Court Decisions

Court Proceedings, Judgments
and Court Orders - 2002

To protect confidential information, the Bureau does not reveal the names of the companies involved unless they were otherwise made public.

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Fine Gold Jewellers and The Diamond Co.

Date: 2002-12-20
Event: Consent Agreement
Court: Competition Tribunal
Court File Number: CT-2002-008
Parties: 1376535 Ontario Limited, Tadros & Tadros Limited, Ibrahim & Tadros Inc. and Tadros and Mina Limited, operating as Fine Gold Jewellers and The Diamond Co.; and Mansour Tadros and Isis Tadros
Provision(s): 74.01 (3) of the Competition Act - Ordinary price: supplier's own

Summary: On December 20, 2002, the Commissioner of Competition filed a consent agreement with the Competition Tribunal requiring the corporations and officers operating the retail chains Fine Gold Jewellers and The Diamond Co. to stop using deceptive practices in the promotion of jewellery sales.

The agreement stemmed from a Competition Bureau investigation which alleged that the jewellery retailers were contravening the ordinary price claims provisions of the Competition Act by continuously offering 50% discounts from inflated regular prices of gold and diamond jewellery. The Act requires that one of the two following tests are met when setting a regular selling price:

• either a substantial volume of the product was sold at that price or a higher price within a reasonable period of time before or after the making of the representation (volume test); or
• the product was offered for sale, in good faith, at that price or a higher price for a substantial period of time recently before or immediately after the making of the representation (time test).

Under the terms of the agreement, the corporations and their officers have agreed to cease making any written or verbal representations relating to the regular selling price of products unless 50% or more of the volume of the product had been sold at the stated regular price or higher within 12 months prior to making the claim.

In addition, 1376535 Ontario Limited, Tadros & Tadros Limited, Ibrahim & Tadros Inc., Tadros and Mina Limited and their officers which operate the 19 retail stores in Ontario, have agreed to pay a $25,000 administrative penalty.

The agreement will remain in force for 10 years.

Court Documents:
Regist ered Consent Agreement (PDF: 167 KB)
Consent (PDF: 90 KB)
News Release:
Competition Bureau Stops Bogus Jewellery Sales

Nippon Gohsei Industries Ltd.

Date: 2002-12-18
Event: Conviction
Court: Federal Court of Canada, Trial Division
Court File Number:
Party: Nippon Gohsei Industries Ltd.
Provision(s): 45 of the Competition Act - Conspiracy
Products: Food preservatives (Sorbates)

Summary: The Competition Bureau's international investigation in the food preservatives industry has concluded with the conviction of Japan-based Nippon Gohsei Industries, Ltd. (Nippon) who pleaded guilty to charges of price fixing and market sharing in Federal Court. The company was sentenced to pay a $100,000 fine for its part in the conspiracy.

The Bureau's investigation, which started in 1998, revealed that Nippon was involved in a conspiracy to fix prices for sorbic acid and potassium sorbate, otherwise known as sorbates. Sorbates are primarily used as mold inhibitors in the manufacture of foods such as dairy products, bakery products, flavours and spices, syrups and other processed foods commonly sold in grocery stores.

The conviction of Nippon Gohsei Industries, Ltd., of Uneo Fine Chemicals Industry Ltd. and of Mr. Yoshiyuki Ebara, concludes the Bureau's inquiry of the sorbates industry.

Court Documents:
Indictment (PDF: 101 KB)
Agreed Statement of Facts (PDF: 282 KB)
News Release:
Competition Bureau Investigation in International Price Fixing Conspiracy Leads to $100,000 Fine

Thane Direct Canada Inc.

Date: 2002-12-13
Event: Consent Agreement
Court: Competition Tribunal
Court File Number: CT-2002-007
Parties: Thane Direct Canada Inc.
Provision(s): 74.01 (1)(a) of the Competition Act - "false or misleading representations"; 74.01 (1)(b) of the Competition Act - "adequate and proper test"

Summary: On December 13, 2002, the Commissioner of Competition filed a consent agreement with the Competition Tribunal in which Thane Direct Canada Inc. agreed to stop selling the Abtronic and the Abtronic Pro. The consent agreement stemmed from a Competition Bureau investigation which alleged that Thane made representations for the promotion of the two electronic muscle stimulation devices that were false or misleading and not based on adequate or proper tests.

Thane sold these two devices via television infomercials and their Web site for approximately $120 each to hundreds of thousands of Canadians, giving the false impression that without performing any physical exercise, a person could lose weight, obtain an athletic physique with well-defined abdominal muscles, replace the workout benefits of a fully equipped gymnasium and increase their strength.

