Competition Bureau
ToolsResourcesGlossaryA description of the major provisions of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act is provided below. This description is provided for information purposes and should not be taken as a complete statement of the law. For greater certainty, readers are advised to consult the law and litigation section.
Consumer Packaging and Labelling Act Competition ActCRIMINAL OFFENCES IN RELATION TO COMPETITION(excluding false or misleading representations and deceptive marketing practices, section 52 through section 60) Conspiracy [section 45] - The conspiracy provisions of the Competition Act prohibit agreements between two or more persons to prevent or unduly lessen competition or to unreasonably enhance the price of a product. Agreements between competitors to fix prices, to allocate customers or geographic markets, or to restrict production of a product by setting quotas among competitors or other means are considered to be "hard-core" cartel activities, with no socially redeeming features. Bid-rigging [section 47] -The Bid-rigging provisions of the Competition Act prohibit agreements between two or more persons, usually competitors, to not submit a bid in response to a tender and agreements that set the bids various parties will submit. However, the bid-rigging provisions do not apply when the parties make the agreement known to the tendering authority before they submit their bids. This allows the tendering authority to cancel the tendering process or modify it in a way that keeps it competitive. Predatory Pricing [section 50(1)(c)] - The predatory pricing provisions address situations in which a firm engages in a policy of selling products below cost for a sufficiently long period of time to eliminate or deter rivals as competitors, and subsequently raises prices or otherwise harms the competitive process. Price Discrimination [section 50(1)(a)] -The price discrimination provisions help to ensure that small and medium-sized businesses have an equal opportunity to participate in the economy by requiring suppliers to make discounts, price concessions and advertising allowances available to competing customers on fair terms. Price Maintenance [section 61] - The price maintenance provisions are designed to provide resellers of products with the freedom to set their own prices and to protect suppliers from customer-led boycotts because they supply firms with low-pricing policies. RESTRICTIVE TRADE PRACTICESRefusal to deal (section 75) The provisions on the refusal to deal treat situations where a person finds it hard to conduct his or her business or cannot do so because he or she is unable to obtain a product in sufficient quantity according to the usual trade terms. FALSE OR MISLEADING REPRESENTATIONS AND DECEPTIVE MARKETING PRACTICESGenerally speaking, the false or misleading representations and deceptive marketing practices provisions of the Competition Act apply to anyone promoting, directly or indirectly, the supply or use of a product or service, or any business interest, by any means. The Act provides criminal and civil regimes to address false or misleading representations and deceptive marketing practices. Criminal Provisions False or misleading representations [section 52] - This provision prohibits knowingly or recklessly making, or permitting the making of, a representation to the public, in any form whatever, that is false or misleading in a material respect. Proof that any person was deceived or misled is not necessary in order to establish a contravention of this provision. Subsection 52(4) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect. Deceptive telemarketing [section 52.1] - This provision prohibits the making, or the permitting of the making, of materially false or misleading representations in promoting the supply of a product or a business interest during person-to-person telephone calls. Telemarketers are also prohibited from engaging in certain practices including: requiring payment in advance as a condition for receiving a prize that has been, or supposedly has been, won in a contest or game; failing to provide adequate and fair disclosure of the number and value of the "prizes"; offering a "gift" as an inducement to buy another product, without fairly disclosing the value of the gift; and offering a product at a grossly inflated price and requiring payment in advance. This provision also requires that telemarketers disclose: the name of the company or person they are working for; the type of product or business interest they are promoting; the purpose of the call; the price of any product being sold and any restrictions or conditions that must be met before the product will be delivered. Directors and officers of a corporation may be held liable for offences committed by the corporation under this section. Subsection 52.1(4) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect. Deceptive Notices of Winning a Prize [section 53] - This provision prohibits the sending of a notice that gives the recipient the general impression he or she has won a "prize" or other benefit and asks or gives the option to pay money or incur a cost in order to obtain the prize or benefit. The provision applies to notices sent by any means, including but not limited to regular or electronic mail. No offence would arise if the recipient actually receives the prize or benefit and the person who sent the notice provides fair and adequate disclosure of the number and approximate value of prizes or benefits, the area or areas to which they have been allocated, and any fact that materially affects the chances of winning; distributes prizes without unreasonable delay; and selects participants or distributes prizes randomly or on the basis of participants' skill, in any area to which the prizes or benefits have been allocated. Double ticketing [section 54] - This provision prohibits double-ticketing which is the selling of a product at a price that exceeds the lowest of two or more prices tagged on, or applied to, a product. Multilevel marketing [section 55] - This provision prohibit operators or participants in a multi-level marketing plan from making representations relating to compensation without fair, reasonable and timely disclosure of the amount of compensation received or likely to be