In the courts: 2006

Court Proceedings, Judgments and
Court Orders - 2006

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

2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000

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Tom Taylor, Ravenshoe Services Ltd.

Date: 2006-12-13
Event: Sentencing
Court: Provincial Court of British Columbia
Court File Number: 138908-1
Parties: Tom Taylor, Ravenshoe Services Ltd.
Provision(s): s. 202, 206, 207 of the Criminal Code - Gaming and betting
Products: Unsolicited mailings of lottery promotions

Summary: In June 2004, charges (nine counts) were laid in the Provincial Court of British Columbia against Tom Taylor and Ravenshoe Services Ltd., under the gaming and betting provisions of the Criminal Code. These charges relate to direct mail lottery schemes that brought in approximately $47 million under the names Canadian Lottery Buyers Association, International Monetary Funding, International Lottery Commission and Transworld Lottery Commission. The lottery schemes were mailed to residents of the United States, the United Kingdom, Australia and New Zealand from 1995 to 2002.

On December 13, 2006 - following a joint submission by the accused and the Crown - Tom Taylor pled guilty to two counts and agreed to a $225,000 fine and other conditions. The court also imposed a probationary term of one year and 100 hours of community service, which includes speaking to seniors about the potential financial harm in responding to certain marketing material. While the corporate accused, Ravenshoe Services Ltd., was unable to pay a fine, the Court said that if the company had such an ability, a $775,000 fine would have been imposed.

News Release:
2006-12-13 Lottery Reseller Hit with Record Fine http://www.competitionbureau.gc.ca/internet/02242e.html

(3098146)

David Stucky

Date: 2006-11-17
Event: Court Decision
Court: Ontario Superior Court of Justice
Court File Number: 258-04
Parties: David Stucky
Provision(s): s. 52 & 52(1) of the Competition Act - False or Misleading Representations
Products: Unsolicited mailings of lottery and merchandise promotions

Summary: On November 17, 2006, the accused was acquitted on all 16 counts of making false or misleading representations under section 52 of Competition Act. This acquittal was based on the view of the Honourable Mr. Justice Arthur Gans that a representation to "the public" in section 52 of the Act includes only the Canadian public. The judgment, however, found all of the promotions except for International Lottery Commission misleading and the accused would have been found guilty on six of the 16 counts but for the ruling on the public issue.

On December 18, 2006, the Attorney General filed an appeal of this acquittal with the Ontario Court of Appeal.

Court Documents: 2006-11-17 - Court Decision (link http://www.canlii.org/on/cas/onsc/2006/2006onsc16807.html)

(108570)

Grafton-Fraser Inc.
Date : 2006-07-27
Event : Registration of Consent Agreement
Court : Competition Tribunal
Court File Number : CT 2006-007
Parties : Grafton-Fraser Inc., Mr. Glenn A. Stonehouse
Provision(s) : 74.01(2) and (3) of the Competition Act - Ordinary price: suppliers generally and Ordinary price: suppliers own
Products : Men's Clothing

Summary :

A consent agreement between the Commissioner of Competition and Grafton-Fraser Inc., a national retailer of menswear products, and Glenn A. Stonehouse, President, Chief Executive Officer and majority shareholder of Grafton-Fraser, was filed with the Competition Tribunal wherein the Commissioner concluded that Grafton-Fraser Inc. and Glenn A. Stonehouse had engaged in reviewable conduct under the ordinary price provisions of the Competition Act between November 1, 1999 and September 2005.

The Commissioner concluded that, commencing in the Spring of 2005, Grafton-Fraser used a price representation (referred internally as the “Regular White Ticket Price”) preceded by the term “compare at” in making reference to the ordinary price offered by suppliers generally, when promoting products at a reduced price (referred internally as the “retail price”). The price represented by Grafton-Fraser as being the ordinary price offered by suppliers generally was fictitious, as Grafton-Fraser could not establish that: (1) a substantial volume of the products were sold by suppliers generally at or above the represented price within a reasonable period of time before the making of the representation; (2) the products were offered by suppliers generally at or above the represented price in good faith for a substantial period of time recently before the making of the representation; and (3) the “compare at” representation was added to the “Regular White Ticket Price” creating the general impression that the reference price refers to a general market price without appropriate market validation.