According to this agreement, Thane has agreed to:

• stop selling and marketing the Abtronic and Abtronic Pro;
• not market any similar device that offers weight loss or muscle toning without exercise, unless the Competition Bureau agrees that the claims are based on adequate and proper tests;
• pay a $75,000 administrative monetary penalty; and
• refund the full value of the devices to eligible consumers who make a request.

Customers interested in refunds should contact Thane by phone at 1-800-978-6329, or by mail at: Thane Direct Canada Inc., 101 Canarctic Drive, Toronto, Ontario, M3J 3N1.

Court Documents:
Regist ered Consent Agreement (PDF: 382 KB)
Consent (PDF: 59 KB)
News Release:
Abtronic Muscle Stimulators Removed from Market by Competition Bureau

Sherwood Co-operative Association Limited

Date:2002-11-20
Court: Saskatchewan Provincial Court

Summary: The Saskatchewan Provincial Court decided not to commit Sherwood Co-operative Association Limited and one of its managers to trial, following a preliminary inquiry relating to charges laid against them on September 27, 2001. The Judge found there was some evidence that the price of the gasoline retailer in Pilot Butte, Saskatchewan, had been influenced upwards by Sherwood Co-operative. However, there was insufficient evidence that the influence was by one of the means prohibited by the price maintenance section of the Competition Act (section 61 (1)(a)), namely by agreement, threat, promise or any like means. The Judge therefore declined to commit the accused to trial.

Degussa AG, Lonza AG, Nepera Inc., Reilly Industries Inc.

Date: 2002-10-16
Event: Convictions
Court: Federal Court of Canada
Court File Numbers: T-1581, 1582, 1583
Parties: Degussa AG of Germany, Lonza AG of Switzerland, Nepera Inc. and Reilly Industries Inc.
Provision(s): 45 of the Competition Act - Conspiracy
Products: Bulk vitamins (Vitamin B3)

Summary: On October 16, 2002, the Federal Court of Canada imposed fines totalling $3.875 million for a conspiracy to fix prices and allocate market shares for the vitamin B3 sold in bulk in Canada, against the remaining accused parties in the Bureau's inquiry.

Degussa AG of Germany, Lonza AG of Switzerland, Nepera Inc. and Reilly Industries Inc. of the United States pleaded guilty to participating in the international conspiracy, which was initiated in January 1992 and continued until March 1998 in breach of Canada's Competition Act.

Degussa AG was sentenced to pay a total fine of $2.5-million, while Lonza AG was fined a total of $1.1-million. Nepera Inc. and Reilly Industries, Inc. were fined $240,000 and $35,000 respectively for offences relating to vitamin B3. The conviction of these parties follow the conviction of Hoffmann-La Roche Ltd., BASF AG, Rhône-Poulenc S.A., Eisai Co. Ltd., Daiichi Pharmaceutical Co. Ltd. in 1999, where total fines of $88.4 million were imposed by the Federal Court of Canada.

News Release:
Competition Bureau investigation leads to over $4-million in fines for international bulk vitamin conspiracies

Dr. Kuno Sommer

Date: 2002-10-16
Event: Conviction
Court: Federal Court of Canada, Trial Division
Court File Number: 1584-02
Party: Dr. Kuno Sommer
Provision(s): 45 of the Competition Act - Conspiracy
Products: Bulk vitamins (Vitamin B3)

Summary: Dr. Kuno Sommer, a Swiss National and former senior executive at Hoffmann-La Roche Ltd, a Swiss corporation, pleaded guilty for his participation in a series of conspiracies in bulk vitamins throughout the period between January 1991 and December 1997. The Federal Court of Canada imposed a fine of $150,000 on Dr. Sommer for his role in multiple conspiracies to fix prices and allocate market shares for 10 bulk vitamins and food additive products sold in Canada, with regard to which eight firms and two individuals were convicted and fined in 1998 and 2000.

The international conspiracy was initiated in January 1992 and continued until March 1998 in breach of Canada's Competition Act.

News Release:
Competition Bureau investigation leads to over $4-million in fines for international bulk vitamin conspiracies

Stroh Brewery Company (Quebec) Ltd.

