Postmedia: Rogers uses "freedom of speech" as excuse for misleading ads

Image from beckstei on Flickr

By Sarah Schmidt for Postmedia News

Rogers Communications Inc. is asking an Ontario court to strike down part of a federal law requiring a company to have "adequate and proper" tests of a product's performance before advertising claims about the product — on the grounds that it violates its freedom of expression.

In addition to taking on the performance claims provision of the Competition Act, the telecom giant is arguing before the Ontario Superior Court the hefty financial penalties that can be imposed on a company for making a false or misleading claim are also unconstitutional.

Rogers has turned to the Canadian Charter of Rights and Freedoms as part of a high-stakes fight against the Competition Bureau. The case is set to proceed in June, with time set aside for arguments and evidence about the constitutionality of key provisions of the Competition Act.

"I don't know what the court's going to do. We'll all find out, but I think both of these constitutional arguments are very interesting," James Musgrave said Thursday.

Musgrave, a partner at law firm McMillan specializing in competition and marketing law, is not involved in the Rogers case, but monitors competition law cases.

The legal battle with Rogers began in November 2010, when the bureau went to court to levy a $10-million penalty for a "misleading advertising" campaign involving the company's Chatr discount cellphone service. The bureau is also asking the court to order Rogers to pay restitution to affected customers and refrain from engaging in similar campaigns for the next decade.

The national advertising campaign, launched with the entry of upstart competitors like Wind Mobile in the market, claimed that Chatr had "fewer dropped calls than new wireless carriers" and its customers have "no worries about dropped calls."

The bureau says it conducted an investigation, which involved an extensive review of technical data obtained from a number of sources, and concluded there was "no discernible differences in dropped call rates between Rogers' discount service and new entrants."

Before the facts can be scrutinized, the constitutionality of the Competition Act will be debated.

Amendments enacted in 2010 increased the maximum penalty for a corporation from $250,000 to $10 million for a first order and $15 million for each subsequent transgression. The penalty, considered a civil matter under the act, is different than a fine, reserved for criminal cases.

Under this new regime, Bell Canada agreed last June to pay an administrative monetary penalty of $10 million after the bureau concluded that Bell charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless. Read more »

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