PUBLIC VERSION

CT-2017-

THE COMPETITION TRIBUNAL

IN THE MATTER OF the Competition Act, RSC 1985, c C-34;

AND IN THE MATTER OF a Consent Agreement pursuant to section 74.12 of the Competition Act with respect to certain deceptive marketing practices of Predecessor Companies to Thane Canada Inc., including Thane Direct Canada Inc. under subsection 74.01(1) of the Competition Act.

BETWEEN:

COMMISSIONER OF COMPETITION

Applicant

– and –

THANE CANADA INC.

Respondent

CONSENT AGREEMENT

WHEREAS the Commissioner of Competition (the “Commissioner”) is responsible for the administration and enforcement of the Competition Act (the “Act”);

AND WHEREAS Thane Canada Inc. is a corporation incorporated pursuant to the laws of Canada (the “Respondent”);

AND WHEREAS on or about December 18, 2015, the Respondent completed the purchase of the assets of a number of companies that were engaged in direct marketing business under the “Thane” brand name in Canada (the “Predecessor Companies” and the “Asset Purchase”);

AND WHEREAS prior to the Asset Purchase, the Commissioner was conducting an examination into the marketing practices of certain of the Predecessor Companies, including Thane Direct Canada Inc., and certain individuals under Part VII.1 of the Act;

AND WHEREAS the Commissioner has concluded that prior to the Asset Purchase, certain of the Predecessor Companies, including Thane Direct Canada Inc., were involved in the promotion and sale of certain electronic muscle stimulation (“EMS”) devices in Canada, sold under the names AbTronic X2 and Ab Command iX2 (collectively, the “Relevant Products”);

AND WHEREAS the Commissioner has concluded that prior to the Asset Purchase, at least one of the Predecessor Companies, including Thane Direct Canada Inc., had made representations to the public in Canada that created the general impression that the use of the Relevant Products would cause weight-loss as well as shaping and contouring of the body, without diet and exercise (the “Representations”), such as “After 8 weeks I’ve lost 15 pounds and 13 inches”;

AND WHEREAS the Commissioner has concluded that certain of the Representations were accompanied by disclaimers that directly contradicted the general impression of the Representations, and that the disclaimers were insufficient to alter the general impression created by the Representations;

AND WHEREAS the Representations were made to the public through a variety of media;

AND WHEREAS the Commissioner has concluded that the Representations were false or misleading in a material respect contrary to paragraph 74.01(1)(a) of the Act, and were not based on adequate and proper testing, contrary to paragraph 74.01(1)(b) of the Act and therefore constituted reviewable conduct;

AND WHEREAS during the course of the Commissioner’s examination, the Ontario Superior Court of Justice appointed a receiver, pursuant to an order dated October 23, 2015, regarding the assets, undertakings and properties of the Predecessor Companies (the “Receivership Order”);

AND WHEREAS pursuant to the Receivership Order, the Ontario Superior Court issued a stay of proceedings in respect of the Predecessor Companies;

AND WHEREAS pursuant to a separate order, dated October 23, 2015, the Ontario Superior Court of Justice approved the vesting and sale of certain assets, undertakings and properties of the Predecessor Companies (the “Vesting Order”);

AND WHEREAS pursuant to the Vesting Order, the assets of the Predecessor Companies, including certain intellectual property and marketing rights associated with the Relevant Products, were transferred as part of the Asset Purchase;

AND WHEREAS pursuant to the Vesting Order and/or otherwise, Thane IP Limited, a company incorporated in the United Kingdom, acquired certain intellectual property assets from the Predecessor Companies in relation to the Relevant Products and the marketing thereof (the “Relevant Assets”);

AND WHEREAS following approval of the Vesting Order and the completion of the Asset Purchase, the Respondent did not hold the intellectual property and marketing rights to market to the Relevant Products in Canada, and the Respondent did not market or sell the Relevant Products in Canada;

AND WHEREAS following the completion of the Asset Purchase, the Commissioner proceeded with a formal inquiry pursuant to subparagraph 10(1)(b)(ii) of the Act into alleged reviewable practices of Amir Tukulj and Patty Booth, who between them were members of Management of the Predecessor Companies, in order to protect the public interest as it pertains to false or misleading representations and unsubstantiated weight loss claims made about the Relevant Products;

