A company that supplies microchips to implant in pets and operates a national pet registry and recovery service was fined $150,000 on Wednesday for misleading consumers.

Anitech Enterprises Inc., which operates under the name PetNet, pleaded guilty in the Federal Court of Canada to a criminal charge of misleading hundreds of thousands of pet owners through a deceptive mail campaign.

From 1991 to 2002, the Markham, Ont.-based company advertised and marketed its identification chip and registry and recovery service as a one-time payment, good for life, with no annual renewal fee. It managed to build a base of 400,000 customers across the country.

In January 2003, PetNet changed its policy and began charging an annual fee of $19.95 for registrants, both new and old.

The Ontario Veterinary Medical Association said that under pressure from veterinarians and upset pet owners, the company agreed to clearly indicate in all future correspondence that the fee did not apply to pets microchipped before Jan. 1, 2003.

When PetNet failed to live up to that promise, the association filed a complaint with the federal Competition Bureau.

The bureau said its investigation confirmed that PetNet sent about 400,000 mailings to pre-2003 clients in several provinces asking them to pay the annual fee and giving the impression that payment was required to keep their pet registered.

"Enticing consumers with guarantees of any kind, including 'one-time charges,' then changing the guarantee raises issues under the act," Raymond Pierce, Deputy Commissioner of Competition said.

"Such conduct not only harms competitors who play by the rules, but also unsuspecting consumers," Pierce said. "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."

The penalties against PetNet also include a 10-year Prohibition Order requiring it not to make any further demands for fees from pre-2003 registrants and to clearly disclose the annual administration fee to all new clients.

The veterinary association said it was pleased with the outcome.

"There are a number of other microchip companies that provide veterinarians and pet owners with excellent products and services," OVMA President Dr. Tim Zaharchuk said. "It was important not to let one company with misleading business practices damage the reputation of microchip providers as a whole."