Why the CASL-related amendments to the Competition Act will matter

The Competition Bureau filed a notice of application to the Competition Tribunal yesterday, brought against Aviscar, Budgetcar, and their parent company, Avis Budget Group Inc. The notice alleges that the companies engaged in deceptive marketing practices by failing to disclose additional fees that can increase the price of a car rental up to 35 percent. The Commissioner is seeking $30 million in administrative monetary penalties as well as consumer refunds.

The media release on the Competition Bureau’s website states that the action “marks the Bureau’s first proceedings under the new provisions of the Competition Act that came into force as part of Canada’s Anti-Spam Legislation (CASL) in July 2014, because Avis and Budget also use electronic messages to disseminate the alleged false or misleading representations.”

So what are these new provisions that came into force with CASL?

The Competition Act has always applied to false and misleading misrepresentations made in an electronic message. However, the bill that created CASL amended the Competition Act to more specifically address false and misleading representations arising in four components of an electronic message: 1) sender information 2) subject matter information (e.g., a subject line); 3) a “locator” (e.g., a URL); and 4) the content of a message.

Categories 1), 2) and 3) are somewhat new in that there is no “materiality” requirement. In other instances under the Competition Act, a representation must be false or misleading in a “material” respect, and a representation is considered material if it is likely to influence an “ordinary citizen” (e.g., to make a purchase). So the CASL-related amendments have made it easier for the Competition Bureau to prove that sender information, subject matter information, and URLs are false or misleading. Time will tell whether this makes a meaningful difference.

With respect to the content of a message, the materiality requirement remains. So the Competition Act applies to false and misleading representations made in the content of an electronic message in the exact same manner is it did before. However, there is an important  change outside of the Competition Act, in that the private right of action applies to these particular CASL-related provisions. As a result, consumers will be able to sue for actual damages and statutory damages of up to $200 per message containing a false or misleading representation, once the private right of action comes into force on July 1, 2017. This means that false and misleading representations made in electronic messages could become more costly to defend than representations made elsewhere.

In this case, the notice provides several examples of where Avis and Budget have allegedly made false or misleading representations, including print ads, websites, mobile apps, and an email.  The Bureau alleges that the subject line in the email sent by Avis is false or misleading, which is how the CASL-related amendments have been applied for the first time. With so many examples, if the Bureau can prove that the various representations are false or misleading, the fact that the subject line is not subject to the materiality condition will likely make little difference in the outcome of the case. So these changes may not matter very much right now, but they will in a few years.

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