Canadian COMPETITION & ANTITRUST LAW

Earlier this year, sweeping amendments were made to the federal Competition Act (the “Act”).  The recent amendments were the most significant in twenty-five years.  While most of the changes are now in effect, some of the changes, including to the criminal conspiracy provisions, will come into effect early next year in March.

Some of the key changes to the Act that impact Canadian companies, trade associations and commercial lawyers advising Canadian companies include:

Criminal conspiracy provisions.  New criminal conspiracy provisions have been enacted for price fixing, market allocation and output restriction agreements.  Canada has now adopted a “per se” U.S. style criminal conspiracy provision, which means that as of next March it will not be necessary to show any adverse market effects in order to establish a criminal conspiracy under the Act for so called “hard-core” cartel agreements (i.e., agreements to allocate markets or customers, fix prices or restrict or limit output/production).  The practical impact of this fundamental change is that whereas formerly only large market participants were potentially exposed to criminal liability, small players (i.e., companies with small market shares) now also face potential criminal liability.  The recent amendments will also make it easier in theory for private parties to commence damages actions for alleged criminal conduct under section 45.  Moreover, there is currently uncertainty as to the treatment of a number of types of common commercial agreements such as franchise, licence and dual distribution agreements.

Criminal conspiracy penalties.  Significantly increased penalties under the criminal conspiracy provisions have been enacted, with fines of up to CDN $25 million (per count) and/or imprisonment for up to 14 years, which will come into force in March next year.  These penalties have been increased from the former CDN $10 million and five years, and signal both the continuing importance to the Bureau of detecting and deterring domestic Canadian cartels and what may be a more vigorous enforcement approach following the recent appointment of a new Commissioner of Competition.  The previous director and officer liability under the Act has not changed.

Civil provision for anti-competitive agreements.  Under the newly amended Act, agreements among competitors that are not caught by the new per se criminal offences will be potentially reviewable under a new civil section for other types of anti-competitive agreements.  Such agreements may include non-compete, research and development, joint purchasing, joint production, joint selling and commercialization agreements.  Under this recently enacted provision, which is part of the new “two-track” conspiracy regime, the federal Competition Tribunal (the “Tribunal”) will have the power, on application by the Commissioner of Competition (the “Commissioner”), to make remedial orders where it is established that the agreement prevents or lessens (or is likely to prevent or lessen) competition in one or more relevant markets.  In this regard, the new civil provision for anti-competitive agreements will be more akin to substantive merger review under the Act.  Under the new rules, the Tribunal will have the power make orders: (i) prohibiting any person, whether or not a party to the agreement, from doing anything under the agreement or (ii) requiring any person, with consent, to take any other action.  Unlike the criminal provisions, however, no monetary penalties can be imposed and private parties will not have any private right of action.

Private actions.  As a result of the recent amendments, and in particular based on the repeal of the “undueness” requirement for criminal conspiracies (i.e., removing the necessity of showing anti-competitive effects), it will now in theory be easier for private plaintiffs and the Bureau to establish the elements of a criminal conspiracy under section 45.

Bid rigging.  New criminal bid rigging rules have been enacted, which are relevant to companies involved in competitive tenders.  These include a new bid rigging offence in addition to the existing offences (for agreements to withdraw a bid that has already been made) and increasing the maximum prison sentence for bid-rigging to fourteen years (increased from the former five years).  The previous unlimited fines for bid rigging (i.e., in the discretion of the court) remain unchanged.

Misleading advertising penalties.  Significantly increased penalties under the civil misleading advertising provisions have been introduced.  These include “administrative monetary penalties” (essentially civil fines) of up to CDN $750,000 for individuals and CDN $10 million for corporations that breach the misleading advertising provisions of the Act.

Merger review and notification.  Fundamental changes have been made to Canada’s merger review and notification regime.  The key changes include: (i) increasing the “size of transaction” threshold for merger notification, (ii) introducing a U.S. style two-phase merger review and notification process (with a single initial waiting period), (iii) introducing a U.S. “second request” style of supplementary information request for complex mergers, (iv) shortening the period during which the Bureau may challenge a completed merger and (v) introducing a single uniform merger notification form.  While the law relating to the substantive analysis of mergers has not changed, the new U.S. style two-phase notification and review regime is expected to introduce additional delay and expense for complex mergers in Canada (i.e., those subject to supplementary information requests from the Bureau).  While some aspects of the new merger notification regime remain unclear, the Bureau has recently introduced new guidelines setting out its approach to the new process.

