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Remarks by Matthew Boswell, Senior Deputy Commissioner of Competition

PIAC Annual Dinner

Ottawa, ON

November 28, 2014

(Check against delivery)

Good evening, everyone.

Thank you so much for inviting me, and for that warm welcome.

I always appreciate the opportunity to get out from behind my desk and meet people who share the Competition Bureau’s concern for consumers’ interests.

PIAC, and its members, clearly fall into that category.

For over forty years, the Public Interest Advocacy Centre (PIAC) has been an important champion for the rights of Canadians in the marketplace. Its work in support of fair competition in areas like financial services and telecommunications policy often dovetails with the work of the Bureau. And that’s not all that surprising, when you recognize that the Bureau’s role is to ensure that Canadian businesses and consumers prosper in a competitive and innovative marketplace.

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Role of competition

Fair competition is one of the cornerstones of our society and our economy in Canada.

In fact, our sense of “fairness” is one of the attributes that we Canadians are best known for — and this extends to our desire to have fair and healthy competition throughout our economy.

The reasons for this are obvious:

  • Competition benefits consumers — ensuring they enjoy fair prices, a wide range of choice among competing products and services, and accurate information to make informed buying decisions.
  • Competition is also good for business — maintaining a level playing field, allowing small- and medium-sized enterprises ample opportunity to compete, and strengthening our ability to compete in global markets.
  • Above all, fair competition is good for Canada. It ensures that our economy functions to its maximum potential. And that, in turn, delivers benefits to all Canadians.

Our role at the Bureau is to protect the public interest and ensure that all businesses have the opportunity to prosper in a competitive and innovative marketplace.

Achieving these goals requires the Bureau to prioritize and focus on those areas which have the greatest impact on Canadian consumers.

Digital economy: a changing landscape

This evening, I would like to focus on one area that is increasing in importance to Canadian consumers, and that I know is on the minds of many in this room: Canada’s Digital Economy.

As in many countries around the world, the rapid emergence and expansion of online commerce has changed the landscape for Canadian consumers, businesses, law enforcement agencies, regulators and advocacy groups.

Just how fast is the landscape changing? Let me share with you some statistics that illustrate the pace of change:

  • According to Forrester Research, Canadians spent $20.6 billion online in 2013. That’s an increase of more than 10 percent over the previous year — a rate of growth that has been consistent since 2010.
  • That level of online spending accounts for about 24 percent of total sales for companies with the capacity to complete Web-based transactions.
  • By 2018, the level of online spending by Canadians is expected to rise to almost $34 billion in annual sales.

I don’t need to tell most people here tonight that the rapid growth of e-commerce is being fuelled by the burgeoning evolution of apps and mobile payments.

Mobile payments have now surpassed card-based, contract-less payments as the highest growth segment in Canadian consumer payments, according to a survey by Technology Strategies International.

In fact, according to data from PayPal, almost 30 percent will use their mobile device to make an online purchase.

More and more companies — including large players like Canadian Tire — are rolling out mobile payment apps, and many other organizations are in the market with their own offerings.

So, here we stand at this watershed moment of how e-commerce will be conducted: Canadian consumers filled with eager anticipation over here; retailers, telcos, financial institutions, mobile device manufacturers and others over there.

And in between the two are law enforcement agencies like the Bureau, who seek to ensure that consumers are able to make informed purchasing decisions based on clear and factual information as online commerce grows exponentially.

The digital economy: the Bureau’s role

It should come as no surprise that this is on the Bureau’s radar. This situation pretty much defines our mandate.

We at the Bureau, like the rest of Canada, want to see a digital economy that:

  • is innovative;
  • allows for fair and healthy competition; and
  • enables Canadian businesses to compete at home and abroad.

We also want to make sure that it benefits consumers, and provides a safe place for Canadians to make informed purchases.

The Bureau’s interest in Canada’s Digital Economy focuses on a few specific areas.

Truth in advertising

Primary among these is truth in advertising.

