Deceptive Marketing Practices

AuthorJohn S. Tyhurst
The Competition Act1 contains an extensive scheme of deceptive prac-
tices provisions. The core provisions, with the longest lineage in the
legislation, are the prohibitions (crimina l and civil) of misleading rep-
resentations. Other criminal provisions address deceptive telemarket-
ing, the awarding of pri zes, double ticketing, and pyra mid selling. Civil
deceptive practices provisions include those de aling with representa-
tions on tests and test imonials, bait and switch advertis ing, sale at above
advertised prices, and ordinary price cla ims.
These provisions may seem at f‌irst blush more suited to provincial
consumer protection or trade practices than competition legislation.
However, laws addressing misrepresentations and deceptive market-
ing promote competitive markets. Accurate information disclosure is
one of the cond itions for “workable competition.” The prescr iptions for
workable competition from economists include that there be no “unfai r,
exclusionary, predatory or coercive tactics,” and that sales promotion
be informative, or not misleading. 2
1 Competition Act, RSC 1985, c C-34 [Competition Act or Ac t].
2 Frederic M Schere r, Industrial Marke t Structure and Economic Perform ance
(Boston: Houghton Mii n, 1980) at 42. See also Ch apter 3, Section C(2)(c) and
Sect ion D(1)(e)(i).
Deceptive Marketing Practices 497
Promoting competitive markets and eciency wa s cited as a ration-
ale for the amendments which expanded t he misleading trade promo-
tion prohibitions in the Act in 1976.3 The Competition Bureau noted in
its supporting material for the amendments that promoting accurate
disclosure and inform ation about products reduces distortions t hat can
lead market s to function less ecient ly.4 The Federal Court of Appeal
in Canada (Commissioner of Competition) v Premier Career Management
Group Cor p echoed this view. Citing the purpose claus e, the court noted
that “the objective of the deceptive marketing provi sions in section 74.01
is to incent f‌irms to compete based on lower prices and higher quality,
in order ‘to provide consumers with competitive prices and product
ch oic es .’”5 The court went on to obser ve that when “a f‌irm feeds mis-
information to potential consumers, the proper functioning of the mar-
ket is necessari ly harmed, and the Act is r ightly engaged.”6 The court
noted that “a focus on the consumer is not indicative of the objective of
the scheme, but is a consideration antecedent to the ultimate objective:
maintaining the proper functioning of the market in order to preser ve
product choice and quality.7
The Federal Court saw an elevated role for consumer protection in
the provisions in Lin v Airbnb. Citing the purpose clause reference to
the objective of competitive prices and product choices, Gascon J stated
that the Competition Act “has been recog nized as a consumer protection
legislation . . . to be interpreted . . . in favour of the consumer.8 He relied
on Supreme Court authority to the eect that “consumer protection
laws are to be interpreted generously in favour of the consumers” and
gave a liberal interpretation of the double ticketing provisions that sup-
ported the certif‌ication of a class action founded on their breach.9
As noted in Chapter 3,10 the deceptive marketing provisions h ave
also been viewed from time to time as advancing marketplace fairness
and honesty. This rationale was referred to when Parliament was con-
sidering amendments which bec ame the deceptive practice oences
covering such matters as mi sleading performance guarantees, bait and
switch advertising, py ramid schemes, misleading promotional contests,
3 Canada, Bur eau of Competition Policy, Stage I Competition Policy, Background
Pape rs (Ottawa, Consumer and Cor porate Aairs, 1976) at 38.
4 Ibid.
5 Canada (Commissioner of Competit ion) v Premier Career Management Group Corp,
2009 FCA 295 at para 61 [Premier Career Management].
6 Ibid at para 62.
7 Ibid at para 63.
8 Lin v Airbnb, Inc, 2019 FC 1563 at para 57 [Lin v Airbnb].
9 Ibid, citing Seidel v TELUS Communica tions Inc, [2011] 1 SCR 531 at para 37.
10 S ee Chapter 3, Section C(2)(c).
and sale above advertising pr ices.11 It was envisioned that these provi-
sions would raise the level of conf‌idence of market participant s, and
hence stimulate economic activity. The minister (André Ouellet) noted
that the amendments would establish rules to encourage the private
sector to conduct business in an orderly fashion and stimulate “public
conf‌idence in the eectiveness of the market system.”12
As the legislative mater ial and jurispr udence indicates, these pro-
visions have thus been linked to several of the objectives found in the
purpose clause, and form part of the fabric of the Competition Act.
In the United States, deceptive marketing prohibitions a re similarly
enforced alongside antitrust laws. S ection 5(a) of the Federal Trad e Com-
mission Act provides t hat “unfair or deceptive acts or practices in or
aecting commerce are . . . declared unlawf ul.”13 While this covers a
wide scope of behaviour, “deceptive” practices were def‌ined in the com-
mis sion’s Policy Statement on Deception as “likely to mislead con sumers
acting reasonably under the ci rcumstances and . . . material to consum-
ers — that i s, it would likely aect the consumer’s conduct or decisions
with regard to a product or service. 14
While the Criminal Code contai ned certain prohibitions against mislead-
ing representations as e arly as 1914,15 it was only in 1960 that the f‌irst
oence for misleading advertising wa s added to the Combines Investiga-
tion Act.16 The Code provisions were consolidated into the Combines Act
in 1969, and in 1976 they were substantially overhauled, with the addi-
tion of several new oences, as noted above.17 For the following twenty-
11 An Act to amen d the Combines Investigation Act and the Bank Act a nd to repeal an
Act to amend the Com bines Investigation Act and the Criminal Code, SC 1974-75-76,
c 76 [An Act to amend the Combines Invest igation Act 1976].
12 Paul Goreck i & William T Stanbur y, The Objectives of Canadian Com petition
Policy 1888-1983 (Montreal: IRPP, 1984) at 137.
13 15 USC § 45(a)(1).
14 US, Federal Trade Commission, FTC Policy Statem ent on Deception, 103 FTC 174
at 175 (1984).
15 Bri an R Fraser, “Misleading Adver tising and Deceptive Market ing Practices
Under the Federal Competition Act: A Review of t he Last 25 Years and Recent
Developments” (2012) 25 Canadian Competition L aw Review 485 at 496–97 [Fra-
ser ]; An Act to amend the Criminal Code, SC 1914, c 24, s 1.
16 An Act to amen d the Combines Investigation Act and the Criminal Cod e, SC 1960,
c45, s 13.
17 An Act to ame nd the Combines Investigation Act 1976, above note 11, s 18(1).

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