Performance representations not based on adequate and proper tests

Paragraph 74.01(1)(b) of the Competition Act is a civil provision. It prohibits the making, or the permitting of the making, of a representation to the public, in any form whatever, about the performance, efficacy or length of life of a product, which is not based on an adequate and proper test. The onus is on the person making the representation to prove that the representation is based on an adequate and proper test. Under this provision, it is not necessary to demonstrate that any person was deceived or misled; that any member of the public to whom the representation was made was within Canada; or that the representation was made in a place to which the public had access. Subsection 74.03(5) directs that the general impression conveyed by a representation, as well as its literal meaning, be taken into account when determining whether or not the representation is false or misleading in a material respect.

If a court determines that a person has engaged in conduct contrary to paragraph 74.01(1)(b), it may order the person not to engage in such conduct, to publish a corrective notice and/or to pay an administrative monetary penalty of up to $750,000 in the case of a first time occurrence by an individual and $10,000,000 in the case of a first time occurrence by a corporation. For subsequent orders, the penalties increase to a maximum of $1,000,000 in the case of an individual and $15,000,000 in the case of a corporation.

Additional information

The onus is on advertisers to ensure that claims about the performance, efficacy or length of life of their products have been substantiated by an "adequate and proper test." The phrase "adequate and proper test" has not been defined by the legislation in order to preserve flexibility in an increasingly complex and highly technical field of expertise. The test must have been concluded before the representation is made. In other words, a subsequent substantiating test would not exempt an advertiser from liability under this provision.

Paragraph 74.01(1)(b) requires an advertiser to proffer evidence in support of the tests, after which it is open to the Commissioner to lead evidence to show that the testing is not "adequate and proper." Performance claims that raise a question under the Act fall into two broad categories: those that are inappropriate in relation to the actual test results and those that are based on poorly designed test methodologies.

1. Inappropriate claims

If the performance claim is broad, the existence of adequate and proper test relevant to only one portion of the claim or under only one condition of use is insufficient. For example, where a national representation of energy savings relates to the tested performance of a heat pump, and it is shown that the test was conducted under the climatic conditions of Southern Ontario, the results should not be generalized to all areas of the country.

Results must not only be significant but must be meaningful. For example, a representation that an air conditioner is quieter than another brand, where the difference cannot be detected by the human ear, should not be used.

Consumer panel testing of product characteristics that are perceptible only to the senses can sometimes establish relative superiority, but cannot usually quantify the extent of the superiority. Consequently, such testing, if proper, could substantiate claims such as "feels softer" or "tastes better," but not a claim such as "three times more softness."

2. Test methodology

The test should indicate that the result claimed is not a mere chance or one-time effect.

Non-repetition of test — it is axiomatic that the reliability of the data resulting from a test is conditional upon the achievement of similar results from a repetition of the test.

User-tests — When consumers are asked to use and evaluate a product, various "test effects" can influence their behaviour. For example, a user testing a gas-saving device may modify his or her driving habits to a degree sufficient to affect the observed results. Furthermore, since such tests are not conducted under "ideal controlled test conditions," other factors such as climate and location would also have an effect. Unless such weaknesses are controlled, user tests would not be adequate and proper. At minimum, control groups are necessary in such situations.

Unrepresentative samples may produce biased test results. If, for example, subjects selected for the test were already known users of the product (and therefore potentially biased in its favour), the use of such results, unless expressly qualified in the representation, would likely contravene this provision.

Most court actions under the former paragraph 52(1)(b) have related to representations made where no tests had been undertaken or where user tests (notably of gas-saving devices) have not been found adequate to substantiate the claims.

Example:

"20% to 40% better gas mileage," where there is no adequate and proper test upon which the statement is based.

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