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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OVERVIEW

“Product of Canada” and “Made in Canada” claims are not required under Canadian law for food or non-food products (i.e., such claims are optional in Canadian marketing).

However, if a “Made in Canada” or similar advertising/marketing claim is made that is materially false or misleading, it can contravene the general civil or criminal false or misleading representation provisions of the federal Competition Act, the Consumer Packaging and Labelling Act or the Textile Labelling Act.

These three federal Canadian statutes prohibit, among other things, false or misleading claims made to promote a product, a business interest or, in the case of the packaging and labelling statutes, certain types of consumer goods.

In the case of food products, “Made in Canada” or “Product of Canada” claims that are false or misleading can violate the federal Food and Drugs Act.

While not law, the Competition Bureau, which is Canada’s federal competition and advertising enforcement agency, has issued Enforcement Guidelines setting out its position in relation to a variety of types of “Product of Canada” and “Made in Canada” claims for non-food related products under the Competition Act and Canada’s two federal packaging and labelling statutes.

In addition to the Bureau’s Enforcement Guidelines, the Canadian Food Inspection Agency has also issued FAQs for “Product of Canada” and “Made in Canada” advertising claims relating to food products that are sold in Canada.

COMPETITION ACT

The general criminal and civil misleading advertising provisions of Canada’s federal Competition Act (sections 52 and 74.01) prohibit false or misleading representations for the purpose of promoting a product, including services, or any business interest. For more information, see: Misleading Advertising.

These provisions of the Competition Act can also apply to “Made in Canada” and other literally false or misleading country of origin claims.

Section 52(1) of the Competition Act is a criminal provision that prohibits anyone, for the purpose of promoting the supply or use of a product or any business interest, from intentionally making a materially false or misleading representation to the public.

Section 74.01(1)(a) of the Competition Act is a civil provision that provides that anyone who makes a materially false or misleading representation to the public to promote the supply or use of a product or any business interest engages in conduct that can be reviewed civilly by the federal Competition Tribunal or a court.

Importantly, in assessing whether a “Made in Canada” or “Product of Canada” claim may be false or misleading for the purpose of the general criminal or civil misleading advertising provisions of the Competition Act, both the general impression of a claim and its literal meaning are relevant.

For example, advertising that includes Canadian flags, maple leafs, beavers or other symbols or images associated with Canada, when the product is not in fact made in Canada, could create a false or misleading general impression that the product is made in Canada.

As such, like any other advertising/marketing to Canadian consumers, both the literal meaning and general impression of creative materials and labelling should be assessed, including any photos, symbols or other graphics that may falsely state or imply that a product is made in Canada.

CONSUMER PACKAGING AND LABELLING ACT

Section 7 of the federal Consumer Packaging and Labelling Act prohibits false or misleading representations on pre-packaged consumer products, which can include “Made in Canada”, “Product of Canada” or other product origin claims.

In this respect, section 7(1) of the Consumer Packaging and Labelling Act provides that “[no] dealer shall apply to any prepackaged product or sell, import into Canada or advertise any prepackaged product that has applied to it a label containing any false or misleading representation that relates to or may reasonably be regarded as relating to that product.”

The Consumer Packaging and Labelling Act also sets out a non-exhaustive list of false or misleading representations, which includes, among other things, false or misleading claims relating to the origin of a product.

For more information, see: Packaging and Labelling.

TEXTILE LABELLING ACT

Section 5 of the federal Textile Labelling Act prohibits false or misleading representations on textile articles, which can include country of origin claims.

In this respect, section 5 of the Textile Labelling Act provides that “[no] dealer shall apply to a consumer textile article a label, or sell, import into Canada or advertise a consumer textile article that has applied to it a label containing any false or misleading representation that relates to or may reasonably be regarded as relating to the article.”

Also, like the Consumer Packaging and Labelling Act, the Textile Labelling Act sets out a non-exhaustive list of false or misleading representations, which includes, among other things, false or misleading claims relating to the origin of a product.

For more information, see: Packaging and Labelling.

POTENTIAL 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.

Under the Consumer Packaging and Labelling Act and the Textile Labelling Act, potential penalties include fines ranging from $5,000 – $10,000.

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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