Stuart Freen is a J.D. candidate at Osgoode Hall Law School.
The Competition Bureau of Canada is asking the Superior Court of Ontario to order Rogers Communications to pay a $10M penalty for misleading advertising in the mobile phone market. The allegations relate to advertisements for the Rogers discount brand Chatr claiming the service had “fewer dropped calls than new wireless carriers.” The Bureau alleges that after extensive testing they concluded that there was no discernible difference in dropped call rates between Chatr and new entrants like Wind Mobile, Mobilicity and Public Mobile. The penalty, if ordered, would represent the maximum penalty available under the recently amended Competition Act.
The Competition Bureau’s announcement comes approximately two months after Wind Mobile filed a formal complaint with the Bureau over the same ads back in September. Competition in the mobile phone market has been fierce since the government opened up the wireless spectrum in 2008 and paved the way for new entrants. Established carriers Rogers, Bell and Telus have been enthusiastically pushing their “flanking” brands Chatr, Solo and Koodo (respectively) in an effort to maintain control over the low-end of the market without cannibalizing their flagship brands.
There are both criminal and civil penalties in place under the Competition Act for persons who make false or misleading representations to the public. However, former competition Commissioner Sheridan Scott suggests to the Globe that the case is anything but a “slam dunk”. She notes that the amended civil penalties are new and have yet to be tested by a court.
Mobilicity previously filed a separate complaint back in August, alleging that Rogers introduced Chatr as a temporary “fighting brand” to drive new entrants out of business. Although Chatr phones use the existing Rogers nation-wide network, the telecom giant chose to only offer the discount brand in select major cities where Wind and Mobilicity have a presence. Mobilicity has been a vocal proponent of “pro-consumer” legislation that would reduce cancellation fees and regulate advertising and billing.