On March 1, 2012, the Ontario Superior Court of Justice found that five companies and three individuals (collectively the Yellow Marketing Group) had made misleading representations to the public in contravention of the federal Competition Act and ordered them to pay over $9 million in administrative monetary penalties (AMPs), the highest ever awarded in contested proceedings regarding false or misleading representations in Canada.
The impugned representations were principally contained in unsolicited faxes that were sent to numerous Canadian individuals, businesses and organizations. The unsolicited faxes contained third-party trade-marks owned by the Yellow Page Group (the Yellow Marketing Group is distinct from the Yellow Pages Group, the latter of which operates the popular telephone directory business), with the “Walking Fingers” logo and the words “Yellow Pages.” The Commissioner of Competition alleged that the unsolicited faxes led Canadians to believe that they were updating their existing records with the Yellow Pages Group, whereas the fine print revealed that they were actually signing a new two-year contract with the Yellow Marketing Group for “internet business directory” services. Canadians who responded to the unsolicited faxes by filling out the requested information subsequently received invoices totaling $2,856.
The Court agreed with the Commissioner’s assessment of the matter, finding that the unsolicited faxes were “intended to deceive and did, in fact, deceive many Canadian businesses and individuals into believing they were dealing with the [Yellow Pages Group].” Further, the Court found that “the fact that the fine print of the Unsolicited Faxes stated that returning them would bind the recipient to a two year contract does not reduce its false or misleading nature. The fine print did not clarify that the Unsolicited Faxes had not been sent by [the Yellow Pages Group] and the disclosure was insufficiently prominent.”
As a result, the Yellow Marketing Group was ordered to publish corrective notices, pay restitution to affected Canadians and pay AMPs totaling over $9 million. Regarding the breakdown of the AMPs, the five companies were jointly ordered to pay an $8 million AMP, whereas two individuals who were considered to be the primary principals running the scheme were each ordered to pay a $500,000 AMP. Finally, the third individual was considered to have played a lesser role in the scheme as a debt collector for the Yellow Marketing Group, and was therefore ordered to pay a lesser AMP of $35,000.
This case illustrates the Competition Bureau’s continuing forceful pursuit of persons considered to have made false or misleading representations in contravention of the Competition Act, and sets a new precedent regarding the Court’s willingness to award significant AMPs in the course of contested proceedings.