THE COMPETITION IN THE MATTER OF the Competition Act , R.S.C. 1985, c. C-34, as AND IN THE MATTER OF an application by pursuant to section 74.11 of the Competition Act regarding paragraph 74.01(l)(b) of the Competition Act ; BETWEEN: COMMISSIONER OF and NUVOCARE HEALTH SCIENCES COMMISSIONER OF COMPETITION’S Commissioner’s Application under section 74.11 of the DEPARTMENT Competition Place 50 Victoria Gatineau, Quebec, K1A Talitha Elle Nekiar Telephone: Fax: 819-953-9267 Counsel to
1 CT-2020-003 TRIBUNAL amended; the Commissioner of Competition for an order conduct reviewable pursuant to COMPETITION Applicant INC. and RYAN FOLEY Respondents WRITTEN SUBMISSIONS for an Order Competition Act OF JUSTICE CANADA Bureau Legal Services du Portage, Phase I Street, 22 nd Floor 0C9 A. Nabbali 819-953-3884 the Commissioner of Competition
OVERVIEW 1 . This is an application by the Applicant pursuant to “Act”). The Applicant seeks an order requiring is reviewable under the Act, as outlined below. 2. The Respondents promote and sell certain cause weight loss or bum fat, along with Respondents have made and continue to make range of platforms, there is no evidence that the proper testing of the Products to make these 3. Consequently, in making unsubstantiated performance are making misrepresentations to the public, contrary 4. The Respondents’ conduct is systematic, widespread, consumers and competition is likely to ensue Commissioner of Competition is issued. In harm commensurate with the price paid for consumers who use the Products for serious relying on the Products; and the misrepresentations proper functioning of the market. 5 . In contrast, should the temporary order sought be to the Respondents. Even if complying with the
2 s. 74.11 of the Competition Act (the the Respondent not to engage in conduct that Products (defined below) that they claim will seven other related claims. Although the these claims systematically, and across a wide Respondents have relied on adequate and claims. and efficacy claims the Respondents to Part VII.1 of the Competition Act. and ongoing, and serious harm to unless the temporary order sought by the particular: consumers are suffering economic the Products; the Products can pose risks to conditions and/or delay proper treatment by made by the Respondents affect the issued, there is little if any inconvenience Tribunal’s order did cause inconvenience to
3 the Respondents, the public interest in having the Act obeyed outweighs any hardship that compliance with the Act may cause to the Respondents. PART I -FACTS A. The Parties 6. The Respondent, Nuvocare Health Sciences Inc. (“Nuvocare”) is a private corporation federally incorporated under the Canada Business Corporations Act on November 12, 2006. i Nuvocare markets and sells a variety of natural health products, making various health-related claims. Four Nuvocare products (the “Products”) are at issue in this application: a) WeightOFF Max! sold under the Nutracentials brand; b) WeightOFF Max! sold under the SlimCentials brands; c) Forskolin Nx sold under the NutraCentials brand; and d) Forskolin+ sold under the SlimCentials brand. 2 7. Mr. Ryan Foley (“Mr. Foley”) is the President and the CEO of Nuvocare 3 , and holds himself out as the founder, creator and formulator of Nuvocare products 4 Moreover, Mr. Foley personally markets, sells, and makes representations to the public relating to Nuvocare products, including the Products.5 1 Affidavit of Danielle McKenzie sworn on February 28, 2020 [McKenzie Affidavit], Application Record, Tab 2, at para 11 . 2 Ibid. , at para 20. 3 Ibid. ,, at para 14. 4 Ibid. , at para. 16. 5 Ibid. , at paras 16, 28-33, 37-41.
8. The Commissioner of Competition (“Commissioner”) Act and is responsible for the administration B. The Commissioner’s Investigation 9. On February 8, 2019, the Bureau issued a warning products in Canada to ensure weight unsubstantiated. 7 10. On March 20, 2019, the Bureau sent a letter by that testing be provided to the Bureau to substantiate Products. The letter specifically set out that, under base any claims about the performance or testing. 8 1 1 . On April 5, 2019, Mr. Foley responded to Competition the Bureau, requesting clarification of the Bureau’s substantiation back up if claims are supported”. 12. On April 25, 2019, Ms. McKenzie responded Bureau’s request and of his and Nuvocare’s offered to extend the Bureau’s deadline to provide 6 Ibid.,, at para 9. 7 Ibid. ,, at para 61. 8 Ibid. „ at para 62. 9 Ibid.,, at para 64.
4 is appointed under section 7 of the and enforcement of the Act. 6 to sellers and marketers of natural health loss claims are not false, misleading, or registered mail to the Respondents requesting performance claims made about the the Act, the onus is on the advertiser to efficacy of a product on adequate and proper Law Officer Danielle McKenzie of request and offering to “provide claim 9 to Mr. Foley and provided clarification of the responsibilities under the Act. Ms. McKenzie the testing to substantiate the performance
claims made about the Products to May 3, 2019. No in response to this correspondence. 10 13. On February 14, 2020, the Commissioner 10(l)(b)(ii) of the Act on the basis that he has making of an order under Part VII.1 of 74.01(l)(a), 74.01(l)(b) and subsection 74.011(2) 14. For the purposes of this application, the representations made by the Respondents relating C. Health Canada Regulatory Approvals 15. The Products are approved by Health Canada Consequently, they are subject to the Natural Health 16. All NHPs approved by Health Canada have under their recommended conditions of use. An be found on its product licence which is available 17. Health Canada permitted the Products for the a) WeightOFF Max! sold under Nuvocare’s function of the thyroid glad. Provides 10 Ibid.,, at paras 59-60. 11 Ibid.,, at para 77. 12 Ibid.,, at para 78. 13 Notice of Application, Application Record, Tab 1 , at para 18. 14 Affidavit of Virginie Treyvaud Amiguet affirmed on February Application Record, Tab 3, at para 17.
5 response or testing was ever received commenced an inquiry under subparagraph reason to believe that grounds exist for the the Act, specifically pursuant to paragraphs of the Act. 11 Commissioner’s Inquiry is focused on the to the Products.12 as Natural Health Products (“NHPs”). Products Regulations. 13 met safety, efficacy and quality requirements NHP’s recommended conditions of use can online on Health Canada’s website. 14 following uses: NutraCentials brand: Helps in the support for healthy glucose metabolism. 27, 2020 [Treyvaud Amiguet Affidavit],
Helps the body to metabolize carbohydrates healthy lifestyle that incorporates calorie-reduced for individuals involved in a weight management program. Helps blood pressure levels. Helps antioxidants. 15 b) WeightOFF Max! sold under Nuvocare’s of the thyroid gland. Provides support for body to metabolize carbohydrates lifestyle that incorporates a calorie individuals involved in a weight management program. Helps (temporarily) to promote cognitive performance. Helps (temporarily) endurance, and to enhance motor diuretic. 16 c) Forskolin Nx sold under Nuvocare’s d) Forskolin+ sold under Nuvocare’s SlimCentials 18. Health Canada did not approve the Products the WeightOFF Max! sold under both the SlimCentials lower level claim related to a potential complement to 15 Ibid. , at para 25. 16 Ibid. , at para 33. 17 Ibid. , at para 40. 18 Ibid. , at para 40.