Date: 2002-10-10
Event: Conviction
Court: Federal Court of Canada, Trial Division, Ottawa
Court File Number: T-1504-02
Party: Stroh Brewery Company (Quebec) Ltd.
Provision(s): 61 of the Competition Act - Price Maintenance
Products: Stroh Branded Beer

Summary: A Competition Bureau investigation in the beer industry in Quebec has led to the conviction in Federal Court of The Stroh Brewery Company (Quebec) Ltd. (Stroh), which pleaded guilty to charges of price maintenance. The company was sentenced to pay a $250,000 fine, the largest fine imposed to date in a price maintenance case.

The Bureau's investigation, which started in 2001, revealed that Stroh engaged in price maintenance in convenience stores and other retail outlets in the Province of Quebec for the sale of bottled beer by the case of various sizes. In particular, convenience stores and retail outlets had to maintain the price specified by Stroh for the products, thereby avoiding any discounting of the products.

Court Documents:
Agreed Statement of Facts (PDF: 241 KB)
Indictment (PDF: 66 KB)
Prohibition Order (PDF: 218 KB)
News Release:
Competition Bureau investigation leads to a $250,000 fine in a price maintenance case

All Communications Network of Canada Co.

Date: 2002-09-23
Event: Charges
Court (preliminary hearing): Halifax Provincial Court
Court File #: 1222594
Accused: All Communications Network of Canada Co.
Provision: 55 of the Competition Act - Multi-level marketing; 55.1 of the Competition Act - Pyramid selling
Products: Long-distance telecommunication services

Summary: Eight charges were laid in Halifax, N.S. against All Communications Network Co. for allegedly recruiting new participants by exaggerating income expectations without disclosing the income of a typical participant. The company operates a multi-level marketing plan which promotes and sells long-distance telecommunication services.

The Competition Bureau alleges that ACN Canada, as it is known, and its participants, through its Web sites and at public meetings, recruited new participants by exaggerating income expectations without disclosing the income of a typical participant. Under the Competition Act, it is illegal to make reference to earnings in a multi-level marketing plan without disclosing a typical participant's income. In addition, operators of a multi-level marketing plan must ensure that any income representation made by a participant in the plan includes disclosure of a typical participant's income.

Furthermore, ACN Canada was charged with operating an illegal scheme of pyramid selling by offering recruitment bonuses to participants who paid for the right to recruit other participants.

News Release:
Multi-level Marketing Firm Charged for Misleading Participants

Sears Canada Inc.

Date: 2002-07-22
Event: Application
Court: Competition Tribunal
Court File Number: CT-2002-004
Party: Sears Canada Inc.
Provision: 74.01 (3) of the Competition Act - Ordinary Price: Supplier's Own
Product: Tires

Summary: The Commissioner's application alleges that Sears Canada Inc. deceived consumers about the real value of their savings by referring to "inflated" regular prices when advertising certain tires at "sale" prices during the year 1999. The Commissioner is asking that the Tribunal issue a 10-year prohibition order and order Sears to cease and desist the alleged conduct, publish a public correction notice, and pay an administrative monetary penalty.

Court Documents:
Notice of Application (PDF: 8,341 KB)
Response (PDF: 2,848 KB)
Reply (PDF: 1,064 KB)
News Release:
Competition Bureau Seeks Order Against Sears: Alleges Tire Prices Inflated

Yellowbusiness.ca

Date: 2002-07-04
Event: Charges
Court: Ontario Court of Justice
Accused: James Tetaka
Provision: 52 (1) of the Competition Act - False or misleading representations
Products Involved: Internet business directory

Summary: The Competition Bureau announced on July 4, 2002, that further charges were laid under the misleading representation and deceptive marketing practices provisions of the Competition Act against an individual responsible for the mailings of Yellowbusiness.ca.

James Tetaka was arrested and charged for his role in a mailout dated May 25, 2001, which asked recipients to send a payment to postal boxes in the Toronto area for the listing of their business in the Internet business directory, Yellowbusiness.ca. Bureau investigators alleged the mailings were made to appear as invoices from an existing service provider, such as Bell Canada or the Yellow Pages, requiring recipients to pay $85.55 when in fact the mailings were solicitations.

These charges follow the guilty plea of Peter Kuryliw, director of 1473253 Ontario Inc., which carried on business under the name Yellowbusiness.ca. Mr. Kuryliw was fined $30,000 on May 28, 2002, and given 90 days to dissolve his numbered company.

News Releases:
2002-07-04 - Further Charges Against Yellowbusiness.ca Operator
2002-05-28 - Director of Yellowbusiness.ca pleads guilty to deceiving Canadian businesses
2001-05-14 - Competition Bureau Issues Warning: Questionable Invoices for Internet Directory Services Resurface

Tamec Inc.