As we all know, it is almost impossible to escape advertising online. In just a few years, Web-based ads have gone from simple banner ads to sophisticated, hyper-targeted messaging. The explosion in the use of mobile devices, and the apps that go with them, has only hastened this.

Advertisting revenue isn’t just flowing — it’s gushing. It’s enough to make a ‘60s-era Mad Man weep.

Remember when Don Draper’s ad firm, Sterling Cooper, had trouble keeping up with ad placements on a handful of major network TV shows? That really does seem like a million years ago, doesn’t it?

Commoditization is the rule, not the exception, online.

Last year, for example, YouTube surpassed $5.6 billion in gross ad revenues — a staggering 51-percent single-year growth — pushing ad-laden content out to more than a billion users.

This rapid growth brings concerns about who is policing that advertising — all of it borderless — and also about the collection and use of data regarding users online behaviour — the better to further target that advertising.

Just over a year ago, in conjunction with the University of Ottawa’s Internet Policy and Public Interest Clinic, the Bureau held a workshop, to explore and discuss the latest innovations in online advertising and the emerging legal and policy issues in Canada and internationally.

At that workshop we looked at several themes, including:

  • the growing importance of advertising in the digital economy;
  • innovations such as behavioural advertising and geolocation; and
  • disclosure issues.

Driving our interest in this area is our strong belief that innovation in digital advertising must not compromise a consumer’s right to truth in advertising.

This is a perspective that is shared by many of the Bureau’s international counterparts, including those from Australia, the United Kingdom and the United States who contributed to the discussion that took place at the workshop.

Advertising may no longer be local in any sense, but it must still comply with local laws and, in Canada, this means, among other laws, it must comply with the legislation enforced by the Bureau.

Although privacy issues do not fall within the Bureau’s mandate, I want to touch on them briefly because I believe they raise some points which tie in to the Bureau’s work around the digital economy.

The ability to collect data that is inherent in digital technology — including the purchasing data in the mobile payment applications I referred to earlier — is an extraordinarily powerful tool.

For advertisers, creating behavioural models out of user data can offer increased profitability because they can target advertising dollars on delivering messages directly to those who are the most likely to be interested in the product or service in question.

It is important to point out that consumers are not necessarily averse to this.

In fact, research shows that most of us would like to receive targeted discounts and advertisements that are pertinent to our interests. But these same findings show that many consumers are very concerned about privacy, and not necessarily aware of how advertisers are using the data they’ve gathered.

Our workshop also revealed an increasing concern that when data is combined with the power of geolocation, another level of concern arises.

Are consumers ready for advertisements that ping their smartphones as they are nearing a specific store, or flash onto the dashboard displays of their vehicles? Are they prepared to have mobile payment systems and the data therein, become another tool for marketers to reach them?

Will these types of innovations be so invasive that they undermine the trust of consumers?

These are questions that are of interest to us all and need to be examined in greater detail.

But, above all, we at the Bureau want to ensure that the rules related to misleading advertising apply online just as they do in more traditional media.

For example, we are quite interested in misrepresentations that create a general impression to consumers that is false or misleading because the advertiser has hidden important terms.

In the workshop I referenced earlier, we looked at three common types of improper disclosure – and the Bureau has active investigations underway that deal with each of these:

  • Online advertisements that are designed not to look like a promotional message, but rather like a legitimate news story or a legitimate consumer-written review;
  • So-called “drip pricing” where consumers are presented with a price for a good or service, but not the full price until later; and
  • Material terms and conditions that are buried in fine print.

Three other areas of concern related to digital advertising were privacy, advertising aimed at children, and disclaimers on mobile devices.

Of course, as I have pointed out, the Bureau hasn’t just been sitting on the sidelines, watching these issues emerge and develop.

In fact, in 2012 the Bureau coordinated a joint internet sweep by members of the International Consumer Protection and Enforcement Network (ICPEN) which targeted fraudulent and deceptive advertising in the rapidly growing online and mobile markets.

Consumer protection agencies worldwide participated in the initiative aimed at increasing consumers' confidence in online transactions by improving their ability to make informed purchasing decisions.