AND WHEREAS Patty Booth was a member of Management of Thane Direct Canada Inc. at the time of the alleged reviewable conduct, but Amir Tukulj was not a member of Management of Thane Direct Canada Inc. at the time of the alleged reviewable conduct;

AND WHEREAS the individuals who were the subject of the inquiry have cooperated with the Commissioner’s inquiry;

AND WHEREAS for the purpose of addressing the Commissioner’s concerns and entering into this Agreement, the Respondent has acquired certain rights in respect of the Relevant Assets in Canada, including in respect of infomercials and related copyrights (the “Relevant Rights”) pertaining to the Relevant Products, which rights and assets are set out in Schedule “A”;

AND WHEREAS for the purpose of addressing the Commissioner’s concerns and entering into this Agreement, the Respondent has agreed not to market the Relevant Products or other similar EMS products in Canada, including utilizing the rights and assets set out in Schedule “A” of this Agreement to market the Relevant Products in Canada, for the duration of this Agreement;

AND WHEREAS a representative of the Respondent is signing this Agreement to ensure compliance with the provisions of Part VII.1 of the Act in Canada regarding the Relevant Products, and the Relevant Rights that the Respondent has acquired or has licensed as set out in Schedule “A”;

AND WHEREAS the Parties are satisfied that this matter can be resolved with the registration of this Agreement which, upon registration, shall have the same force and effect as an order of the Tribunal;

AND WHEREAS the Commissioner and Thane Direct Canada Inc. (whose assets were sold under the approved Vesting Order and as part of the Asset Purchase) registered a Consent Agreement with the Tribunal on December 13, 2002, regarding similar reviewable conduct that expired in 2012;

AND WHEREAS Thane Direct Canada Inc. complied with this prior Consent Agreement;

AND WHEREAS the Commissioner has concluded that there was a return to similar conduct by at least one of the Predecessor Companies, namely Thane Direct Canada Inc., regarding EMS devices following the expiration of this prior Consent Agreement and the Commissioner has taken this conclusion into account in arriving at the terms of this Agreement;

AND WHEREAS for the purposes of entering this Agreement, Thane Canada Inc. does not contest the Commissioners’ conclusions regarding the conduct of the Predecessor Companies as set out in these recitals;

NOW THEREFORE in order to resolve the Commissioner’s concerns, the Parties hereby agree as follows:

I.  INTERPRETATION 

[1]  For the purpose of the Agreement, the following definitions shall apply:

1. “Act” means the Competition Act, RSC 1985, c C-34;
2. “Affiliate” means an affiliated corporation, partnership or sole proprietorship within the meaning of subsection 2(2) of the Act;
3. “Agreement” means this Consent Agreement entered into by the Parties pursuant to section 74.12 of the Act;
4. “Commissioner” means the Commissioner of Competition appointed pursuant to section 7 of the Act, and their authorized representatives;
5. “Execution Date” means the date on which the Agreement has been signed by both Parties;
6. “Management” includes the current and future Chief Executive Officer, Chief Operating Officer, Chief Administrative Officer, Chief Financial Officer, Chief Accounting Officer, President, Vice-Presidents, Secretary, Controller, General Manager, Managing Director, if any, and any individual who performs their functions in Canada;
7. “Parties” means the Commissioner and the Respondent collectively, and “Party” means any one of them;
8. “Person” means any individual, corporation, partnership, firm, association, trust, unincorporated organization or other entity;
9. “Predecessor Companies” means a number of companies that were engaged in direct marketing business under the “Thane” brand name, whose assets were sold under the Vesting Order and as part of the Asset Purchase, namely
1. Thane International Inc., incorporated pursuant to the laws of Delaware,
2. Thane Direct, Inc., incorporated pursuant to the laws of Delaware,
3. Thane Direct Company, incorporated pursuant to the laws of Nova Scotia,
4. Thane Direct Marketing, Inc., incorporated pursuant to the laws of Ontario, and
5. Thane Direct Canada Inc., incorporated pursuant to the laws of Ontario,
6. including their directors, officers, employees, agents, representatives, successors and assigns, and all joint ventures, subsidiaries, divisions and Affiliates controlled by these corporations within the meaning of subsection 2(4) of the Act, and the respective directors, officers, employees, agents, representatives, successors and assigns of each;
10. “Product” means product within the meaning of subsection 2(1) of the Act;
11. “Relevant Assets” has the meaning set out in the recitals to this Agreement;
12. “Relevant Products” has the meaning set out in the recitals to this Agreement;
13. “Relevant Rights” has the meaning set out in the recitals to this Agreement, and as set out in Schedule “A” to this Agreement;
14. “Representations” has the meaning set out in the recitals to this Agreement;
15. “Respondent” means Thane Canada Inc., a corporation incorporated pursuant to the laws of Canada, and its Subsidiaries (if any), successors and assigns, and all current directors, officers, employees of the foregoing, as well as agents and representatives under the control of the foregoing;
16. “Respondent’s Marketing Personnel” means all current and future Respondent’s employees and Respondent’s Management who are materially involved in or responsible for the formulation or the implementation of advertising, marketing or pricing for products the Respondent supplies in Canada;
17. “Subsidiary” has the meaning as defined in subsection 2(3) of the Act;
18. “Supply” or “Supplied” means supply within the meaning of subsection 2(1) of the Act; and
19. “Tribunal” means the Competition Tribunal established by the Competition Tribunal Act, RSC 1985, c 19 (2^nd Supp).