Criminal price maintenance, predatory pricing and price discrimination repealed.  The former criminal price maintenance, predatory pricing and price discrimination provisions under the Act have been repealed.  These provisions were widely criticized as being unsound in relation to current economic thinking and as well as being overbroad in potentially sanctioning conduct with no adverse market effects.  While predatory pricing and price discrimination will now be dealt with under the civil abuse of dominance provisions, the former criminal price maintenance provision has been replaced with a civil section together with a new right of private access allowing private parties to seek Tribunal remedial orders.

Administrative monetary penalties for abuse of dominance.  Significant “administrative monetary penalties” have been introduced for contravention of the civil abuse of dominance provisions under the Act of CDN $10 million (CDN $15 million for subsequent contraventions).  The introduction of what are essentially civil fines for abuse of dominance is both controversial and significant – controversial in respect that abuse of dominance is not conduct that is per se illegal, but rather prohibited only when extensive economic analysis shows that a dominant player has abused its dominant position in one or more relevant markets; the change  is significant because firms now potentially face significant penalties for aggressive competitive conduct, whereas formerly the most that could be obtained was a Tribunal order to cease the conduct.  Among the many potential impacts of this change is that it may have a chilling effect on some forms of perfectly legitimate competitive conduct or alter the analysis in settlement negotiations with the Bureau.

Competitor Collaboration Guidelines.  The Competition Bureau has issued new draft Competitor Collaboration Guidelines setting out its approach to the new two-track conspiracy regime to collaborations between competitors.  These guidelines are particularly relevant for providing some guidance as to how the Bureau will approach many common types of “vertical” commercial agreements, such as dual distribution agreements between suppliers and customers.

Trade association guidelines.  The Bureau has issued new draft enforcement guidelines dealing specifically with trade association activities.  While formerly the Bureau’s enforcement approach in relation to trade associations was included in other general guidelines, the Bureau is now proposing to issue separate, standalone enforcement guidelines dealing specifically with the activities of trade associations and their members.

Corporate competition compliance policy guidelines.  The Bureau has issued new guidelines dealing with corporate compliance policies, including in relation to trade association compliance policies.

In short, Canadian competition law has changed significantly.  The key changes will likely have the most impact on the review of many forms of common commercial agreements, commercial arrangements among competitors (e.g., joint ventures, strategic alliances and distribution arrangements, etc.) and trade association activities in Canada.  The changes will as well impact both the timing and analysis of merger notification and clearance in Canada.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging, Canadian Competition Law Resources, Competition Law Links or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to clients across Canada and internationally.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us at +1 604 687 0555 or +1 778 867 5558.

DISCLAIMER

The materials and information on CANADIAN COMPETITION LAW are provided as legal information about Canadian competition law.  Reading and accessing this information does not create a lawyer-client relationship.  The information on our blog does not constitute legal advice or a legal opinion on any issue.  In addition, the information and materials on this website will change based on new competition law developments and, as such, may not be current as of the date of access.  As such, we take no responsibility for the accuracy or currency of the competition law information or materials on our blog, which should not be relied upon without receiving legal advice from competent legal counsel.

PROMOTIONAL CONTESTS

OUR SERVICES

We practice federal competition law, have provided Canadian competition law advice to clients across Canada and internationally and provide a full range of competition law and foreign investment law services including in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act.  Our competition law services in relation to promotional contests include:

- Application of the Competition Act and Criminal Code to promotional contests.
- Drafting and reviewing contest rules and disclosure.
- Drafting and review of promotional contest marketing materials.
- Application of the misleading advertising provisions of the Competition Act.

RECENT PROMOTIONAL CONTEST NEWS

Manitoba-based Resort Company Penalized for Running Misleading Contests

On November 23, 2009 the Competition Bureau announced that Elkhorn Ranch & Resort Ltd., a Manitoba-based company that sells vacation property time shares, has agreed to pay CDN $170,000 for operating promotional contests in contravention of the promotional contest provisions of the Competition Act.   For more information see:  Resort Company Penalized for Running Misleading Contests.

