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, 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

Offence/Reviewable Practice Maximum Penalty OldNew Misleading Advertising (criminal) 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 MarketingFirst Offence Subsequent Offences First Offence Subsequent Offences Individuals 50,000100,000750,0001,000,000 Businesses 100,000200,00010,000,00015,000,000 Increased Penalties

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: Fax: