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, endorsements/testimonials, 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, endorsements/testimonials and influencer marketing, ordinary selling price (OSP) claims (e.g., in connection with sales) and scarcity and urgency cues, among other types of advertising and 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 of the Competition Act include Competition Tribunal or court orders to stop the conduct, publish a corrective notice, pay restitution to consumers and administrative monetary penalties (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 if that amount can be reasonably determined; and (ii) for corporations, up to the greater of $10 million ($15 million for each subsequent order), 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.
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: CASL, Contests and CASL and CASL Compliance Errors. For CASL checklists and precedents that we offer, see: CASL Precedents.
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SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that helps clients in Toronto, Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to anti-spam legislation (CASL), Competition Bureau complaints, the general misleading advertising provisions of the federal Competition Act, Internet, new media and social media advertising and marketing, promotional contests (sweepstakes) and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
