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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“Consumers expect to pay the advertised price. We’re taking action against Cineplex because misleading tactics like drip pricing only serve to deceive and harm consumers. For years, we have urged businesses, including ticket vendors, to display the full price of their products upfront. I remind all businesses to review their pricing claims to make sure they do not mislead consumers.”

Competition Bureau, “Competition Bureau sues
Cineplex for allegedly advertising misleading ticket prices” (May 18, 2023)

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False and misleading product price claims have consistently been one of the Competition Bureau’s top enforcement priorities under Canada’s federal Competition Act.

A number of provisions of the Competition Act can apply to price related advertising.

CIVIL REVIEWABLE MATTERS

Civil sections of the Competition Act that can apply to price related advertising claims include sections 74.01 (the general civil misleading advertising provision), 74.01(2) and 74.01(3) (ordinary selling price (OSP) claims in relation to sale and discount related claims), 74.011 (civil electronic marketing related provisions), 74.04 (bait and switch selling) and 74.05 (sales above advertised price).

CRIMINAL OFFENCES

Criminal offences under the Competition Act that can apply to price related advertising claims include sections 52 (the general criminal misleading advertising provision), 52.01 (criminal electronic marketing related provisions), 52.1 (deceptive telemarketing) and 54 (double ticketing).

DRIP PRICING

In addition to the above, in June 2022, the Competition Act was amended to expressly add drip pricing as a potential criminal offence or civil reviewable matter under sections 52(1.3) and 74.01(1.1) of the Competition Act.

Drip pricing refers to failing to disclose the full price of a product or service upfront with additional fees only disclosed, for example, in a long disclaimer or later in an online checkout process.

The drip pricing provisions were further strengthened on June 20, 2024 under amendments to the Competition Act (Bill C-59) that now make it clear that the only additional fees that a seller can “drip” (i.e., not disclose upfront) are those imposed directly on a purchaser by provincial or federal legislation (e.g., sales taxes).

The Competition Act now defines drip pricing as follows: “… the making of a representation of a price that is not attainable due to fixed obligatory charges or fees … unless the obligatory charges or fees represent only an amount imposed on a purchaser of the product … by or under an Act of Parliament or the legislature of a province”.

Drip pricing has been one of the Competition Bureau’s recent deceptive marketing enforcement priorities, together with false or misleading performance claims, ordinary selling price (OSP) claims and misleading testimonials/endorsements.

For more information, see: Drip Pricing.

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.

The Competition Bureau also commonly negotiates civil consent agreements (i.e., settlements) with parties, which can include remedies not expressly set out under the Competition Act such as the requirement to adopt a competition law compliance program, or seeks a prohibition order under the criminal provisions of the Competition Act.

The enforcement of the criminal and civil deceptive marketing provisions of the Competition Act is also an ongoing priority for the Competition Bureau, particularly false or misleading price claims, performance claims and ordinary selling price claims.

For more information, see: Enforcement.

PROVINCIAL/TERRITORIAL
CONSUMER PROTECTION LEGISLATION

False or misleading price claims can also raise issues under provincial and territorial consumer protection legislation. For example, section 14 of Ontario’s Consumer Protection Act prohibits false, misleading or deceptive representations.

In addition, sector specific regulation or voluntary industry codes of conduct also commonly include rules against false or misleading price claims.

For example, Ad Standards’ Canadian Code of Advertising Standards, which is a voluntary industry code of conduct administered by Ad Standards in Canada, includes specific clauses in relation to deceptive price claims, price comparisons, “regular price” claims, discount claims and bait and switch advertising.

COMPETITION BUREAU ENFORCEMENT PRIORITIES

Federally, some of the price-related advertising enforcement priorities for Canada’s Competition Bureau have consistently included the following:

Literally False Product/Service Price Claims

This is where the advertised price of a product or service is literally false.

Literally false advertising claims, including false price claims, can be enforced under either the general criminal or civil misleading advertising provisions of the Competition Act (sections 52 and 74.01).

For more information, see: Misleading Advertising.

Misleading Price Claims

An advertising claim does not need to be literally false to violate the Competition Act. In this regard, the general impression of advertising claims is relevant in addition to the literal meaning.

Misleading price claims can include, for example, “drip pricing” (under sections 52(1.3) and 74.01(1.1) of the Competition Act) where the full price of a product or service is not disclosed upfront with additional fees only disclosed, for example, in a long disclaimer or later in an online checkout process.

Failing to adequately disclose upfront the full price of a product (or additional fees or charges) has been challenged by the Competition Bureau in many cases. See, for example, here, here and here.

For more information, see: Misleading Advertising. See also: Drip Pricing and General Impression Test.

False or Misleading Sales Claims

False or misleading sales claims can include, for example, where “sales” are held without end or when no price reduction has been made when a sale is held.

For more information, see: Ordinary Selling Price (OSP) Claims and Sale Claims.

Misleading Ordinary Selling Price (OSP) Claims

Ordinary selling price (OSP) claims are when a seller refers to their own “regular” or “ordinary” price (or similar claims) or the regular/ordinary price in the market generally without meeting the required time or volume tests set out in sections 74.01(2) and 74.01(3) of the Competition Act.

In addition, in June 2024, section 74.01(3) of the Competition Act, which sets out the tests for OSP claims relating to a seller’s own products or services, was amended under Bill C-59 to reverse the onus from the Competition Bureau to sellers to have to prove, if challenged, that an OSP claim has met either the time test or volume test for making such claims.

The Competition Bureau has commenced enforcement against many traditional and online retailers over the past twenty-five years for allegedly failing to comply with the Competition Act’s OSP provisions, including Forzani, Suzy Shier, Hudson’s Bay, Sears, Michaels and Amazon, among others.

For more information, see: Ordinary Selling Price (OSP) Claims and Sale Claims.

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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.

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