The Commissioner also concluded that Grafton-Fraser used a price representation (referred internally as the “Regular White Ticket Price”) in making reference to its own ordinary price, when promoting products at a reduced price (referred internally as the “retail price”). This “Regular White Ticket Price” was fictitious, in that: (1) in respect of certain products, Grafton-Fraser had not sold a substantial volume of the products at or above the represented price within a reasonable period of time before the making of the representation; (2) in respect of certain products, Grafton-Fraser did not offer the products at or above the represented price for a substantial period of time recently before the making of the representation; (3) the “Regular White Ticket Price” was used to create the general impression that this price is the price at which goods were ordinarily sold; and (4) the “Regular White Ticket Price” was used solely as a basis for exaggerating the savings claims to customers as “new arrivals” were immediately placed on sale.

Grafton-Fraser Inc. agreed to pay an administrative monetary penalty of $1,000,000 and a portion of the Bureau's costs of $200,000; ensure that all current and future regular price representations comply with the OSP provisions of the Competition Act ; implement and maintain a corporate compliance program; and post a corrective notice in its retail stores, on its Web site and in newspapers across Canada.

News Release :

2006-07-27 - Grafton-Fraser pays $1.2 million to settle misleading advertising case with Competition Bureau

Court Documents :

Consent Agreement: The Commissioner of Competition v. Grafton-Fraser Inc. and Glenn A. Stonehouse (3069506)


Canadian Imperial Bank of Commerce

Date: 2006-06-14
Event: Registration of Consent Agreement
Court: Competition Tribunal
Court File Number: CT-2006-005
Parties: Media Syndication Global, Havas S.A., Interactive Marketing Group ULC
Provisions: 74.01(1) and 74.01(2) of the Competition Act - False or misleading representations concerning the price at which a product would be ordinarily supplied.
Products: Bushnell Binoculars (8x21) and Blood Pressure Monitors

Summary: Between 2002 and 2004, promotional offers on Bushnell (8x21) Binoculars and Mark of Fitness Blood Pressure Monitors were inserted in CIBC’s monthly Visa statements. A Bureau investigation revealed that the regular prices claimed in the bill inserts were overstated. As part of a settlement reached between the Competition Bureau and the parties, over 2,000 Canadians will receive a refund.

Court document: Consent Agreement

News Release: 2006-06-14 - Competition Bureau investigation leads to refunds in misleading mail-outs.

Yellow Business Pages.com and Yellow Business Directory.com

Date: 2006-06-08 and 2005-11-25
Event: On appeal from the sentence
Court: Court of Appeal for Ontario
Court File Number: C42553 and C42481
Accused - individuals: Alan Benlolo, Elliot Benlolo and Simon Benlolo
Provision(s): 52 (1) of the Competition Act - False or misleading representations
Product: Internet business directory

Summary: Alan Benlolo, Simon Benlolo, and Elliot Benlolo appealed their sentences and fines that were imposed on them for violating the false or misleading representations provisions of the Competition Act (Section 52) for operating a Yellow Pages type scam in 2000. For more court decisions resulting from the trial, please see the listings in: http://epicpre.ic.gc.ca/epic/site/cb-bc.nsf/en/01182e.html

Their scam involved sending close to 900,000 mail pieces to businesses and non profit organizations in Canada. These mail pieces falsely appeared to be bills or invoices from Bell Canada or Yellow Pages, when in fact they were solicitations to have the recipients' business details appear in Internet-based directories operating under the names Yellow Business Pages.com and Yellow Business Directory.com.

After being found guilty by a jury on April 23, 2004, Madam Justice Molloy of the Ontario Superior Court sentenced Alan and Elliot Benlolo on October 1, 2004, to three years in federal penitentiary and a $400,000 fine each for their involvement in the scam. Simon Benlolo received a nine-month conditional jail sentence (including three months house arrest) and a $100,000 fine. Another individual who was involved in the scam, Victor Serfaty received a 18-month conditional jail sentence (including six months house arrest), 100 hours of community service and a $15,000 fine, though he did not appeal his sentence or fine.

