Competition Bureau’s Position on Advertising During COVID-19 Pandemic
In the context of COVID-19, the Competition Bureau (“Bureau”), in coordination with Health Canada, has indicated its intention to take action against companies that fail to comply with the Competition Act (the “Act”) and, in particular, its provisions relating to misleading advertising and performance claims. The Act includes a wide range of civil and criminal deceptive marketing practices provisions that apply to anyone who is promoting a product, service or business interest. Failing to comply with these provisions can have serious consequences, including financial penalties, restitution and reputational harm – and in some cases criminal fines and jail time.
On March 20, 2020 the Bureau issued a statement confirming its commitment to enforcing the Act against deceptive marking practices relating to COVID-19 and, in particular, false, misleading or unsubstantiated performance claims about a product’s ability to prevent, treat or cure the virus. Subsequently, the Bureau has actively solicited complaints from the public on its website and on social media. Even before the pandemic, the Bureau indicated in its 2019-20 Annual Plan that it intends to “[p]rioritize high-impact and consumer-focused enforcement cases” that “[f]ocus on key areas important to all Canadians including…health and bio-sciences” and that it intends to support Canadian health care by, among other things, “[pushing] for … [t]ruth in the advertising of health … products and services”.
On May 6, 2020, the Bureau issued a second, more forceful statement warning businesses against making false or misleading claims that their products and services can prevent, treat or cure COVID-19 and to take immediate action to comply with the law. In particular, it has warned against making claims that herbal remedies, bee related products, vitamins, vegetables or other food and drink products can prevent COVID-19 infections; and making claims – without first conducting the testing required by law – that certain UV and ozone air sterilization systems, as well as certain air filters or air purifiers, will effectively kill or filter out the virus. Examples of claim language that could raise concerns for the Bureau (and which have in fact raised concerns for Health Canada) include:
- “anti Coronavirus”
- “Coronavirus protection”
- “used to kill COVID-19”
- “solution to Coronavirus outbreak”
In addition to reminding Canadian businesses to ensure that their marketing and labelling complies with the law, the Bureau has also taken action to stop potentially deceptive claims that could give rise to a false impression that products or services can treat COVID-19 infections or protect against the virus. At this time the Bureau has issued direct compliance warnings to a variety of businesses and retailers across six Canadian provinces, including Ontario. Moving forward, it is likely that the Bureau will take enforcement action against companies that do not comply with the Act after being warned.
Similarly, the U.S. Federal Trade Commission (“FTC”) has sent multiple rounds of warning letters to companies allegedly selling products, unapproved by the U.S. Food and Drug Administration, that may violate federal law by making deceptive or scientifically unsupported claims about their ability to treat or cure coronavirus (COVID-19). In particular, FTC has warned companies against:
- making unsubstantiated claims that vitamins, teas, herbs, essential oils and colloidal silver are able to treat or prevent coronavirus;
- making unsubstantiated claims that acupuncture, intravenous (IV) “therapies” with high doses of Vitamin C, ozone therapy and purported stem cell treatments are able to treat or prevent coronavirus; and
- making unsubstantiated claims that “treatments”, including Chinese herbal medications, sound therapy, homeopathic treatments and even shields claimed to boost the immune system by protecting the wearer from electromagnetic fields, can treat or cure coronavirus.
These types of claims would also likely raise issues under the Act.
Practical Advice for Businesses
To ensure that your business’ marketing practices comply with the law, the following is advisable:
- Identify and ensure that any performance claims in your advertisements (including on websites, product labelling and social media) are substantiated and backed up by adequate and proper testing.
- Fully and clearly disclose all material information in an advertisement. The failure to disclose material information could raise issues under the Act
- Consider both the literal meaning of and the general impression created by an advertisement. Both must be true – issues could arise if either is false or misleading.
- Minimize the risk of engaging in false or misleading advertising and other anticompetitive activity by maintaining an internal corporate compliance program.