In the first case considered by the appointed members of the CRTC under Canada’s Anti-Spam Law (CASL), the Commission has significantly reduced the size of the penalty previously issued by staff, potentially raising questions about the appropriateness of previous AMPs issued under the law.
A Notice of Violation was originally issued by CRTC staff to Blackstone Learning Corporation in January of 2015, requiring that company to pay an Administrative Monetary Penalty (AMP) of $640,000. However, following a review by the CRTC, the amount payable has been reduced to $50,000.
Under the scheme of the Act, the Commission may designate persons or classes of persons to exercise powers in relation to any matter referred to in the designation. Somewhat unusually, the enforcement powers under CASL – such as the power to issue preservation demands, notices to produce, and notices of violation - are actually granted to such designated persons, rather than to the Commission itself. The CRTC has designated a Chief Compliance Officer, and potentially other staff members, to exercise such powers.
Where a power is exercised by a designated person, representations may be made by the subject of a CASL investigation to the appointed members of the CRTC, who can review the action of the designated person and revoke or amend that action, as appropriate. With respect to Notices of Violation in particular, upon receipt of representations from the subject of the notice, the Commission must decide, on a balance of probabilities, whether the subject committed the violation, and if so, may impose the penalty set out in the notice, may reduce or waive the penalty, or may suspend payment of the penalty, subject to any conditions that the Commission considers necessary to ensure compliance with the Act.
In the case of Blackstone, the CRTC appears to have reduced the applicable penalty largely on the basis that the company “is a small business with a relatively limited ability to pay”, as well as the fact that CASL is a relatively new regulatory regime, and that Blackstone had no history of non-compliance under CASL. The amount was reduced notwithstanding that Blackstone apparently did not cooperate with the CRTC investigation, refusing to respond to a Notice to Produce issued pursuant to the Act, even after a Commission decision requiring that it do so.
While the significant reduction in the AMP payable by Blackstone is noteworthy of itself, the case may be particularly noteworthy as the reduction, and the factors cited by the Commission in support of that decision, may raise questions for some about the appropriateness of some of the AMPs previously paid with respect to earlier investigations.
In this regard, other than the $1.1 million Notice of Violation issued to Compu-Finder, prior to the Blackstone decision, all of the AMPs paid to date under CASL - ranging from $48,000 to $200,000 - were paid pursuant to undertakings into which companies voluntarily entered in order to settle investigations by CRTC staff. There was no review of these settlements by the appointed members of the Commission.
Consistent with the Commission rationale in the Blackstone decision, CASL would also have also been a relatively new regulatory regime in each of the previous settled CASL cases, and each of the companies concerned would also have had no history of non-compliance with the anti-spam law. Moreover, unlike the facts in Blackstone, in each of the previous undertakings, the companies (Plentyoffish Media,Porter Airlines, Rogers Media and Kellogg Canada) cooperated fully with the staff investigation and took immediate steps to rectify alleged non-compliance, as explicitly indicated in the undertakings and news releases associated with those cases.
It remains to be seen whether the strong guidance from the CRTC in the Blackstone decision will inspire companies in future to make representations to the appointed members of the Commission with respect to alleged violations of CASL, in the hope of reducing the AMPs payable, rather than entering into voluntary undertakings with Commission staff.