Bureau turns up heat on water heater rentals

TORONTO - The federal competition watchdog is accusing two companies of "abuse of dominance" in Ontario's market for rental home water heaters.

The Competition Bureau says it's seeking a total of $25 million in financial penalties — $15 million from Direct Energy and $10 million from Reliance Comfort.

The companies say they'll oppose the allegations before the Competition Tribunal, the federal agency that hears cases brought by the bureau.

The Competition Bureau says the companies have return policies and procedures that are designed to prevent consumers from switching to a competitor. The bureau also says customers are subjected to aggressive retention tactics when they call to return a rented water heater.

It also alleges there are unwarranted fees and charges as well as restrictions on when and where water heaters can be returned.

Reliance Comfort Limited Partnership said it was disappointed by the bureau's action, saying it had been in "co-operative discussions" about its return policies.

It also insisted that its return procedures are designed to protect consumers from aggressive sales tactics by its rivals, who want home owners to change suppliers.

"Reliance intends to vigorously defend its current practices that it firmly believes are in best interests of its customers," said Roger Rossi, president and CEO of Reliance Comfort.

"The action taken against us today will not clean up the well-documented problem of misleading sales tactics used by competitors' door-to-door salespeople. We believe that taking action against these unlawful practices should be the priority of the Competition Bureau."

In a separate announcement, Direct Energy also said it would "vigorously defend" its position and denied the bureau's allegations.

"Direct Energy strongly believes that all customers and homeowners deserve to have all of the necessary information for them to make informed and intelligent choices. Such practices and procedures do not inhibit competition," it said.