Practical Law Canada Competition, of which I am Lawyer Editor, published a new Legal Update that discusses recent Canadian deceptive marketing related developments under the Competition Act, R.S.C. 1985, c. C-34 (Competition Act). The Update includes a discussion of the recent deceptive marketing related amendments to the Competition Act and current Competition Bureau enforcement and guidance.
Below is an extract of the new Legal Update with a link to the full Update.
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Competition Act Amendments
On June 23, 2022, sweeping amendments to the Competition Act, R.S.C. 1985, c. C-34 were passed, which include changes to the civil and criminal misleading representation provisions of the Competition Act (see Bill C-19, An Act to implement certain provisions of the budget tabled in Parliament on April 7, 2022 and other measures). These amendments are the most significant changes to the Competition Act since 2009, when the last major amendments were enacted. For a summary of the amendments, see Guide to the 2022 amendments to the Competition Act, Competition Bureau, June 24, 2022 (Competition Act Amendments Guide).
New Drip-Pricing Provisions
The recent amendments include new criminal and civil provisions on drip pricing (that is, failing to state the full price of a product or service upfront, with the full price only disclosed at a later stage, such as the check-out stage of an online purchase) under sections 52 and 74.01 of the Competition Act.
Under the new and explicit drip-pricing sections (sections 52(1.3) and 74.01(1.1), Competition Act), a misleading representation includes representing a price that is not attainable due to fixed obligatory charges or fees, unless the mandatory charges or fees are required by either federal or provincial legislation.
Drip pricing has been one of the Competition Bureau’s (Bureau) deceptive marketing enforcement priorities along with false or misleading performance claims, ordinary selling price claims and misleading testimonials/endorsements (see, for example, the Competition Act Amendments Guide). Before these amendments, the Bureau had successfully taken enforcement action against drip-pricing practices under the general civil misleading representation provisions under section 74.01 of the Competition Act. Nevertheless, the Bureau cited significant resources and efficiency issues during court proceedings against drip pricing to support expressly prohibiting drip pricing under the Competition Act (see Examining the Canadian Competition Act in the Digital Era, Competition Bureau, February 8, 2022).
For more information about drip pricing, see Practice Notes:
- Digital Marketing and the Competition Act.
- Disclaimers Under the Competition Act.
- Misleading Advertising Under the Competition Act.
See also Legal Updates:
- Recent Digital Deceptive Marketing Enforcement Under the Competition Act.
- New Competition Bureau Deceptive Marketing Practices Digest: Priorities Include Misleading Data Privacy Claims.
Higher Penalties for Civil Deceptive Marketing
The administrative monetary penalties (AMPs) under Part VII.1 of the Competition Act (deceptive marketing practices) have also significantly increased under the recent amendments.
For corporations, the maximum AMP has increased from $10 million ($15 million for each subsequent violation) to the greater of $10 million ($15 million for each subsequent violation) or three times the value of the benefit derived from the deceptive conduct or, if that amount cannot be reasonably determined, 3% of the corporation’s worldwide gross revenues (section 74.1(c)(ii), Competition Act).
According to the Bureau, the previous maximum AMPs were seen as insufficient to deter deceptive marketing practices in some cases. For more information about the enforcement of the civil and criminal misleading representation provisions of the Competition Act, see Practice Notes, Misleading Advertising Under the Competition Act and Criminal Competition Law Enforcement.
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For the full Legal Update, see here.
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We are a Toronto based Canadian competition law and advertising law firm who 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. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
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