2022 Year in Review: Canadian Advertising, Marketing and Regulatory Law – Key Highlights and Developments
2022 marked a busy and notable year for advertisers and marketers as several key legislative and regulatory proposals, changes and practices were announced or came into force. This article provides a brief overview of recent developments impacting advertising in Quebec due to Bill 96, drip pricing and harsher penalties for deceptive marketing practices, environmental claims and important new labelling requirements for “unhealthy” foods and natural health products.
Changes to Advertising and Labelling Rules in Quebec: Bill 96
One of the most significant and widely publicized law reforms adopted by the Québec government in recent years is Bill 96, An Act respecting French, the official and common language of Québec (the “Act”). Bill 96 aims to reinforce the predominant use of the French language in Québec and amends the Charter of the French Language to impose stricter rules on the use of French by businesses that operate or transact with customers within the province.
One of these rules includes the use of French on public signage, posters, and commercial advertising. Previously, business owners were allowed to use a trademark on public signage and posters visible from outside premises if that trademark was “recognized” (meaning, a registered or unregistered trademark), and a registered French version of that mark did not exist on the Trademarks Register. Under Bill 96, an unregistered trademark is no longer sufficient. A trademark in a language other than French may be used on public signage only if it is registered and no French registration exists. Should storefront signage contain both a trademark in French and a trademark in a language other than French, the French text must be markedly predominant under Bill 96.
Businesses should also be wary about the use of product labels on goods sold in Québec. Under the Act, every inscription on a product, on its container or its wrapping, or on a document or object supplied with it, including the directions for use and the warranty certificates, must be drafted in French. This rule applies also to menus and wine lists.
These French inscriptions may be accompanied by a translation in another language, but that translation must not be available on more favourable terms. The use of non-French trademarks on packaging may be permitted, but only if the mark is registered (i.e., the “recognized” trademark exception no longer applies). Even if the mark is registered, however, any generic or descriptive portions included in the registration must be translated into French.
The penalties for violations under the Act are harsher than before. Under Bill 96, the Office Québécois de la langue française (OQLF) will be able to request an injunction to force compliance with the rules. Fines for non-compliance increased from $600-$6,000 to $700-$7,000 for individuals, and from $1,500-$20,000 to $3,000-$30,000 for businesses. These fines will double or triple for recurring violations. The OQLF will also be able to request a court order for the withdrawal or destruction of non-compliant signs, advertisements, and billboards at the cost of their owners or installers.
Bill 96 came into force on June 1, 2022. Businesses that operate or offer goods/services in Québec will now have until June 1, 2025, to come into compliance with the Act. For a more in-depth discussion on Bill 96 and its impact on trademark use in Québec, see our article here.
Competition Act and Drip Pricing
In an effort to modernize Canada’s competition regime, the federal government passed several significant amendments to the Competition Act, R.S.C. 1985, c. C-34 that codified express prohibitions against drip pricing and imposed harsher and discretionary fines for deceptive marketing practices.
Drip pricing involves offering and advertising a product or service at unattainable prices because consumers must also pay additional “hidden” charges or fees to buy the product or service. Drip pricing (which doesn’t include charging additional fixed charges or fees imposed by the government such as HST) is considered to be false or misleading under the law since consumers are paying higher prices than those advertised. The Competition Bureau has sought to combat drip pricing practices in Canada in recent years.
As of June 23, 2022, both the civil and criminal provisions of the Competition Act now identify drip pricing as a deceptive marketing practice. The making of a representation of a price that is not attainable due to fixed obligatory charges or fees constitutes a false or misleading representation under sections 52 (1.3) and 74.01 (1.1) of the Act.
Violations of these provisions and violations of other deceptive marketing practices provisions can carry stiff fines and penalties. Previously, penalties were capped at $750,000 (and $1 Million for each subsequent violation) for individuals and $10 Million for corporations ($15 Million for subsequent violations). The amendments to the Act now impose a new maximum penalty at the greater of these fines or three times the value of the benefit derived from the deceptive conduct if that amount can be reasonably determined. If that amount cannot be reasonably determined, the maximum penalty will be 3% of annual worldwide gross revenues. The same maximum penalties for corporations apply to those who violate the abuse of dominance provisions of the Act.
On June 23, 2023, fines for criminal agreements between competitors to fix prices, restrict supply or allocate markets are no longer capped at $25 million. Imposed fees will soon be “at the discretion of the court”.
Environmental Claims and Greenwashing
The Competition Bureau also has taken an increasing interest in addressing environmental claims and greenwashing under the false and misleading advertising prohibitions in the Competition Act. Greenwashing generally refers to marketing or advertising that misrepresents or exaggerates the environmental benefits or advantages of a product or service. A news release was issued by the Bureau in early 2022 warning consumers about the use of unlawful false, misleading, or unsupported environmental claims and encouraged consumers to report these claims to the Bureau.
