Marketing and e-commerce to drive competition litigation risk in 2024
The main risks for businesses from both Competition Bureau enforcement and class actions in 2024 arise in the context of marketing and e-commerce: the Bureau and class action plaintiffs are increasingly focused on pricing and contractual representations made on websites. The Bureau continues to use the new tools at its disposal to address so-called “drip pricing”, and courts have continued a trend seen in recent years to make it easier for plaintiffs to bring civil claims for false or misleading representations.
The Competition Bureau and enforcement risk
2024 is potentially a year of change at the Competition Bureau, as the current commissioner’s five-year term expires in early March. No matter whether the current commissioner’s mandate is renewed or a new commissioner is appointed, we expect the Bureau to maintain an aggressive stance on one of its focus areas from recent years: marketing issues, particularly regarding pricing representations and “urgency cues” on websites.
The Bureau has been using the new tools Parliament added to the Competition Act to challenge “drip pricing”, commencing a claim against Cineplex in 2023 to challenge a mandatory “online booking fee” added to the price of movie tickets purchased on Cineplex’s website and mobile apps. While sectors like airlines, rental cars, and ticketing have long been a focus of the Bureau, these provisions are of general application, and all businesses engaged in e-commerce should consider whether their sites have mandatory fees and, if so, whether the disclosure of those fees complies with the Act’s requirements.
Civil litigation under the Competition Act
Recent case law from the British Columbia Court of Appeal has continued a trend we identified in 2021: the courts are removing long-standing impediments to class actions seeking damages for misrepresentation and false advertising. Previous cases from the BC Court of Appeal (and the Superior Courts in Ontario) required that plaintiffs show they relied on a misrepresentation to their detriment, and therefore suffered damages. This made it difficult to bring a class action because proving that a class member relied on a particular representation requires individual inquiry.
In 2022 and 2023, multiple cases from the Court of Appeal appear to have relaxed (in certain circumstances) this requirement. This development potentially opens the door to more class actions for misleading representations to the public, including on product labels and website terms of use. While it can remain problematic for plaintiffs to prove damages in these cases, that is often an issue that is left to the merits and is not necessarily an impediment to certifying a class action. Legal and marketing teams should remain vigilant in considering the representations that are made in their marketing materials and on their websites to mitigate the risk of class actions for misrepresentations.