OVERVIEW OF CANADIAN PROMOTIONAL CONTEST LAW

Promotional contests in Canada are primarily governed by the Competition Act (the “Act”), the Criminal Code  (the “Code”) and the common law of contract.  In addition, Quebec has separate legislation that applies to promotional contests (the Act respecting lotteries, publicity contests and amusement machines).  As such, promotional contest law in Canada is an amalgam of regulatory law, criminal law and common law contract law.

Moreover, given that the improper operation of a promotional contest can lead to civil and/or criminal liability under the Act, the Code and/or as a result of a contractual (i.e., common law) challenge, it is critical to review proposed promotional contests for legal compliance, as failure to properly structure a promotional contest can have disastrous consequences.

In this regard, a Manitoba company recently paid a penalty of more than $150,000 for operating a promotional contest allegedly in contravention of the promotional contest provisions of the Act (see below).

Competition Act

The Act for the most part requires that certain disclosure be made when conducting “any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit …”  Some of the key requirements under the Act include: (i) disclosing the number and approximate value of prizes, (ii) disclosing the area (or areas) to which they relate and (iii) any fact that may materially affect the odds of winning.  In addition, the Act provides that the distribution of prizes cannot be unduly delayed.

As a result of the disclosure requirements set out in the Act, most contest organizers provide a short version of a contest’s terms at the point of sale, with a full version of rules available on request, on the organizer’s website, etc.  Point of sale disclosure often includes the number and approximate value of prizes, any regional allocation, the skill testing question requirement, information relating to the odds of winning, the closing date for the contest and information relating to the odds of winning.

In addition to specific rules relating to promotional contests, the “general” misleading advertising provisions of the Act also apply to the operation of promotional contests.  As such, it is important that the terms of promotional contests not be false or misleading in a material respect (i.e., do not raise issues under the general misleading advertising provisions of the Act, which means that in addition to the detailed statutory disclosure, the overall impression of contest claims must practically be considered as part of a review).

The potential penalties for contravening the promotional contest or general misleading advertising provisions include a court order to cease the conduct, civil or criminal fines, an order to publish a “corrective notice” and/or imprisonment.  In sum, the penalties can be significant if you don’t get a contest right.

Criminal Code

In addition to the promotional contest provisions the Act, the Code also governs promotional contests in Canada (sections 206 and 207 of the Code).  In particular, the Code makes it a criminal offence to operate an illegal lottery.  While the relevant provisions of the Code are complex and somewhat archaic, in short an illegal lottery consists of: (i) a prize, (ii) chance and (iii) consideration (i.e., something of value provided by contestants as a condition for eligibility to participate in the contest).

For this reason, promotional contest organizers often remove either the consideration and/or chance elements (i.e., including a sufficiently skill testing question) in order to remove a contest from the scope of the illegal lottery provisions of the Code. 

It is worth noting, however, that the determination of what constitutes “consideration” and “chance” can be challenging and complex in some cases.

Common Law

It is also worth noting that in addition to the regulatory requirements set out in the Act and the Code, promotional contests have been held to be contracts.  As such, promotional contests are also governed by the common law of contract in Canada.  

As such, in addition to ensuring compliance with the Act and Code, as well as Quebec legislation if applicable, it is also important that the terms and conditions of a promotional contest be carefully structured to reduce potential contractual liability.  This includes careful review of long rules and winner release forms.

Summary and Practical Considerations

As promotional contests in Canada are, generally speaking, governed by the Act, the Code, the common law of contract and, in some instances, separate Quebec regulation, it is critical that contests be crafted with care and attention to detail to ensure compliance.

Key practical aspects in effectively designing a promotional contest in Canada, and to avoid disaster, include attention and care in the drafting of mandatory short rules (short statutory disclosure required under the Act), drafting long contest rules (which raise many similar issues as drafting effective contracts) and reviewing all print and online disclosure to ensure compliance with the Act (including the general misleading advertising provisions) and the Code.

In sum, while the basic law of promotional contests is not complex, the devil is in the details.  As such, it is crucial that care be taken to ensure that all required statutory elements are included, and that appropriate care is also taken to reduce the likelihood of any legitimate contractual challenges.

PROMOTIONAL CONTEST LINKS & RESOURCES

Competition Bureau

Promotional Contests

Promotional Contests (Enforcement Guidelines)

Texts

Goldman & Bodrug, eds., Competition Law of Canada, looseleaf (Juris Publishing).

Pritchard & Vogt, Advertising and Marketing Law in Canada, 3rd ed. (Markham: LexisNexis, 2009).

