Marketing Law - Contract Law and Competition Act

Question 1 - Contract breach:How could the following dispute have been prevented?

BlackBerry will pay Nokia $137 million over a contract dispute related to whether certain payments allegedly due under a patent license contract between BlackBerry and Nokia were in fact owed to Nokia. BlackBerry released a press statement that said it accepted the decision and the company would pay the $137 million to Nokia company.

Question 2 - Competition law: Review Article 2 and answer the questions:

• What aspect of the Competition Act is the focus of this article?
• Give a brief description of the situation.
• What was the result?

Article 2: 1-year sentence for engineering executive who rigged bids for public contracts in Gatineau

A former executive for Quebec engineering firm Dessau received a 12-month sentence, including 6 months of house arrest and 6 months under curfew, after pleading guilty today in the Court of Quebec to rigging bids for City of Gatineau infrastructure contracts. Dave Boulay, formerly Dessau's Director and Assistant Vice-President, Outaouais, admitted to participating in a bid-rigging scheme from 2006 to 2008 in which several engineering firms conspired to divide up City of Gatineau contracts among themselves.The City of Gatineau was not aware of the bid-rigging scheme.

Quick Facts

• Following a Competition Bureau investigation, criminal charges were laid in June 2018 against Mr. Boulay and three others in connection with bid-rigging on a total of 21 City of Gatineau infrastructure contracts awarded between 2004 and 2008.
• Mr. Boulay received leniency in sentencing due to factors including his cooperation with the investigation and the fact that he had no role in the instigation of the bid-rigging scheme.
• Court proceedings are ongoing against the remaining accused: Andr Mathieu, formerly Vice-President and Associate for Cima+; Claude Marquis, formerly Regional Director, Outaouais for Genivar (now WSP Canada); and Michel Famery, formerly Regional Vice-President for Dessau.

Question 3 - Competition law: Review Article 3 and answer the questions:

• What aspect of the Competition Act is the focus of this article?
• Give a brief description of the situation.
• What was the result?

Article 3: Competition Bureau sues Ticketmaster over misleading ticket price advertising

The Competition Bureau took action today against Ticketmaster and its parent company, Live Nation, for allegedly making deceptive claims to consumers when advertising prices for sports and entertainment tickets.

The Bureau's investigation found that Ticketmaster's advertised prices are deceptive because consumers must pay additional fees that are added later in the purchasing process. This practice, which is known as "drip pricing", results in consumers paying much higher prices than advertised. Ticketmaster's mandatory fees often inflate the advertised price by more than 20% and, in some cases, by over 65%.

This legal action follows a public statement by the Bureau in July 2017, which called on all sporting and entertainment ticket vendors to review their marketing practices and display the real price of tickets upfront.

The Bureau has filed an application with the Competition Tribunal seeking, among other things, an end to the alleged deceptive marketing practices and an administrative monetary penalty.

Quotes

"In July, we called on ticket vendors to review their marketing practices. Today, we are filing an application with the Tribunal to stop Ticketmaster from making deceptive claims to consumers. Together, these actions send a strong signal to online retailers: consumers must have confidence that advertised prices are the ones they will pay." - John Pecman,Commissioner of Competition.

Quick Facts

• Ticketmaster has made the alleged deceptive marketing claims on a number of websites, including ticketmaster.ca, ticketsnow.com and ticketweb.ca, and on mobile applications.
• The mandatory fees imposed by Ticketmaster vary by ticket, and include "service fees", "facility charges" and "order processing fees".
• Ticketmaster sold over 480 million tickets in 2016 worldwide.

Question 4 - Competition law: Review Article 4 and answer the questions:

• What aspect of the Competition Act is the focus of this article?
• Give a brief description of the situation.
• What was the result?

Article 4: Hertz and Dollar Thrifty to pay $1.25 million penalty for advertising unattainable prices and discounts

The Competition Bureau has reached a consent agreement with Hertz Canada Limited (Hertz) and Dollar Thrifty Automotive Group Canada Inc. (Dollar Thrifty) where both companies will pay a total of $1.25 million inadministrative monetary penalties, ensure their advertising complies with the law and implement new procedures aimed at preventing advertising issues in the future.

The consent agreement is the result of an investigation where the Bureau concluded that Hertz and Dollar Thrifty were advertising enticing low prices to attract consumers. However, those low prices were unattainable because mandatory fees were systematically added to those prices. The Bureau concluded that the companies' price representations were misleading, and it was not sufficient for the companies to provide an estimate of the total price before consumers completed their reservation.

The additional mandatory fees could increase consumers' final price by as much as 10% to 57%. The Bureau concluded that some of these fees were described in a way that implied that they were mandatory taxes or surcharges imposed by various governments when, in fact, Hertz and Dollar Thrifty chose to impose the additional mandatory fees to recover part of their own cost of doing business. The companies will revise the description of their fees to ensure the descriptions are not misleading.

The Bureau also concluded that Hertz and Dollar Thrifty advertised discounts that led consumers to believe that they would get a percentage off of their total bill. In fact, the discount was not applied to the total bill and the additional mandatory fees still had to be paid in full.