6 and fats. Could be a complement to a diet and regular physical activity maintain healthy support cardiovascular health. Provides SlimCentials brand: Helps in the function healthy glucose metabolism. Helps the and fats. Could be a complement to a healthy reduced diet and regular physical activity for Provides antioxidants. alertness and wakefulness, and to enhance to relieve fatigue, to promote performance. Used (temporarily) as a mild NutraCentials brand: Source of antioxidants. 17 brand: Source of antioxidants. 18 to make weight loss health claims. It approved and NutraCentials brand to make a a healthy lifestyle that incorporates a
7 calorie-reduced diet and regular physical activity for individuals involved in a weight management program. 19 Health Canada does not consider general weight management claims to be comparable to weight loss claims, which fall under the high risk category. 20 19. Health Canada also did not approve the Products to make fat bum, targets belly far or increases metabolism health claims. 21 D. The Impugned Representations made by the Respondents 20. For the purposes of this application, the Commissioner’s investigation is focused on the representations made by the Respondents to the public relating to the performance or efficacy of the Products (“Impugned Representations”). The Impugned Representations have been made on: a) on the Products’ labels or packaging; b) on the websites Nuvocare.ca, Nuvocare.com, Nutracentials.com and Slimcentials.com (the “Websites”); c) on social media sites (including YouTube, Facebook, and Instagram); d) in promotional emails; e) at consumer expos; f) in online or print magazines. 22 19 Ibid. , at paras. 29 and 37. 20 Ibid. 21 Ibid., at paras 26, 30, 34 and 38. 22 McKenzie Affidavit, supra note 1 , at paras 21, 23 and 42.
8 1. SlimCentials WeightOFF Max! 21 . SlimCentials WeightOFF Max! is a supplement in capsule form. It received a Health Canada Natural Health Product Number (“NPN”) on January 21, 2015. Its NPN is 80057549.23 22. The Respondents have made and continue to make representations that the use of the product SlimCentials WeightOFF Max! will cause weight loss, including: a) “EXTRA STRENGTH WEIGHT LOSS”; 24 b) “EXTRA STRENGTH WEIGHT CONTROL”; 25 c) “The world’s best premium weight loss ingredients at the dosages proven to work together in one formulation”; 26 d) “The world’s best premium weight loss nutrients all in dosages clinically proven to work”; 27 e) “The nutrients in WeightOFF MAX! naturally combine to deliver 6 key benefits that make weight-loss faster and easier!”; 28 f) “6-IN-l Weight Loss Solution”; 29 g) “HELPS YOU LOSE WEIGHT 6 WAYS”; 30 h) “CUT 200% MORE WEIGHT THAN DIETING ALONE”; 31 i) “Clinical studies prove that WeightOFF Max! can cut 200% more weight than just dieting alone”; 32 j) “Lose-Weight”; 33 23 Ibid. , at para 25; Treyvaud Amiguet Affidavit, supra note 13, at para 33. 24 McKenzie Affidavit, supra note 1 , at para 28(a). 25 Ibid. , at para 28(b). 26 Ibid. , at para 28(c). 27 Ibid. , at para 28(d). 28 Ibid. , at para 28(f). 29 Ibid. , at para 28(g). 30 Ibid. , at para 28(h). 31 Ibid. , at para 28(i). 32 Ibid. , at para 28(j). 33 Ibid. , at para 28(k).
9 k) “Works in 6 ways for effective weight loss”; 34 1) “3X MORE Weight Control in 90 Days!” 35 23. The Respondents have made and continue to make representations that the use of the product SlimCentials WeightOFF Max! will bum fat, release fat, and block fat including: a) “THE ULTIMATE ALL IN ONE NATURAL FAT BURNING SOLUTION”; 36 b) ..shown to block carbohydrate usage, making it easier for the body to bum fat as energy”; 37 and c) “Bums fat as energy”. 38 24. The Respondents have made and continue to make representations that the use of the product SlimCentials WeightOFF Max! will cut appetite, including: a) “CUTS APPETITE” 39 ; and b) Cuts appetite and curbs emotional eating. This leads to reduced calorie intake & reduced snacking by up to 30% daily »40 25. The Respondents have made and continue to make representations that the use of the product SlimCentials WeightOFF Max! will block carbohydrates, including: 34 Ibid., at para 28(1). 35 Ibid. , at para 28(m). 36 Ibid., at para 30(a). 37 Ibid., at para 30(b). 38 Ibid. , at para 30(c). 39 Ibid., at para 31(a). 40 Ibid., at para 31(b).
10 a) “BLOCKS CARBOHYDRATES”; 41 b) “Block carbohydrate usage making it easier for the body to bum fat as energy” 42 . 26. The Respondents have made and continue to make representations that the use of the product SlimCentials WeightOFF Max! will decrease emotional eating, including:“Cuts appetite and curbs emotional eating”. 43 2. NutraCentials WeightOFF Max! 27. NutraCentials WeightOFF Max! is a supplement in capsule form. It received a Health Canada NPN on September 15, 2014. Its NPN is 80053895.44 28. The Respondents have made and continue to make representations that the use of the product NutraCentials WeightOFF Max! will cause weight loss, including: a) “EXTRA STRENGTH WEIGHT LOSS”; 45 b) “EXTRA STRENGTH WEIGHT CONTROL”; 46 c) “The world’s best premium weight loss ingredients at the dosages proven to work together in one formulation”; 47 d) “Our most powerful weight loss formula ever!” 48 . 41 Ibid. , at para 32(a). 42 Ibid., at para 32(b). 43 Ibid. , at para 33(e). 44 Ibid. , at para 26; Treyvaud Amiguet Affidavit, supra note 13, at para 25. 45 McKenzie Affidavit, supra note 1 , at para 28(a). 46 Ibid , at para 28(b). 47 Ibid , at para 28(c). 48 Ibid , at para 28(e).
11 29. The Respondents have made and continue to make representations that the use of the product NutraCentials WeightOFF Max! will bum fat, release fat, and block fat, including: a) “Our most powerful fat burner”, 9 b) “Increases fat release and burning while also blocking fat storage”; 50 and c) “Speeds up your metabolism helping you bum fat easier”. 51 30. The Respondents have made and continue to make representations that the use of the product NutraCentials WeightOFF Max! will cut appetite, including: “Cut appetite and ignite metabolism”. 52 31. The Respondents have made and continue to make representations that the use of the product NutraCentials WeightOFF Max! will decrease emotional eating, including: a) “Decreases emotional eating and reduces appetite”; 53 b) “Decreasing emotional eating and your natural desire to crave sweets”; 54 c) “Decreasing emotional eating”; 55 and d) “Decrease emotional eating”. 56 49 Ibid. , at para 30(d). 50 Ibid. , at para 30(e). 51 Ibid , at para 30(f). 52 Ibid. , at para 31(c). 53 Ibid. , at para 33(a). 54 Ibid. , at para 33(b). 55 Ibid. , at para 33(c). 56 Ibid. , at para 33(d).
12 3. SlimCentials Forskolin+ 32. SlimCentials Forskolin+ is a supplement in capsule form. It received a Health Canada NPN on February 13, 2015. Its NPN is 80058127.57 It has the same NPN as Nutracentials Forskolin Nx.58 33. The Respondents have made and continue to make representations that the use of the product SlimCentials Forskolin+ will bum fat, including: a) “When it comes to burning body fat and preserving muscle, forskolin should be your solution”; 59 b) “Clinically proven fat burning solution”; 60 c) “This powerful formula delivers potent fat burning effects”; 61 d) “DUAL-ACTION effect that stimulates the Body’s KEY fat-buming enzyme via 2 distinct mechanisms”; 62 e) “Stimulates an enzyme responsible in the body for fat burning”; 63 f) “Increases KEY Fat-Buming enzyme”; 64 and g) “Speeds up your metabolism helping you bum fat easier”.65 34. The Respondents have made and continue to make representations that the use of the product SlimCentials Forskolin+ will target belly fat, including: 57 Treyvaud Amiguet Affidavit, supra note 13, at para 39. 58 Ibid.; McKenzie Affidavit, supra note 1, at para 34. 59 Ibid., at para 37(a). 60 Ibid. , at para 37(b). 61 Ibid., at para 37(c). 62 Ibid. , at para 37(d). 63 Ibid., at para 37(e). 64 Ibid. , at para 37(f). 65 Ibid., at para 37(g).