Young, David M.W. and Brian R. Fraser, Canadian Advertising and Marketing Law, looseleaf (Toronto: Carswell, 1990 – ).

Legislation

Competition Act

Criminal Code

Act respecting lotteries, publicity contests and amusement machines (Quebec)

RECENT CASES

On November 23, 2009 the Competition Bureau announced that Elkhorn Ranch & Resort Ltd., a Manitoba-based company that sells vacation property time shares, has agreed to pay CDN $170,000 for operating promotional contests in contravention of the promotional contest provisions of the Competition Act. 

In its News Release, the Bureau stated:

“After conducting an investigation into Elkhorn’s 2006 and 2007 promotional contests, the Bureau concluded that the company had run contests without fair disclosure of accurate odds of winning and without ensuring that winners were selected on a random basis. Elkhorn’s contests also gave the misleading impression that the grand prize was a brand new SUV, when the prize, if awarded, was a one or two–year lease on an SUV, with stringent conditions. The contests were primarily associated with the marketing of Elkhorn’s time share properties in Western Canada. Consumers were solicited by phone, at trade shows and at time share presentations.”

As part of its settlement with the Bureau (under a consent agreement), Elkhorn is required to: (i) pay an administrative monetary penalty of $150,000, (ii) pay costs of the Bureau’s investigation in the amount of $20,000, (iii) ensure that all of its future contests are conducted fairly and with full disclosure, (iv) publish corrective notices in select newspapers and on its websites and (v) adopt a corporate compliance program to ensure compliance with the deceptive marketing sections of the Competition Act.

In addition to general misleading advertising provisions, the Competition Act also contains a number of other provisions that regulate a range of marketing activities including bait and switch selling, selling above advertised price, multi-level marketing plans, pyramid selling schemes, deceptive telemarketing and the “ordinary selling price” provisions (dealing with sales) and promotional contests.

The promotional contest provisions of the Act, among other things, require that persons conducting promotional contests disclose the number and approximate value of prizes, the areas to which they relate and chances of winning.   In addition, the Criminal Code also contains provisions regulating promotional contests.  As such, review of promotional contests should include ensuring that rules comply with the Competition Act and Criminal Code.

While enforcement of the promotional contest rules under the Act is relatively uncommon, the Bureau does commence investigations for breaches of these rules from time to time and this most recent case is a sober reminder of the potential penalties for being offside the rules.  It is also worth noting that, as a result of recent amendments, the penalties for contravention of the civil false or misleading representation provisions of the Act have now been increased to $750,000 (for individuals) and $10 million (for corporations).

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to Canadian and international clients.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.

Competition Bureau Issues Consumer Rebate Promotions Guidelines

On September 21^st, the Competition Bureau published its Consumer Rebate Promotions Enforcement Guidelines.

In releasing the new Enforcement Guidelines the Bureau stated:

“The purpose of the Guidelines is to clarify the Competition Bureau’s approach to interpreting the false or misleading representations provisions of the Competition Act, the Consumer Packaging and Labelling Act and the Textile Labelling Act in the area of consumer rebate promotions.  The Guidelines also outline best practices that the Bureau recommends businesses follow when offering rebates, both to comply with the law and to ensure consumers can make informed purchasing decisions. The Guidelines are part of the Bureau’s ongoing effort to clarify and provide guidance about its enforcement policies and practices.”

The new Guidelines were subject to public consultations earlier this year.

For the News Release:  Competition Bureau News Release.
For the Enforcement Guidelines:  Consumer Rebate Promotions Guidelines.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging, Canadian Competition Law Resources, Competition Law Links or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to clients across Canada and internationally.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us at +1 604 687 0555 or +1 778 867 5558.

DISCLAIMER

The materials and information on CANADIAN COMPETITION LAW are provided as legal information about Canadian competition law.  Reading and accessing this information does not create a lawyer-client relationship.  The information on our blog does not constitute legal advice or a legal opinion on any issue.  In addition, the information and materials on this website will change based on new competition law developments and, as such, may not be current as of the date of access.  As such, we take no responsibility for the accuracy or currency of the competition law information or materials on our blog, which should not be relied upon without receiving legal advice from competent legal counsel.

