Competition Bureau asks Court to have Rogers to pay $10 million for “misleading advertising” of Chatr

Wowzers… a wind has blown through Canada and it could cost Rogers $10 million (plus restitution) . Remember a few months back when new entrant Mobilicity complained to the Competition Bureau that Rogers new discount wireless brand was – as Chairman John Bitove stated – “trying to destroy our success”. Or how about when Wind Mobile Chairman Tony Lacavera stated that “There is absolutely no solid or objective technical basis” that Chatr advertising they have “fewer dropped calls than new wireless carriers”.

Well today the Competition Bureau completed their 2 month investigation and has begun legal proceedings against Rogers Communications Inc. to stop what the Bureau has concluded is misleading advertising of Rogers’ Chatr”.

According to the release on the Competition Bureau’s website it states that “The Bureau’s investigation, which involved an extensive review of technical data, obtained from a number of sources, led the Bureau to conclude that there is no discernible difference in dropped call rates between Rogers/Chatr and new entrants”.

The Competition Bureau is going to the Ontario Superior Court of Justice and asking Rogers to:
– immediately stop the advertising campaign and refrain from engaging in similar campaigns
– pay an administrative monetary penalty of $10 million dollars;
– pay restitution to affected customers; and
– issue a corrective notice to inform the general public about the nature and provisions of the order issued against them.

Melanie Aitken, Commissioner of Competition said that “We take misleading advertising very seriously. Consumers deserve accurate information when making purchasing decisions and need to have confidence they are not being misled by false advertising campaigns. The spectrum auction was intended to enhance competition in the wireless sector… New entrants attempting to gain a foothold in the market should not be discredited by misleading claims made by their competitors.”

HUGE news for the new entrants. Over $10 million… that’s a serious amount of discounted handsets they have to sell to make that money back.

Update: It seems that this is not a done deal yet. The Competition Bureau is only at a stage of “asking” the Court for Rogers to do the above. Regardless – they will end up paying some sort of amount for the false claims.

Update #2: Wind Mobile has just responded to the news by the Competition Bureau:
Anthony Lacavera, Chairman of WIND Mobile said “As longstanding champions of wireless choice for Canadians, we are very pleased that the Competition Bureau has come to this conclusion and we applaud its decision to stand up for Canadian consumers and their right to accurate information. This signifies another important milestone in the ongoing fight for fair wireless in Canada.

In the press release WIND backed their network by saying their “technologically advanced network has been built to accommodate an evolution to 4G, providing superior quality of service and handling of multimedia, messaging and mobile applications as technology evolves. By comparison, Chatr is run on Rogers’ old 2G network.”

Update #3: Mobilicity President & CEO Dave Dobbin has just issued a statement:We commend the Competition Bureau for taking action on the complaints that Mobilicity initiated months ago and we are committed to continuing to lead the way to ensure fair competition. It seems that the government of Canada, the governments of Quebec, Ontario and Manitoba, and about 31 million Canadians are fed up with the Big 3. We believe they are fed up with high prices, lousy service and high-handed attitude. Today alone, Rogers was hit with a massive lawsuit by the Competition Bureau and they even called the police on Mobilicity’s Magenta Militia singing dance troupe. We invite all Canadians to join Mobilicity in this fight for consumers.

Update #4: Finally Rogers has responded to this news. We were sent an e-mail that stated the following:

We’re surprised by the actions of the Competition Bureau,” said Ken Engelhart, Senior Vice President of Regulatory, Rogers Communications. “We have extensive, independent third party testing to validate our claims and we stand by our advertising. We will vigorously defend this action in court.”

“We’ve completed extensive testing in coverage areas across the country and there’s no question that the testing validates the advertising in market,” said Todd Stone, President & CEO, Score Technologies. Score Technologies is an independent third party organization that specializes in network testing for leading wireless carriers across North America.

Thoughts on all this?

Source: Competition Bureau