Bill C-59: Balancing green goals with economic risks

This post is the first in a four-part series on investigation and enforcement proceedings for greenwashing claims under the Competition Act. It describes those proceedings and their implications, and suggests key risk mitigation activities that businesses in Canada should bear in mind.

Part Two will outline some of the key considerations for companies that may be under active investigation by the Competition Bureau. Part Three will focus on civil proceedings for deceptive marketing practices, addressing the two new anti-greenwashing provisions and private right to action under the Competition Act. Finally, Part Four will summarize the process for claims that proceed under the criminal deceptive marketing practices regime.

On June 20, 2024, the Fall Economic Statement Implementation Act, 2023 (Bill C-59) became law and amended Canada’s Competition Act (the Act) to introduce anti-greenwashing provisions that aim to enhance the accountability of businesses making environmental and social claims.

Reviewable conduct now includes unsubstantiated claims made to the public about the benefits of a product, business, or business activity related to protecting or restoring the environment, or mitigating the environmental, ecological, and social¹ causes or effects of climate change.

These provisions apply to anyone that promotes, directly or indirectly, their products, services or business interests in Canada. This includes foreign businesses advertising and marketing in Canada, and anyone supplying products containing unsubstantiated claims to wholesalers, retailers or distributors in Canada.

The Competition Bureau (the Bureau) and private parties may challenge false, misleading or unsubstantiated environmental and certain social claims in several ways, as set out below.

The Bureau, an independent federal law enforcement agency, has broad authority to investigate potential contraventions of the Act, including greenwashing. If a company makes a false, misleading or unsubstantiated environmental or social claim, the Bureau has several investigation and enforcement tools:

1. Informal investigation: The Bureau receives thousands of deceptive marketing complaints annually from private parties via the online complaint form. If a complaint shows merit, an initial review gathers more information to assess if the Act has been violated. At this stage, the Commissioner of Competition (the Commissioner) may conduct both criminal and civil investigations and proceed upon information voluntarily provided by the company under investigation or others. 
2. Formal inquiry: If the issue is serious enough, the Commissioner may initiate a formal inquiry either: (i) based on the sworn application of six Canadian residents; (ii) if the Commissioner has reason to believe a contravention of the Act has occurred; or (iii) if directed by the Minister of Innovation, Science and Industry. Once a formal inquiry is launched, the Commissioner may obtain court orders compelling testimony, production of records and information, and interim orders. The Commissioner must conduct its investigation in private, though information may be disclosed if the matter becomes public.
3. Legal action: If the investigation finds evidence of false or misleading claims, the Commissioner can take further steps:
   1. The Commissioner may refer the matter to the Public Prosecution Service of Canada for criminal prosecution. This is reserved for the most egregious matters, where misleading claims are made knowingly or recklessly.
   2. The Commissioner may pursue civil remedies through the Competition Tribunal. Only the civil track is available for unsubstantiated claims.

The Commissioner may not pursue a company both criminally and civilly.

Private parties, such as consumers, competitors and non-government organizations have several options for challenging a company’s claims. For instance, private parties may:

1. File an online complaint form asking the Bureau to investigate.
2. Bring an action in Court against a company, as either a private civil action or class action, for
   1. Damages as a result of conduct that is contrary to the criminal deceptive marketing practices provisions.
   2. Damages and other relief in respect of false or misleading representations at common law and under provincial consumer protection legislation.

Meanwhile, starting on June 20, 2025, private parties will have expanded rights allowing them bring a matter before the Tribunal against a company for violating civil deceptive marketing practices. Before a private action proceeds, “leave” (permission) must be granted by the Tribunal.

If a company is found to have made environmental or social claims that are false, misleading or unsubstantiated, consequences vary based on severity:

• With respect to criminal proceedings, companies may be fined with no prescribed limit.
• With respect to civil proceedings, the following remedies are available:
• Interim/temporary orders (effective June 20, 2025, private parties will be able to seek temporary orders).
• Prohibition orders, prohibiting the false or misleading representations or unsubstantiated claims in question (for a period of 10 years unless the court specifies a shorter period).
• Corrective notices, requiring the publication of such notices.
• Administrative monetary penalties (AMPs) payable to the government, of up to the greater of $10 million for the first order (and $15 million for each subsequent order), three times the value of the benefit derived from the agreement, or if the amount cannot be reasonably determined, 3 per cent of the organization’s annual worldwide gross revenues.
• The payment of restitution to those who purchased the products at issue²– except wholesalers, retailers or other distributors, to the extent that they have resold or distributed the products—any manner that the court considers appropriate.

Importantly, a due diligence defence is available—for civil matters, no order can be made against a person for publication of corrective notice, AMPs or restitution, if that person establishes that it exercised due diligence to prevent the reviewable conduct from occurring.

The avenues available to regulators and the public to scrutinize and act against greenwashing are widening. What is more, the Act’s new greenwashing measures and private right to action underscore the need for companies to back-up their environmental and social claims. Companies must remain vigilant in their internal processes and public disclosures. A failure to adapt could result in costly investigations, enforcement actions and reputational risk or harm.  Given the potential risks, it is crucial that companies update their internal processes and ensure that their public reporting undergoes regular legal review on an annual basis.

To mitigate such risks, companies should:

• Identify where they have made ESG disclosures or talked about their ESG commitments publicly, ranging from website content, investor decks, media interviews, sustainability reports and social media, as well as anywhere else ESG commitments or disclosures are made in the public domain
• Assess their ESG disclosures from a legal risk perspective and against these new legal requirements, including ensuring their ESG data, information, targets and goals are credible and verified—and, alternatively, are not vague, overly broad, selective, absolute or unqualified.
• Conduct multi-disciplinary reviews of their claims to ensure they are substantiated and, where applicable, aligned with internationally recognized standards.
• Close gaps in compliance programs and ensure their internal and external processes and controls can withstand the expected additional legal scrutiny from the public.
• Consider providing submissions to the Competition Bureau as part of the ongoing public consultation on guidelines aimed at the recent amendments to the Act.

Please note this publication presents an overview of the investigation and enforcement proceedings for deceptive marketing practices under the Competition Act. It is for informational purposes only and is not a replacement for legal advice. If you need guidance, please contact our ESG Legal Risk and Disclosure team to explore how we can help you navigate your legal needs.

1. Social causes or effects of climate change are considered for product benefit claims under s. 74.01(1)(b.1) only.
2. Restitution is only available for orders relating to violations of the general prohibition against materially false or misleading representations; this is not available for breach of either of the two new greenwashing provisions.