Date: 2002-06-18
Event: Prohibition Order
Court: Court of Quebec, District of Montreal
Court File Number: 500-73-001642-012
Party: Tamec Inc. and its subsidiaries Commercial Information Bank of Canada and Deev Inc.
Provision(s): 52 of the Competition Act - False or misleading representation; 52.1 of the Competition Act - Deceptive telemarketing
Products: Business directories

Summary: Tamec Inc. and its subsidiaries pleaded guilty in a Montreal court to deceptive telemarketing and misleading advertising charges under the Competition Act. The guilty pleas resulted from an investigation by the Competition Bureau into deceptive telemarketing activities aimed at Canadian businesses and government institutions, as well as religious, educational and non-profit organizations, across Canada.

Following the guilty pleas, the accused parties were fined $300,000. The court also imposed an order to be in effect for a period of 10 years which prohibits the convicted parties and their officers from engaging in similar deceptive marketing practices. Tamec has also agreed to commit an additional $180,000 towards a remediation program which will offer victims up to $300 each in free goods and services.

Court Documents:
Prohibition OrderPDF Document (247 KB)
* available in French only
News Release:
Montreal Telemarketing Companies Plead Guilty for Deceptive Telemarketing Activities

Marvin Redler (S.S. Viking Industries, C.S.R.H. Heritage Group Inc., F.D.G. Fortune One Group and F.N.G. First National Galleries)

Date: 2002-05-31
Event: Guilty plea
Court: Court of Quebec (District of Montreal)
Party: Marvin Redler
Provision(s): 52 (1) of the Competition Act - False or misleading representations; 52.1 of the Competition Act - Deceptive telemarketing
Product: Promotional items

Summary: On May 31, 2002, Marvin Redler of Dollard des Ormeaux, Quebec, pleaded guilty to nine misleading advertising and deceptive telemarketing charges under the Competition Act. The guilty plea followed a lengthy criminal investigation conducted by the Bureau relating to deceptive telemarketing and direct mail practices carried out by a number of Montreal-based telemarketing firms from 1994 to 1999.

Mr. Redler was sentenced on December 13, 2002 to a one year suspended sentence, 200 hours of community service to be performed within 9 months and a 10 year prohibition order.

Mr. Redler was a telemarketer with S.S. Viking Industries and C.S.R.H. Heritage Group Inc., which were charged with misleading advertising under the Act in December 1999 and May 2000, respectively. Both companies and their directors pleaded guilty and received sentences ranging from large fines to jail terms. Mr. Redler was also the director of two telemarketing companies, F.D.G. Fortune One Group and F.N.G. First National Galleries, which were charged with deceptive telemarketing by the Bureau on September 21, 2000.

News Release:
2002-06-04 - Montreal man pleads guilty for his role in deceptive telemarketing operations
2000-09-21 - Criminal Charges Laid Against Montreal-based Telemarketer
2000-08-02 - Montreal-based Telemarketing Company pleads guilty to criminal charges under the Competition Act
1999-12-01 - Criminal Charges Laid Against Montreal-based Telemarketers

P.V.I. International Inc.

Date: 2002-05-30
Event: Prohibition Order
Court: Competition Tribunal
Court File Number: CT-2001-001
Parties: P.V.I. International Inc., Michael Golka and Darren Golka
Provision(s): 74.01 (1)(a) of the Competition Act - "false or misleading representation"; 74.01 (1)(b) of the Competition Act - "adequate and proper test"; 74.02 of the Competition Act - Representation as to reasonable test and publication of testimonials
Product(s): Fuel saving device

Summary: On May 30, 2002, the Competition Tribunal issued an order against P.V.I. International Inc. ("P.V.I."), Michael Golka and Darren Golka. The order is the result of a March 1, 2001 application in which the Commissioner alleged that the respondents had engaged in reviewable conducts contrary to paragraphs 74.01 (1)(a) and (b) and section 74.02 of the Competition Act.

The Tribunal determined that P.V.I. made false and misleading representations to the public in promoting its fuel saving/emission reducing device known as the Platinum Vapor Injector. It found that the respondents made certain performance claims regarding the device which were not supported by adequate and proper tests. Claims that the U.S. government had approved the device were also determined to be false or misleading.

The order prohibits the respondents from making fuel savings, emission reductions and government approval representations when promoting the Platinum Vapor Injector or any similar devices. It requires that Michael Golka and Darren Golka each pay an administrative monetary penalty of $25,000 for their role in the conduct. P.V.I., the company, was ordered to pay an administrative monetary penalty of $75,000. The Tribunal did not order the publication of a corrective notice.

