Application of the Canadian Competition Act to Representations on the Internet

The Canadian Competition Bureau ("the Bureau"), which is responsible for administration and enforcement of the Competition Act ("the Act"), recently released a Bulletin on its approach to enforcing the Act concerning misleading representations and deceptive marketing practices on the Internet. The primary focus of the Bulletin is on commercial web sites and marketing strategies using e-mail. Other channels of communications such as chat rooms or newsgroups may also come within the Act. The highlights in the Bulletin include:

• The Bureau will assert jurisdiction over foreign entities to the fullest extent authorized by law. This area is evolving and is to be determined on a case-by-case basis.
• Both the general impression conveyed by a representation and its literal meaning are to be taken into account for considering whether a representation is false or misleading.
• Determining which party possessed decision-making authority or control over content and the nature and degree of such authority or control on a case-by-case basis is key to finding the party to be held liable for "creating" the misleading representation. The potential candidates include the web page designer, the web host operating the server, the Internet service provider, or the business on whose behalf the representation was made. The Bureau will focus primarily on those businesses responsible for content and not those merely acting as conduits of content.
• Businesses should not assume that consumers should will read an entire web site: information for avoiding. Information required to avoid the creation of a false or misleading impression should be presented in such a fashion as to make it noticeable and likely to be read.
• A disclaimer cannot cure or retract a false or misleading representation. A list of general principles of guidance is given for considering whether a disclaimer is sufficient to alter the general impression created by the principal representation including location of the disclaimer on the web site; hyperlinks; attention grabbing tools such as graphics, sounds or flash images; the prominence of the disclaimer; the accessibility of the disclaimer; and repetition of the disclaimer.
• Certain specific information must be disclosed for certain categories of representations.
• Telemarketing and Internet advertising via "interactive telephone communications" may come within the Act.
• The Bureau will assert jurisdiction over foreign entities to the fullest extent authorized by law. This area is evolving and is to be determined on a case-by-case basis.

Effective on April 1, 2003, persons will be able to apply to the Bureau for a binding opinion on the application of any provision of the Act or regulations to specified courses of action. For the bulletin, please see http://strategis.ic.gc.ca/SSG/ct02501e.html