13 a) “DUAL BELLY-FAT MELTING REMEDY”; 66 b) “Dual action belly-fat melting remedy is designed to effectively help you shed those extra pounds faster”; 67 and c) “Forskolin helps decrease belly fat and overall body fat levels by increasing the enzyme HSL”. 68 4. NutraCentials Forskolin Nx 35. NutraCentials Forskolin Nx is a supplement in capsule form. It received a Health Canada NPN on February 13, 2015. Its NPN is 80058127.69 It has the same NPN as SlimCentials Forskolin+. 70 36. The Respondents have made and continue to make representations that the use of the product NutraCentials Forskolin Nx will bum fat, including: a) “When it comes to burning body fat and preserving muscle, forskolin should be your solution”; 71 b) “Stimulates an enzyme in the body responsible for fat burning”; 72 c) “Speeds up your metabolism helping you bum fat easier”; 73 d) “Helps release and bum stored body fat”; 74 e) “Stimulates enzyme to Help Bum More Fat”; 75 66 Ibid. , at para 39(a). 67 Ibid. , at para 39(b). 68 Ibid. , at para 39(c). 69 Treyvaud Amiguet Affidavit, supra note 13, at para 39. 70 Ibid. . ; McKenzie Affidavit, supra note 1 , at para 35. 71 McKenzie Affidavit, supra note 1 , at para 37(a). 72 Ibid. , at para 37(e). 73 Ibid., at para 37(g). 74 Ibid., at para 37(h). 75 Ibid., at para 37(i).
14 f) “Lose an average of 9.9 lbs of body fat in 12 weeks”; 76 g) “Forskolin is lightning in a bottle and a miracle flower to help you fight fat”; 77 h) .support a key fat-burning enzyme in the body known as HSL”; 78 i) “This fat melting nutrient ignites metabolism and fat burning and promotes leaner, tighter muscle tone”; 79 37. The Respondents have made and continue to make representations that the use of the product NutraCentials Forskolin Nx will target belly fat, including: a) “DUAL BELLY FAT MELTING REMEDY”; 80 and b) “Forskolin helps decrease belly fat and overall body fat levels by increasing the enzyme HSL” 81 . 5 . Combination of the Products 38. The Respondents have made and continue to make representations about the performance or efficacy of the Products in combination, these representations include the following: a) “For even more powerful weight loss results, try combining WeightOFF Max! with SlimCentials Forskolin+”; 82 b) “Weight Loss Results with this Perfect Pair WeightOFF MAX! & Forskolin Nx”; 83 c) “INCREASE WEIGHT LOSS EVEN FASTER”; 84 76 Ibid. , at para 37(j). 77 Ibid , at para 37(k). 78 Ibid. , at para 37(1). 79 Ibid , at para 37(m). 80 Ibid. , at para 39(a). 81 Ibid. , at para 39(c). 82 Ibid. , at para 41(a). 83 Ibid. , at para 41(b). 84 McKenzie Affidavit, at para 41(c).
d) “Combining Forskolin Nx with WeightOFF! while promoting leaner tighter muscle appetite”; 85 e) “Bum MORE Body Fat Maintain MORE f) “Combine Multi-Award Winning WeightOFF Even More Dramatic LEAN BODY g) “MEET YOUR NEW FAT-BURNING h) “CLINICAL STRENGTH WEIGHToff BODY”; 89 i) “This potent combination tackles weight-loss PART II - POINTS IN ISSUE 39. The issues for determination on this application a) the Respondents are engaging in conduct reviewable b) serious harm is likely to ensue unless issued; and c) the balance of convenience favours 85 McKenzie Affidavit, at para 41(d). 86 McKenzie Affidavit, at para 41(e). 87 McKenzie Affidavit, at para 41(f). 88 McKenzie Affidavit, at para 41(g). 89 McKenzie Affidavit, at para 41(h). 90 McKenzie Affidavit, at para 41(i).
15 MAX will ignite your metabolism tone while reducing body fat & curbing your Muscle”; 86 MAX! + Forskolin Nx and Achieve RESULTS!”; 87 DREAM TEAM”; 88 MAX! + Forskolin Nx = YOUR DREAM from 7 angles”. 90 . are whether it appears to the Tribunal that: under Part VII.1 of the Act; the order sought by the Commissioner is issuing the order sought by the Commissioner.
PART III - SUBMISSIONS A. TRIBUNAL’S AUTHORITY TO SOUGHT
1 . The Tribunal may issue an Order where Act are met 40. Subsection 74.11(1) of the Act establishes a Temporary order 74.11 (1) On application by the Commissioner, a court may order a person who it appears to the court is engaging in conduct that is reviewable under this Part not to engage in that conduct or substantially similar reviewable conduct if it appears to the court that (a) serious harm is likely to ensue unless the order is issued; and (b) the balance of convenience favours issuing the order. 41. This current version of section 74.11 of the interpreting this provision, the Tribunal should purpose. As the Supreme Court of Canada Canadaf It has been long established as a matter “the words of an Act are to be read grammatical and ordinary sense harmoniously Act, the object of the Act, and the intention 91 Canada Trustco Mortgage Co v Canada, [2005] 2 SCR 601, 2005 also 65302 British Columbia Ltd v Canada, [1999] 3 S.C.R. 804, at para. 50.
16 ISSUE THE TEMPORARY ORDER
“it appears’’ the elements in 74.11 of the three part test; it reads: Ordonnance temporaire 74.11 (1) Sur demande presentee par le commissaire, le tribunal peut ordonner a toute personne qui, d’apres lui, a un comportement susceptible d’examen vise par la presente partie de ne pas se comporter ainsi ou d’une maniere essentiellement semblable, s’il constate que, en 1’absence de 1’ordonnance, un dommage grave sera vraisemblablement cause et que, apres 1’evaluation comparative des inconvenients, il est preferable de rendre l’ordonnance. Act has not been interpreted judicially. In look to the provision’s text, context and explained in Canada Trustco Mortgage Co v of statutory interpretation that in their entire context and in their with the scheme of the of Parliament. SCC 54 [Canada Trustco] at para 10. See
42. The Commissioner submits that, applying this Act establishes a low standard for the Tribunal to a) Legislative purpose 43. The legislative history of section 74.11 requirement for a “strong prima facie case” replaced it with the requirement that “it appears for the Tribunal to issue an order under section 44. When it was originally adopted in 1999, subsection 74.11 (1) Where, on application by the Commissioner, a court finds a strong prima facie case that a person is engaging in reviewable conduct under this Part, the court may order the person not to engage in that conduct or substantially similar reviewable conduct if the court is satisfied that (a) serious harm is likely to ensue unless the order is issued; and (b) the balance of convenience favours issuing the order. [emphasis added]
17 principle, it is clear that section 74.11 of the issue the requested order. makes it clear that Parliament removed the in the previous version of section 74.11 and to the Court” in order to lower the standard 74.11 of the Act. 74.11(1) stated: 74.11 (1) Le tribunal qui constate, a la demande du commissaire, Texistence d’une preuve prima facie convaincante etablissant qu’une personne a un comportement susceptible d’examen en application de la presente partie peut ordonner a celle-ci de ne pas se comporter ainsi ou d’une maniere essentiellement semblable, s’il est convaincu que. en Tabsence de Tordonnance, un dommage grave est susceptible d’etre cause et que, apres 1’evaluation comparative des inconvenients, il est preferable de rendre Tordonnance. [surligne ajoute]
45. Amendments to this provision were initially clause 76. The legislative summary of Bill C-27 The existing powers in the Act that permit the Competition to apply to the court for are updated so that they can also products facilitating the commission who fail to prevent an offence. The standard of a “strong nrima facie case” be replaced by a less stringent standard (clause 76). [emphasis added] 46. The French version of the legislative summary Les pouvoirs actuels prevus par la LC la concurrence a demander au tribunal une une injonction sont mis a jour afin contre quiconque foumit un produit facilitant la infraction a la LC ou n’empeche pas que le tribunal « constate T...1 l’existence convaincante » avant de rendre cette norme moins stricte. c’est-a-dire que dommage grave sera vraisemblablement cause added]
47. The French version of the legislative summary version of the legislative summary, to replace lower standard. This is the case even though uses two different phrases in place of “it appears “constate que”. Indeed, by explicitly referring 92 Bill C-27, 40th Parliament, 2nd Session, First reading, section 93 Legislative Summary of Bill C-27: Electronic Commerce Protection 94 Resume legislatif du projet de loi C-27 : Loi sur la protection
18 introduced in 2009 as part of Bill C-27, 92 under states: 93 Commissioner of an order similar to an injunction be used against those who supply of an offence under the Act, or requirement that the court meet the before issuing this order would of “if it appears to the court” reads as follows 94 : pour autoriser le commissaire de ordonnance assimilable a de pouvoir etre egalement utilises perpetration d’une une telle infraction. L’exigence d’une preuve nrima facie ordonnance est remplacee par une le tribunal « constate que f...l un » (art. 76). [emphasis
evinces the same intention as the English the previous “strong prima facie case” with a the French version of the current section 74.11 to the court”, that is, “d’apres lui” and to « dommage grave », the French version of 76. Act, May 27, 2009, clause 76. du commerce electronique, 27 mai 2009.
