Right of private action comes into effect June 20, Fasken lawyer says it's effect too early to know
With the release of its final guidance earlier this month, the Competition Bureau has completed its review and update of the Competition Act's greenwashing provisions. Now, it’s up to the business and legal communities to come to terms with the new guidelines.
Antonio Di Domenico, a Fasken partner and co-leader of its competition, marketing, and foreign investment group, says it will take some time to fully understand how the new guidelines and changes to the act will play out.
“These greenwashing amendments are quite granular with respect to expectations about environmental representations to the public, and they bring the Competition Bureau into unchartered territories, as I don’t think [the Competition Bureau is] traditionally used to considering substantive environmental considerations.”
Di Domenico explains that one of the key changes involves who has the onus to prove environmental claims. Under the old provisions, he says the Bureau had the jurisdiction to pursue false and misleading statements. Now, the person or business making environmental claims “would bear an onus to demonstrate that there is adequate proper testing or substantiation, depending on the context for that claim.”
He calls this a “pretty significant” change as it increases the need for risk assessment and compliance checking for any company that wants to promote its environmental credentials. But the catch with this change is that no hard and fast standard is described in the act for what it means by testing or substantiation.
Di Domenico says the guidelines are designed to be adaptable, enabling the Competition Bureau to assess claims based on the specific context. “The guidelines make pretty clear that it will be a flexible standard based on the circumstances at issue at the time,” he says. He views this flexibility as beneficial in fast-evolving areas like environmental marketing, where overly rigid standards could quickly become obsolete. At the same time, Di Domenico acknowledges that this approach creates uncertainty around what constitutes adequate and proper substantiation – a challenge both the Bureau and the Competition Tribunal must navigate when disputes arise.
Another significant change to the act involves private actors. As of June 20, new private rights of action will be in effect, which means that private parties will be able to apply for permission to file an application against businesses under the deceptive marketing practices provisions of the act, essentially allowing challenges of a company’s environmental claims. These private actors will be able to seek both monetary and non-monetary relief as compensation for greenwashing statements.
At this point, Di Domenico says it’s too early to know how popular this option will be or how successful claimants will be in getting their grievances heard.
“I do think it will take some time for this litigation process to work itself out, and that’s because, in part, the legislation provides for a leave test, where you have to get leave of the tribunal to bring a claim. And in the context of deceptive marketing practices, which would capture greenwashing, the test would be whether the tribunal deems it in the public interest to grant leave to bring the proceeding. And we don’t have, in the context of the Competition Tribunal, precedent for that yet.”
To ensure that a business is ready to adapt to the realities of the new guidelines, Di Domenico says that it’s a good time to carefully review any claims being made and ensure that there is the ability to substantiate them. Specifically, he suggests looking at any future-oriented claims.
Additionally, he recommends developing a solid understanding of the causal connection between any environmental claims being made and their substantiation.
“For example, there could be circumstances where an environmental representation is quite broad in nature, but the substantiation for it is quite narrower, and that’s where you can have a causal connection problem, or a ships passing through the night kind of problem. With that, you want to have a critical look at not only whether or not you have substantiation, but how robust it is — whether it was causally connected to the representation being made.”
But in spite of the changes to the act and the new guidelines being put forward by the Competition Bureau, Di Domenico’s overall advice is not to worry.
“I don’t think that there’s going to be consequential change arising from these provisions with respect to environmental representations as a whole. I would just encourage people not to overreact and to just wait and see how these provisions are enforced, publicly and privately.”