I.  Overview

On September 18^th the federal Competition Bureau (the “Bureau”) released its new Merger Review Process Guidelines (the “Merger Guidelines”).  The Bureau’s new Merger Guidelines provide detailed guidance on how the Bureau will administer the new U.S. style two stage merger review and notification process in Canada, which came into force earlier this year.

In its News Release, the Bureau said:

“The Guidelines have been designed to offer a high degree of transparency and predictability regarding the Bureau’s procedural approach to merger review,” said Melanie Aitken, Commissioner of Competition. “They reflect not only our experience to date, but also the positive and constructive feedback received during the Bureau’s consultations with external stakeholders.”

Earlier this year, as part of sweeping amendments to the Competition Act (the “Act”) the merger notification provisions were amended.  Some of the key changes in relation to mergers include: (i) raising the “size of transaction” threshold for pre-merger notification (with a mechanism to increase the thresholds based on inflation), (ii) reducing the period post-closing that the Commissioner of Competition can challenge a completed merger from three years to one and (iii) establishing a new U.S. style two stage merger review procedure, under which the Bureau may issue “supplementary information requests” where a merger may raise significant competition issues.  The recent amendments do not, however, affect the Bureau’s approach to substantive merger analysis, which remains unchanged.

II.  Summary of Merger Guidelines

(a)  Two-stage Merger Review

Under the new merger review process, there is now a uniform initial 30 day waiting period during which parties to a notifiable transaction may not complete a transaction (formerly Canada had different initial waiting periods which turned on the type of pre-merger notification filing that was made).

In this regard, the Bureau indicates in the Merger Guidelines that most notified mergers are likely to be cleared during the initial waiting period, though states that for “those few transactions that give rise to potentially significant issues, the Bureau may issue a supplementary information request (“SIR”) … for additional relevant information.”

(b)  Initial 30 Day Waiting Period

Where a proposed merger transaction exceeds the relevant monetary thresholds in the Act, the parties to a transaction are required to notify the Bureau. Where a transaction is notifiable, the parties are prohibited from completing the transaction during an initial 30 day waiting period (subject to receiving clearance), which starts the day after a complete notification is received by the Bureau.

With respect to the initial waiting period the Bureau states that its goal is to “determine in an efficient manner whether the proposed transaction is likely to result in a substantial lessening or prevention of competition, or whether the review of the transaction can be closed.”  The Bureau also states that during this initial period it may ask parties for records and data on a voluntary basis, which may minimize the need for, or scope of, a subsequent SIR.

Where in the Bureau’s view a proposed transaction appears likely to raise significant competition issues, it will determine whether additional information from the merging parties is required to assess the potential competitive impact of a transaction.  In this regard, the Bureau states that if additional information is required it will generally seek a SIR from the merging parties (and potentially from third parties through voluntary information requests or compulsory production orders).  The Bureau also states that it may issue a SIR where it has not completed its review within the initial 30 day waiting period.

It is worth pointing out that the recent amendments to the Act do not alter the ability of merging parties to request Advance Ruling Certificates (“ARCs”) under section 102 of the Act (the strongest form of clearance under the Act).

(c)  Service Standards

With respect to service standards (the time the Bureau will take to review a particular transaction), the Bureau indicates that it will continue to assign service standards based on whether a transaction is deemed “non-complex”, “complex” or “very complex”.  In this regard, the Bureau indicates that its review standards will be as follows:

Non-complex transactions.  The service standard period for non-complex mergers will remain unchanged at two weeks.

Complex transactions.  Where a transaction raises competition issues that cannot be reviewed adequately within the initial 30 day waiting period, but a SIR is not the “preferred method” to gather information, the Bureau will allow the initial 30 day waiting period to lapse on the understanding (potentially reflected in a timing agreement) that: (i) the Bureau will continue to review the proposed transaction, (ii) the parties will cooperate with the Bureau to address additional information requests voluntarily and (iii) that the parties will not complete the transaction for an agreed period of time to allow the Bureau to finish its review.

Very complex transactions.  With respect to very complex transactions, the Bureau provides little comfort in the Merger Guidelines stating only that very complex transactions are “considered to require a longer period of time to allow the Bureau to complete its assessment of significant and often complicated competition issues.”

(d)  Filing Fees

The recent amendments to the Act do not affect the pre-existing merger notification filing fees, which remain unchanged.

