Is a new sheriff coming to town? Competition Bureau's role in regulating food claims

5 minute read
21 July 2020

Food companies should pay attention to recent action by the Competition Bureau (the "Bureau"), as it may signal that the Bureau intends to take a more active role in regulating claims and advertising with respect to regulated products, such as foods.

The Canadian Food Inspection Agency (CFIA) is responsible for enforcement of the Food and Drugs Act (FDA) as it relates to food, as well as the Safe Food for Canadians Act, both of which contain broad, very similar prohibitions against making any claim or representation with respect to food that is false, misleading, deceptive or likely to create an erroneous impression. As a result, CFIA has taken the lead in pursuing companies making food claims that are potentially false or misleading to consumers.

It's important to note though that the Bureau is responsible for enforcement of the Competition Act, including Part VII.1 -- Deceptive Marketing Practices. While we often think of this legislation for its provisions related to price representations, it also includes as "reviewable conduct" making "a representation to the public that is false or misleading in a material respect" or "a statement, warranty or guarantee of the performance, efficacy or length of life of a product that is not based on an adequate and proper test."

The deceptive marketing provisions of the Competition Act apply when a company is "promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest". In other words, the provisions are not limited by product category -- products that are otherwise regulated, for example under the FDA, are not exempt from the application of the Competition Act, including Part VII.1.

Despite the broad application of the Competition Act, the Bureau has generally taken a hands-off approach when it comes to enforcing against false or misleading representations or performance claims for foods and other regulated products, such as drugs and natural health products (NHPs). Rather, it has typically deferred to CFIA and Health Canada as the regulators of those products.

Notwithstanding this, recent events indicate that the Bureau may be reconsidering this approach. In February 2019, it published a news release reminding NHP companies making weight loss claims that they must also comply with the Competition Act. Subsequently, in its Deceptive Marketing Practices Digest -- Volume 5, published in March 2020, the Bureau highlighted unsubstantiated weight loss claims as a top marketing issue. While past Bureau enforcement on weight loss has centered around consumer devices (e.g. electronic muscle stimulators) these publications specifically call out NHPs as being at risk of Bureau enforcement action.

Shortly after the Digest was published, the Bureau sent out a news release that it has taken action to stop a company from selling certain NHPs making weight loss and fat burning claims as the company has not provided adequate and proper testing to support its claims, even though Health Canada licensed the product with certain claims related to weight management and fat metabolism.

The notice indicates the Bureau is working with Health Canada on this investigation and enforcement action, but it appears to be taking the lead in the matter, despite Health Canada's enforcement abilities pursuant to the FDA's general prohibition on false or misleading claims for drugs and NHPs, similar to the prohibition for foods.

While this may not be the start of a broader push by the Bureau to enforce against false or misleading representations with respect to foods, it is at least a reminder that the Bureau has certain enforcement powers under the Competition Act, and associated policies (e.g. for influencer marketing), that food companies need to be cognizant of, in addition to CFIA guidance.

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