The prices and discounts were advertised across various media, including on the companies' websites, on mobile applications and by email.

Quotes

"Enhancing Canadians' trust in the digital economy is a priority for the Bureau. Today's resolution will address any remaining issues in Hertz and Dollar Thrifty's advertising, including online. The two companies proactively and voluntarily took steps to address the conduct and will make further changes to ensure consumers are provided with accurate information." - John Pecman, Commissioner of Competition

Quick Facts

• The agreement, which is registered with the Competition Tribunal and is legally binding, resolves the Commissioner's concerns; as such no further legal proceeding is required at this time.
• The Administrative Monetary Penalty is paid to the Receiver General of Canada and becomes part of the government's general revenues.
• Hertz and Dollar Thrifty have also agreed to provide the Bureau with proof that they have implemented a corporate compliance program to improve their procedures going forward.
• Both companies are owned by the same parent company, Hertz Global Holdings Inc.
• In June 2016, Avis and Budget paid $3 million in penalty to resolve similar concerns over unattainable prices due to additional mandatory fees. They also paid $250,000 towards the Bureau's investigative costs.
• The Bureau will continue to examine similar conduct in the car rental market and will take appropriate action as necessary.

Question 5 - Competition law: Review Article 5 and answer the questions:

• What aspect of the Competition Act is the focus of this article?
• Give a brief description of the situation.
• What was the result?

Article 5: Competition Bureau sues HBC over alleged deceptive regular price claims and clearance sales

The Bureau has taken legal action today against the Hudson's Bay Company (HBC) for what it considers to be deceptive regular price claims and deceptive clearance promotions for mattresses and foundations sold together as sleep sets.

The Bureau's investigation found that HBC has engaged in deceptive marketing practices by offering sleep sets at grossly inflated regular prices and then advertising deep discounts on these prices suggesting significant deals to consumers. The Competition Act ensures that retailers do not entice consumers by making reference to an inflated regular price when advertising sales.

It is also alleged that HBC misled consumers into thinking that it was selling its remaining on-hand inventory during "clearance" and "end of line" promotions, when HBC was actually ordering new factory fresh sleep sets to fulfill each new purchase.

The Bureau has filed an application with the Competition Tribunal seeking an end to what it considers to be deceptive marketing practices, and the payment of an administrative monetary penalty by HBC.

Quotes

"Today's application to the Competition Tribunal is about providing consumers with accurate and truthful information when making purchasing decisions. Savings claims must always reflect real discounts.The Bureau will continue to take all appropriate action in order to ensure that consumers are provided with honest information." - John Pecman, Commissioner of Competition.

Quick Facts

• Regular price comparison claims have a powerful effect, because consumers seek out good deals.
• This makes regular price representations and related savings claims powerful marketing tools that must be truthful.
• HBC has been making the representations at issue throughout Canada, since at least March 2013.

Question 6 - Competition law: Review Article 6 and answer the questions:

• What aspect of the Competition Act is the focus of this article?
• Give a brief description of the situation.
• What was the result?

Article 6: Montreal based company fined $450,000 for deceptive telemarketing

On February 6, 2017, Mega Byte Information was sentenced by the Court of Qubec after pleading guilty to operating a deceptive telemarketing scheme that sold subscriptions to online directories using misleading sales techniques that targeted thousands of businesses in Canada, the United States, and Europe.

As part of the guilty plea, the company will pay a fine of$450,000. In addition, the company's president, Georges Haligua, is prohibited from engaging in telemarketing for 10years. Mega Byte Information was part of a larger group of companies overseen by Mr. Haligua.

Products were sold under the company names of Merchant Retail Supplies, Electronic Transaction Supplies, Express Transaction Services, IT Data Direct, Mega Byte Information, International Secure Technologies, Paper Roll Logistics and Services de fournitures aux dtaillants.

It should be noted this matter was resolved in this manner because of the recent Supreme Court decision in RvJordan. As the delay exceeded timelines provided by the decision, the Crown decided it was in the public interest to resolve this matter by way of a guilty plea. The Bureau vigorously pursues those who participate in anticompetitive activity and criminal deceptive marketing practices and refers these matters to the Public Prosecution Service of Canada for prosecution. They have independent authority on all decisions regarding the prosecution of a case, including sentencing submissions to the courts.

Quick Facts

• In September 2011, five individuals and four Montrealbased companies were charged with making misleading representations and engaging in deceptive telemarketing under the Competition Act, and fraud under the Criminal Code of Canada.
• Amalia DiFalco pleaded guilty on April 8, 2015, to charges of making misleading representations and engaging in deceptive telemarketing. She was fined$50,000, received a 15month conditional sentence and was required to perform 120hours of community service.
• Carl RubatDuMrac pleaded guilty on April 16, 2015 to charges of engaging in deceptive telemarketing. On May 29, 2015, he was ordered to make a donation of$5,000 to a charitable organization, received a 2month conditional sentence and was required to perform 175 hours of community service.
• ric Chenail pleaded guilty to charges of making misleading representations and engaging in deceptive telemarketing. On June 23, 2015, he was fined $10,000, received a 4month conditional sentence and was required to perform 175hours of community service.