the legislative summary also makes clear that the three elements of the test. 48. Bill C-27 died on the order paper and was amendments to section 74.11. Bill C-28 was 74.11 came into force on July 1, 2014.96 b) Context and Text 49. The phrase “it appears to the Court” has not been the context of section 74.11.97 While the phrase interpreting those sections does not assist in 50. The same phrase “it appears to the Court” also to security for costs. Rule 416 reads as follows: Where security available 95 2010, 59 Elizabeth II, Chapter 23, section 80. 96 Bill C-28, 40th Parliament, 3rd Session, Coming Into Force. 97 The Commissioner has been successful in at least two prior of the Act. However, these cases were decided before Parliament amended the requirement to prove a “strongprimafacie case”, and they orders. These cases include Commissioner of Competition and of Competition and Universal Payphone Systems Inc., 1999 Competition, 2014 Comp. Trib. 14, affd 2015 FCA 149 also discussed 74.11 (at para 112), although the main question was on subsection 98 For example, sections 33 and 123.1 use the expression “it appears superior court of criminal jurisdiction”; and Section 100 uses 99 For example, in Canada (Director of Investigation and Research) 194 (Comp. Trib.) [Superior Propane], the Tribunal considered under both the former and the current version, provides that “[...] any person named in the application from doing any act or thing directed toward the completion or implementation of the [“a”, added].99 The Tribunal repeated this part of section 100 and thing that may constitute or be directed toward the completion added] (at paras 12-13), without discussing what “it appears the Tribunal. 100 SOR/98-106
19 standard is intended to be lower for all re-introduced as Bill C-28, with the same adopted in 201095 and the amended section considered by the Tribunal or a court in is used elsewhere in the Act? % jurisprudence interpreting section 74.11 of the Act. 99 appears in the Federal Courts Rules 100 related Cautionnement cases in obtaining temporary orders under section 74.11 the language of this provision to remove both provide limited reasons for granting the temporary Yellow Page Marketing BV et al, The Commissioner CanLII 26 (CT). Kobo Inc v The Commissioner of briefly the threshold under the previous section 106(2) of the Act. to the court”; Section 34(2) uses “it appears to a “it appears to the Tribunal”. v. Superior Propane Inc. (1998), 85 C.P.R. (3d) section 100, which read differently at that time, but the Tribunal may issue an interim order forbidding that it appears to the Tribunal may constitute or be under the current version] proposed merger” [emphasis then held that “[t]he focus is on forbidding any act or or implementation of the proposed merger” [emphasis to the Tribunal” requires of the parties or envisages for
416 (1) Where, on the motion of a defendant, it appears to the Court that [...] (g) there is reason to believe that the action is frivolous and vexatious and the plaintiff would have insufficient assets in Canada available to pay the costs of the defendant, if ordered to do so, or [...] the Court may order the plaintiff to give security for the defendant’s costs. [emphasis added] 51. In Maheu v IMS Health Canada,101 Prothonotary expression “it appears to the court” under the [18] A second and more reasoned security for costs has been foreclosed Rule 416(l )(g). The elements are first, that it must appear that there is reason to believe that the and second, that the plaintiff is without Canadian This wording, an appearance of vexatiousness different from the absolute standard which the Court has used in applying strike out. [...]
[21] From all of this IMS, which subverted for a commercial advantage, submits clearly within Rule 416(l)(g), for it need that "there is reason to believe" that this vexatious". From a plain reading of the not show, in absolute terms, that Mr. frivolous and vexatious. This is a required to strike out a pleading. [...] 101 Maheu v IMS Health Canada 2002 FCT 558 (rev’d 2003 FCT
20 416 (1) Lorsque, par suite d’une requete du defendeur, il parait evident a la Cour que l’une des situations visees aux alineas a) a h) existe, elle peut ordonner au demandeur de foumir le cautionnement pour les depens qui pourraient etre adjuges au defendeur : [...] g) il y a lieu de croire que Taction est ffivole ou vexatoire et que le demandeur ne detient pas au Canada des actifs suffisants pour payer les depens s’il lui est ordonne de le faire; [surligne ajoute] Hargrave considered the meaning of the above rule and wrote: approach to this submission that lies in the necessary elements of to the Court action is frivolous and vexatious assets to pay costs. or frivolousness, is very of frivolousness and vexatiousness Rule 221 on an application to
alleges that the Act is being that the situation falls only show that "it appears" Application "is frivolous and rule, it is apparent that IMS need Maheu's Application is in fact very different standard than that [emphasis added] 1; 2003 FCA 462) [ Maheu].
52. On appeal, the Federal Court of Appeal did words “there is reason to believe” rather than Court of Appeal agreed that Rule 416 sets a 53. The phrase has been judicially considered in considering the standard established by the utility in interpreting section 74.11 of the Act.103 54. In sum, the phrase “it appears to the court” in in accordance with Parliament’s purpose and standard for the Tribunal to grant a temporary deceptive marketing provisions. B. THE RESPONDENTS ARE ENGAGING 1. Representations not based on Adequate the Act 55. Paragraph 74.01(l )(b) of the Act states: Misrepresentations to public 74.01 (1) A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, 102 Maheu at paras 53 and 54. 103 The Supreme Court has dealt on a few occasions with provisions any specific meaning. See for example: Google Inc v Equustek (Minister of Health) vJJ, 2005 SCC 12 at paras 15-25; Gronnerud 2002 SCC 38 at paras 14, 18.
