Practical Law Canada has published a New Legal Update, which discusses product performance claims under the Competition Act and the Competition Bureau’s increased enforcement focus on performance claims that are not supported by adequate and proper testing. The Legal Update also includes an overview of the test for performance claims under the Competition Act, recent enforcement guidance and key areas of risk. Below is an excerpt with a link to the full Legal Update at Practical Law.
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On March 20, 2020, the Competition Bureau (Bureau) issued a statement announcing its enforcement priorities during the 2019 novel coronavirus disease (COVID-19) outbreak (see Statement from the Commissioner of Competition regarding enforcement during the COVID-19 coronavirus situation). One of the Bureau’s two top enforcement priorities in relation to COVID-19 is deceptive marketing practices, including false or misleading claims about a product’s ability to prevent, treat or cure the virus (product performance claims). Consumer product companies and their advisors should also expect the Bureau to continue to pursue product performance claims in general that are not based on adequate and proper testing.
While performance claims, for example relating to the speed or reliability of a product, are commonly used to distinguish a company’s products from competitors, the Competition Act, R.S.C. 1985, c. C-34, contains a standalone civil provision that prohibits such claims where they are not based on adequate and proper tests (section 74.01(1)(b)). For more information, see:
Practice Note, Performance Claims Under the Competition Act.
Practice Note, Misleading Advertising Under the Competition Act.
Misleading Advertising Due Diligence Checklist.
The Bureau has challenged performance claims in a wide variety of industries over the years, including in relation to automobiles, anti-corrosion devices, cell phones, chimney-cleaning products, clothing, disease cures, fuel saving devices, hot tubs, sports equipment and tanning and weight loss products, among others.
For example, on March 11, 2020, the Bureau announced that it was asking the Competition Tribunal (Tribunal) to stop Nuvocare Health Sciences Inc. from making performance claims in relation to its health products pending its investigation into whether the company’s claims were supported by adequate and proper testing. See Competition Bureau, News Release, Competition Bureau takes action to stop weight loss claims by seller of ‘WeightOFF Max!’ and ‘Forskolin Nx’ (March 11, 2020).
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For the full Update, see: Product Performance Claims: Increased Risk in Making Unfounded Claims During COVID-19 Outbreak).
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