(e)  Supplementary Information Requests

The Bureau states that as “very few mergers raise a serious issue of a substantial lessening or prevention of competition … it is unlikely that the SIR mechanism will be employed on a frequent basis” by the Bureau.  In this regard, the Bureau states that it will only issue a SIR when a proposed transaction raises significant competition issues and additional information is required (in which case the Bureau will notify the merging parties “as soon as reasonably possible” during the initial 30 day waiting period).

If the Bureau issues a SIR, a second 30 day waiting period is triggered during which the parties to a notifiable transaction may not close (subject to receiving clearance).  This second waiting period commences once the Bureau has received from each party a complete response (which is a stricter requirement than the U.S. equivalent, under which substantial completion may be sufficient).

If merging parties proceed to complete a proposed transaction before the waiting period has expired, potential penalties include: (i) a court order requiring any party to the transaction to dissolve the merger or (ii) an order to pay an administrative monetary penalty of up to $10,000 per day of non-compliance.

In addition, with respect to pre-issuance dialogue, the Bureau indicates that it will generally issue draft SIRs and engage in dialogue with the party’s counsel and/or business personnel regarding the information request.  Such pre-issuance dialogues may include disussions of: (i) the form of requested data, (ii) who holds the relevant data, (iii) confidentiality, (iv) the most relevant sources of information and (v) reducing the potential burden of a SIR (e.g., by limiting time periods, identifying obstacles to production, etc.).  The Bureau states, however, that pre-issuance dialogues are not intended to debate the substantive merits of the case.

(f)  Scope Restrictions

With respect to restricting the scope of SIRs, the Bureau states that it is “committed to adhering to certain practices and procedures so as to ensure that a party’s burden in responding to a SIR is no greater than necessary … [and] allowing the Bureau to obtain information required to conduct its review.”  In this regard, the Bureau sets out the following guidelines:

Limiting Number of Custodians.  The Bureau states that it will “at the option of the party and in all but exceptional cases” limit the number of custodians to be searched in relation to a SIR to a maximum of 30 individuals.  In addition, parties seeking to limit the number of custodians must provide the Bureau: (i) detailed personnel charts and (ii) a staff member with suitable knowledge of each employee’s roles and responsibilities (and their relationship to the issues that are the basis of the Bureau’s investigation).

Limiting Time Period.  The Bureau states that its “default search period” for hard copy and electronic records prepared or received by a party will generally be limited to two years preceding the SIR (three years for data requests).

Back-up Media.  In general, parties will not be required to produce back-up media where sufficient records can be obtained by less onerous means.  In this regard, the Bureau states that it will discuss such requests on a case-by-case basis.

Timing Agreements.  The Bureau states that it encourages merging parties to consult with the Bureau in relation to the anticipated timing of key steps in a transaction, which may be embodied in a timing agreement.  Such agreements may include, for example: (i) timing for closing, (ii) timing for the Bureau’s interim assessment, (iii) timing for the Bureau’s final assessment, (iv) dates to identify employees to interview, (v) commitments to comply with information requests and (v) timing for updates for status updates from the Bureau.

International Cooperation.  With respect to multi-jurisdictional mergers, the Bureau states that it will generally agree to providing the Bureau with records produced to foreign antitrust agencies provided: (i) that the parties have given appropriate confidentiality waivers to the foreign antitrust agency to permit information sharing with the Bureau, (ii) that restrictions unacceptable to the Bureau are not imposed in relation to the Bureau’s use of data and records and (iii) any such data and records will be treated for all purposes “as if” provided directly to the Bureau.

OUR CANADIAN MERGER CONTROL SERVICES

We practice federal competition law, have provided competition law and compliance advice to clients across Canada and internationally and provide a full range of competition law services in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act.  We have provided pre-merger notification and foreign investment advice in relation to numerous domestic and cross-border mergers.  Our Canadian merger control and foreign investment services include:

- Advice on the application of the Competition Act to mergers.
- Application of the Investment Canada Act to foreign investment in Canada.
- Preparing pre-merger notification filings and submissions.
- Drafting transaction documents.
- Merger-related compliance guidelines (pre-merger conduct memoranda).
- Coordinating and advice in relation to multi-jurisdictional merger review.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to Canadian and international clients.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.