21 not disturb this finding. While focusing on the the phrase “it appears to the court”, the Federal lower standard. 102 other statutory contexts but without explicitly phrase. Therefore, this case law is of limited section 74.11 of the Act should be interpreted the plain meaning of its text, and sets a low order that requires compliance with the Act’s IN REVIEWABLE CONDUCT and Proper Testing are Reviewable under Indications trompeuses 74.01 (1) Est susceptible d’examen le comportement de quiconque donne au public, de quelque maniere que ce soit, aux fins de promouvoir directement ou indirectement soit la foumiture ou l’usage d’un produit, soit des interets commerciaux quelconques : [...] containing this expression but has not given it Solutions Inc, 2017 SCC 34 at para 28; Nova Scotia (Litigation Guardians of) v Gronnerud Estate,
(b) makes a representation to the public in the form of a statement, warranty, or guarantee of the performace, efficacy or length of life of a product that is not based on adequate and proper test thereof, the proof of which lies on the person making the representation; 56. It is not necessary that the Commissioner establish nor that any member of the public to whom Canada. 105 57. In the present case, the Respondents make misrepresentations labels, on their websites, on their social media consumer shows, in print magazines; and representations are made to promote the Respondents’ business interests generally. a) Materiality 58. A representation is material if it could influence Tribunal observed in Commissioner of Competition [191] r...l As the jurisprudence teaches, the representations induce consumers misleading them on a fundamental representations could influence ordinary to pay for Cellotherm treatments based 104 Paragraph 74.03(4)(a) of the Act. 105 Paragraph 74.03(4)(b) of the Act. 106 The Commissioner of Competition v Gestion Lebski Inc, 2006
22 b) ou bien, sous la forme d’une declaration ou d’une garantie visant le rendement, l’efficacite ou la duree utile d’un produit, des indications qui ne se fondent pas sur une epreuve suffisante et appropriee, dont la preuve incombe a la personne qui donne les indications; that any person was deceived or misled, 104 the representation was made was within to the public on their Products’ pages, in their promotional emails, at in retail stores. It is indisputable that these use of the Products, and to promote the consumer conduct. As the Competition v Gestion Lebski Inc: .106 the “material aspect” is that to engage in conduct by point. I find that those citizens to make the decision on the representations made, CACT 32 [Gestion Lebski]at para 191 and 288.
believing that mere thermal stimulation permanently in a specific location, to when the evidence shows that the results. f ...l [288] Paragraph (d) refers to the In order to better understand what is indications” in the French version, we version, which refers to “the materiality reference back to the expression a material respect” -“fausses ou trompeuses In other words, account must be representations were in fact misleading, have defined the word “material”, that is. likely to engage in conduct, [emphasis added] 59. The Impugned Representations are clearly material. Consumers bum fat may be induced into buying the Products made by the Respondents. b) General Impression 60. Subsection 74.03(5) of the Act provides that in impression conveyed by a representation as account. The Supreme Court of Canada interpreted v Time. 107 In that case, the Supreme Court emphasized advertisement: [55] In our opinion, the respondents importance of the layout of an advertisement. It must be that the legislature adopted the general 107 Richard v Time Inc, 2012 SCC 8 [Time].The provision, art. 218 P-40.1 reads: uTo determine whether or not a representation constitutes it gives, and, as the case may be, the literal meaning of the terms French version reads: « Pour determiner si une representation Pimpression generate qu’elle donne et, s’il y a lieu, du sens litteral des
23 will help them to lose weight lose fat or to reshape their figure, Cellotherm cannot produce those materiality of the representations. meant by ‘7’importance des should consider the English of any representation”, a “false and misleading in sur un point important”, taken of the extent to which the in the sense in which the courts to induce the consumer looking to lose weight or based on the Impugned Representations to be taken into account proceedings under section 74.01, the general well as its literal meaning shall be taken into similarly worded legislation in Richard the importance of the layout of an are wrong to downplay the remembered impression test to take account of the Quebec Consumer Protection Act CQLR c a prohibited practice, the general impression used therein must be taken into account.” The constitue une pratique interdite, il faut tenir compte de termes qui y sont employes. »
of the techniques and methods that are to exert a significant influence on consumer considerable importance must be attached to the entire context, including the consumer. 108 61. The Supreme Court also found that in the case impression is formed after initial contact with [57] In sum, it is our opinion that the the first impression. In the case of general impression is the one a person the entire advertisement, and it relates advertisement and the meaning of the 62. The Supreme Court further found: .110 [67] The general impression test provided applied from a perspective similar purchasers”, that is, consumers who observe that which is staring them with an advertisement. The courts must not conduct their the perspective of a careful and diligent 63. Finally, the Supreme Court found that the “credulous and inexperienced”. Under this standard, average consumer is “prepared to trust merchants conveyed” by the representations. i n « Inexperienced” 108 Ibid , at para 55. 109 Ibid , at para 57. 110 Ibid , at para 67. 111 Ibid , at para 72.
24 used in commercial advertising behaviour. This means that not only to the text but also way the text is displayed to the [emphasis added] of false or misleading advertising, the general the entire advertisement: 109 test under s. 218 C.P.A. is that of false or misleading advertising, the has after an initial contact with to both the layout of the words used. [...] [emphasis added] for in s. 218 C.P.A. must be to that of “ordinary hurried take no more than ordinary care to in the face upon their first contact analysis from consumer. [emphasis added] relevant consumer is described by the words “credulous” reflects the fact that the on the basis of the general impression refers to a consumer as “someone who
is not particularly experienced as detecting the representations. » 112 64. The Ontario Superior Court applied a modified in the context of the Competition Act,113 on Consumer Protection Act serve different purposes. the test to read “credulous and technically inexperienced account for the fact that the consumers targeted particular market segment comprising consumers wireless services. 115 65 . Prior to Time, courts had also referred to the “ordinary citizen”, 116 the “average purchaser”, ignorant, the unthinking and the credulous”. 118 112 Ibid., at para 71. 113 Canada (Competition Bureau) v Chatr Wireless Inc 2013 114 Ibid., at paras 126-127. 115 Ibid., at paras 131 and 132. 116 Commissioner of Competition v Sears Canada Inc., 2005 Comp. Trib. 2, at para is, by definition, a fictional cross-section of the public lacking ordinary reason and intelligence and common sense that such reveal. In the last analysis, therefore, it is for the trier of fact to would create, not by applying his own reason, intelligence and that that fictional ordinary citizen would gain from hearing or 117 See for example R v Bussin (1977), 36 C.P.R. (2d) 111 (Ont. Co. Ct.) average person who is an amalgam somehow of all the various and so I look at it from the basis of the "average purchaser" of 118 For example, see R v Tremco Manufacturing Co. (1973), 15 decided cases have determined that "the ignorant, the unthinking One must be governed by public's understanding of the meaning not the meaning assigned by those engaged in a particular calling (1972), 11 C.P.R. (2d) 240 (Que. Q.B.) at para 14: “[...] The includes the ignorant, the unthinking and the credulous and not the bitter experience to beware of commercial advertisements.”
25 falsehoods or subtleties found in commercial version of the Supreme Court’s test in Chatr the basis of its view that the Act and the 114 The Ontario Superior Court modified consumer of wireless services” to by the representations belonged to a who wanted unlimited talking and texting appropriate consumer standard in terms of the 117 and the “public” which includes “the ONSC 5315 [Chatr ]. 326: “[...] The ordinary citizen any relevant expertise, but as well possessing the a cross-section of the public would inevitably determine what impression any such representation common sense, but rather by defining the impression reading the representation.” at para 7: “[...] [T]he test to use is the characteristics that one might reasonably consider this device. [...]”. C.P.R. (2d) 232 (Ont. Co. Ct.) at para 25: “The and the credulous" are included in the "public". conveyed by words used in an advertisement, and or industry.” See also R. v. Kraft Foods Ltd. standard to be used ... is that of the public, which standards of the skeptical who have learned by
66. The Commissioner submits that the Supreme ordinary) consumer in Time ought to be “inexperienced” means “someone who is falsehoods or subtleties found in commercial representations”, has experience with a particular product or market. Further, the Act is similar to that under consumer protection and competition caused by deceptive marketing that the general impression conveyed by an advertisement is 67. In any event, the Commissioner submits that consumers are not more sophisticated than the credulous Time.
2. Misleading Representations 68. The Respondents make representations that the SlimCentials WeightOFF Max! will cause weight loss, bum fat, cut appetite, block carbohydrates and decrease emotional eating. Yet, there is no evidence that the Respondents have relied on adequate and proper testing of SlimCentials WeightOFF Max! and found it to have any of these effects. 121 69. The Respondents make representations that the NutraCentials WeightOFF Max! will cause weight loss, bum fat, release fat, block fat storage, cut appetite, and decrease emotional 119 Time, supra note 107, at para 71. 120 See Time, supra note 107, at para 60; see also Commissioner of Competition v Premier Career Management Group Corp,2009 FCA 295 [Premier] at para 61. 121 McKenzie Affidavit, supra note 1, at paras 62-66 and 68.
