Canadian Institute 26th Annual Advertising and Marketing Law Conference
January 22, 2020
Toronto, ON
(As prepared for delivery)
Hello everyone. Thank you Jennifer, for that kind introduction, and thank you for having me here today to talk about advertising and marketing law from the Competition Bureau perspective.
Almost a year ago now, Matthew Boswell took over as Commissioner at the Competition Bureau, and since then we've been re-examining how the Bureau conducts its work, particularly in relation to the digital economy.
We are boosting our digital intelligence expertise and our tools and training to help us challenge anticompetitive conduct in today's complex global economy.
Shortly after beginning his term, Commissioner Boswell addressed the Canadian Bar Association at their annual spring conference in Toronto, signalling to the competition law community that active enforcement in the digital economy would be an area of primary focus for the Bureau during his term.
As Deputy Commissioner, I reiterated his message at the fall Ontario Bar Association Conference.
We will, of course continue our efforts to help businesses comply with the law through outreach, but we will also use all of the tools in our toolbox, as resources permit, to address potentially problematic behaviour, including the increased use of temporary injunctions to stop such conduct, pending a full hearing.
It's true that we may not always win cases, but it's important to take them on regardless - so potential targets know that we are watching, and to bring clarity to the law.
Over the last year, this commitment has been evident in almost all of our work, but particularly in the area of fraudulent and deceptive marketing practices, and that's what I'll go over today.
I'll share with you the Bureau's enforcement priorities as they relate to advertising and marketing, I'll talk a bit about the Bureau's role in the area of consumer privacy and data use in the digital economy, and I'll discuss our upcoming international collaboration opportunities.
But before I get to those points, I think it's important to contextualize them within the digital economy.
Digital commerce is integral to today's economy -- and it's a key consideration in almost all of our work at the Bureau.
From April to September 2019, the Bureau launched 16 cases, and we continue to work on 37 active cases, all related to the digital economy.
Digital is changing the way Canadians work, live and interact with each other, bringing new opportunities to grow the economy, attract investment and create the jobs of the future.
But, this global sea change means we must re-evaluate how we look at marketing and advertising as the industry shifts to an increasingly digital focus, and we must work to build consumer trust in the digital economy.
This matters to the Competition Bureau because trust is the foundation of a thriving economy - it allows consumers to make choices with confidence and businesses to compete and innovate freely.
As Canada's Competition Bureau, it's our job to build that trust, and over the coming years, the Bureau will address many novel challenges to that trust.
Dishonest price claims, suspicious consumer reviews, and dishonest information about data privacy rank high on the list of concerns.
And, as Deputy Commissioner of the Bureau's Deceptive Marketing Practices Directorate, these are the things that keep me up at night.
With the ever-expanding size and importance of the digital economy, it's critical that the Bureau rise to this challenge.
And so, we are taking a clear and strong stance to not only confront anti-competitive issues in the digital economy, but to be a world leader in our efforts.
When conducting our investigations, we will consider options such as consent agreements to resolve cases in a way that reflects the public interest.
There are, of course, practical implications for advertisers here.
Businesses must consider the requirements of the Competition Act when advertising prices and making marketing claims, because failing to do so could mean breaching the law.
Let me share with you a couple of recent examples that demonstrate the Bureau's focus on bringing more enforcement cases to court.
Recently, we took action against Flighthub for what appeared to be false claims on its websites. The Bureau felt these claims could result in hidden fees being charged to consumers for flight-related services like seat selection and flight cancellation.
While the Bureau continues its ongoing investigation into the marketing practices of FlightHub, we negotiated a temporary consent agreement that prohibits FlightHub from using false or misleading marketing practices on flighthub.com and justfly.com.
As part of this agreement, FlightHub will not mislead consumers into believing that the company will reserve a specific seat, or offer flexible cancellation and rebooking options, nor will it mislead consumers about the cost of flights.
Hudson's Bay Company, or HBC, is a good example of our renewed focus on "hard" enforcement.
We took them to court over their advertising and pricing for sleep sets in Canada. It was the Bureau's view that HBC offered their sleep sets at artificially high "regular prices," and then advertised deep discounts off the inflated "regular price."
As a result of the Bureau's work on this case, HBC was required to pay a 4.5-million-dollar penalty and costs, and create a compliance program that will help them stay on the right side of the Act.
False and misleading claims harm competition and consumers, and as advertisers, you must consider the Competition Act when setting and advertising prices and when making claims about a product or service.
As more and more consumers make purchases online, hidden fees are increasingly an area of concern.
Since 2015, the Bureau has successfully resolved five cases involving hidden fees.
The Bureau took action against Ticketmaster for its pricing claims, in which it allegedly advertised an initial price for event tickets and then charged consumers additional fees later in the purchasing process.
When consumers tried to buy tickets at the advertised price, they often found that throughout the online purchasing process, several mandatory fees were added.
The Bureau concluded that these fees often increased the cost of tickets by over 20% and, in some cases, by over 65%.
In June of 2019, the Bureau reached a settlement with Ticketmaster, in which the company agreed to pay 4.5 million dollars in penalties and costs and establish a corporate compliance and monitoring program.
Consumers should be able to trust that the prices they see upfront are the ones they will ultimately pay.
The Bureau's intervention in this case sends a clear message to the marketplace that these types of business practices will not be tolerated.
The Bureau also recently investigated what it concluded to be misleading claims by four of Canada's largest rental car companies.
So far, the Bureau's work in this space has led to almost 6 million dollars in penalties and the creation and use of formal programs to ensure future compliance with the law.
These cases are really important for us because they send a message to all digital advertisers that Canada's competition watchdog is on guard for anyone who tries to use misleading pricing schemes and deceptive claims to attract consumers.
The Bureau is leveling the playing field between competitors in industries where we detect potentially anticompetitive conduct.
And we are certainly not limiting ourselves to cases involving hidden fees. We are also focused on influencer marketing.
Consumers need to know when influencer content is actually an advertisement.
An Ad Standards study revealed that a full 35 percent of Canadians aged 18-35 say they have made a purchase based on the recommendation of an Internet influencer and 41 percent said that they find the practice of influencer marketing to be acceptable.
So, it's clear that Canadians are spending a lot of money based on the recommendations of Internet influencers, and the Bureau wants to make sure that consumers are not being misled.
We thoroughly reviewed influencer marketing practices, and subsequently sent letters to close to one hundred brands and marketing agencies in the health and beauty, fashion, technology and travel sectors advising them of their requirements under the law.
We reminded them that the Competition Act applies to influencer marketing just as it does to traditional advertising.
Influencers must clearly disclose their connection with the business, product or service they promote.
If an influencer receives payment in money, commissions, free products or services, or discounts, or if they have a personal or family connection to the company, they must disclose that information to consumers.
And advertisers need to know that if they are forbidden from making a certain claim about their product, an influencer is also forbidden.
Influencer marketing is not a way around the law.
We've provided new guidance to advertisers and influencers on our website to help them stay on the right side of the law.
Specifically, influencers should ensure that their disclosures are as visible as possible, and that they are clear and contextually appropriate, and their reviews and testimonials are based on actual experience.
This influence can have a significant impact on the buying habits of Canadian consumers, therefore, it's a key area of focus for the Bureau.
