On August 19, 2013 Justice Marrocco of the Ontario Superior Court of Justice released his final determination of the application commenced by the Commissioner of Competition in The Commissioner of Competition v. Chatr Wireless Inc. and Rogers Communications Inc.
The Commissioner of Competition commenced the application in November 2010 (amended in March 2011) seeking, among other things:
- a declaration that Rogers Communications Inc. (“Rogers”) and its brand Chatr Wireless Inc. (“Chatr”) had engaged in reviewable conduct contrary to paragraphs 74.01(1)(a) (false or misleading representations) and 74.01(1)(b) (representations not based on adequate and proper testing) of the Competition Act;
- an order that Rogers and Chatr stop making representations about dropped call performance for a period of 10 years; and
- an order requiring Rogers and Chatr to publish notices describing their reviewable conduct, including the geographic area to which the conduct related and a description of the manner in which the false and misleading representations were disseminated.
The Commissioner identified two allegedly offending representations, both related to dropped calls:
- “Fewer dropped calls than new wireless carriers”; and
- After November 5, 2010, representations that Chatr subscribers would have “no worries about dropped calls.”
These two representations appeared as part of an extensive social media and public relations campaign coincident with the launch of Chatr in June 2010 and a broad and nationwide campaign composed of television, radio, digital, out of home and print advertising thereafter.
The representations were sometimes accompanied by a disclaimer that stated: “Based on: cell site density; quality of indoor and underground reception; and seamless call transition when moving out of zone.”
The Commissioner asserted that the two representations were false because:
- In Ottawa, Chatr’s dropped call rate was higher than those of certain new carriers on 84 of 92 days;
- In Toronto, Chatr’s dropped call rate was higher than a new carrier’s on 53 of 92 days.
The Commissioner also complained that the representations were misleading because they conveyed the general impression that there was an appreciable dropped call rate difference among carriers, when in fact the difference was not appreciable during the period tested.
Adequate and proper testing
Rogers and Chatr purported to support the fewer dropped calls claim with drive tests. The Commissioner complained that the drive tests did not constitute “adequate and proper testing” because, among other things:
- Rogers did not conduct any drive tests in Calgary or Edmonton before making the two offending representations; and
- Rogers’ drive tests in the greater Toronto area prior to September 27, 2010, did not include test data against Public Mobile.
The general impression conveyed and literal meaning of the advertisements
In assessing the impressions conveyed by the advertisements at issue, Marrocco J. concluded that the appropriate consumer perspective in assessing whether or not the claims at issue in this case were false or misleading was that of a “credulous and technically inexperienced consumer of wireless services.”
In assessing the general impression conveyed by the advertisements, Marrocco J. concluded that the general impression conveyed by the “fewer dropped calls” and “no worries about dropped calls” advertisements is that there are no worries about dropped calls on the Chatr network because there are fewer dropped calls on that network, and that the Chatr network is more reliable than those operated by the new carriers.
Must the representations be true in each city?
One of the arguments made by the Commissioner is that the contentious ads were false unless the evidence provided that the fewer dropped calls claim was true in each of the cities in which Chatr operated and advertised. Rogers / Chatr, on the other hand, argued that the consumers would have expected the claims to be true on average across all cities where Chatr operated.
Marrocco J. accepted the Commissioner’s position, finding that, upon consideration of all the evidence, the fewer dropped calls claim represents to a credulous and technically inexperienced consumer that use of a Chatr phone within any Chatr zone will result in fewer dropped calls than would be true for a Wind Mobile, Public Mobile or Mobilicity customer.
Accordingly, in order for the fewer dropped calls claim to be neither false nor misleading, the Rogers network should have offered fewer dropped calls than the new carriers in each of the cities in which Chatr operates.
Evidence in support of the representations
One of the key issues before Marrocco J. in assessing whether or not the representations at issue were false or misleading was whether “switch generated data” (data collected by network operators about call performance) provided to the Competition Bureau by certain new carriers and by Rogers / Chatr was admissible evidence to demonstrate that the fewer dropped calls claim was false with respect to other providers.
Following a review of the extensive expert evidence provided on the reliability of this switch generated data, Marrocco J. concluded that although this evidence was admissible, it was dangerous to place significant weight on a comparison of the switch generated dropped call rates when determining whether the Chatr fewer dropped calls claim was false or misleading.
Further, Marrocco J. rejected the Commissioner’s argument that the fewer dropped calls claim was misleading unless there was a discernibledifference in drop call rates amount Rogers / Chatr and other providers. Rather, he was satisfied that a consumer would choose a network that offered fewer dropped calls to avoid the possibility of dropped calls, but would not expect the drop call experience to be discernibly different from that of other providers.
In the result, and because the Commissioner’s false and misleading advertising claim was based to a significant degree on the switch generated data, Marrocco J. found that he was not satisfied that the Commissioner had proven on a balance of probabilities that Rogers / Chatr’s fewer dropped calls claim was false or misleading.
Nevertheless, Marrocco J. found that Rogers / Chatr had failed to conduct an adequate and proper test in:
- Calgary and Edmonton; and in
- Toronto and in Montreal against Public Mobile,
prior to making the fewer dropped calls claim at the time of Chatr’s launch in those cities, and therefore engaged in reviewable conduct contrary to s.74.01(1)(b) of the Competition Act.