II.  COMPLIANCE WITH THE DECEPTIVE MARKETING PRACTICES PROVISIONS OF THE ACT

[2]  The Respondent shall not market the Relevant Products or similar EMS products in Canada, including utilizing the rights and assets set out in Schedule “A” hereto to market the Relevant Products or similar EMS products in Canada, for the term of this Agreement as set out in paragraph 12, and shall comply with Part VII.1 of the Act for any EMS Product that is Supplied by the Respondent in Canada after the Execution Date.

III.  PAYMENTS

A.  ADMINISTRATIVE MONETARY PENALTY

[3]  The Respondent shall pay an administrative monetary penalty in the amount of $350,000.00 dollars.

B.  FORM AND TIME OF PAYMENT

[4]  The payment referred to in paragraph 3 shall be made within 30 days after the Execution Date by certified cheque or by wire transfer payable to the Receiver General for Canada.

 

IV.  CORPORATE COMPLIANCE PROGRAM

[5]  Within 90 days after the Execution Date, the Respondent shall establish, and thereafter maintain, a corporate compliance program, the goal of which will be to promote the compliance of the Respondent with the Act generally and Part VII.1 of the Act specifically. The corporate compliance program shall be framed and implemented in a manner consistent with the Commissioner’s bulletin entitled “Corporate Compliance Programs” as published as of the Execution Date of this Agreement on the Competition Bureau’s website (www.competitionbureau.ca).

[6]  The Respondent’s Management shall fully support and enforce the corporate compliance program and shall take an active and visible role in its establishment and maintenance.

V.  COMPLIANCE REPORTING AND MONITORING

[7]  The Respondent shall provide the Commissioner with written confirmation that all of the Respondent’s Marketing Personnel have received a copy of this Agreement within 21 days after the Execution Date.

[8]  For the purposes of monitoring compliance with this Agreement, a member of the Respondent’s Management shall provide to the Commissioner information, in the form as the Commissioner requests and under oath or solemn affirmation, including, without limitation, copies of any representations or other records, relating to any matters referred to in Parts II, IV and V of this Agreement that the Commissioner requests in respect of the Relevant Products, within 30 days following receipt of a written request from the Commissioner.

VI.  NOTICE OF CHANGES

[9]  The Respondent’s Management must immediately inform the Commissioner of any changes in the Respondent that may affect compliance with this Agreement, including dissolution, bankruptcy, change(s) in name(s), sale, merger, reorganization, material acquisition, disposition or transfer of assets, any fundamental change for purposes of the Respondent incorporating statute or any transaction with respect to the Relevant Assets or Relevant Rights in Canada. In the event that there is a subsequent sale of the business (namely a sale of shares to new owners), this Agreement shall accompany the sale of the business and remain in full force and effect with the new owners unless and until the Agreement is rescinded or varied upon application pursuant to section 74.13 of the Act. In the event that there is a sale of all or substantially all of the assets of the business to non-arm’s length owners, this Agreement will apply as if the asset sale was a share sale to the non-arm’s length owners unless and until the Agreement is rescinded or varied upon application pursuant to section 74.13 of the Act.

