SWEEPING CANADIAN COMPETITION ACT
AMENDMENTS (BILL C-59) PASSED JUNE 20, 2024
On June 20, 2024, Bill C-59 was passed (the Fall Economic Statement Implementation Act, 2023), which introduced the third of three significant rounds of amendments to Canada’s federal Competition Act in two years (together with Bill C-19 and Bill C-56). This new round of amendments to the Competition Act completes a sweeping overhaul of the Competition Act across virtually all key provisions of Canada’s competition legislation. These amendments are also the most significant changes to Canadian competition law since the modern Competition Act came into effect in 1986 replacing the former Combines Investigation Act.
The Bill C-59 amendments, among other things, strengthen the Competition Bureau’s powers to enforce key deceptive marketing provisions of the Competition Act (e.g., relating to drip pricing, performance claims and ordinary selling price (OSP) claims), strengthen private party rights to seek Competition Tribunal remedies (e.g., for civil deceptive marketing and violations of the civil agreements provisions of the Act), introduce new penalties (e.g., administrative monetary penalties for violating the civil agreements provisions of the Act and for reprisal actions penalizing individuals for complying with the Act) and introduce a new clearance regime for environmental protection related agreements. Canada’s Competition Act merger review regime was also substantially overhauled, eliminating the efficiency defence, introducing market share presumptions and a more restrictive remedial test for restoring competition.
These amendments, together with those enacted in June 2022 and December 2023 (Bill C-19 and Bill C-56), increase the potential competition law risk for companies, trade and professional associations and other entities, particularly those without credible and effective competition law compliance programs and that have not reviewed their business practices to reflect Canada’s new competition laws. For the Competition Bureau’s summary of the June 20, 2024 Bill C-59 amendments to the Competition Act, see: Guide to the June 2024 amendments to the Competition Act (June 25, 2024).
Our blogs will be updated to reflect these amendments.
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“Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product. Refunds are normally paid in the form of cash or a cheque. For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them. Rebates can be beneficial to both consumers and businesses. For consumers, rebates can result in lower effective prices. For businesses, rebates provide a flexible tool that may increase the volume of sales. However, when rebates are not promoted or administered correctly, consumers may ultimately pay more than intended, and competitors can be unfairly disadvantaged. There are two types of rebates: Instant rebates – consumers receive the rebate at the time of purchase. The rebate is generally available to anyone who purchases the product, without further condition; mail-in rebates – consumers apply for the rebate after the purchase, by mail-in application, online or by other means. ‘Mail-in rebate’ includes mail-in, Internet and other delayed- payment rebates. Various market participants may be involved in promoting and administering rebates.”
(Competition Bureau, Enforcement Guidelines,
Consumer Rebate Promotions)
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“True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque. By contrast, some promotions offer gift cards or credits to be used on future purchases. While these may be a good deal, they are not rebates.”
(Competition Bureau, “Are You Getting the Real Deal?
Understand Rebate Promotions Before You Buy”)
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OVERVIEW OF REBATES
UNDER THE COMPETITION ACT
The Competition Bureau has issued Enforcement Guidelines on Consumer Rebate Promotions (Rebate Guidelines).
The Rebate Guidelines, which originated, in part, from the Competition Bureau’s concern with the use of deceptive mail-in rebates, set out its approach to interpreting the civil and criminal misleading representation provisions of the Competition Act and similar provisions under the federal Consumer Packaging and Labelling Act and Textile Labelling Act.
DEFINITION OF “REBATE”
The Competition Bureau’s Rebate Guidelines define consumer rebates as follows:
“Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product. Refunds are normally paid in the form of cash or a cheque. For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.”
POTENTIAL DECEPTIVE MARKETING ISSUES
ASSOCIATED WITH “REBATE” CLAIMS
The Rebate Guidelines set out five examples of when consumer rebate promotions may violate the criminal or civil misleading advertising provisions of the Competition Act (sections 52 or 74.01) as follows:
1. Inadequate disclosure of rebate conditions.
2. Limitations or exclusions.
3. Rebates disguised as the sale price or regular price.
4. Mail-in rebates disguised as instant rebates (i.e., available at the time of purchase).
5. Discounts on future purchases disguised as rebates.
6. Unfulfilled mail-in rebates.
BEST PRACTICES FOR MAKING “REBATE” CLAIMS
UNDER THE COMPETITION ACT
The Competition Bureau’s Rebate Guidelines set out the following five best practices for making rebate offers to avoid violating the Competition Act:
1. Prominently and clearly disclose all conditions, limitations or exclusions that are inconsistent with consumers’ general impression, all in a manner that is likely to come to their attention.
2. Show the price consumers will pay at the time of purchase.
3. Clearly indicate the amount of the rebate that may apply.
4. Clearly identify the type of rebate offered (i.e., whether mail-in or instant rebate).
5. Clearly explain, in the case of a mail-in rebate, that if the after-rebate price is stated, this price is subject to conditions, and ensure that this information is prominently disclosed in a manner that is likely to come to consumers’ attention.
Canada’s Competition Bureau has generally advised consumers to determine whether: there is a deadline to apply or an expiry for the rebate; they must buy another product to qualify; they need to provide more than just a receipt to receive a rebate (e.g., a UPC code); there is any limit on the number of rebates per household; there are any restrictions on geographic location and/or mailing address (such as a rural address) that may affect eligibility; a rebate is only valid if a purchase is made at certain retailers; or there are any other limitations or conditions that may affect eligibility.
POTENTIAL COMPETITION ACT
PENALTIES FOR MAKING FALSE OR MISLEADING
“REBATE” OFFERS
Some of the potential penalties for violating the civil deceptive marketing practices provisions under Part VII.1 of the Competition Act include Competition Tribunal or court orders to stop the conduct, publish a corrective notice, pay restitution to consumers and orders to pay AMPs.
Following 2022 amendments to the Competition Act, the maximum AMPs for civil deceptive marketing increased: (i) for individuals, up to the greater of $750,000 ($1 million for each subsequent order) and three times the value of the benefit derived from the deceptive conduct; and (ii) for corporations, up to the greater of $10 million ($15 million for each subsequent order) or three times the value of the benefit derived from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenues.
In addition, as a result of June 2024 amendments to the Competition Act (under Bill C-59), starting on June 20 2025, private parties will also be able to seek leave from the Competition Tribunal to commence proceedings under the civil deceptive marketing practices provisions with the only leave requirement for standing being that the proceedings are in the “public interest”.
The potential penalties for violating the general criminal misleading advertising section of the Competition Act (section 52) include, on indictment, a fine in the discretion of the court and/or imprisonment for up to 14 years and, on summary conviction, a fine of up to $200,000 and/or imprisonment for up to one year.
The Competition Bureau also commonly negotiates civil consent agreements (i.e., settlements) with parties, which can include remedies not expressly set out under the Competition Act such as the requirement to adopt a competition law compliance program, or seeks a prohibition order under the criminal provisions of the Competition Act.
The enforcement of the criminal and civil deceptive marketing provisions of the Competition Act is also an ongoing priority for the Competition Bureau, particularly false or misleading price claims, performance claims and ordinary selling price claims.
COMPETITION BUREAU ADVISORY OPINIONS
The Competition Bureau offers binding advisory opinions under the Competition Act, including for interpretation of the application of the misleading advertising provisions of the Competition Act to rebate related promotions.
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SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to anti-spam legislation (CASL), Competition Bureau complaints, the general misleading advertising provisions of the federal Competition Act, Internet, new media and social media advertising and marketing, promotional contests (sweepstakes) and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