Where “drip pricing” is concerned, we have taken action against Leon’s and the Brick for what we believe are deceptive marketing practices occurring both online and in traditional advertising forms.

And, as some of you are aware, the Bureau has an on-going court case against Bell, Rogers, Telus and the Canadian Wireless Telecommunications Association, where the Bureau alleges that they made, or permitted to be made, misleading representations about the price of premium rate digital content for mobile devices. As part of this case, the Bureau is seeking restitution to customers impacted by the companies’ permitting the use of misleading advertising as well as administrative monetary penalties from Bell, Rogers and Telus, and CWTA.

I know that PIAC, in particular, has expressed its support for our work on this case.

This case is still before the court in Ontario, but in August we saw some encouraging developments in the United States in relation to our pursuit of evidence in this matter.

The U.S. Federal Trade Commission has been offering us assistance to obtain key documents from Aegis Mobile — a Maryland based company that collected and analyzed (on behalf of the Canadian companies) the advertising used to promote the premium text messages and digital content at issue in our case. We were pleased by a US District Court decision to order Aegis Mobile to hand over these key documents to the US FTC so that the FTC could deliver those documents to the Bureau.

This decision is important because it marks the first time that the US court has permitted this kind of assistance from the FTC to obtain documents on behalf of the Bureau.

It reflects our ability to reach beyond our borders when enforcing the Competition Act, and highlights the commitment of the US Federal Trade Commission and the Bureau to work together to tackle multi-jurisdictional issues related to the digital economy.

In a decision related to a mobile cramming case that is similar to our own, on August 8th, the US FTC announced that it had reached a settlement in its case against AT&T mobility for unlawful billing of unauthorized third-party charges. The settlement will require AT&T to pay $80 million to the FTC to provide refunds to impacted consumers. The $80 million is part of a sizeable $105 million total settlement reached with federal and state law enforcement officials.


Also related to the discussion of the digital economy is the Bureau’s mandate — in combination with the Canadian Radio-television and Telecommunications Commission and the Office of the Privacy Commissioner — to enforce Canada’s Anti-Spam Law, or CASL.

CASL gives the Bureau specific new provisions in the Competition Act that target false or misleading representations and deceptive marketing practices in the electronic marketplace, including: social media; promotional emails; text messages; and instant messages.

CASL also provides the Commissioner with new injunctive powers to address these kinds of practices.

The Commissioner can collect evidence on behalf of foreign counterparts and share this evidence with foreign authorities in jurisdictions with similar legislation.

Likewise, the Commissioner can share information with domestic partners in the CRTC and the Office of the Privacy Commissioner about false or misleading representations made electronically.

These provisions will bolster the Bureau’s ability to collaborate with its domestic and international counterparts to combat false or misleading representations and deceptive marketing practices taking place online.

In that vein, the Bureau has signed an MOU with the CRTC and the OPC and is actively working with these organizations on CASL implementation.

All this to say that — while CASL is still in early stages of implementation — the Bureau is very much on the case.

The issues I have touched on this evening are merely a few of the many that are emerging in this brave new world of e-commerce.

Like the technologies that enable it, the issues associated with the digital economy are constantly evolving.

The Bureau, in keeping with its role, continues to stay abreast of these issues and to focus on those within its mandate that have the greatest impact on consumers, businesses and the economy.

I know you’re anxious to move on to dinner and an opportunity to chat with colleagues and friends, so let me leave you with these final thoughts.

The Bureau recognizes the tremendous importance of the digital economy — but we also know that the e-commerce world must be a place where consumers are protected from false and misleading advertising and other forms of harmful behavior.

Indeed, we are experiencing an unprecedented change in the way that commerce is conducted — change that is accelerating at an exponential rate, change that requires vigilance on the part of the Bureau, and change that requires us to collaborate with all of our partners to promote compliance with our legislation and to support the work that we do to protect consumers.

As we advance further into the digital age, the Bureau’s strong relationship with partners like PIAC, will remain extremely important.

We value the role that PIAC plays in supporting our work and we look forward to continuing to work with you.

Thank you very much for your attention and enjoy the rest of your evening.

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