Competition Bureau, Rogers, open arguments in $10M ‘misleading advertising’ case

TORONTO—The Competition Bureau and Rogers Communications Inc. started opening arguments Wednesday in a $10-million lawsuit against the telco at the Ontario Superior Court. 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. In its November 2010 court application, the Competition Bureau asked the court to order Rogers to stop the advertising campaign and refrain from similar campaigns for a 10-year period; pay restitution to affected wireless customers as well as an administrative monetary penalty of $10 million; and issue a corrective notice to inform the public about any order issued against it. The Competition Bureau argues the company did not first conduct “adequate and proper” testing to prove the advertising was true. It argues that Chatr’s follow-up ads about customers having “no worries” about dropped calls were also misleading. Lawyers for the Competition Bureau on Wednesday began opening arguments for the case after the court finished with constitutional questions raised by Rogers last fall. Tom Curry, a lawyer with Lenczner Slaght representing the Competition Bureau, said the “new entrants” indirectly alluded to in the Chatr ads, Mobilicity, Wind Mobile, Public Mobile Inc., and Videotron Ltd. (owned by Quebecor Media Inc.), all entered the market using spectrum licences purchased in Industry Canada’s 2008 AWS spectrum auction. The federal government had expressed concerns that Canada’s wireless prices were higher than in other jurisdictions, Curry said, and had outlined auction policy objectives that included lowering wireless prices and spurring competition. “Rogers did not test all of the new wireless carriers before making the representations. They did not test wireless services in all cities in which the services were offered before making the representations,” Curry said. “The backdrop the important … public interest goal, the competition goal, of protecting the emergence of new entrants and new carriers from breaches of the Competition Act." Curry said the Competition Bureau has obtained briefing notes from inside the Rogers boardroom about the company’s plan to position Chatr as a new entrant. He said Rogers hired marketing agency Wurstlin Group and public relations firm Edelman to create and promote the Chatr discount brand to compete with new entrants offering discounted services in urban areas. “You will hear that we obtained a briefing document, or documents, that instructed the agencies as to their mandate,” he said. Rogers' lawyers are expected to present their opening arguments Thursday. Rogers argued last fall that the bureau’s power to impose multi-million dollar administrative monetary penalties under the Competition Act violated the company’s rights under the Canadian Charter of Rights and Freedoms to criminal law processes such as the presumption of innocence, The Wire Report reported in January. Rogers said the bureau has the power to impose “extraordinary fines” on companies for the advertising of products when those advertising claims may be proven true and “entirely accurate by post-claim tests,” according to court documents. About seven days of hearings were held last fall, mostly to deal with the constitutional questions. Hearings resumed Tuesday this week and the court finished with the constitutional issue Wednesday morning before beginning with the trial’s opening arguments in the afternoon. The trial is now scheduled to proceed daily until mid-September, with the Competition Bureau’s witnesses appearing first. Those include Andrew McAlpine, the bureau's senior competition law officer assigned to the Chatr case; executives with new entrants Public Mobile and Wind Mobile; and expert witnesses, among others. Executives with Public Mobile and Wind Mobile said in affidavits filed with the court last fall that Chatr’s 2010 ad campaign led the new market entrants to extend promotions and lower their pricing. Rogers’ witnesses, as planned, include Bob Berner, Rogers’ executive vice-president and chief technology officer and Garrick Tiplady, Rogers’ senior vice-president of customer experience and senior vice-president of Chatr. Berner, in his affidavit, said Rogers conducted “drive tests” with devices attached to cars to measure its own dropped call rates against those of the new entrants before launching the “fewer dropped calls” ad campaign. “I am confident that Rogers' Network performed better than the networks of the New Carriers … including in respect of dropped calls, both prior to and at the time the impugned advertisements were in the market,” Berner said in the affidavit. McAlpine, the bureau's senior competition law officer assigned to the Chatr case, filed an affidavit last fall that compared dropped call rates and concluded that the “difference between the dropped call rates of Chatr and the dropped call rates of the new wireless carriers is a fraction of a single call for every hundred calls.” McAlpine said consumers' perceptions about the reliability of their wireless carrier is important and that dropped calls are a primary driver of customer switches between providers. Rogers immediately removed all references to dropped calls in Chatr’s advertising when it learned of the Competition Bureau’s court application. Justice Frank Marrocco is hearing the case. sdoyle@thewirereport.ca

Competition Bureau, Rogers, open arguments in $10M ‘misleading advertising’ case

News | August 8, 2012

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Competition Bureau, Rogers, open arguments in $10M ‘misleading advertising’ case

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