A ruling of the Supreme Court of British Columbia granting communications giant Telus Communications Company an interlocutory injunction against its competitor, Rogers Communications Inc. has renewed the interest of Canadian businesses in the power of Canada’s Competition Act (the Act).  The decision, which came down in November of 2009, was upheld on appeal to the British Columbia Court of Appeal.  The terms of the injunction granted by the Court restrain Rogers from advertising its wireless network services as being “Canada’s most reliable network”, or by using other statements that create the impression that Rogers can provide more reliable services or wireless services than Telus. 

In making its injunction application, Telus relied on the often tried but seldom successful application of Section 52 of Canada’s Competition Act, which prohibits the promoting of products and services by making a representation that is false or misleading in a material respect.  By virtue of Section 36 of the Act, persons who suffer loss or damage as a result of such conduct can sue to recover such loss or damage.  In short, these provisions of the Act, taken together, are designed to protect consumers and business who suffer as a result of false advertising.

The evidence before the Court was that Rogers had originally established through comparison testing that its wireless network was indeed more reliable than those of Telus and Bell.  However, the technology of the wireless networks used by Telus later changed to one that was more advanced, and Rogers’ comparison that is network was the “most reliable” was no longer, in the Court’s opinion, factually true.  Even in the face of this change in their competitor’s technology, Roger’s continued in its advertising to represent to the public that its network was the most reliable in Canada. 

In examining the evidence before it, the Court therefore found that Telus had a very strong case against Rogers based on Telus’ allegations that Rogers has knowingly made a representation to the public that was misleading in a material respect.  The fact that Rogers had once indeed had the most reliable network was of no consequence, and the Court concluded that “Rogers must, on the evidence, be taken to know that its representation that it has Canada’s most reliable network is based on a comparison that is no longer valid.  It compares apples to oranges…”

It was the strength of the case presented by Telus that the Court relied on to allow Telus’ injunction application, coupled with the Court’s finding that “the public interest is best served by representations in advertising that are not misleading.”  Although many injunction applications fail because the party seeking the injunction cannot prove the likelihood of irreparable harm should the injunction not issue, the Court in this case found that an injunction against Rogers should issue because not only would damages provide an inadequate remedy to Telus (the case was heard just before the onset of the Christmas shopping season), but that quantifying the damages that Telus would suffer should Rogers’ advertising go unrestrained would be extremely difficult to do. 

This case represents an important step forward for the protection of the rights of consumers and businesses in the face of false or misleading advertising.  In focusing on the strength of the plaintiff’s case as opposed to a technical application of the law with regard to the granting of interlocutory injunctions (and in particular the need to prove irreparable harm), the B.C. Courts have apparently broadened the effectiveness of not only the Competition Act, but likely of other protections available against false or misleading advertising, such as the tort of trade slander.  It may now become easier to stop false or misleading advertising before significant harm is visited upon consumers and businesses that choose to compete fairly in the marketplace.

James Katz is an Associate with the law firm of BrazeauSeller.LLP. He practices in the areas of litigation and intellectual property. James can be reached at 613-237-4000 ext. 267 or at [email protected]. For more information about James, please visit www.brazeauseller.com.