Commissioner Knuckles Down on Moose Knuckles’ Use of “Made in Canada” Claims
On April 26, 2016, the Commissioner of Competition (the “Commissioner”) brought an application to the Competition Tribunal (the “Tribunal”) against Moose International Inc., a manufacturer of premium winter jackets under the Moose Knuckles brand.
The application was brought under the civil deceptive marketing provisions of the Competition Act (the “Act”) and alleges that the company misled consumers by advertising their jackets as being “Made in Canada”. The Commissioner alleges that Moose Knuckles jackets are “mostly manufactured in Vietnam and Asia” with “only the finishing touches” being done in Canada. Further, the application alleges that consumers are willing to pay a premium for products that are “Made in Canada” and that manufacturers must provide consumers with accurate country of origin information so that they can make informed purchases. This is the first challenge by the Commissioner of an alleged misleading use of a “Made in Canada” claim.
The Commissioner has asked the Tribunal to impose an administrative monetary penalty of $4 million, require the company to notify the public of its conduct, provide “some form of reasonable restitution” to customers, and pay the Commissioner’s legal costs.
Moose International has publicly rejected these allegations and maintains that its “core products are made in Canada”.
“Made in Canada” Claims
The Bureau has released Enforcement Guidelines regarding the use of “Made in Canada” and “Product of Canada” claims. While there is no requirement that manufacturers label their items with the country of origin, the use of a “Made in Canada” or “Product of Canada” claim is subject to the Act’s deceptive marketing provisions.
According to these guidelines, to qualify as being “Made in Canada” manufacturers must ensure that the following three conditions are met:
- The last substantial transformation of the good occurred in Canada;
- At least 51% of the total direct costs of producing or manufacturing the good have been incurred in Canada; and
- The “Made in Canada” representation is accompanied by an appropriate qualifying statement, such as “Made in Canada with imported parts” or “Made in Canada with domestic and imported parts.”
- Where a company seeks to use its “Canadian-ness” as part of its branding strategy, it must ensure that its representations regarding its ties to Canada are not misleading. This is especially true regarding the use of “Made in Canada” or “Product of Canada” claims given the Commissioner’s Enforcement Guidelines – in particular, where these claims are likely to influence consumers’ purchasing decisions. Even if a company successfully defends its use of these claims, the mere existence of enforcement proceedings can significantly impact brand value and brand reputation.
- Where a company changes its manufacturing practices, it needs to re-evaluate any statements regarding the origin of its products, including its use of “Made in Canada” or “Product of Canada” claims (in this regard, it is worth noting that the Commissioner’s application indicates that Moose Knuckles jackets were made in Canada until 2012, at which point the company “started having the parkas produced oversees in Vietnam and elsewhere in Asia”).
- The aggressive enforcement of the Act’s misleading advertising claims continues to be one of the Commissioner and the Bureau’s enforcement priorities. If the Commissioner’s case is successful, there will likely be increased enforcement regarding the use of Canadian origin claims.
For a copy of the Bureau’s press release, please click here.
For a link to the Bureau’s application to the Competition Tribunal, please click here.
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