Hockey Helmet Performance Claims Case Illustrates Competition Act Compliance Requirements

On November 17, 2020, the Competition Bureau (Bureau) announced that it had reached a consent agreement with TRUE Sports Inc. (TRUE Sports) relating to hockey helmet performance claims made by the hockey equipment manufacturer (see Competition Bureau, News Release, Competition Bureau completes investigation into performance claims related to TRUE hockey helmets (November 17, 2020)).

According to the Bureau, TRUE Sports had made performance claims relating to its helmets that gave the general impression that they could reduce the risk of concussions. The advertising claims in this case were made by the manufacturer through the use of diagrams, illustrations and text.

While TRUE Sports had conducted laboratory testing prior to making the claims, the Bureau’s position was that the testing was not adequate and proper to support them. In particular, the Bureau determined that the hockey equipment manufacturer relied in part on brain injury studies that largely focused on sports with fundamentally different patterns of injuries than those suffered playing hockey.

Under the True Sports, Inc. - Registered Consent Agreement negotiated with the Bureau, TRUE Sports agreed to donate $100,000 worth of sports equipment to charity, or a hockey league or association, stop making unfounded performance claims and implement an enhanced competition law compliance program. For more information about competition law compliance programs, see Practice Note, Competition Law Compliance Programs and Standard Document, Competition Law Compliance Program.

The Competition Act, R.S.C. 1985, c. C-34 (Competition Act) contains a standalone civil provision that prohibits performance claims that are not based on adequate and proper tests (section 74.01(1)(b)). For more information about performance claims and the Competition Act, see Practice Note, Performance Claims Under the Competition Act and Misleading Advertising Due Diligence Checklist.

Section 74.01(1)(b) requires that performance claims must be supported by adequate and proper testing (the factors for determining the adequacy of which have been set out by the Competition Tribunal (Tribunal)) and that any such testing must be conducted before a performance claim is made. The onus for establishing that a performance claim is “adequate and proper” is on the person making the claim. In addition, both the literal meaning of a performance claim and its general impression (for example, any images or graphics used) are relevant in determining whether section 74.01(1)(b) has been violated.

The potential penalties for violating the performance claims provision of the Competition Act include Tribunal or court orders to cease the conduct, publish a corrective notice or pay an administrative monetary penalty of up to $750,000 for individuals and $10 million for corporations. Performance claim cases in Canada are, however, commonly resolved by way of negotiated consent agreements. For more information about consent agreements, see Practice Note, Consent Agreements Under the Competition Act.

The Bureau has challenged performance claims in a wide variety of industries over the years, including in relation to automobiles, anti-corrosion devices, cell phones, chimney-cleaning products, clothing, drugs, fuel saving devices, hot tubs, sports equipment and tanning and weight loss products, among many others.

This case, which is the third that the Bureau has commenced in relation to ice hockey helmets, highlights several key aspects of making product performance claims in Canada:

Interestingly, while the Bureau has highlighted deceptive marketing as one of its COVID-19 related enforcement priorities, it suggests in the consent agreement reached in this case that the relatively lenient requirements imposed on TRUE Sports, including a relatively modest penalty, are based, in part, on the “difficulties imposed on the Respondent due to the COVID-19 Pandemic”. For more information, see Legal Update, Competition Bureau Increases Enforcement Against Deceptive COVID-19 Advertising Claims.