COMPETITION BUREAU RECOMMENDATIONS ON DECEPTIVE MARKETING PRACTICES: AN OVERVIEW
Andrée-Anne Perras-Fortin1 et Jonathan Chbat2 [1]
ROBIC, LLP
1 Partner and Lawyer, 2 Articling student
On March 15, 2023, the Competition Bureau (the “Bureau”) released its submission[2] in response to the federal government’s consultation on the reform of the Competition Act[3] (the “Act”). As a reminder, the Act had already undergone significant changes in 2022[4] . The Bureau’s recent submission builds on this prior consultation, focusing on areas where it believes adjustments are still needed.
In its submission, the Bureau makes over fifty recommendations to modernize the Canadian competition legal regime. While the Bureau’s submission addresses several fundamental aspects of the Act, we focus on its recommendations pertaining to deceptive marketing practices.
The Average Consumer and the Ordinary Selling Price
First, to put an end to the courts’ inconsistency in determining consumer standard for deceptive marketing, the Bureau recommends importing into the Act the standard established by the Supreme Court of Canada (“SCC”) in Richard v. Time Inc.[5] , namely the “credulous and inexperienced consumer”[6] . It should be noted that this case dealt with provisions of the Quebec Consumer Protection Act (“CPA”) regarding misleading representations. Some of these provisions of the CPA were inspired by the text of the Combines Investigation Act, a slightly modified version of which can now be found in the Act[7], thus justifying the Bureau’s suggestion. The SCC concluded that the appropriate standard was that of a “credulous and inexperienced consumer”, that is, a person who believes what they read and is not expected to question it. This relatively lower standard better protects the consumer.
With respect to the “ordinary selling price” provisions, the Bureau recommends reversing the burden of proof so that the advertiser would be required to prove that its represented claim is a genuine discount. The Bureau also recommends removing the presumption that savings claims are based on competitors’ prices, rather than the advertiser’s own price. In the Bureau’s view, this presumption differs from the reality of the market.
Drip Pricing and Electronic Messages
Second, with respect to the new “drip pricing” provision[8] added to the prohibition on false or misleading representations on June 23, 2022, the Bureau recommends that the legislator go back to the drawing board to refine certain aspects. Specifically, the Bureau believes that the current wording regarding drip pricing claims has created a loophole that would allow advertisers to pass on to Canadian consumers their own legal compliance costs. To address this loophole, it proposes to clarify that the exemption applies only to mandatory federal, provincial or territorial sales tax charges.
In addition, the Bureau notes that the provisions of the Act concerning electronic messages do not explicitly refer to drip pricing. The Bureau suggests that it be clarified that the drip pricing provisions apply to all deceptive marketing practices, including those involving electronic messages. Further, the Bureau proposes to amend the language in subsection 74.1(6) of the Act to include administrative remedies for false or misleading representations made by electronic messages, and to clarify in section 74.011 of the Act that proof of deception is not required to establish the civil offence of false or misleading representations by electronic messages, like the criminal provision of the Act.
The Office’s other recommendations to ensure better compliance with the Act
Finally, to ensure an improved compliance with the Act in relation to deceptive marketing practices, the Bureau makes several recommendations, pertaining to which the Act should:
- provide a mechanism for choosing between the criminal or civil regime, depending on the seriousness of the deceptive conduct;
- provide a broader range of remedies to better protect consumers, not only upstream of deceptive marketing practices, but also downstream, allowing them, for example, to cancel a contract resulting from such practices or to claim damages to a greater extent;
- allow courts to issue temporary orders to: (i) prohibit the recurrence of deceptive conduct where it has ceased (not just where it is actually occurring at the time of a commissioner’s application); and (ii) prohibit the recurrence of substantially similar reviewable conduct;
- increase the ability of courts to issue permanent orders to third parties who facilitate deceptive marketing behaviour; and
- expand the power of the courts to freeze assets.
With the Bureau’s recommendations in place, it remains to be seen how they will be received by the legislature. We will be following developments on deceptive marketing practices closely. In the meantime, please do not hesitate to contact members of our Regulatory Affairs if you have any questions regarding the application of the Act.
[1] Andrée-Anne Perras-Fortin is a lawyer and Jonathan Chbat is an articling student at ROBIC, a multidisciplinary firm of lawyers and patent and trademark agents.
The authors would like to thank Caroline Jonnaert for editing this vignette.
[2] COMPETITION BUREAU, The Future of Competition Policy in Canada. Submission by the Competition Bureau, March 15, 2023, online: <The Future of Competition Policy in Canada>
[3] Competition Act, R.S.C. 1985, c. C-34.
[4] Caroline Jonnaert, Jason Moscovici, “Important Amendments to the Competition Act: An Overview”, in robic.com, July 2022, online: <IMPORTANT AMENDMENTS TO THE COMPETITION ACT: AN OVERVIEW – ROBIC>.
[5] 2012 SCC 8.
[6] Id. at para. 78.
[7] Id. at para. 45.
[8] Recall that a “drip pricing” exists when a product or service is advertised at a certain price, yet consumers must pay additional non-government-imposed charges to purchase that product or service.