Transcript misleading advertising

Competition Act Amendments 2009:
Misleading Advertising
By Bill Hearn, McMillan LLP
Canadian Marketing Association Webinar
April 14, 2009
Outline
• Overview of misleading advertising prohibition in
Competition Act
• Where Bill C-10 has tightened the rules
• How Bill C-10 has increased fines, penalties and
remedies for consumers
• Implications for marketers
Truth in Advertising 101
Misleading Advertising
• Tell the truth
• Have support for what you say
• Keep your promise
• In the heat of battle, make good decisions
MISLEADING ADVERTISING
Misleading Advertising
• Offence under Competition Act
• Both criminal and civil prohibitions
• Seriousness of offence and whether
misrepresentation made “knowingly” or
“recklessly” determines whether Bureau
goes criminal track
Misleading Advertising
• “Representation” – broadly defined
•
“Made
to the public”
• Bill C-10 tightened rules/closed possible loopholes,
making it not necessary to establish that:
-
any person was misled
-
anyone in Canada misled: Sticking it to Mr. Stucky, Ontario Court of Appeal
decision February 17, 2009
-
representation was made in a place where public had access: Competition
Tribunal’s July 2008 decision in Premier Career Management Group case
Misleading Advertising
• False or misleading in a material respect
• Tests: False = Objective…Misleading = Subjective
• Literal meaning and general impression
• Disclaimers
MISLEADING ADVERTISING
Increased Penalties
Maximum Penalty
Offence/Reviewable
Practice
Misleading
Advertising
(criminal)
Old
New
Fine at the discretion of the court and/or
five years imprisonment
Fine at the discretion of the court
and/or 14 years imprisonment
Deceptive Marketing
First Offence
Subsequent
Offences
First Offence
Subsequent
Offences
Individuals
50,000
100,000
750,000
1,000,000
Businesses
100,000
200,000
10,000,000
15,000,000
Misleading Advertising
• Big penalty for civil offence
- Prospects for Charter challenge
- Implications for consent settlement
agreements
- Avoiding litigation costs, personal criminal
sanctions and multi-count violations
Other Consumer Remedies
• Competition Tribunal may:
- order restitution to victims of deceptive
marketing practices
- freeze assets of accused business and
prevent disposal of property before finding
• interim order likely where accused is not a
sizeable and reputable business
Implications for Marketers
• Easier to prove offences
• Non-compliance more costly (in terms of
liability for penalties imposed by regulator
and damages awarded in private lawsuits)
• Should review and update marketing law
compliance programs to mitigate risks
Bill Hearn
McMillan LLP
Brookfield Place
181 Bay Street
Suite 4400
Toronto, ON M5J 2T3
Tel: 416.865.7240
Fax: 416.865.7048
Email: [email protected]