received by typical participants in the plan. Pyramid selling [section 55.1] - This provision provides that a multi-level marketing plan that includes either compensation for recruitment, required purchases as a condition of participation, inventory loading, or the lack of a buy-back guarantee on reasonable commercial terms, constitutes a prohibited "scheme of pyramid selling". Offence and punishment - Any person who contravenes section 52, 52.1, 53, 55 or 55.1 is guilty of an offence and liable to a fine of up to $200,000 and/or imprisonment up to one year on summary conviction, or to fines in the discretion of the court and/or imprisonment up to five years upon indictment. Any person who contravenes section 54, is guilty of an offence and liable to a fine of up to $10,000 and/or imprisonment up to one year on summary conviction. Civil Provisions False or misleading representations [Paragraph 74.01(1)(a)] - This provision prohibits the making, or the permitting of the making, of a representation to the public, in any form whatever, that is false or misleading in a material respect. Subsection 74.01(6) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect. Representations not based on adequate and proper test [Paragraph 74.01(1)(b) ] - This provision prohibits the making, or the permitting of the making, of a representation to the public, in any form whatever, about the performance, efficacy or length of life of a product, which is not based on an adequate and proper test. The onus is on the person making the representation to prove that the representation is based on an adequate and proper test. Subsection 74.01(6) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect. Misleading warranties and guarantees [paragraph 74.01(1)(c)] - This provision prohibits the making, or the permitting of the making, to the public, of any materially false or misleading product warranty or guarantee, or promise to replace, maintain or repair an article. This includes circumstances in which there is no reasonable prospect that the warranty, guarantee or promise will be carried out. Subsection 74.01(6) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect. False or misleading ordinary selling price representations [subsections 74.01(2) and 74.01(3)] - These provisions prohibit the making, or the permitting of the making, of any materially misleading representation, to the public, as to the ordinary selling price of a product, in any form whatever. The ordinary selling price is determined by using one of two tests: either a substantial volume of the product was sold at that price or a higher price, within a reasonable period of time (volume test); or the product was offered for sale, in good faith, for a substantial period of time at that price or a higher price (time test). Subsection 74.01(6) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect. In the event that the represented ordinary price refers to the ordinary price of suppliers in the market, unless these suppliers have sold a substantial volume of the product at the represented ordinary price, or alternatively, these suppliers have offered the product for sale in good faith at the represented ordinary price, this price can not be referenced as the ordinary price, and an issue is raised under subsection 74.01(2). In the event that the represented ordinary price refers to the supplier’s ordinary price, unless the supplier has sold a substantial volume of the products at the represented ordinary price, or alternatively, the supplier has offered the product for sale in good faith at the represented ordinary price, this price can not be referenced as the ordinary price, and an issue is raised under subsection 74.01(3). Untrue, misleading or unauthorized use of tests and testimonials [section 74.02] - This provision prohibits, the unauthorized use of tests and testimonials, or the distortion of authorized tests and testimonials. The provision also prohibits a person from permitting such representations to be made to the public. Bait and switch selling [section 74.04] - This provision prohibits "bait and switch" selling which occurs when a product is advertised at a bargain price, but is not available for sale in reasonable quantities. The provision does not apply if the advertiser can establish that the non-availability of the product was due to circumstances beyond its control, the quantity of the product obtained was reasonable, or the customer was offered a rain check when supplies were exhausted. Sale above advertised price [section 74.05] - This provision prohibits the sale or rent of a product at a price higher than its advertised price. The provision does not apply if the advertised price was a mistake and the error was immediately corrected. Promotional contest [section 74.06] - This provision prohibits any promotional contest that does not disclose the number and approximate value of prizes, the area or areas to which they relate and any important information relating to the chances of winning such as the odds of winning. It also stipulates that the distribution of prizes cannot be unduly delayed and that participants be selected or prizes distributed on the basis of skill or on a random basis. It should be noted that in addition to complying with section 74.06 of the Act, a contest must be lawful as it relates to other federal statutes such as the Criminal Code, as well as other relevant provincial statutes and local by-laws. The possible applicability of these statutes and by-laws should be explored. Remedies - If a court determines that a person has engaged in conduct contrary to paragraph 74.01(1)(a), 74.01(1)(b), or 74.01(1)(c), subsection 74.01(2) or 74.01(3), or section 74.02,74.04, 74.05 or 74.06 it may order the person not to engage in such conduct, to publish a corrective notice and/or to pay an administrative monetary penalty of up to $50,000 in the case of a first time occurrence by an individual and $100,000 in the case of a first time occurrence by a corporation. For subsequent orders, the penalties increase to a maximum of $100,000 in the case of an individual and $200,000 in the case of a corporation. Consumer Packaging and Labelling ActThe Consumer Packaging and Labelling Act (CPLA), which is a criminal statute, requires that prepackaged consumer products bear accurate and