Canadian COMPETITION LAW

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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THE COMPETITION ACT

The federal Competition Act, which is one of the primary Canadian statutes that regulates Canadian advertising and marketing, can apply to Internet and other electronic marketing (e.g., social media, e-mail and other new media) as well as traditional print marketing.

The general criminal and civil misleading advertising provisions of the Competition Act (sections 52(1) and 74.01(1)) apply regardless of the medium used to make an advertising/marketing claim – i.e., they apply to print, Internet, e-mail, social media and other new media advertising.

In addition, many of the other civil and criminal provisions of the Competition Act relating to specific types of advertising and marketing practices, including contests, deceptive prize notices, testimonials/endorsements, ordinary selling price (OSP) claims and performance claims apply regardless of the medium in which a claim is made.

In addition, the Competition Act also includes specific electronic marketing provisions under section 74.011, which make the following practices reviewable where they are made to promote a product or any business interest: (i) false or misleading sender or subject matter information, (ii) false or misleading electronic messages and (iii) false or misleading locators. The Competition Act also contains three largely similar criminal offences under section 52.01, which also require that the conduct be engaged with intent.

False and misleading digital marketing is an ongoing Competition Bureau enforcement priority. In this regard, the Competition Bureau has commenced cases in relation to false/misleading online price claims, drip pricing, astroturfing, inadequate disclaimers and other disclosures, false/misleading claims relating to contests and other promotions, testimonials/endorsements and influencer marketing, ordinary selling price (OSP) claims (e.g., in connection with sales) and scarcity and urgency cues, among other types of marketing practices.

The Competition Bureau has also issued specific enforcement guidelines for online/Internet advertising (Application of the Competition Act to Representations on the Internet) and periodically conducts Internet enforcement sweeps for online misleading advertising in particular industry sectors.

POTENTIAL COMPETITION ACT PENALTIES

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 (Part VII.1) 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.

OTHER LAWS

In addition to the federal Competition Act, Internet, social media and new media advertising and marketing in Canada can also be governed by federal and provincial privacy laws, intellectual property law (e.g., copyright and trade-mark law), provincial and territorial consumer protection legislation, Canadian anti-spam law (CASL) and defamation law.

CASL (Federal Anti-spam Legislation)

CASL is often relevant when running contests or other types of promotions in Canada, including if electronic distribution lists will be used to market the contest/promotion, the contest/promotion will include the collection of e-mails for marketing unrelated to administration of the promotion, if participants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or participants are encouraged or required to “share” information about the promotion with friends or family.

Given the potentially severe penalties for violating CASL, which include administrative monetary penalties of up to CDN $10 million, it is important for those running contests or other promotions in Canada to ensure that they comply with CASL for electronic marketing related to a promotion.

For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors. For CASL checklists and precedents that we offer for sale, see: Anti-Spam Law (CASL) Precedents.

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For more information about Canadian laws relating to Internet, social media and new media advertising, see Canadian Advertising Law, Anti-spam Law (CASL), Contests, Contests and Social Media, Testimonials and Endorsements and Misleading Advertising.

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SERVICES AND CONTACT

We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

Our experience includes advising clients in Toronto, across Canada and the United States on the application of Canadian competition and regulatory laws and we have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.

To contact us about a potential legal matter, see: contact

For more information about our firm, visit our website: Competitionlawyer.ca