On June 28th, the Competition Bureau announced that Bell Canada has agreed to stop making allegedly misleading claims relating to the prices for its services and to pay an administrative monetary penalty of $10 million.
In making the announcement, the Bureau said:
“The Bureau determined that, since December 2007, Bell has charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless. The advertised prices were not in fact available, as additional mandatory fees, such as those related to TouchTone, modem rental and digital television services, were hidden from consumers in fine-print disclaimers.
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As an example, Bell’s Web site had been advertising a bundle for home phone, Internet and television services starting as low as $69.90 per month. However, it was impossible for customers to buy the bundle for the advertised price. In fact, the lowest possible price, including the mandatory fees, was $80.27—approximately 15% higher than advertised. Customers purchasing any of the services individually were also faced with the same misleading information, as additional fees were excluded from those advertised prices as well.”
In Canada, the federal Competition Act contains both civil and criminal provisions dealing with false or misleading representations and also governs a variety of specific forms of marketing conduct including “ordinary selling price” claims, selling above an advertised price, deceptive telemarketing, promotional contests and performance claims.
Generally speaking, the “general” civil misleading advertising provisions of the Act prohibit representations to the public, for the purpose of promoting a product or business interest, that are false or misleading in a material respect. The criminal provisions, which are substantially similar, prohibit false or misleading representations that are made intentionally (i.e., knowingly or recklessly).
The maximum penalties under the civil misleading advertising provisions of the Act were also dramatically increased in 2009, as a result of sweeping amendments to the Competition Act (up to $10 million for corporations). Parties can, however, and in a number of past cases have agreed to, settle misleading advertising cases for amounts exceeding the statutory maximum fines provided under the Act – for example, to avoid potential criminal liability (as misleading advertising can be reviewed by the Bureau as either a civil matter or criminal offence).
In this case, the Bureau challenged the accuracy of price claims made by Bell, as well as hidden fees and fine-print disclaimers. According to the Bureau, its concerns were based primarily on allegedly literally false claims (i.e., services that were not available at all at the advertised prices, including for Bell’s home phone, Internet, satellite TV and wireless services).
Advertising and marketing claims can violate the misleading advertising provisions of the Act where they are either literally false or merely misleading (e.g., true claims can also violate the Act in some cases where they fail to disclose essential information).
Not surprisingly, courts and the Bureau have, as in this case, for the most part raised concerns with either literally false or misleading claims that relate to price, performance or other essential product aspects, which are the most likely to be found to be “material” for the purposes of the misleading advertising provisions of the Act (to constitute misleading advertising under the Act a claim must be shown to be not only false or misleading but also “material” – i.e., likely to cause an average consumer to purchase the product).
This most recent case involving Bell follows other recent enforcement efforts by the Bureau against high profile companies including its $10 million misleading advertising claim against Rogers (see: Competition Bureau Takes Action Against Rogers Over Misleading Advertising).
Misleading advertising and other deceptive marketing also continues to be an enforcement priority for the Bureau. For example, in a recent speech, the Commissioner of Competition Melanie Aitken said:
“We are also on the watch for misleading and fraudulent representations in areas that hit close to home for Canadians. Our goal is to address and redress such unlawful conduct and, at the same time, to build confidence in the marketplace and demonstrate the relevance of the Bureau’s work to Canadians in their everyday lives.”
See: Remarks by Melanie Aitken, Commissioner of Competition to the CBA Spring Conference: Focus on Civil.
For the complete Bureau news release in the Bell case see:
For a copy of the consent agreement filed with the Competition Tribunal see:
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