TRADE ASSOCIATIONS

OUR COMPETITION LAW SERVICES FOR TRADE ASSOCIATIONS

We practice federal competition law, have provided competition law and compliance advice to clients across Canada and provide a full range of competition law services in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act.  We regularly counsel trade associations and their executives and personnel on compliance with the Competition Act. Our Canadian competition law services for trade associations include:

- Trade association competition law compliance programs.
- Competition law compliance seminars and talks for association executives.
- Audits and compliance reviews of trade association activities.
- Advice on the application of the recently amended Competition Act.
- Vetting trade association meetings, conventions and communications.
- Reviewing trade association rules, bylaws, policies and voluntary codes.
- General competition law and competition compliance advice for associations.

RECENT TRADE ASSOCIATION CASES AND NEWS

Our New Competition Law Publications for Associations – The Competition Law Guide for Associations

We are delighted to announce the forthcoming new book that we are co-authoring on competition law and associations (trade and professional associations): The Competition Law Guide for Associations.  This new book, to be published by Carswell in 2011 and the first of its kind in Canada, will provide an overview of Canadian competition law relevant to trade and professional associations and discuss key areas of association activities that can, in some instances, raise competition/antitrust law risk (e.g., association membership criteria and discipline, association rules and codes of conduct, advertising regulation and restrictions, fee guidelines and tariffs, self-regulation and codes of conduct, meetings and information exchanges, surveys and studies and joint activities including joint purchasing, marketing, production, research and development, marketing and lobbying and advocacy).  This new book will also provide guidelines for association activities to reduce competition/antitrust law risk.

The Commissioner of Competition v. The Canadian Real Estate Association – Tribunal Date Set for Motions for Leave to Intervene

The federal Competition Tribunal has announced that a date has been set for the Tribunal to hear motions for leave to intervene in the Competition Bureau’s abuse of dominance application against The Canadian Real Estate Association.  Motions for leave to intervene will be heard in Ottawa on Wednesday, June 30, 2010.  For more see: Competition Bureau – Notice of Application, Canadian Real Estate Association – Response,Competition Bureau – Reply.  For the intervenors’ requests for leave to intervene see: Lawrence Mark Dale – Request for Leave to Intervene and National FSBO Network Inc. – Motion for Leave to Intervene.

Competition Bureau Announces Coming Into Force of Canada’s New Conspiracy Laws

New Canadian Laws for Agreements Between Competitors

Competition Bureau Continues Challenge of CREA MLS Rules

CREA MLS Abuse of Dominance Case

Competition Bureau Refuses to Vary Interac Consent Order

Interac Association Request to Vary Consent Order

Competition Bureau Issues Final Competitor Collaboration Guidelines

Competitor Collaboration Guidelines

OVERVIEW OF TRADE ASSOCIATIONS & THE COMPETITION ACT

“A [compliance] program also plays a crucial role for trade associations because trade associations face unique compliance issues.  Given that an association provides a forum where competitors collaborate on association activities, trade associations are exposed to greater risks of anti-competitive conduct.  A number of past Bureau cases have involved trade associations that were engaged in agreements to harm competition.  It is therefore critical that trade associations implement credible and effective programs with strict codes of ethics and conduct.  Such programs may allow trade associations and its members to avoid improper actions and to protect themselves from being used as a conduit for illegal activities.  They may also allow trade association members to fully benefit from the association’s activities while reducing the potential for inadvertent contraventions of the Acts.”  (Competition Bureau, Corporate Compliance Programs Information Bulletin)

Trade associations often serve many legitimate purposes, including promoting common interests to the public, lobbying, advocacy, research, education and promoting and improving product standards.  However, because trade association activities involve the interaction of direct competitors, associations can in some cases raise competition law issues under the federal Competition Act (the “Act”).  Recent public criminal and civil association investigations have involved the Saskatchewan Roofing Contractors Association and The Canadian Real Estate Association, among others.  There have also recently been historic amendments to the Act that have resulted in, among other things, significantly increased penalties for conspiracy (fines of up to $25 million and/or imprisonment for up to 14 years) and misleading advertising (with civil fines of up to $10 million for corporations).

In general, the types of association activities that can in some cases raise competition law issues under the Competition Act include those dealing with pricing, advertising, customers, territories, market shares, terms of sale and other key aspects of competition.  Some of the specific association activities that can potentially raise issues include: (i) board and membership meetings, (ii) information exchanges (exchanges of competitively sensitive information), (iii) association rules and bylaws (e.g., mandatory or suggested fee guidelines, advertising restrictions, membership restrictions, member discipline and other rules relating to competitive aspects of member activities), (iv) dealing with members and discipline and (v) advertising or marketing restrictions.

