Transcript Competition Act

“You Can’t Say That!”
Product and Packaging Claims
Presented to: Canadian Manufacturers & Exporter
Small Manufacturing Summit
February 17, 2011
Brian R. Fraser
Partner and Co-Leader Advertising, Marketing and Regulatory
Affairs National Practice Group
Gowling Lafleur Henderson, LLP
Table of Contents
Table of Contents:
1. Introduction
2. Federal Competition Act
3. Consumer Packaging and Labelling Act
4. “Made in Canada” Claims
5. Quebec – Charter of the French Language
2
Introduction – Where are the Rules are Found
• Advertising and marketing law is not governed
primarily by one statute
• Governed by:
• Federal Statutes
• Provincial Statutes
• Industry Self-Regulation (e.g. Advertising Standards
Canada)
• Codes, Guidelines and Policies (e.g. Canadian
Marketing Association, Canadian Standards
Association)
3
Introduction – Who Are Some Of The Key Regulatory Players
• Federal
• Competition Bureau (www.competitionbureau.gc.ca)
• Health Canada (www.hc-sc.gc.ca)
• Canadian Food Inspection Agency (www.inspection.gc.ca)
• Privacy Commissioner (www.priv.gc.ca)
• Provincial
• Consumer Protection Offices
• Liquor Boards & Commissions
• Provincial Privacy Commissions (Alberta, Quebec and B.C)
4
Competition Act
• The Federal Competition Act:
• Competition Act Regulates (among other things):
• Misleading Advertising
• Price Claims
• Contest Disclosure
• Telemarketing
5
Competition Act
• Misleading Advertising:
• Essence: “Making a representation to the public that is false or
misleading in a material respect”
• What is “material”?: Is it likely to influence the consumer’s
purchasing decision?
• Application: Very broad – Applies to all products and services,
and to claims made in any media, including traditional media,
online and even oral representations
• Test: What is the general impression created by the
representation (not just the literal meaning)
• Look at the advertising as a whole – what’s the consumer’s net
take-away?
6
Competition Act
Misleading Advertising (continued):
•
“Dual Track” Enforcement Process:
• Criminal (s.52)
• Beyond reasonable doubt
• Standard of “Intent”: “knowingly or recklessly” engage in prohibited conduct
• Penalties – jail or fines
• Civil (s.74.01)
• Balance of probabilities
• No guilty intent (mens rea) required
• Penalties:
• Cease and Desist Order
• Corrective Notices
• AMP’s (Fines)
7
Competition Act
Misleading Advertising
(continued):
• Most cases of misleading advertising will be handled via the civil
process
• Bureau reserves the right to proceed via criminal prosecution
where the accused acted knowingly or recklessly (had the
requisite legal intent – known as “mens rea”) and will take into
account a number of factors, including the degree of harm,
whether vulnerable groups targeted and whether the accused is a
repeat offender
• The Act also provides (s.36) a private right of civil action, but
requires the criminal standard of “knowing or reckless” conduct
8
Competition Act
Criminal Penalties
• Until the 2009 Budget Amendment (March 12, 2009):
• If “summary conviction”, the maximum penalty was
$200K fine and/or 1 year imprisonment
• If Crown proceeded by indictment, then directors and
officers of advertiser faced prison sentences of up to 5
years and a fine in the discretion of the court
9
Competition Act
Civil Penalties
• Prior to March 12, 2009:
• If Competition Tribunal or courts found violation of s.74.01 of Competition
Act, then advertiser could be subject to the following sanctions:
• A cease and desist order for up to 10 years
• A requirement that the advertiser publish a notice of the misleading
claim and court’s order
• An administrative monetary payment (AMP) for individuals up to $50K
(first order)/$100K (subsequent orders) and for corporations up to
$100K (first order)/$200K (subsequent orders)
10
Competition Act
Penalties
•
NOW:
• Criminal: Increase maximum prison term from 5 to 14 years
• Civil:
• Still have cease and desist orders and corrective notices
• Individuals – Increase AMP’s from $50K to $75K for first “offence” and from $100K
to up to $1 Million
• Corporations – Increase AMP’s from $100K for first offence to $10 Million and from
$200K to up to $15 Million for repeat offence
• Competition Tribunal empowered to:
• Require companies to pay restitution to victims
• Freeze assets if there is concern money may not be available for consumer redress
11
Competition Act
Performance Claims
• S.74.02 – governs claims regarding “performance,
efficacy or length of life” of product
• Must be based on “adequate and proper test”
• Onus of proof lies on advertiser
• Test must have been conducted prior to claim being
made
12
Competition Act
“Green” Claims
• Competition Bureau has issued guidance document (in
conjunction with CSA):
“Environmental Claims: A guide for industry and advertisers”
• One year “transition period” for enforcement ended
June 25, 2009 – Now “in force”
13
Competition Act
“Green” Claims
• Highlights:
• “vague and non-specific” claims – e.g. “environmentally friendly”, “green”, etc.
are discouraged
• Claims must be specific and verified
• Claims shall take into account the full life-cycle and net environmental impact
of the product
• Comparative claims, in particular, need to be quantified
• Detailed instructions are provided for certain selected claims – e.g.
“compostable”, “degradable”, “recyclable”, “reduced energy consumption”, etc.
and use of Mobius loop and natural symbols (e.g. fish and trees)
14
Consumer Packaging and Labelling Act
Consumer Packaging and Labelling Act
•
Applies to All “Prepackaged Products”
•
Require 3 Declarations:
1. Product Identity
2. Net Quantity
3. Manufacturer/Dealer Name and Address
•
Declarations 1 and 2 Must be Bilingual
•
Prohibits Misleading Labelling
•
Other product-specific regimes (including for food, drugs,
NHP’s, textiles, tobacco products, hazardous products, etc.)
may also impact label requirements
15
“Made in Canada” Claims
“Product of Canada”
• The last substantial transformation of the good occurred in Canada; and
• 98% of the total direct costs of producing or manufacturing the goods
have been incurred in Canada
“Made in Canada”
• The last substantial transformation of the good occurred in Canada;
• At least 51% of the total direct costs of producing or manufacturing the
goods have been incurred in Canada; and
• The “Made in Canada” representation is accompanied by an appropriate
qualifying statement, such as “Made in Canada with imported parts”
16
Quebec – Charter of the French Language
Subject to some exceptions, basic rule:
• Every inscription on a product, on its container or on its
wrapping, or on a document or object supplied with it,
including the directions for use and the warranty
certificates, must be drafted in French.
• The French inscription may be accompanied with a
translation or translations, but no inscription in another
language may be given greater prominence than that
in French.
17
Quebec – Charter of the French Language
Some “manufacturer’s” exemptions:
• “The product is from outside Québec, is intended for incorporation
into a finished product or for use in a manufacturing, processing
or repair operation and is not offered in Québec for retail sale”
• “The product is from outside Québec and the inscription is
engraved, baked or inlaid in the product itself, riveted or welded to
it or embossed on it, in a permanent manner. However,
inscriptions concerning safety must be written in French and
appear on the product or accompany it in a permanent manner”
18
Thank You
Brian R. Fraser
Tel: (416) 862-4293
Email: [email protected]
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