The Court of Appeal for Ontario heard the appeal filed by Alan, Elliot and Simon Benlolo on November 25, 2005, and handed down its unanimous decision on June 8, 2006. The Court of Appeal dismissed the appeal of the sentences by Alan and Elliot Benlolo, but allowed the appeal of Simon Benlolo, in part, by reducing his fine to $35,000.

Court Documents:

Appeal decision: 108610

Datacom Marketing Inc

Company Name: Datacom Marketing Inc (Ontario 143178), Datacom Direct Inc (Ontario 1417524) and the Quebec affiliate Datacom Marketing Inc, Quebec registration number 1149885080
Date: 2006-05-26
Status: In Court
Court: Ontario Court of Justice
Court File Number: 06-12003115-01
Parties: Datacom Marketing Inc (Ontario 143178), Datacom Direct Inc (Ontario 1417524), Quebec registration number 1149885080, Bernard Fromstein, Judy Neinstein, Paul Barnard, James Sharo, George Pavlopoulos
Provision(s): s. 52.1 of the Competition Act - Deceptive telemarketing; s. 52.(1) of the Competition Act - Misleading representation; s. 380(1) (a) of the Criminal Code - Fraud over $5,000; s. 465 (1) (c) of the Criminal Code - Conspiracy
Products: Unsolicited business directories

Summary : On May 26, 2006, the Competition Bureau announced that three individuals have been charged for their involvement in deceptive telemarketing activities over a 10-year period in Toronto. Two others were charged for their involvement in the alleged scam operating out of Montreal. The companies have also been charged. Charges include counts under both the Competition Act and the Criminal Code.

As part of the alleged scam, Datacom telemarketers contacted small and medium-sized businesses in Canada and the United States, claiming that they were updating information in their business directory listings. The telemarketers implied that the business had ordered a listing in the past and that someone in the company had already authorized an order.

It is alleged that the telemarketers failed to disclose important information as required by the telemarketing provision of the Competition Act including: the company they represented, the price of the directory, the terms and conditions to return it, the purpose of the call and the nature of the product.

The businesses subsequently received a business directory, which they likely would not have ordered, had it not been for the false or misleading representations.

(3002834)

Centre de Santé Minceur

Date: 2006-05-23

Event: In Court
Tribunal: Competition Tribunal
Court File No: CT-2005-07
Parties: Gestion Lebski Inc, La Société de Financement Vanoit Inc, Maigrissimo Inc, Gestion Finance Tamalia Inc, 9083-8434 Québec Inc, Sylvain Leblanc
Provision(s): Paragraphs 74.01(a) and (b) of the Competition Act - Deceptive Marketing Practices
Products: Slimming natural products, devices and care services.

Summary: On June 27, 2005, the Commissioner made a notice of application to the Competition Tribunal to order the parties to cease making representations to the public with respect to the marketing of natural products claimed to cause rapid weight loss, and the use of a device purported to yield the same results as liposuction without surgery.

News Release:
June 28, 2005 - Competition Bureau Challenges Weight Loss Claims Made by Quebec Companies

Court Document:
June 27, 2005 - Notice of Application

(109673)

Business Supply Centre and National Supply Centre

Date of charges: 2006-03-30

Status: First Appearance Scheduled May 25, 2006

Accused - Companies: 1462986 Ontario Inc. operating as Business Supply Centre and National Supply Centre

Accused Parties - Individuals: Andrew James Wilson

Provision(s): 52.1 (2)(a) of the Competition Act - Deceptive telemarketing; 52.1(2)(b) of the Competition Act - Deceptive telemarketing; s. 52.1 (3)(a) of the Competition Act - Deceptive telemarketing; S. 380 (1)(a) Criminal Code - Fraud

Products or services: Toner and/or Ink Jet Cartridges

Summary: On March 30, 2006, criminal charges were laid against Andrew James Wilson, 1462986 Ontario Inc., also operating as Business Supply Centre and National Supply Centre in the City of Toronto, in the Toronto Region and elsewhere in Canada.

