May 27, 2016
Earlier today, the Competition Bureau (Bureau) announced two final settlements in its four-year year litigation against Canada’s major telecoms and the Canadian Wireless Telecommunications Association (CWTA). See: Bell customers to receive up to $11.82 million as part of Competition Bureau agreement.
In making the announcement, the Commissioner of Competition said:
“We are pleased that the agreements reached with Bell and the CWTA bring an end to the legal proceedings initiated by the Competition Bureau. Trust in the digital economy is vital for Canadians in the 21st century. As with the settlements reached with Rogers and Telus, Bell’s settlement represents a significant win for consumers and will deter others from engaging in misleading advertising that results in unauthorized charges to consumers.”
This case, which was first commenced by the Bureau in 2012, involved allegations that Canada’s three largest telecoms (Rogers, Telus and Bell) made or permitted materially false or misleading representations that consumers could receive premium text messaging and other services for free, when they were in fact charged for content, and that claims were made that consumers were safeguarded from receiving and having to pay unauthorized charges, when the telecoms collected and facilitated such charges keeping a percentage. The Bureau’s allegations against the CWTA were similar. Its position was that the trade association made or permitted to be made materially false or misleading premium text message claims.
Perhaps the most interesting aspect of this case was the fact that the provision of premium text services and their billing involved unrelated content providers and aggregators, raising the key issue of liability for the telecoms based on the activities of third parties. Also interesting is that the Bureau also pursued an industry association in this case, which reflects a continuing scrutiny of professional and trade associations (the most noteworthy recently decided case being its abuse of dominance proceedings against the Toronto Real Estate Board – see here).
While Rogers and Telus both settled (for my earlier posts on this case see here, here and here), the Bureau had been continuing its litigation against Bell and the CWTA.
As part of today’s settlements, Bell agreed, among other things, to issue up to $11.82 million in rebates to current and former customers, commence a consumer awareness campaign to education consumers about how charges can be incurred on wireless devices and how to avoid unwanted charges and enhance its competition compliance program focusing on “billing on behalf of” practices. For more information about competition compliance programs, see here.
The CWTA agreed to develop a consumer awareness campaign, issue a public notice to affected customers and implement an internal corporate compliance program also focusing on “billing on behalf of” practices.
For copies of the Bell and CWTA consent agreements, see: Commissioner of Competition v. Bell Mobility Inc., Consent Agreement, CT-2016-007 (May 27, 2016) and Commissioner of Competition v. The Canadian Wireless Telecommunications Association, Consent Agreement, CT-2016-008 (May 27, 2016).
Implications
This case, while settled, has a number of implications for advertisers and their counsel, including:
1. It shows that the new economy, particularly mobile, remains an enforcement priority for the Bureau.
2. Accurate price claims are top of the Bureau’s advertising enforcement priorities.
3. Advertisers and their counsel should take care to ensure that material claims, particularly those related to price, are both literally true and not misleading.
4. Any important additional charges or other material conditions should be brought to the attention of consumers upfront.
5. The Bureau continues to be interested in trade and professional associations that may be violating the Competition Act (for example, where an association itself may be engaging in misleading advertising).
6. Third party marketing partners can potentially lead to liability for a brand.
7. Finally, while obvious, the penalties for Competition Act non-compliance can be significant – even as the result of settlements.
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