Section 74.02 of the Competition Act prohibits publishing a testimonial or representing that another person has made a test related to an advertised product’s performance, effectiveness or length of life, except when:
- the third person who gave the testimonial or made the test has previously published the testimonial or represented that he or she has made the test; and
- the person, prior to publishing the testimonial or representation that a test has been conducted, has secured in writing the third party’s approval of the testimonial or representation as well as permission to publish or make it.
Furthermore, the representation or testimonial made or published by the person must accord with the representation or testimonial the third party has previously made, published or approved. An example of this would be where a quote is taken out of context, such as where a reputable lab’s report of a product test is published and it expresses favourable comments or results on certain points, but these are heavily qualified. If the representation presents these comments or results without important qualifications, the representation could be in breach of this provision.
Remedies for non-compliance
If a court determines that a person has violated section 74.02 of the Act, which is a civil provision, it can order them to stop engaging in such conduct, to publish a correction, and/or to pay an administrative monetary penalty.
For individuals, the penalty for first-time violations is up to the greater of:
- $750,000 ($1 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, if that amount can be reasonably determined.
For corporations, the penalty for a first-time violation is up to the greater of:
- $10 million ($15 million for each subsequent violation); and
- three times the value of the benefit derived from the deceptive conduct, or, if that amount cannot be reasonably determined, 3% of the corporation’s annual worldwide gross revenue
Having a credible and effective compliance program can provide benefits in dealing with the Competition Bureau to resolve a violation of one of the legislation it enforces. A compliance program can also help:
- reduce the risk of potentially illegal conduct
- protect your brand and reputation
- detect instances of potentially illegal conduct at an early stage
- identify when others might put you at risk
To find out more information on written opinions under section 124.1 of the Competition Act, contact the Bureau’s Information Centre toll-free at 1-800-348-5358 or online. If a written opinion is provided by the Commissioner, a fee will apply based upon the section of the Act the proposed conduct or practice applies to. A written opinion is binding on the Commissioner as long as the facts submitted are accurate, and it remains binding if the facts on which the opinion is based remain substantially unchanged and your conduct or practice is carried out, as proposed. All fees and service standards for written opinions are set out in the Competition Bureau Fee and Service Standards Policy.
- Written opinions
- Advertising dos and don’ts
- Enforcement Guidelines:
- Competition Act, section 74.02
- Influencer marketing and the Competition Act
- Online reviews (Volume 1: Deceptive Marketing Practices Digest)
- Influencer marketing (Volume 4: Deceptive Marketing Practices Digest)