26 Court’s interpretation of the (average or followed. As noted by the Supreme Court, not particularly experienced as detecting the y not whether the consumer objective of the Competition legislation: to prevent harm to consumers practices by enabling consumers to assume accurate and not the opposite. 120 looking to lose weight or bum fat and inexperienced consumer referred to in
eating. Yet, there is no evidence that the Respondents testing of NutraCentials WeightOFF Max! and 70. The Respondents make representations that the belly fat, and increase metabolism. Yet, there on adequate and proper testing of SlimCentials effects. 123 71. The Respondents make representations that the target belly fat, and increase metabolism. Yet, there relied on adequate and proper testing of NutraCentials of these effects. 124 72. The Respondents make representations that, by together, consumers will achieve more powerful weight loss increase weight loss, ignite metabolism, and among other claims. Yet, there is no evidence and proper testing of the use of any combination these effects when used together. 125 122 Ibid. , at paras 62-66 and 68. 123 Ibid. , at paras 62-66 and 68. 124 Ibid. , at paras 62-66 and 68. 125 Ibid. , at paras 62-66 and 68.
27 have relied on adequate and proper found it to have any of these effects. 122 SlimCentials Forskolin+ will bum fat, target is no evidence that the Respondents have relied Forskolin+ and found it to have any of these NutraCentials Forskolin Nx will bum fat, is no evidence that the Respondents have Forskolin Nx and found it to have any combining one or more of the Products results, bum more calories, tackle weight loss from 7 different angles, that the Respondents have relied on adequate of the Products and found them to have
28 3. Lack of Adequate and Proper Testing 73. Whether a particular test is “adequate and proper” will depend on the nature of the representation and the meaning or general impression conveyed by that representation.126 74. The words adequate and proper have been held to be synonymous with sufficient and appropriate. 127 The courts have generally interpreted “proper” to mean fit, apt, suitable or as required by the circumstances. 128 75. In order for a test to be adequate and proper, it must establish the effect claimed. Subjectivity in testing must be eliminated as much as possible.129 76. The testing need not be as onerous and exacting as required to publish papers in scholarly journals, but the test should clearly demonstrate that “the result claimed is not a mere chance or one time effect”. 130 77. The adequate and proper testing must be done prior to the representation to the public.131 In Chatr, the Court found that performance claims that were made prior to the relevant testing were not based on an adequate and proper test and thus failed. Any performance or efficacy claim must be supported by testing before the representation is made; otherwise, the Tribunal will find the representations were not based on an adequate and proper test.132 126 Chatr, supra note 113, at para 295; The Commissioner of Competition v Imperial Brush Co Ltd and Kel Kem Ltd (c.o.b. as Imperial Manufacturing Group), 2008 CACT 2 [Imperial Brush] at para 122. 127 Chatr, supra note 113, at para 455. 128 Imperial Brush, supra note 126 at para 122. 129 Chatr, supra note 113, at paras 124 and 295. 130 Ibid , at paras 124, 295, and 344. 131 Ibid., at para 293; Imperial Brush, supra note 126, at para 125. 132 Chatr, supra note 113, at paras 440-445.
78. The Respondents have failed to adduce any of, and to support, the representations they made of the Products. Therefore, as in Chatr and Respondents have engaged in reviewable conduct. 79. In the alternative, if the Respondents are able undertaken in advance of the representations, the Brush, that testing must take into account the be considered adequate and proper testing: a) depends on the claim made as understood b) must be reflective of the risk or harm assist in preventing; c) must be done under controlled circumstances external variables or take account in d) are conducted on more than one destruction testing may be an exception); e) results need not be measured against a the nature of the harm at issue and establish the desired effect in a material manner; f) must be performed regardless of anticipated volume of sales. 133 133 Imperial Brush, supra note 126, at para 128.
29 evidence of testing they undertook in advance with respect to the performance or efficacy Imperial Brush, the Commissioner submits the to point to some form of testing that was Commissioner submits that, as in Imperial following non-exhaustive factors in order to by the common person; which the product is designed to prevent or or in conditions which exclude a measurable way for such variables; independent sample wherever possible (e.g. test of certainty but must be reasonable given that it is the product itself which causes and the size of the seller's organization or the
80. One of the cornerstones for adequate and proper the conditions” under which the product is Tribunal noted that the testing conducted on stoves outdoors, which did not replicate the actual conditions would be used, and therefore did not constitute 81. Merely relying on unsupported premises is insufficient. For Tribunal noted:
The Bulletins may be interpreted by support for the premise that sodium reduce creosote. It may well lead to to determine whether the promise has premise is not sufficient to support the The premise needs to be tested in light of 82. Therefore, the Respondents cannot rely simply Products work as advertised. 83. Moreover, anecdotal stories do not constitute 84. Despite representations made by the Respondents research, the Bureau has not received any testing make about the Products. 134 Ibid., at para 177. 135 Ibid.. 136 Ibid., at para 158. 137 Ibid., at para 217.
30 testing is to “replicate or even approximate to be used/operated. 134 In Imperial Brush, the was insufficient because it was conducted in which the stoves and the products adequate and proper testing. 135 example, in Imperial Brush, the
a person to provide some type of chloride based products (salt) may a further and more detailed analysis significant reality. However, this Respondents’ representations. the Respondents’ products. 136 on untested premises to allege that the “tests” under the Act.137 that Nuvocare products are supported by to substantiate the representations that they
85. The SlimCentials.com website invites consumers SlimCentials WeightOFF Max!. None of the WeighOFF Max! 138 None of the three studies that SlimCentials WeightOFF Max! will block increase fat release or decrease emotional eating.139 86. The NutraCentials.com website invites consumers NutraCentials WeightOFF Max!. None of WeightOFF Max! 140 None of the studies appear NutraCentials WeightOFF Max! will block increase fat release or decrease emotional eating.141 87. The SlimCentials.com website invites consumers SlimCentials Forskolin+. 142 The study does that SlimCentials Forskolin+ or NutraCentials metabolism. 143 88. The Nutracentials.com website invites consumers Nutracentials Forskolin Nx. 144 The study 138 McKenzie Affidavit, supra note 1, at paras 69-70. 139 Ibid., at para. 70. 140 Ibid., at paras 71-72. 141 Ibid., at para. 72. 142 Ibid.,, at para 73. 143 Ibid. 144 Ibid.
31 to read three “studies” relating to three studies appear to examine SlimCentials appear to explicitly address the representations fat storage, cut appetite, block carbohydrates, to read three “studies” relating to the studies appear to examine NutraCentials to explicitly address the representations that fat storage, cut appetite, block carbohydrates, to read one “study” relating to the appear to explicitly address the representations Forskolin Nx will target belly fat, or increase to read one “study” relating to the does appear to explicitly address the
representations that SlimCentials Forskolin+ fat, or increase metabolism. 145 89. Should the Respondents not provide any testing ought to conclude that none of the statements Products are substantiated by adequate and Respondents provide testing in response to the reviewed by an expert in the field and will seek 4. Respondents ’ Burden 90. Once the Applicant has demonstrated that the shifts to the Respondents to demonstrate that the has been substantiated by an “adequate and proper 91. Despite the Commissioner’s request for testing, the evidence that they tested any one or more of effects claimed in the Impugned Representations. 92. Had the Respondents performed testing on the the Respondents would have provided it to made aware of his obligations in the Bureau’s 145 Ibid. 146 Canada (Commissioner of Competition) v. PVI International Inc, 2002 at paras 45, 46, 51; Chatr, supra note 113,at paras 292 and 303.
