Warranties and guarantees

This section of the Competition Act (paragraph 74.01(1)(c)) refers to prohibitions against making a representation about the warranty or guarantee of a product if it is misleading or there is no reasonable prospect that it will be carried out. This includes any promise to replace, maintain, or repair a product or continue a service until it has achieved a specified result.

General impression test

When deciding whether a representation raises concerns under the Competition Act, the court considers both the literal meaning of the information and the general impression it makes. This is known as the “general impression test.”

Remedies for non-compliance

If a court determines that a person has made misleading claims about warranties and guarantees, the court may order the person to stop engaging in such conduct, to publish a corrective notice, 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

Compliance programs

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

Commissioner’s opinions

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.

Further reading