By Jamie Sturgeon | Financial Post | Nov. 19The potential penalty for a “misleading” advertising campaign starts at t$10-million for Rogers Communications Inc. after competition authorities alleged Friday the carrier willfully deceived potential customers by touting its new “Chatr” brand was more reliable than those sold by new entrants Wind Mobile, Mobilicity or Public Mobile.
That fine — the maximum the Competition Bureau is allowed to level against first-time offenders — could rise however, when a case is heard by the Ontario Superior Court of Justice, where the tribunal will ask a judge to also order financial restitution to affected customers.
“Whenever we identify an egregious activity, we will not hesitate to seek the maximum penalty,” a bureau spokesman said.
The Competition Bureau wrapped a two-month investigation this week — a blazing pace by bureaucratic standards — into ads for Rogers' new Chatr flat-rate service trumpeting a superior network experience and call reliability compared to the corps of upstarts.
The bureau’s findings: “There is no discernible difference in dropped call rates between Rogers/Chatr and new entrants,” the body said in a statement.
“[The] bureau has begun legal proceedings against Rogers to stop what the bureau has concluded is misleading advertising.”
The body also delivered one of the stiffest decisions against a transgressor in memory, filing a request with the courts seeking $10-million, an immediate stop to the advertising campaign as well as “restitution to affected customers” meaning Rogers may yet be liable for more financial
damages depending on a judge’s decision.
What that means specifically is unclear, but according to tribunal spokesman Greg Scott, affected customers could be those who elected for a pricier
Chatr plan, starting at $35/month an up, rather than a new entrant product because of misplaced reservations about network quality.
Ken Engelhart, senior vice-president of regulatory for Rogers, defended the firm’s claims. “We have extensive, independent third party testing to
validate our claims and we stand by our advertising,” he said in statement. “We will vigorously defend this action in court.”
Rogers launched Chatr, which sells unlimited talk and text plans across Toronto and five other major cities, in July to directly compete with customers targeted by Wind and the other two startups.
“It's evidence of how far offside they were on this,” Anthony Lacavera,Wind's chairman said. “They are reacting to our presence in the market, so
we’re happy about that. What we’re not happy about is people using misleading or unethical advertising techniques."
Mobilicity first filed an anti-competitive complaint in August, followed by Wind's formal request to have the body review Chatr's ad claims. Wind has
gained more than 140,000 subscribers since rolling out services major markets across the country this year. Subscriber figures for Mobilicity, it too in markets across the country now, are not known.
The startup, backed by Toronto entrepreneur John Bitove Jr., challenged Chatr's legality under the so-called "fight brands" clause in the Competition Act, which for bids incumbents using temporary shadow products to kill of smaller opponents.
Mr. Lacavera breaks with the arguement however. “We fundamentally don’t have an issue with companies launching as many brands as they want, offering as many choices as they want, we took issue with the misleading advertising.”
The bureau is not seeking an immediate injunction on the ads however, but will seek to have the campaign halted through the upcoming court hearings.
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