VII.  GENERAL

[10]  During the term of this Agreement, (i) the Respondent shall provide a copy of this Agreement to all Respondent’s Marketing Personnel within 14 days after the Execution Date, and (ii) all future Respondent’s Marketing Personnel will be provided with a copy of this Agreement within 14 days after their commencement of employment. Within 14 days after being provided with a copy of this Agreement, the Respondent shall secure from each such person a signed and dated statement acknowledging that they read and understood this Agreement and Part VII.1 of the Act.

[11]  Notices, reports and other communications required or permitted pursuant to any of the terms of this Agreement shall be in writing and shall be considered to be given if dispatched by personal delivery, registered mail or facsimile transmission to the Parties at the following addresses:

a. The Commissioner:

Commissioner of Competition
Competition Bureau of Canada
Place du Portage, 21^st Floor
50 Victoria Street, Phase I
Gatineau, QC K1A 0C9

Facsimile: 819-956-2836

Attention: Senior Deputy Commissioner of Competition, Cartels and Deceptive Marketing Practices Branch

With a copy to:

Executive Director and Senior General Counsel
Competition Bureau Legal Services

Department of Justice
Place du Portage, 22^nd Floor
50 Victoria Street, Phase I
Gatineau, QC K1A 0C9
Facsimile: 819-953-9267

b. The Respondent:

Thane Canada Inc.

5255 Orbitor Drive, Suite 501

Mississauga, ON L4W 5M6

Attention: President

With a copy to:

Osler, Hoskin & Harcourt LLP

1 First Canadian Place, Suite 6200

Toronto, ON M5X 1B8

Facsimile: 416-862-6666

Attention: Christopher Naudie

Any Party hereto may from time to time change its address or facsimile number by giving notice to the other Parties hereto in accordance with the provisions of this paragraph 11. The Commissioner and the Respondent may also consent to accept notices or other communications required or permitted pursuant to this Agreement by electronic mail.

[12]  This Agreement shall be binding upon the Respondent for a period of 10 years following its registration.

[13]  The Parties consent to the immediate registration of this Agreement with the Tribunal pursuant to section 74.12 of the Act.

[14]  The Commissioner may, in his sole discretion and after informing the Respondent in writing, extend any of the time frames in Parts IV and V of this Agreement.

[15]  The Commissioner may, with the consent of a Respondent, extend any of the time frames in Part VI of this Agreement.

[16]  Nothing in this Agreement precludes the Respondent or the Commissioner from bringing an application under section 74.13 of the Act to rescind or vary this Agreement. The Respondent will not, for the purposes of this Agreement only, including execution, registration, interpretation, enforcement, variation or rescission, contest the Commissioner’s conclusions as stated herein. Nothing in this Agreement will be taken as an admission or acceptance by the Respondent of any facts, liability, wrongdoing, effects, impacts, submissions, legal argument or the Commissioner’s conclusions for any other purpose, nor shall it derogate from or limit any rights or defences of the Respondent against third parties, including defences under the Act.

[17]  The Respondent shall not make any public statements that contradict the terms of this Agreement.

[18]  The Respondent submits to the jurisdiction of the Tribunal for the purposes of this Agreement and any proceeding initiated by the Commissioner relating to this Agreement for variation or rescission.

[19]  In the event of a dispute regarding the interpretation, implementation or application of this Agreement, any of the Parties shall be at liberty to apply to the Tribunal for an order or directions. In no event shall any dispute suspend any time period under this Agreement. The Parties agree that the Tribunal has jurisdiction to make such order as is required to give effect to this Agreement.

[20]  This Agreement may be executed in two or more counterparts, each of which shall be an original instrument, and all of which taken together shall constitute one and the same instrument. In the event of any discrepancy between the English and French versions of this Agreement, the English version shall prevail.

[21]  This Agreement constitutes the entire and only agreement between the Parties and supersedes all previous negotiations, communications and other agreements, whether written or oral, unless they are incorporated by reference herein. There are no terms, covenants, representations, statements or conditions binding on the Parties other than those contained herein.

[22]  The computation of time frames contemplated by this Agreement shall be in accordance with the Interpretation Act. For the purpose of this Agreement, the definition of “holiday” in the Interpretation Act shall include Saturday. For the purposes of determining time frames, the date of this Agreement is the last date on which it is executed by a Party.

[23]  The Agreement shall be governed by and interpreted in accordance with the laws of Ontario and the laws of Canada applicable therein, without applying any otherwise applicable conflict of law rules.

The undersigned hereby agree to the filing of the Agreement with the Tribunal for registration.

