PetNet pleads guilty and pays $150,000 fine for misleading mailings

"One Price for Life" means just that, says Competition Bureau

OTTAWA, July 28, 2004 — The Competition Bureau announced today that Anitech Enterprises Inc., also known as PetNet, was fined $150,000 after pleading guilty in the Federal Court of Canada to a criminal charge for misleading thousands of pet owners through a deceptive mail campaign. In addition to a 10-year Prohibition Order imposed on PetNet, Mr. Paul Brown, a former senior executive of PetNet, also agreed to abide by a Prohibition Order.

PetNet, a Markham, Ontario-based company, is a distributor of microchips used for permanent identification of pets, and owns and operates a National Pet Registry and Recovery Service. From 1991 to September 2002, PetNet advertised and marketed its microchip and recovery service as a nominal, one-time, lifetime fee, with no annual renewal fees. Over the years, it built its customer base to over 400,000 registrants across Canada, mostly under the direction of Mr. Brown.

On January 1, 2003, PetNet changed its fee policy instituting an annual administration fee of $19.95 for registrants, both new and old. PetNet's decision to apply this new policy to its pre-2003 registrants raised concerns under the Competition Act and caused the Bureau to intervene.

The Bureau's investigation confirmed that PetNet sent approximately 400,000 mailings to pre-2003 registrants in several provinces across Canada, requesting payment of the fee. The mailings gave the impression that payment was required to keep one's pet registered.

According to the Prohibition Order, PetNet, or any successor, is required to:

• cease making further demands for payment of any fee from pre-2003 registrants relating to services originally contracted for;
• clearly disclose the annual administration fee to all new registrants; and
• establish and implement a corporate compliance program.

"Enticing consumers with guarantees of any kind, including 'one-time charges', then changing the guarantee, raises issues under the Act. Such conduct not only harms competitors who play by the rules, but also unsuspecting consumers," said Raymond Pierce, Deputy Commissioner of Competition. "We want to send a clear message to the business community that the Bureau will take swift action against companies and individuals engaging in such conduct."

Although Mr. Brown was not found guilty of any offence, the Order prohibits him from making any false or misleading representations in the future and requires him to sever all relations with PetNet, or any successor, including disposing of all his shares in the company. In acknowledgement of the seriousness of the matter, he has made a monetary contribution of $50,000 to PetNet.

This case marks the first use of the Immunity Program in relation to the false or misleading advertising provisions of the Competition Act. Those who cooperated with the Bureau provided frank, complete and timely disclosure of all evidence, which ultimately ensured the case's success.

Consumers who suspect they have been a victim of deceptive marketing practices are encouraged to contact the Bureau's Information Centre at 1 800 348-5358, or visit our Web site at www.cb-bc.gc.ca.

Please see Immunity Program under the Competition Act for more information.

The Competition Bureau is an independent law enforcement agency. We contribute to the prosperity of Canadians by protecting and promoting competitive markets and enabling informed consumer choice.

Certified Federal Court Documents
(Court File numbers T-1373-04 and T-1374-04)

Anitech Enterprises Inc.
Statement of Admitted Facts PDF
Indictment PDF
Prohibition Order PDF

Paul Brown
Statement of Admitted Facts PDF
Prohibition Order PDF

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