Chatr ‘fewer dropped calls’ ads not misleading, Ontario court says

Rogers Communications Inc.’s advertising campaign that claimed its Chatr wireless brand had “fewer dropped calls” than its new entrant competitors was not misleading, said the Ontario court judge who heard the Competition Bureau’s $10-million case against the company. In a judgment released Monday, Ontario Superior Court Justice Frank Marrocco said “drive tests” Rogers conducted in advance of the 2010 ad campaign sufficiently proved that Rogers’ network dropped fewer calls than networks belonging to Canada’s new entrant carriers, who had recently launched their own wireless services. “I am satisfied that the Rogers drive testing in fact adequately and properly tested the fewer dropped calls claim made subsequent to that drive testing,” Marrocco said in a 78-page decision. “I do not accept the applicant’s submission that the Rogers drive testing results support a finding that the fewer dropped calls claim is either false or misleading.” The federal Competition Bureau in 2010 launched a lawsuit against Rogers, seeking a $10-million fine for “misleading advertising” that ran in the summer and fall of 2010, in which Rogers’ discount brand Chatr advertised that it had “fewer dropped calls” than new wireless entrants Wind Mobile, Public Mobile Inc., Videotron Ltd. and Mobilicity. The Competition Bureau argued in its November 2010 application that Rogers did not first conduct “adequate and proper” testing to prove the advertising was true, and that Chatr’s follow-up ads about customers having “no worries” about dropped calls were also misleading. In his decision, Marrocco said it would be “dangerous” for the court to place “significant weight” on “switch data” the bureau collected from each of the carriers, which the bureau said provided a direct comparison of the providers’ actual dropped call rates. That data—which uses network infrastructure to record how often those networks drop calls—contained too many variables to provide a direct comparison of network performance, he said. Rogers’ drive testing—in which the company tested its own devices and those from the new entrants while driving through a network’s footprint—“is used all over the world to compare network performance,” Marrocco said, adding it provides a better comparison. “Because the applicant’s assertion that the fewer dropped calls claim is false is based to a significant degree upon switch generated data, I am not satisfied that the applicant has proven on a balance of probabilities that the respondents’ fewer dropped calls claim was false,” the decision said in specific reference to the bureau’s claim that new entrant Wind Mobile’s network did not record more dropped calls than Rogers during a four-month period in 2010. Marrocco said subsequent Rogers testing demonstrated that its Chatr brand had lower dropped call rates than Wind and Public Mobile in both indoor and outdoor environments in the late summer and early fall of 2010. He rejected the competition bureau’s argument that the Chatr ads were misleading unless there was a “discernible difference” in the companies’ dropped call rates. “This is not a case where an indiscernible difference means that the services are indistinguishable,” he said, noting that it is reasonable to believe that a consumer would choose a mobile provider that offered fewer dropped calls. Monday’s decision did not vindicate Rogers entirely, as the court found the company did not complete drive tests in the Calgary and Edmonton markets before making its “fewer dropped calls” claim in those markets, as is required under Section 74.01(1)(b) of the Competition Act. Rogers also failed to test its network against Public Mobile’s network in Toronto and Montreal before making its “fewer dropped calls” claim, the decision said. It said those two instances were “reviewable conduct” and contrary to the Competition Act. Kent Thompson, counsel with Davies Ward Phillips & Vineberg LLP who represented Rogers in the case, said in a telephone interview Tuesday that it is possible, though unlikely, that Rogers could still face a financial penalty or other remedies as a result of those aspects of the decision. “The adequate and proper testing provisions have been part of the Competition Act for decades,” he said. “There is no case in which the Competition Bureau has sought remedies against a party that has published completely accurate and truthful advertising, simply because the timing requirements of the adequate and proper testing provisions were not complied with.” He added that the courts would be required to hold a separate hearing to determine what damages it would require Rogers to pay, if it opted to impose a penalty. As part of its defence, Rogers had also argued that a $10-million administrative monetary penalty the Competition Bureau asked the court to impose on the company was “criminal in nature” and constituted “true penal consequences.” It argued that the bureau’s ability under the Competition Act to assign a penalty of that magnitude violated the company’s Charter rights, because its leave to appeal the penalty was through civil court action, which does not provide the same rights and protections as criminal proceedings. Greg Scott, a Competition Bureau spokesman, told The Wire Report in January 2012 that this was the first time a company had challenged the bureau’s power to impose administrative monetary penalties, which he described as “an effective tool to prevent and deter anti-competitive behaviour.” Marrocco said he was satisfied that the bureau could impose administrative penalties of up to $10 million under the Competition Act, and that such a penalty “does not engage” Rogers’ Charter rights. In a release Tuesday, the Commissioner of Competition John Pecman said the bureau is disappointed with the decision and considering its “next steps in this matter.” “Nevertheless, we are pleased that the Court has dismissed the constitutional challenges brought forth by Rogers, and has agreed with our position that Rogers did not conduct adequate and proper testing beforehand to support its claims about dropped calls in some Canadian cities,” he said. “The Bureau successfully argued that the requirement for adequate and proper testing before making a claim about the performance of a product is justified. Similarly, the Court agreed with the Bureau’s position that administrative monetary penalties are not criminal in nature.” —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Chatr ‘fewer dropped calls’ ads not misleading, Ontario court says

News | August 20, 2013

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Chatr ‘fewer dropped calls’ ads not misleading, Ontario court says

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