claims by Rogers in a nation-wide ad campaign that its discount mobile and text service, Chatr, had fewer dropped calls than the new wireless carriers.
In a public statement in response to its complaint, Wind stated Rogers’ claim of fewer dropped calls is unsubstantiated, and since Wind's network statistics are confidential and inaccessible to Rogers, any meaningful comparison of dropped calls between networks is impossible.
Inherent in Wind’s statement is dissatisfaction with governmental policy. Presently, there is no requirement that mobile providers provide a seamless transition when a call switches networks. In fact, Wind stated that incumbent providers have lobbied against this. The result is that users of new mobile providers experience dropped calls when their calls switch to an incumbent’s network. Wind states this is not reflective of the quality of its network, but of a policy loophole incumbent providers are using to gain a competitive advantage.
After the complaint was filed, the Bureau conducted a two-month investigation, including a review of technical data, and found no discernible difference in dropped call rates between Chatr and the other new discount providers. Proceedings were initiated for misleading advertising, seeking an order that Rogers:
- pay $10 million (which is the maximum administrative penalty available against a corporation),
- halt the advertising campaign at issue, and refrain from similar campaigns,
- pay restitution to affected customers, and
- issue a corrective notice informing the public about the order against them.
Last year the Act was amended, increasing the maximum penalty for a corporation from $250,000 to $10 million and introducing the restitution remedy. This is the first time these provisions will be tested and applied in court.