32 or NutraCentials Forskolin Nx will target belly in response to this Application, the Tribunal as to the performance or efficacy of the proper testing. Alternatively, should the Application, the Commissioner will have it to tender an expert report forthwith. alleged representations were made, the onus relevant statement, warranty or guarantee test”. 146 Respondents have failed to provide any the Products and found it to have any of the Products and if this testing were available, the Commissioner, given that Mr. Foley was request for this information. CACT 24
93. The Respondents identify four (4) specific benefit from the use of the Products, namely: who want to lose those last few lbs”. 147 There use of the Products on these categories of consumers effect for these category of people. 148 94. The Respondents also identify the following NutraCentials brand products. These include: a) Males and females over the age of muscle;
b) Individuals taking diabetic, heart, thyroid and other medications; c) Individuals taking vitamins and other medications, and; d) Anyone who wants to use the purest, cleanest, highest quality, most potent nutrients clinically proven to have powerful fat loss benefits while also improving overall health.
95. There is no evidence that the Respondents tested these category of consumers and found that NutraCentials categories of consumers. 96. Additionally, the Respondents make representations and Nuvocare products are supported by research. impression that the Products are clinically-proven 147 McKenzie Affidavit, supra note 1 at para 49. 148 Ibid.. 149 Ibid., at para 50. 150 Ibid., at para 28(d).
33 categories of consumers that are intended to “obese”, “overweight”, “spare tire”, and “those is no evidence that the Respondents tested the and found the Products to have any four (4) types of consumers that should use . 149 18 who want to lose body fat and maintain
the use of any NutraCentials products on products had any effect on these that they are a research-based company These representations create the general 150 to lead to weight loss, and that
Nuvocare has done human clinical trials 151 on the Products have been tested, through human C. SERIOUS HARM IS LIKELY TO ENSUE 1. Section 74.11 sets out a low harm threshold 97. Section 74.11 sets out a low standard for the Tribunal to the order sought. This is clear from the wording the fact that the Commissioner brings an application Parliament has made reviewable and subject to 98. Under section 74.11 of the Act, it must appear absent the order sought by the Commissioner. “Serious standard than “irreparable harm”, the standard the Tribunal need only conclude that it appears need not conclude that harm has occurred or 99. In considering the issue of “serious harm”, enforcing the Act must be considered. The application in the public interest.152 In bringing to enforce a private right or interest. The ultimately, to protect certain public rights. In 151 Ibid., at para 16(c). 152 Commissioner of Competition v Parkland Industries Ltd., 2015 [ Parkland] at paras 59, 62 and 63.
34 their products. Yet, there is no evidence that clinical trial or otherwise. UNLESS THE ORDER IS ISSUED conclude that harm will occur absent of the provision itself, and is confirmed by in the public interest to stop conduct administrative monetary penalties. to the Tribunal that “serious harm” is “likely” harm” is a different and lower for injunctions at common law. Moreover, that “serious harm” is “likely”; the Tribunal will necessarily occur if the order is not issued. the Applicant’s role in administering and Commissioner is presumed to bring this this application, the Applicant is not seeking Applicant is seeking to uphold the Act and, light of that fact, it is submitted that the test for Carswell Nat 1878, 2015 Comp. Trib. 4
establishing whether serious harm is likely from that applied in cases involving between 100. Finally, Parliament has clearly indicated that false to lead to serious harm, not only by making it reviewable the conduct subject to administrative monetary improvement of consumer information benefits functioning of the market. 153 By contrast, the information in itself constitutes a serious harm functioning of the market. 2. Serious Harm will Ensue Absent the 101. Serious harm is clearly made out in this case. The ongoing, and widespread. It has caused and consumers and to competition. 102. The conduct is systemic, as reflected in the Respondents’ promotional emails, at consumer expos, in packaging. 154 Indeed, it is integral to the Respondents’ Canadians seeking to lose weight or bum fat. 155 153 Imperial Brush, supra note 126, at para 79. 154 McKenzie Affidavit, supra note 1 , at paras 21 and 23. 155 Ibid. , at paras 48-50.
35 to ensue in the instant application is different private litigants. or misleading representations are likely under the Act, but also by rendering penalties. As the Tribunal has observed, the consumers, competitors, and the proper continuation of false or misleading consumer to consumers, competitors, and the proper Order Sought reviewable conduct in this case is systemic, continues to cause serious harm both to Websites, on social media sites, in print magazines, and on product labels or business. The Respondents target
103. The conduct is ongoing across a number of platforms on social media sites, in promotional emails, at consumer product labels or packaging. 156 104. The conduct is widespread. The Impugned Representations social media sites, in promotional emails, at consumer product labels or packaging. 157 Through the are available to all Canadians with an Internet-connected number of Canadians. This means that untold the Impugned Representations. a) Harm to consumers 105. Economic loss to consumers can constitute “serious under section 74.11 was found where the evidence by Canadian businesses to the Yellow Respondents.158 106. The Products are available to Canadian consumers retailers and channels. This includes major online through a number of websites controlled 1 S6 Ibid., at paras 21 and 23. 157 Ibid., at paras 21 and 23. 158 Factum of the Moving Party, the Commissioner of Competition, (Commissioner of Competition) v Yellow Page Marketing B.V 159 McKenzie Affidavit, supra note 1, at paras 42, 45 and 47
36 including the Respondents’ Websites, expos, in print magazines, and on are made via their Websites, on expos, in print magazines, and on Internet alone, the Impugned Representations device, and can reach a large numbers of consumers are being exposed to harm”. In Yellow Pages,“serious harm” established that money was being paid nationally through a wide array of retail stores, health food retailers, as well as by the Respondents.159 August 4, 2011, paragraph 64; Canada 2012 ONSC 927, 2012 CarswellOnt 2837
107. The Respondents also make representations Products to induce consumers into buying the Respondents have ever tested the Products. 108. The Respondents target vulnerable consumers similar benefits. The reviewable conduct is causing a. These consumers purchase the Products other benefits of the Products touted suffer an economic loss commensurate b. These consumers may use the Products proper treatment of a condition based Respondents. 163 109. There is also harm associated with risk to products according to levels of risk. 164 These evidence necessary to support the safety and authorized by Health Canada to make the high the Respondents’ Impugned Representations the Respondents are authorized to make. b) Harm to competition 110. The reviewable conduct also causes harm to 160 Ibid., at paras 16(c), 28(d), 28(j) and 37(b). 161 Ibid., at para 67. 162 Ibid., at paras 48-49. 163 Ibid., at para 50; Treyvaud Amiguet Affidavit, supra note 164 Treyvaud Amiguet Affidavit, supra note 13, at para 13. 165 Ibid., at para. 21 and Exhibit C. 166 Ibid ,at para. 21, 29, 30, 37, 38, 41.
37 that they have conducted clinical trials 160 on the Products. 161 Yet, there is no evidence that the seeking to lose weight or bum fat and other direct harm to these consumers as: to obtain the weight loss, fat bum and by the Respondents 162 , and they therefore with the price they paid for the Products; for serious conditions and/ or may delay on the representations made by the health. Health Canada has categorized certain levels are proportionate to the standard of efficacy of a product. 165 The Products are not risk claims they are making. 166 . However, go beyond the parameters of the health claims competition generally. 13, at para 20.
111. If the Tribunal is satisfied that the Applicant has exists that the Respondent has engaged and 74.01 of the Act, then, on the basis of that finding, the is likely to ensue if the Respondent is permitted issue. 112. The Federal Court of Appeal has held that harm elements of 74.01(1)(a) are made out: .167 [61] With the purpose clause in mind, of the deceptive marketing provisions compete based on lower prices and consumers with competitive prices and deceptive marketing provisions—unlike do not list actual harm to competition as to competition is not listed as an element of truism that the Act always seeks to prevent harm that whenever the elements of paragraph per se harm to competition. [62] When a firm is permitted to public, putative consumers may be more that firm over the superior products information isdistorted in this manner, firms their goods or services, rather than to produce services, at a lower price. Therefore, as the misinformation to potential consumers, necessarily harmed, and the Act is rightly 113. Although this application is brought pursuant to Applicant’s submission that the same reasoning Brush “... the objective of paragraph 74.01(l 167 Premier, supra note 120.
