Lululemon on Friday agreed to comply with a decision from Canada's Competition Bureau and remove all claims from a line of clothing alleging health benefits from seaweed.

The Vancouver based yoga-wear retailer will immediately remove all tags and other product notices that contain "unsubstantiated" claims of therapeutic or performance benefits from a line of clothing it says is infused with seaweed, said the regulatory agency.

Lululemon 3-month TSX chart

The bureau cited the Textile Labelling Act, which says it is illegal to make false or misleading representations relating to a garment, including representations regarding fibre content.

The clothing maker came under fire earlier this week after The New York Times carried a story disputing company claims about the contents of its VitaSea product line. Lululemon said seaweed in the material reduces stress as well as provides anti-inflammatory, antibacterial, hydrating and detoxifying benefits.

"These claims … were questionable to us," said Andrea Rosen, acting deputy commissioner of competition.

In a statement issued late Friday, Lululemon CEO Bob Meers said the content of the clothing is not in question.

"We are altering the labels on our VitaSea products in our Canadian stores, in cooperation with the Competition Bureau of Canada, to remove references to the therapeutic and performance attributes of the VitaSea technology."

"It is important to note that the bureau takes no issue with the material content as described on our care and content labels. Independent testing has confirmed the presence of vitamins, minerals, and amino acids in the VitaSea fabric."

Meers said the company would launch a review of "the therapeutic attributes described on all product hang tags."

Company disputes newspaper claim

Lululemon shares ended mixed on Friday after the company challenged the newspaper's claims that the fabric didn't contain seaweed.

The stock closed down 30 cents at $40.50 on the TSX, but gained 24 cents to end the week at $41.74 US on the Nasdaq.

"We stand behind our products, our processes, and refute any claims in recent press reports to the contrary," Meers said in a release issued Thursday evening.

Lululemon says in its promo material that its VitaSea clothing line is made with seaweed fibre, "which releases marine amino acids, minerals and vitamins into the skin upon contact with moisture."

The Times commissioned a laboratory to test the content of the clothing. The lab said it couldn't rule out the presence of seaweed in the Lululemon clothing, but also couldn't prove Lululemon's claim.

The Times said it had the Lululemon clothing tested after an investor who is shorting the company's stock had the clothing tested and gave the newspaper the results.

Lululemon said Thursday that Smartfiber AG, the developer of the SeaCell fibre used in the VitaSea line, conducted independent tests in December 2006 that confirmed the presence of vitamins, minerals and amino acids in the fabric.

Lululemon said a lab in Hong Kong tested the fabric in June of this year and again on Nov. 14, and confirmed its contents were as advertised.