In her final days as Canada’s commissioner of competition, Melanie Aitken has launched two significant actions: laying criminal charges over an alleged breach of a merger-related consent order, and seeking $10 million penalties against each of Canada’s three largest wireless carriers alleging they violated the misleading advertising provisions of the Competition Act. The former is an unusual approach, as breaches of a consent order are often dealt with via civil contempt proceedings before the Competition Tribunal. The latter, if successful, would represent the largest civil penalties ever imposed by a court under the act.
Criminal charges: don’t trash your consent agreement
On September 11, 2012, the Competition Bureau announced that it laid criminal charges under section 66 of the Competition Act against Progressive Waste Solutions Ltd. and its subsidiary BFI Canada Inc. for “multiple breaches” of a June 2010 consent agreement with the bureau. The consent agreement resulted from the 2010 merger of IESI-BFC Ltd. and Waste Services Inc. (now known collectively as “Progressive”) and was intended to remedy concerns about a substantial lessening or prevention of competition in four cities and one county across Canada. Under the terms of the agreement, the parties were required to divest certain assets and customer contracts, and were prohibited from soliciting or reacquiring divested customers for a period of one year. If the parties became aware of a material breach of the agreement, they were to promptly notify the bureau.
The bureau alleges that Progressive solicited and reacquired a divested customer, provided a false declaration of compliance with the consent agreement, and failed to promptly notify the bureau of the breach. If convicted on a summary basis, Progressive could face fines of up to $25,000 per count. Progressive has denied the allegations and representatives have stated that the company will “vigorously defend this matter.”
Regardless of the outcome of this dispute, the case highlights the importance of ensuring mechanisms are in place within a company that is the subject of a consent agreement to manage any compliance obligations and flag any potential problems. The case is also noteworthy for the bureau’s aggressive response to the alleged failure to abide by the consent agreement. While a non-criminal route is available to sanction failures to follow a consent agreement, the commissioner, in choosing the criminal route, intended to send “a strong signal to business that breaching a consent agreement…is an extremely serious matter and will not be tolerated.”
Misleading advertising: facing $10m AMP, big 3 wireless carriers not LOL
On September 14, 2012, the bureau announced that it commenced legal proceedings against Bell Canada, Rogers Communications Inc., TELUS Corporation and the Canadian Wireless Telecommunications Association (CWTA) under the misleading advertising provisions of the Competition Act. The bureau alleges that the carriers, together with the CWTA, facilitated the sale to their own customers of premium-rate digital content for fees that had not been adequately disclosed. The carriers allegedly retained a share of the revenues collected. The bureau also alleges that customers were led to believe the services were free, and that Bell, Rogers, Telus and the CWTA led customers to believe measures were in place to prevent these unauthorized charges.
The bureau is seeking the following redress:
- full refunds for customers;
- administrative monetary penalties — $10 million each from Bell, Rogers and Telus, and $1 million from the CWTA;
- a stop to any representations that do not clearly disclose the price and other terms and conditions applicable to premium-rate digital content; and
- a corrective notice from each of Bell, Rogers, Telus and the CWTA, to inform the general public about the terms and conditions of any order issued against them.
The bureau has aggressively pursued firms for inadequate disclosure in their advertising materials since reaching a settlement with Bell in June 2011. In that instance, Bell became the first firm to pay the maximum $10 million administrative monetary penalty for misleading advertising for allegedly misleading consumers over the bundled prices of its cable, Internet, wireless and home phone services. Bell disagreed with the bureau’s position and indicated in a statement that it settled the case in order “to immediately resolve the issue and move forward.”
In taking these actions only one week before she steps down as commissioner, Aitken has ensured that one of her key legacies will be a vigorous enforcement record. However, as noted earlier, for all of the cases she has initiated, only one has been decided and it remains under appeal. Nonetheless, the message to businesses should be clear: the bureau will use all of the powers at its disposal, including seeking significant monetary penalties, to pursue instances of misleading advertising.