Court Documents:
Notice of Application for an Order Pursuant to Section 74.1(1) of the Competition Act (PDF: 1,504 KB)
Response to Application (PDF: 555 KB)
News Release:
Consumers Misled by Gas Saving Device: Competition Bureau Obtains Decision Against PVI International Inc.

 

Yellowbusiness.ca (108656)

Date: 2002-05-28
Event: Guilty plea, Fine
Court: Ontario Court of Justice (District of Toronto)
Court File Number: 
550-36-00049-013
550-26-287-010
550-26-000291-012
550-26-303-015
550-26-306-018
550-26-305-010
550-26-304-013
550-26-335-017
550-26- 336-015
Parties: Yellowbusiness.ca / Peter Kuryliw
Provisions: 52 (1) of the Competition Act - False or misleading representation
Product: Internet business directories

Summary: Peter Kuryliw, the sole director of Yellowbusiness.ca, was fined $30,000 for misleading thousands of businesses and non-profit organizations across Canada with a deceptive mailout for an Internet directory. 

In May 2001, Yellowbusiness.ca mailed documents to over 40,000 businesses and non-profit organizations across Canada asking recipients to send a payment to a postal box in the Toronto area for an Internet business directory that listed details of their organizations. The mail piece was misleading in that the format and text of the "bill" and its layout gave the impression that it was a phone bill, and that the costs were related to the Yellow Pages or Bell, or some service that the recipients were already utilizing.  Particular language on the bill also gave the impression that this company had been in existence for some period of time and had an established customer base, which was not true.

News Releases:
2002-05-28 Director of Yellowbusiness.ca pleads guilty to deceiving Canadian businesses
2001-05-14 - Competition Bureau Issues Warning: Questionable Invoices for Internet Directory Services Resurface

Phone Directories Company Inc.

Date: 2002-05-10
Event: Consent Order
Court: Competition Tribunal
Court File Number: CT-2002-002
Party: Phone Directories Company Inc.
Provision(s): 74.01 (1)(a) of the Competition Act - False or misleading representations
Products: Phone directories

Summary: On May 15, 2002, the Commissioner of Competition filed a consent order with the Competition Tribunal requiring Phone Directories Company Inc. to refrain from making false or misleading representations in connection with the sale of its directories.

Business owners in the Kamloops and Okanagan Valley areas of British Columbia had complained that the U.S.-based company, which operates in B.C. as Western Phone Directories, failed to deliver on promises concerning publication dates, the number of copies to be distributed, and the area of distribution.

Under the terms of the consent order, Phone Directories Company Inc. has agreed not to make representations by any means, including via the Internet, which are false or misleading, including those regarding:

• the number of telephone directories to be published for any given geographic area;
• the time period in which any given telephone directory will be published and distributed;
• the geographic area over which any given telephone directory will be distributed; and
• the density of distribution of any given telephone directory.

In addition, pursuant to the consent order, Phone Directories Inc. has paid a $5,000 administrative penalty. The order will remain in force for 10 years.

Court Documents:
Regist ered Consent Agreement (PDF: 156 KB)
News Release:
Phone Directories Company Consents to Order to Refrain from Making Misleading Representations

Yellow Business Pages Corp. and 1421628 Ontario Limited

Date: 2002-01-22, 2002-01-17, 2001-02-05, and 2000-11-30
Event: Charges
Court: Ontario Court of Justice
Accused - companies: Yellow.com Business Pages Corp. 1448466 Ontario Limited and 1421628 Ontario Limited
Accused - individuals: Alan Benlolo, Elliot Benlolo and Simon Benlolo of Thornhill, Ontario and Victor Serfaty, of Richmond Hill, Ontario.
Provision: 52 (1) of the Competition Act - False or misleading representations
Products Involved: Internet business directory

Summary: On November 30, 2000 eight charges under the misleading representations provisions of the Competition Act were laid against three individuals and two companies for allegedly invoicing businesses for unsolicited Internet directory listing services. Further charges were laid against the same parties on February 5, 2001. Another individual and company were charged in January 2002 for their role in the alleged misleading representations.

The charges relate to documents mailed under the names "Yellow Business Pages.com" and "Yellow Business Directory.com" to businesses and charitable organizations across Canada between May and December of 2000. The Bureau alleges the mailings were made to appear as invoices or bills when they were in fact solicitations.

News Releases:
2001-02-05 - Arrests Made and More Charges Laid Against Internet Business Directory
2000-11-30 - Charges Laid for Unsolicited Internet Directory Services