Antitrust Law Daily Wrap Up, ADVERTISING NEWS: Canadian court dismisses Competition Bureau’s misleading advertising claims against Rogers Communications, (Aug 20, 2013)

By Tobias J. Gillett, J.D., LL.M.

The Ontario Superior Court of Justice has dismissed misleading advertising claims brought against Rogers Communications Inc. by the Canada Competition Bureau, although it did find that Rogers made performance claims about its Chatr wireless services without conducting adequate testing, and dismissed Rogers’ constitutional challenges to certain provisions of the Competition Act, the Competition Bureau announced today.

In November 2010, the Competition Bureau filed an action against Rogers, challenging its advertising claims that consumers subscribing to Rogers' Chatrservices would experience “fewer dropped calls than new wireless carriers” and have “no worries about dropped calls.” At that time, the Competition Bureau asserted that its investigation disclosed that the dropped call rates experienced by Chatr customers were no different than those experienced by customers of new wireless providers. The Canadian government opened the domestic wireless market to new entrants in 2008 with an auction of wireless spectrum. Rogers halted its advertising campaign within a month of the Competition Bureau’s action.

During the court proceedings, Rogers challenged two provisions in the Competition Act on constitutional grounds: (1) the requirement that advertisers must conduct adequate testing prior to making performance claims and (2) the administrative monetary penalty remedy available under the misleading representations provisions of the Act. The court rejected these arguments, concluding that the testing requirement was justified and that the penalty was not criminal in nature.

However, the court concluded that Rogers’ advertising did not mislead consumers, although it did find that Rogers neglected to conduct adequate testing prior to making its claims about the performance of its services.

Competition Commissioner John Pecman released a statement voicing his dissatisfaction with the court’s decision regarding the Competition Bureau’s misleading advertising claims, but indicating his approval of the court’s decision with respect to the testing and constitutional issues.

"We are disappointed that the Court did not agree that Rogers’ claims were misleading to consumers, and we are currently considering our next steps in this matter,” Pecman stated. “Nevertheless, we are pleased that the Court has dismissed the constitutional challenges brought forth by Rogers, and has agreed with our position that Rogers did not conduct adequate and proper testing beforehand to support its claims about dropped calls in some Canadian cities.”

Rogers statement. Rogers issued a press release expressing its approval of the court’s decision that its advertising did not mislead consumers.

"We're pleased that the court today confirmed that Chatr's advertising of fewer dropped calls, in connection with its 2010 launch, was fair and accurate,” the press release read. “The court also confirmed that the drive testing used by Rogers is the best method for comparing network performance and is universally accepted, both in Canada and internationally. Testing conducted both before and after the 2010 launch confirmed the accuracy of Chatr's advertising. The court found that we should have completed additional testing in certain urban markets in advance of the launch. This testing was completed shortly after launch.”

Companies: Rogers Communications Inc.

News: Advertising