Avis: CASL-related amendments to Competition Act violate the Charter

Earlier this year the the Competition Bureau brought an application against Aviscar, Budgetcar, and their parent company, Avis Budget Group Inc. The Bureau alleges that the companies engaged in deceptive marketing practices by failing to disclose additional fees that can increase the price of a car rental by as much as 35 percent. The Bureau is seeking $30 million in administrative monetary penalties as well as consumer refunds. In response, Avis et al. argue that “Recovery Fees” are standard across the rental car industry and well-known to consumers.

As discussed in an previous post, one component of the Bureau’s case involves allegations that Avis sent emails that are false or misleading. According to the notice, one email sent in 2014 gave “the general impression that it is possible for a consumer to save up to 25% off his or her next weekend rental“, when in fact Avis does not apply the discount to the Recovery Fees. The Bureau therefore argues that it is not possible to save up to 25%.

The Bureau relies in part on s. 74.011(1) of the Competition Act, one of the sections added to the law when CASL was passed, which applies to sender and subject matter information of an electronic message. This section is unique because, unlike other sections that deal with false or misleading representations, there is no requirement that a representation be false or misleading in a “material” respect. This appears to be the first case involving the CASL-related amendments under the Competition Act.

The respondents claim that the emails are neither false nor misleading, in addition to arguing that s. 74.011(1) is an unreasonable restriction under s. 2(b) of the Charter because the section

places unjustified limits on freedom of expression in that it applies over-broadly to all false or misleading representations regardless of whether they are false or misleading in a material respect.

The respondent asks the Competition Tribunal to either strike s. 74.011(1) from the Act or read in a materiality condition.

This won’t be the first time the Tribunal considers s. 2(b) of the Charter: in 2005 the Tribunal found that while s. 74.01(3) (which deals with misrepresentations of a seller’s ordinary selling price) does infringe s. 2(b), the infringement is reasonable and demonstrably justified.

Whether or not the respondent succeeds on the constitutional arguments in this case may have little bearing on the overall outcome of the matter, given that the information in the subject line of the Avis email is just one small piece of the Bureau’s case. However, stakeholders have argued before that the lack of a materiality requirement could lead to problems, so it will be interesting to see how the Tribunal rules on this. And, more importantly, it is likely that we will see others arguing that CASL violates the right to freedom of expression under the Charter in the future.

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