DATED at Mississauga, in the Province of Ontario, this 7^th day of December, 2017.

“Patty Booth”

Patty Booth

for Thane Canada Inc.

DATED at Gatineau, in the Province of Quebec, this 1 0^th day of January, 2018.

“John Pecman”

Commissioner of Competition
John Pecman

SCHEDULE “A”

The following rights, to the extent that they are active and pertain to marketing in Canada and as previously held by Thane IP Limited and/or its affiliates, have been acquired and/or licensed by Thane Canada Inc. for the purpose of implementing this Agreement and for the duration of this Agreement:

Trademarks

Trademark	Country	App/Reg. Nr.	Status
ix2	Australia	App Nr.: 1690636	Cancelled – Not protected
ix2	Canada	App Nr.: 1682363	Abandoned – Not protected
ix2	International	Reg Nr.: 1244811	Active
ix2	US	App Nr.: 86317057	Abandoned – Not protected
AB COMMAND	Australia	App. Nr.: 1663645	Lapsed – Not Protected
AB COMMAND	Canada	Reg. Nr.: TMA981339	Active
AB COMMAND	International	Reg. Nr.: 1226346	Active
AB COMMAND	US	Reg. Nr.: 4580773	Active

 

COPYRIGHTS

Country		Copyright	Registration
			Nr.
US		ABTRONIC X2 retail box.	VA 1-731-
			272
US		ABTRONIC X2 belt artwork.	VA 1-734-
			182
US		ABTRONIC X2 internet webpage, English version.	VA 1-713-
			915
US		ABTRONIC X2 retail box.	VA 1-731-
			272
US		ABTRONIC X2 Diet Plan.	TX-7-306-
			246
US		ABTRONIC X2. 1:35 webclip, German.	PA 1-744-
			488
US		ABTRONIC X2 Dual Channel Fitness Belt Instructions (joint	TX 7-427-
		w/AbtronicX2/Red Lemon	370
	US	AbTronic X2 Diet & Workout Plan 140410.	TXu 1-910­593
	US	AbTronic X2 - 2 Product Use Guides (First Use Guide	TXu 1-910-
		140415 and Instruction Manual 140422).	585
	US	AbTronic X2 webpage, rev. 2014 (thane.ca).	VA1-975-
			207
	US	AB COMMAND retail box.	VAu 1-117-
			413
	US	Ab Command, Diet Plan & First Use Guide (130409) &	TX 7-934-
		User's Manual (130410).	196
	US	Ab Command product labels (belt tag & gel label).	TXu 1-930-
			270
	US	Ab Command - 2 Product Use Guides (First Use Guide	TXu 1-930-
		141112 and Instruction Manual 141114).	278
	US	Ab Command Diet & Workout Plan (141114).	TXu 1-929-
			249
	US	Ab Command retail box (150115).	VAu1-202-
			152
	US	Ab Command iX2 – 2 product information sheets (150108).	VAu 1-198-
			628
	US	Ab Command iX2 upsell kit package insert (141223).	VAu 1-198-
			630
	US	Ab Command iX2 Nutrition & Cardio Guide (141224).	TXu 1-930-
			647
	US	Ab Command iX2 - 2 Product Use Guides (First Use Guide	TXu 1-938-
		and Instruction Manual (141224).	601
	US	Ab Command iX2 retail box (150312).	VAu 1-205-
			644
	US	Ab Command iX2 Instruction Manual R1 (150223).	TXu 1-949-
			869
	US	Ab Command iX2 Quick Start Guide R1 (150223) and Ab	TXu 1-949-
		Command iX2 Nutrition & Cardio Guide R1 (150225).	870
	Ecuador	ABTRONIC X2 Diet Plan.	35538
	Ecuador	ABTRONIC X2 Dual Channel Fitness Belt Instructions	35539
		(Product Manual).
	Ecuador	ABTRONIC X2 Retail Box.	35541
	Ecuador	ABTRONIC X2 Belt Artwork.	35542

 

REGISTERED COMMUNITY DESIGNS

RCD		Design Registration Nr.		Status
AB Command iX2		002642082-0001 to 0026420820002 (inclusive)		Active
Ab Command iX2	002642108-0001		Active

 

For greater certainty, nothing in this Schedule or this Agreement shall limit the ability of Thane IP Limited and/or its affiliates to assign or transfer rights which are unrelated to Canada.