Bell fined $10M for ‘misleading advertising’

Federal competition authorities have hit Bell Canada Inc., the country’s largest telecommunications company, with a $10-million penalty for “misleading advertising” spanning the last three and a half years.

“The [Competition] Bureau determined that, since December 2007, Bell has charged higher prices than advertised for many of its services, including home phone, Internet, satellite TV and wireless,” the organization said Tuesday. “The advertised prices were not in fact available, as additional mandatory fees … were hidden from consumers in fine-print disclaimers.”

Melanie Aitken, commissioner of the Competition Bureau said in an interview the geographic scale and length of time the marketing was in market warranted the strong response.

“Make no mistake, these ads were run across the country. We had Canadians from coast to coast being affected,” she said. “Yes ten million [dollars] is significant, and it does send an important message both to Bell and players in every industry about the importance of being open and honest with consumers in your advertising.”

The “administrative monetary penalty” fee — the maximum allowed under the Competition Act — is similar to the one leveled by authorities against rival mobile giant Rogers Communications Inc. last November. The country’s largest wireless provider was also hit with the steepest penalty allowed for under the law for its marketing of Chatr, the company’s new low-cost wireless brand, which Rogers promoted as a more reliable service than new entrant competitors, like Wind Mobile.

Ms. Aitken, whose agency just this week struck down an agreement in the airline industry between Air Canada and U.S. carrier United Continental because of monopoly concerns, said the telecom industry, while notorious for hidden fees and add-on costs which result in consumer “bill shock”, is not being targeted.

“We’re hopeful that the fine and result of this case will send a signal far beyond this industry,” she said.

A Bell spokesman said Tuesday the company will not concede its ads were designed to hide costs, but will accept the fine. “While we totally disagree, we agreed to resolve the issue with the consent agreement and move forward rather than grinding through a lengthy and costly legal challenge,” spokesman Mark Langton said.

In its release, the Competition Bureau used an example where Bell advertised a bundled plan for home phone, Internet and television costing $69.90 a month. Yet once mandatory fees were added in, the lowest possible cost to the subscriber was $80.27/month — or 15% higher than the advertised price.

In addition to paying the fee, Bell has agreed to update all marketing within 60 days.

“A fine-print disclaimer is no licence to advertise prices that are not available,” Ms. Aitken said. “If you’re going to be talking about something as important as the total cost to consumers, you better make it sufficiently prominent and clear.”

Rogers has appealed the Competition Bureau’s penalty through the courts and will present its case in hearings this fall.

The Competition Bureau, technically a law enforcement body, asked the separate Competition Tribunal to seek Tuesday’s penalty after a seven-month investigation intiated because of consumer complaints.

 Source: National Post