false or misleading advertising

Competition Law

Posted on by Behdad Hosseini
Competition Law in Ontario

Competition Law

  • Competition law in Canada is exclusively federal.
  • There are no provincial or territorial competition laws.
  • The Competition Act is the governing law.
  • It aims to protect consumers.
  • It has both civil and criminal provisions.
  • The Competition Bureau is responsible for administering and enforcing the Act.
  • The head of the Competition Bureau is the Commissioner of Competition, who is appointed by the Federal Governments.

The Bureau investigates anti-competitive activity. It may challenge a merger or other civil violation by filing an application with the Competition Tribunal. The Tribunal is a separate, specialized court.

It examines “reviewable practices” and decides whether a civil violation of the Act has occurred.

Reviewable practices include:

  • mergers
  • abuse of dominance
  • agreements that substantially lessen competition
  • price maintenance
  • vertical non-price restrictions and deceptive advertising
  • marketing practices done without a reckless or knowing state of mind.

The Bureau investigates reviewable practices and may challenge them directly before the Competition Tribunal. If the Competition Tribunal finds a violation of the Act, the violators are usually prohibited from continuing that conduct.

The Bureau may make recommendations to the Public Prosecution Service of Canada (“PPS”) if the criminal provisions of the Act have been violated. The PPS then decides how to proceed. The PPS is an independent agency responsible for federal criminal prosecutions.

The director of PPS is the Deputy Attorney General of Canada. Under the Act, violations of the criminal law are conspiring to restrain trade, implementing in Canada offshore conspiracies to restrain trade, bid rigging, multi-level marketing, and deceptive advertising and marketing practices done knowingly or recklessly.

Criminal violations carry a fine of up to $25 million and 14 years in prison.

Conspiracies to reduce competition are prohibited. These include agreements between competitors to fix prices, allocate markets or customers, control the supply of a product, and withhold or withdraw a bid (bid rigging).

Certain harmful distribution practices are prohibited; specifically, those that occur when a supplier places conditions or restrictions on the supply of a product, or refuses to supply a product altogether.

These types of activities, known as tied selling, market restriction, refusal to deal and exclusive dealing, are considered reviewable practices. The Competition Tribunal decides whether the conduct violates the Act by looking at the specific facts.

A business may avoid criminal prosecution by participating in the Competition Bureau’s Immunity Program. To qualify for immunity, the business must be the first to notify the Bureau. The business must cease its illegal conduct and cooperate with the Bureau.

The information provided must lead to a criminal prosecution. The business may choose to use a lawyer to secure its position as the first to report the information and, may initially remain anonymous.

Mergers, regardless of their size, are subject to review by the Bureau. The Bureau may review a merger to assess whether it is a threat to competition and, if that threat exists, to challenge it before the Competition Tribunal.

The Tribunal may block the merger or order divestiture or other remedies if it decides the transaction will substantially lessen competition.

Abuse of dominance is considered a reviewable practice. A dominant position in the marketplace is not illegal by itself, but activities that abuse that dominance may be. Examples are anti-competitive conduct that eliminates or punishes competitors, or prevents new competitors from entering the market.

The Act establishes rules for truthful advertising. The Act has both criminal and civil provisions prohibiting misleading and deceptive advertising and marketing.

Criminal violations include:

  • making a materially false or misleading statement or representation made knowingly or recklessly
  • deceptive telemarketing
  • deceptive notices of winning a prize
  • double ticketing
  • pyramid selling schemes.

Civil violations include:

  • making a materially false or misleading statements not made with a knowingly or recklessly
  • performance representations not based on proper testing
  • misleading warranties or guarantees
  • bait and switch selling
  • misleading or unauthorized use of testimonials
  • selling a product above its advertised price.

You, as a private litigant, may sue to enforce the Act.

The two types of claims are: (1) a “private action” before the courts for damages and other relief for conduct that violates the Act’s criminal provisions; (2) an application for “private access” to the Competition Tribunal for conduct that qualifies as a reviewable practice.

Private actions are often brought as class actions. Private access claims, added to the Act in 2002, are rare.

Our professional team at HLF can help devise a compliance program for your business to reduce the risk of liability under the Act’s civil and criminal provisions.

We can also represent you before the Bureau if you’re seeking immunity or being investigated, before the Tribunal if you’re facing a hearing and in any related litigation. Give us a call.

 


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