38 demonstrated that a strong prima facie case continues to engage in conduct contrary to s. Tribunal can infer that serious harm to continue to make the representations at to competition is presumed whenever the it becomes clear that the objective in section 74.01 is to incent firms to higher quality, in order “to provide product choices.” Importantly, the many other provisions of the Act— an element of the offence. Since harm the offence in this case, but it is a to competition, it is presumed 74.01(l ¥q) are made out, there is make misleading representations to the likely to choose the inferior products of of an honest firm. When consumer are encouraged to be deceitful about or provide higher quality goods or appellant contends,when a firm feeds the proper functioning of the market is engaged, given its stated goals. [emphasis added] paragraph 74.01(l )(b) of the Act, it is the applies, as Phelan J. indicated in Imperial )(b) is the protection of consumers,
competitors, and the proper functioning unsubstantiated representations about the performance, efficacy the circumstances of this case, there is further assumed. Any consumers, that choose to purchase their impugned misrepresentations, will by market.
D. THE BALANCE OF CONVENIENCE 114. For this final element under s. 74.11 of the Act, the the balance of convenience favours issuing the 115. Under this part of the test, the Tribunal must determine greater harm from the granting or refusal of merits. 169 Here, it is consumers that will suffer granted. In this case, any hardship imposed temporary order sought by the Commissioner are a failure to issue such order, in essence Representations stop. 116. As outlined above, there is compelling evidence that this conduct is causing and will continue allowed to continue. In a situation such as this, 168 Impe rial Brush, supra note 126, at para 80. 169 RJR MacDonald Inc v Canada (Attorney General), [1995] 103
39 of the market from the harm caused by or life of a product”. 168 In reason that harm to competition should be Products from the Respondents due to definition affect the proper functioning of the
FAVOURS ISSUING THE ORDER Tribunal is required to consider whether order. which of the parties will suffer the the interim order, pending a decision on the the greater harm if the interim order is not on the Respondents by the issuance of the far outweighed by the harm occasioned by by public interest in having the Impugned that reviewable conduct is taking place, and to cause serious harm to consumers if it is particularly where the relief is being sought 3 SCR 199 at p. 342; Parkland, supra note 147 at para
by a public law enforcement official with a balance of convenience should strongly favour 117. Where an injunction is sought to protect the public will rarely conclude that the public interest in hardship the injunction would impose upon the Sharpe’s“Injunctions and Specific Performance It seems clear that where the Attorney statutory provision and is able to establish be very reluctant to refuse [an injunction] case, it was held that the general rule longer one between individuals, it is section of the public refusing to abide by 118. Any competitive harm to the Respondents misrepresentations is offset by the harm to the In Bell Canada v Cogeco Cable Canada, 172 against Cogeco. The defendant Cogeco argued favour, since the interlocutory injunction representations during a critical period for marketing to school” marketing season. The Court rejected period for marketing to prospective customers, Bell, a affected by the advertising campaign. 173 170 Parkland, supra note 147 at para 107. 171 Robert Sharpe, Injunctions and Specific Performance, 2nd the right of British Columbia v. Alpha Manufacturing Inc. et al., 150 172 Bell Canada v Cogeco Cable Canada, 2016 ONSC 6044 173 Ibid., at para 38
40 mandate to protect the public interest, 170 the issuing the temporary order sought. interest or to enforce public rights, courts having the law obeyed is outweighed by the person subject to the injunction. As stated in General sues to restrain breach of a substantive case, the courts will on discretionary grounds. In one no longer operates; the dispute is no one between the public and a small the law of the land. 171 from loss of revenues that result from the consumers caused by the misrepresentations. Bell was seeking an interlocutory injunction that the balance of convenience lied in its would prevent it from making certain to prospective customers- the “back this argument, noting that if it is a critical competitor, could also be significantly ed. (Toronto: Canada Law Book, 1996); The Queen in D.L.R. (4th) 193. [Cogeco]
119. Any inconvenience caused to the Respondents Commissioner is minimal. Issuance of the order that the Respondents modify the content of emails, promotional material at consumer expos, print magazines, and or packaging. 120. The Ontario Superior Court in Cogeco found case) did not tip the balance of the convenience the representations were allowed to continue. E. DURATION OF THE ORDER SOUGHT 121. The Commissioner acknowledges his duty expeditiously as possible to complete the inquiry in respect of which the order was issued”. 122. As set out above, the Commissioner’s inquiry necessary to stop the misleading representations identified above, from continuing to cause serious competition while the Commissioner completes Commissioner shall proceed as expeditiously while having regard for the anticipated need for evidence in order to advance his investigation.174 174 McKenzie Affidavit, supra note 1, at para. 80.
41 by the issuance of the Order sought by the sought by the Commissioner would require their Websites, social media sites, promotional their product labels that the cost of modifying websites (in that compared to the harm that would occur if under subsection 74.11(6) to “proceed as under section 10 arising out of the conduct is ongoing. The temporary order sought is being made by the Respondents, which are harm to consumers, competitors and to his inquiry. If the order is granted, the as possible, during the period of interim relief, the use of formal powers to gather additional
F. LIABILITY OF MR. FOLEY DIRECTLY 123. For the purposes of s. 74.01(1) of the representations to the public, be it a natural person, a 124. Respondents, whether a company or a natural person, are liability is direct and does not arise from the him/her. 176
125. Liability is assigned to (1) a person who expressly person who is “effectively” responsible for latter, this can be a person who planned, directed representations being made. This is the case representations himself or herself. 177 126. In Gestion Lebski, a director of one of the representations. The Tribunal found he was “the he was the one making decisions about the approach products. As such, he was found effectively representations to the public and was therefore company for which he was the director. 178 175 Gestion Lebski, supra note 126, at para 268 and 271 176 Ibid. , at para 268 and 271 177 Ibid., at para 267 178 Ibid., at paras 263-265.
42 Act, “a person” covers anyone who makes legal person, or both. 175 both in the same position: their attribution of the misconduct of others to it or
made the representations, and/or (2) a the representations made to the public. For the and was ultimately essential to the even if the person did not expressly make the respondents was held liable for the impugned prime mover” behind the representations as to be taken in marketing the relevant responsible for making the impugned found directly liable on the same basis as the
127. Mr. Foley is the President and CEO of Nuvocare and formulator of the Products 180 . Mr. Foley Representations to the public in his capacity does not expressly make the representation, he representations being made the public by virtue PART IV - ORDER SOUGHT 128. The Commissioner submits he has met the test for requests that the Tribunal exercise its discretion the Notice of Application. ALL OF WHICH IS RESPECTFULLY SUBMITTED DEPARTMENT Competition Bureau 50 Victoria Street, Gatineau, Quebec, Talitha A. Nabbali Elle Nekiar Telephone: 819-953-3884 Fax: 819-953-9267 Counsel to the 179 McKenzie Affidavit, supra note 1 , at para 14. 180 Jbid. . at para 16. 181 Ibid. , at para. 14.
43 179 . He also claims to be the founder, creator expressly makes several of the Impugned as President and CEO of Nuvocare. Where he is “effectively” responsible for the of being President and CEO of Nuvocare.181 relief under section 74.11 of the Act and to issue the Order set out in paragraph 1 of this 16 th day of March, 2020. o OF JT/StfCE CANADA Legal Services 22 nd Floor K1A 0C9 Commissioner of Competition