On March 20, 2020, the Competition Bureau (Bureau) issued a statement announcing its enforcement priorities during the 2019 novel coronavirus disease (COVID-19) outbreak (see Statement from the Commissioner of Competition regarding enforcement during the COVID-19 coronavirus situation). One of the Bureau's two top enforcement priorities in relation to COVID-19 is deceptive marketing practices, including false or misleading claims about a product's ability to prevent, treat or cure the virus (product performance claims). Consumer product companies and their advisors should also expect the Bureau to continue to pursue product performance claims in general that are not based on adequate and proper testing.

While performance claims, for example relating to the speed or reliability of a product, are commonly used to distinguish a company's products from competitors, the Competition Act, R.S.C. 1985, c. C-34, contains a standalone civil provision that prohibits such claims where they are not based on adequate and proper tests (section 74.01(1)(b)). For more information, see:

The Bureau has challenged performance claims in a wide variety of industries over the years, including in relation to automobiles, anti-corrosion devices, cell phones, chimney-cleaning products, clothing, disease cures, fuel saving devices, hot tubs, sports equipment and tanning and weight loss products, among others.

For example, on March 11, 2020, the Bureau announced that it was asking the Competition Tribunal (Tribunal) to stop Nuvocare Health Sciences Inc. from making performance claims in relation to its health products pending its investigation into whether the company's claims were supported by adequate and proper testing. See Competition Bureau, News Release, Competition Bureau takes action to stop weight loss claims by seller of 'WeightOFF Max!' and 'Forskolin Nx' (March 11, 2020).

In announcing its enforcement against Nuvocare, the Bureau said:

Unsupported performance claims have also consistently been one of the Bureau's top advertising-related enforcement priorities (together with false or misleading price claims, ordinary selling price claims that do not meet the tests set out under the Competition Act and influencer advertising that fails to disclose the material connection with a brand or is otherwise false or misleading). For more information, see Practice Note, Performance Claims Under the Competition Act. See also The Deceptive Marketing Practices Digest, Volume 2, Competition Bureau, March 7, 2016 (Deceptive Marketing Practices Digest Volume 2) and The Deceptive Marketing Practices Digest, Volume 5, Competition Bureau, March 4, 2020 (Deceptive Marketing Practices Digest Volume 5). In its 2019-20 Annual Plan, the Bureau also specifically highlighted healthcare related performance claims as one of its top priorities. See 2019-20 Annual Plan: Safeguarding the Future of Competition, Competition Bureau, July 25, 2019.

Section 74.01(1)(b) of the Competition Act:

The potential penalties for violating the performance claims provision of the Competition Act include Tribunal or court orders to cease the conduct, publish a corrective notice or pay an administrative monetary penalty of up to $750,000 for individuals ($1 million for subsequent orders) and $10 million for corporations ($15 million for subsequent orders).

The Tribunal and Canadian courts have also set out criteria for evaluating whether testing for a performance claim is adequate and proper. In addition, the Bureau has issued guidance in relation to its enforcement position under section 74.01(1)(b) of the Competition Act. See, for example, Practice Note, Performance Claims Under the Competition Act. See also Deceptive Marketing Practices Digest Volume 2 and Deceptive Marketing Practices Digest Volume 5.

Some specific issues that can arise in relation to performance claim testing include:

In addition to potentially violating section 74.01(1)(b) of the Competition Act, a false or misleading performance claim can also contravene the general criminal or civil misleading representation provisions of the Competition Act or the federal Consumer Packaging and Labelling Act, R.S.C. 1985, c. C-38 (CPLA). False or misleading representations under the CPLA include, among other things, descriptions relating to the performance of a product that are likely to deceive a consumer. For more information, see Practice Note, Misleading Advertising Under the Competition Act.

Based on the fact that product performance claims were already a top Bureau advertising-related enforcement priority, as well as now being subject to increased scrutiny in light of the COVID-19 outbreak, it is important that companies and their legal advisors ensure that any claims relating to the performance of a product or service comply with section 74.01(1)(b) of the Competition Act and related law established by the Tribunal and Canadian courts.