meaningful labelling information to help consumers make informed purchasing decisions. The CPLA prohibits the making of false and misleading representations and sets out specifications for mandatory label information such as the product’s name, net quantity and dealer identity. Subsection 4(1) prohibits a dealer from selling, importing or advertising a prepackaged product unless it has applied to it a declaration of net quantity as prescribed by the Act and the Consumer Packaging and Labelling Regulations. Subsection 4(2) requires that this declaration appear on the principal display panel, is clearly and prominently displayed, easily legible and in distinct contrast to other information or representations shown on the label. Section 10 requires that each prepackaged product containing a declaration of net quantity bear a statement of the product’s identity in terms of either its common name, generic name or function, as well as a declaration of the dealer’s name and principal place of business. Section 5 prohibits a dealer from making representations in advertisements with respect to the net quantity of a prepackaged product unless they are in accordance with the Act and Regulations. Subsection 7(1) prohibits the sale, importation or advertisement of a prepackaged product that has a label applied to it that contains false or misleading representations relating to or reasonably regarded as relating to that product. Subsection 7(2) provides guidance on what types of expressions, words, figures, depictions, descriptions, symbols or illustrations may be considered to be false or misleading representations. Subsection 7(3) prohibits providing less product, beyond the prescribed tolerances, than the declared net quantity. Subsection 9(1) prohibits dealers from selling, importing or advertising prepackaged products in a container that has been constructed, filled or displayed in such a manner that may mislead consumers as to the quality or quantity of the product. Subsection 9(2) provides a defence for this practice if the dealer can establish that the container was filled in accordance with accepted production practices. Offence and punishment - Every dealer who contravenes any of sections 4 to 9 is guilty of an offence and liable to a fine of up to $5,000 on summary conviction, or to a fine up to $10,000 upon indictment. Every person who contravenes any provision of the Act, other than any sections 4 to 9, or any regulation made under paragraph 18(1)(d), (e) or (h), is guilty of an offence and is liable to a fine of up to $1,000 and/or imprisonment up to six months on summary conviction, or to a fine of up to $3,000 and/or imprisonment up to one year upon indictment. Textile Labelling ActThe Textile Labelling Act (TLA), which is a criminal statute, requires that consumer textile articles bear accurate and meaningful labelling information to help consumers make informed purchasing decisions. The TLA prohibits the making of false and misleading representations and sets out specifications for mandatory label information such as the generic name of each fibre present and the dealer’s full name and postal address or a CA identification number. Paragraph 3(a) prohibits a dealer from selling, importing or advertising a prescribed consumer textile article unless it bears a label stating the fibre content of the article. Paragraph 3(b) requires that this label be applied in accordance with all applicable provisions of the Act. Paragraph 6(b) requires that each label containing a representation with respect to the fibre content show the identity of the dealer. Section 4 prohibits making any representation with respect to the advertising of a consumer textile article unless it is made in accordance with the Regulations. Subsection 5(1) prohibits the sale, importation or advertisement of a consumer textile article that has a label applied to it that contains false or misleading representations relating to or reasonably regarded as relating to the article. Subsection 5(2) prohibits the making of false or misleading representations related to textile fibre products. Subsection 5(3) provides guidance on what types of expressions, words, figures, depictions, descriptions or symbols may be considered to be false or misleading representations. Offence and punishment - Every dealer who contravenes any of section 3, 4 or 5 is guilty of an offence and liable to a fine of up to $5,000 on summary conviction, or to a fine up to $10,000 upon indictment. Every person who contravenes any provision of the Act, other than section 3, 4 or 5, or of the regulations is guilty of an offence and is liable to a fine of up to $1,000 and/or imprisonment up to six months on summary conviction, or to a fine of up to $3,000 and/or imprisonment up to one year upon indictment. Precious Metals Marking ActThe Precious Metals Marking Act (PMMA), which is a criminal statute, provides for the uniform description and quality marking of precious metals articles (articles made with gold, silver, platinum or palladium) to help consumers make informed purchasing decisions. The PMMA prohibits the making of false or misleading representations related to precious metal articles. It also requires that dealers who choose to mark their articles with representations related to the precious metal quality, do so as prescribed by the Act and the Regulations. The quality mark must be accompanied by a trade-mark that has been applied for or registered with the Registrar of Trade Marks, Industry Canada. Section 3 prohibits dealers from marking a precious metal article or importing a marked article where the marking is not as authorized by the Act. Subsection 4(1) specifies that a quality mark be true and accurate in conformity with the standards and tolerances provided in the Regulations. Subsection 4(2) specifies that only marks authorized by the Regulations, and applied in a manner authorized by the Regulations, can be applied to a precious metal article. Subsection 4(3) requires a registered trade mark to be applied to the article when an authorized quality mark has been applied. Offence and punishment - Every dealer or person who contravenes the Act is guilty of an offence and liable to a fine of up to $500 on summary conviction.
|
|
Created: 2005-04-22 Updated: 2006-01-23 |
 Top of Page |
Important Notices |