First Private Enforcement Sought Under Federal Misleading Advertising Laws

The “public interest” private right of access to the Competition Tribunal has become very popular since it came into force last June, with six applications for leave to date. For background, private litigants can now seek leave from the Tribunal to enforce these civil provisions of the Competition Act. If successful, the Tribunal can award administrative monetary penalties (up to 3% of global gross revenue), reimbursements to affected purchasers (up to the full purchase price), among other remedies.

Up until now, all of these applications have claimed civil abuse of a dominant market position, but on Friday the Tribunal received its first substantive application alleging civil deceptive marketing practices … but it came with an unusual twist. The application alleges deceptive regular price claims, which is not new as it mirrors the Competition Bureau’s enforcements over the past decade, but in an unconventional development, the allegations from Whitecap Partnership concern the business pricing claims made by its data licensing supplier, Pulse Seismic.

The Competition Bureau’s enforcements have historically focused on market harm to consumers, but the laws requiring regular prices to be supported are not explicitly limited to consumer pricing representations. If granted leave, this application could therefore be the first time a private applicant has enforced the civil requirement that rack/regular business pricing be substantiated by the strict Competition Act time/volume tests, and could pave the way for enforcement against other B2B advertising claims.

For background on the application, Whitecap is a major oil and gas producer and is a customer of Pulse Seismic, a supplier of 2D and 3D seismic data. According to Whitecap’s evidence, Pulse claims to own Canada’s largest seismic data library and has a near monopoly on the relevant market. At issue is a fee that Pulse charges when a customer undergoes a merger, amalgamation, or similar transaction, and which is based on Pulse’s undiscounted retail price for the licensed data. Whitecap alleges that Pulse’s retail price does not satisfy the strict time/volume tests previously established in Competition Act litigation concerning consumer pricing claims.

While no cases under this new “public interest” right of access have yet been decided on their merits, in dismissing the first application for leave, the Tribunal adopted a version of the Supreme Court of Canada’s test for public interest standing. One of the branches of that test requires that the application be “genuine”, so that the “essential character of the proposed proceeding” is “directed towards addressing competition in the market”. Essentially, the Tribunal will not grant leave if the application is a disguised commercial dispute between the parties. For its part, Whitecap insists that Pulse’s dominant position in this data market raises genuine competition issues and that this application isn’t just strategic litigation.

If leave is granted, this case raises important questions about the scope of the ordinary selling price provisions in a B2B context, and by extension the application of all of the deceptive marketing representations to B2B firms.

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