In January 2022, the Bureau reached a consent agreement with the coffee machine manufacturer Keurig Canada Inc. over concerns that the company made false and misleading claims about the recyclability of its single-use K-Cup pods.
The Bureau asserted that Keurig’s recyclability claims were false or misleading in areas outside of British Columbia and Quebec where the pods were not accepted as recyclable matter. It found that Keurig gave the false impression that consumers could prepare the pods for recycling by peeling the lids off and emptying the coffee grounds when some local recycling programs required additional steps. As part of the consent agreement, Keurig agreed to pay a $3 million penalty as well as make an $800,000 donation to a Canadian charity focused on the environment. Keurig also agreed to change all its claims, publish corrective notices, and enhance its corporate compliance program to prevent future deceptive marketing.
In October 2022, the Bureau launched a formal inquiry into representations made by the Royal Bank of Canada (RBC) to reduce greenhouse gas emissions and address climate change. The Bureau asserts that RBC’s representations are materially false and misleading since RBC is taking action to increase emissions and exacerbate climate change by providing tens of billions of dollars annually in financing for fossil fuel development and expansion. The investigation is still ongoing.
The Keurig case and the Bureau’s inquiry into RBC serve as a warning that companies making recyclability and environmental claims should exercise great caution as the Bureau takes environmental claims seriously and will take action against greenwashing claims.
Bill C-252 and Advertising Unhealthy Foods to Children
In February 2022, Bill C-252, An Act to amend the Food and Drugs Act (prohibition of food and beverage marketing directed at children) was introduced by a Member of Parliament with an aim to restrict the marketing of food and beverages high in sugar, saturated fats, or salt directed at children under the age of 13. Bill C-252 was designed to address the persuasive influence of advertising on children’s food preferences, attitudes, purchase requests, consumption patterns and overall health. The proposed legislation aims to promote a healthy Canadian population, including children, while reducing the likelihood of serious health problems and contributing to a healthy economy.
Bill C-252 is similar to the Senate Bill S-228 Child Health Protection Act (“CHPA”), which was introduced in 2016 and aimed to ban ads for food and drinks aimed at children under 13. While the CHPA passed Senate and House of Commons readings, it did not reach a final vote due to the dissolution of Parliament in 2019. Bill C-252 signals a reintroduction of the issue of advertising unhealthy foods to children in Parliament. If it receives royal assent, it will create national advertising restrictions and align with the regulatory initiatives taken by the Canadian government, including the front-of-packaging labelling requirement discussed below. Bill C-252 passed its first and second readings in the House of Commons and is currently awaiting a committee study.
New Regulations re: Front-of-Package Nutrition Symbols
In an effort to help Canadians make informed choices when purchasing packaged food and beverages, the Federal Government published regulations amending the Food and Drug Regulations (“FDR”) in July 2022. Certain foods high in saturated fats, sugars, and sodium now require the following label on the front of their packaging:
The label will only display the names of the nutrient(s) of concern in that particular packaged food or beverage item. For example, the packaging for a chocolate bar that is both high in saturated fats and sugar will bear a front-of-package (“FOP”) symbol that displays both the “Sat fat” and “Sugar” nutrients to the right of the magnifying glass. The need to include the label on the packaging depends on several factors. The product must first have a “high” level of saturated fat, sugar, or sodium—or any combination of the three. Most commonly, the nutrient content in an item will be considered “high” if it contains 15% or more than the daily value set out in Health Canada’s Table of Daily Values.
There are also some exceptions and prohibitions to the inclusion of the FOP symbol. Certain foods, such as infant formula or meal replacements are prohibited from carrying the FOP symbol on their label. Other food products are exempt from requiring the FOP symbol, such as products with a small display surface, packaged raw meat, whole fruits and vegetables, and whole eggs—to name just a few.
The amendments have been in force since their publication, but manufacturers have until January 1, 2026, to be in compliance with the new requirements.
Changes to Labelling Requirements for Natural Health Products (NHPs)
And finally, in July 2022, amendments to the Natural Health Products Regulations were published in the Canada Gazette Part II, which will make significant changes to labelling requirements for NHPs. In December 2022, Health Canada published an updated Guidance Document to provide clarity on how to achieve NHP labelling compliance and identify best practices under these new Regulations.
Notable changes will include a new Product Facts Table with standardized content and format (see Fig. 1), new labelling requirements for gluten, aspartame, added sulphites, and for food allergens likely to lead to anaphylaxis in those affected, and the product license holder or their contractual proxy will be required to provide modernized contact information on the product label.
The new labelling requirements will come into force on June 21, 2025, and labels for NHPs licensed before this date will have an additional three years to achieve compliance. However, we recommend NHP license holders futureproof their labels in the intervening period to prevent retraction of stock when the new requirements come into force.
Fig 1: Example Product Facts Table reproduced from Health Canada’s Guidance Document