It is alleged that the accused engaged in deceptive telemarketing while promoting the sale of toner and/or ink jet cartridges for use in office equipment such as photocopies and printers. The parties failed to disclose mandatory information in a fair and reasonable manner, made false or misleading representations with respect to price increases, price discounts and pricing errors on invoices. It is further alleged that the parties provided clients with inferior [refilled] toner and generic ink jet cartridges at grossly inflated prices. It is further alleged that the parties used these deceptive practices to defraud Canadian businesses of an amount in excess of $5,000.

(167654)

Merchant Supply International (9094-6858 Quebec Inc) / International Merchant Supply (3838102 Canada Inc)

Date of charges: 2006-03-30
Status: In Court
Court: File # 500-73-002580-062 - Cour du Québec
Accused - Companies: Merchant Supply International (MSI) (9094-6858 Quebec Inc) and International Merchant Supply (IMS) (3838102 Canada Inc).
Accused - Individuals: Owners Neil Leventhal and Pierre Richard; Rick Aquino and Matthew Grenia, officers of the company.
Provision(s): s. 52.1 (3)(a) of the Competition Act - Deceptive telemarketing; s. 52.1 (2)(b) of the Competition Act - Deceptive telemarketing;
Products or services:  rolls of paper, ink cartridges and cleaning cards for use with electronic payment and credit card devices

Summary : On March 30, 2006, the Competition Bureau announced that criminal charges were  laid against four persons allegedly involved in deceptive telemarketing activities in Quebec.. Also charged were the companies:  Merchant Supply International (MSI) (9094-6858 Quebec Inc.) and International Merchant Supply (IMS) (3838102 Canada Inc.).
Businesses in Canada and the United States were contacted by telemarketers claiming to be their regular suppliers of rolls of paper, ink cartridges and cleaning cards for use with electronic payment and credit card devices, and/or claiming that an increase in the price of these supplies was imminent. The telemarketers also failed to disclose important information, such as the price of the merchandise offered and the terms and conditions of returning it. The businesses subsequently received office supplies which they would not have ordered had it not been for the false representations.

News Release:
2006-03-30 - Competition Bureau Investigation Leads to Deceptive Telemarketing Charges Against Individuals and Office Supplies Companies

(109677)

The Commissioner of Competition v. Canada Pipe Company Ltd./Tuyauteries Canada Ltée

Date: 2006-03-07
Event: Appeal
Court: Federal Court of Appeal
Court File Number: A-106-05
Party: Canada Pipe Company Limited
Provisions: 79 and 77 of the Competition Act -  Abuse of Dominant Poisition and exclusive dealing
Products: Cast iron pipe, fittings and mechanical joint couplings for drain, waste and vent applications

Summary:  In March 2006, the Competition Bureau appealed to the Federal Court of Appeal the Competition Tribunal's 2005 decision that Canada Pipe Company Ltd. had not abused its dominant position in Canada. On June 23, 2006, the Federal Court of Appeal allowed the Bureau's appeal and dismissed Canada Pipe's cross-appeal.

Court Documents:

Federal Court of Appeal Judgment*
Federal Court of Appeal Reasons for Judgment (appeal)*
Federal Court of Appeal Reasons for Judgment (cross-appeal)*

* These documents are available by calling the Competition Bureau's Information Centre at: 1-800-348-5358

Fabutan Sun Tan Studios
Date: 2006-02-27
Event: Registration of Consent Agreement
Court: Competition Tribunal
Court File Number: CT 2005-003
Parties: The Dosco Group Inc., Fabutan Corporation, Fabutan Studios, Douglas Scott McNabb, Fabutan Sun Tan Studios
Provision(s): 74.01(1)(a)(b) of the Competition Act - False or misleading representations and representations as to performance without adequate and proper test.
Products: Indoor tanning services

Summary: The Commissioner of Competition registered a consent agreement with the Competition Tribunal requiring Fabutan Corporation and its President, Douglas Scott McNabb, to refrain from making representations linking indoor tanning with unproven benefits of Vitamin D. 

Under the agreement, Fabutan has undertaken to ensure that any messages to the public concerning any relationship to exposure to UV-B and possible health benefits associated with Vitamin D are accompanied by statements that tanning may cause premature aging of the skin and skin cancer, that mild exposure to UV-B is sufficient to generate Vitamin D and tanning is not required. Fabutan further agreed to refrain from making statements conveying the impression that tanning has proven health benefits unless such benefits have been scientifically demonstrated.  The company agreed to establish and maintain a corporate compliance program, to post a corrective notice on its Web site, and to pay an administrative monetary penalty of $62,500.  Douglas Scott McNabb agreed to make a charitable donation of $12,500.  The Commissioner's original Application against The Dosco Group Inc. and Fabutan Studios was discontinued.

Information Notice:
2006-02-27 - Fabutan agrees to stop promoting unproven health benefits of indoor tanning 

Court Documents:
Consent Agreement

(3037974)

Econoco Inc.
Date: 2006-02-23
Event: Application Filed 
Court: Competition Tribunal
Court File Number : CT 2006-002
Parties: Econoco Inc., Réal Laroche, Claude Tardif
Provision(s): 74.01(1)(a) and (b) of the Competition Act - False or misleading representations and representations as to performance without adequate and proper test.
Product: Econopro, a device to save fuel and reduce emissions.

Summary: The Competition Bureau has filed an application for an order with the Competition Tribunal to prevent Econoco Inc. and its directors from making misleading representations to the public about the Econopro, which is marketed as a device to save fuel and reduce emissions.

News Release:
2006-02-23 - Competition Bureau Challenges Effectiveness of Fuel Saving Device

(3002630)

Fuel Saver Pro
Date: 2005-12-16, 2005-12-22, 2006-01-09
Event: Registration of Consent Agreements
Court: Competition Tribunal
Court File Numbers: CT- 2005-011, CT- 2005-012, CT- 2005-013, CT- 2006-001
Parties: Mike Stothers, Cory Grattan, Tracey Grattan, Everette Grattan, Joe Walsh.
Provision(s): S. 74.01(1)(a)(b) of the Competition Act - false or misleading representations and  representations as to performance without adequate and proper tests
Products: Bogus fuel saving device

Summary: Acting on information obtained under the “Button Pusher Spam Sweep” from the U.S. Federal Trade Commission (FTC), the Bureau commenced an inquiry into the marketing practices of several individuals involved in the sale and promotion of the Fuel Saver Pro. The Bureau’s investigation revealed that between January 2002 and May 2004 Mike Stothers of Montreal, Quebec, Cory Grattan and Tracey Grattan of Douglas, N.B., Everette Grattan of Penniac, N.B., and Joe Walsh of Dartmouth N.S. worked with an American distributor of the Fuel Saver Pro. These individuals sent spam containing false or misleading representations about the ability of the product to increase fuel efficiency and reduce emissions. Extensive testing conducted on behalf of the FTC, as well as testing by the U.S. Environmental Protection Agency, has concluded that the claims about the Fuel Saver Pro could not be substantiated.

Subsequent to the Bureau’s investigation, four consent agreement were filed with the Competition Tribunal. The consent agreements, which are valid for 10 years, require the parties to not make any representations to the public, including via Internet and email, which are false or misleading; not make any performance claims to the public without having first provided proof of adequate and proper testing to the Bureau; and pay administrative monetary penalties totalling $12,000.

Court Documents
Registered Consent Agreements
2005-12-19 - Cory Grattan - Tracy Grattan
2005-12-21 - Everette Grattan
2005-12-16 - Mike Stothers
2006-01-09 - Joe Walsh

News Release:
2005-12-20 - Competition Bureau joins U.S. Law Enforcement in Derailing Bogus Fuel Saving Scam

(3098939)