Sections Relevant to Trade Associations

There are no specific sections of the Act dealing exclusively with trade associations.  However, some of the general sections that are particularly relevant to trade association activities include the criminal conspiracy, abuse of dominance, price maintenance and misleading advertising sections of the Act (discussed below).

Criminal Conspiracy

Section 45 of the Act, which is in many cases the most important section for trade associations, contains three criminal conspiracy offences.  The investigation and prosecution of criminal conspiracies is also a top enforcement priority for the Bureau.

Under section 45, three types of “hard core” anti-competitive agreements will be illegal as of March 12, 2010:

Price fixing agreements.  Section 45 will make it a criminal offence for competitors (or potential competitors) to fix, maintain, increase or control the price for the supply of a product (e.g., agreements to set prices, discounts, minimum prices or establish fee tariffs).  “Price” is broadly defined to include discounts, rebates, allowances and price concessions.  Based on the potential liability for price fixing agreements, it is important that prices, discounts and other aspects of price are determined independently by association members and that members do not discuss price or other competitively sensitive topics.

Market allocation/division agreements.  Section 45 will also makes it a criminal offence for competitors (or potential competitors) to allocate sales, territories, customers or markets for the production or supply of a product (e.g., agreements between competitors to not compete in relation to certain customers, groups or types of customers, in certain regions or market segments or in relation to certain types of transactions or products).

Supply restriction agreements.  Finally, section 45 will make it a criminal offence for competitors (or potential competitors) to fix, maintain, control, prevent, lessen or eliminate the production or supply of a product including services (e.g., agreements to limit the quantity or quality of products supplied, reduce the quantity of quality of products supplied to specific customers, limit increases in production or discontinue supply to specific customers or groups of customers).

In general, the risk for trade associations under the criminal conspiracy sections is twofold: (i) that an association itself may become a party (or be seen as aiding or abetting) to an anti-competitive agreement and (ii) that trade association members themselves may become parties to an anti-competitive agreement.

To establish these offences, it is not necessary to prove that there have been any negative effects on any particular market (i.e., the offences are “per se” offences, which means that merely establishing that there was an agreement and intent to enter the agreement is sufficient with no adverse market effects).

It is also not necessary to show that an agreement was ever carried out (i.e., the offence is in the agreement not in the implementation).  An agreement can also be established based merely on circumstantial evidence (i.e., while the existence of an agreement must be proven beyond a reasonable doubt, an actual written agreement does not need to be produced, which can be proven by other evidence – e.g., evidence of meetings among competitors followed by a stabilization of prices, etc.).

Finally, with respect to the criminal conspiracy offences, there will now be a new “ancillary restraints” defense, which will provide a defense where it can be shown that an agreement between competitors is: (i) ancillary to a broader agreement, (ii) is directly related to and reasonably necessary to give effect to the broader agreement and (iii) that the broader agreement does not itself constitute an offence under section 45.  While this new defense will likely apply to agreements that are either potentially pro-competitive (e.g., certain joint venture arrangements) or “on the line”, it will likely provide no defense to “hard core” anti-competitive agreements – i.e., bare price fixing, market division/allocation or output restriction agreements.

The penalties for violating the criminal conspiracy sections can be very severe and, as of March 12^th, will include fines of up to $25 million (per count), imprisonment for up to 14 years and/or “prohibition orders” to stop the conduct.  In addition, private parties that have suffered actual loss or damage as a result of criminal conduct under the Act (including s. 45 – criminal conspiracies), including competitors or customers, have the right to commence private civil damages actions.

Abuse of Dominance

Abuse of dominance is another section that potentially applies to trade associations and their activities.  Under sections 78 and 79 of the Act, abuse of dominance occurs where a dominant firm (or firms) in a market has engaged in or is engaging in a practice of anti-competitive acts that has an intended negative effect on a competitor that is exclusionary, predatory or disciplinary, with the result that competition has been, is being or is likely to be prevented or lessened substantially.

Evaluating whether conduct constitutes an abuse of dominance can be highly complex and require significant economic analysis.  Having said that, some of the types of trade association activities that can potentially raise abuse of dominance issues include efforts to restrict access to essential services or markets or setting educational, qualification or membership standards that result in impeding entry.

The penalties for abuse of dominance include “administrative monetary penalties” (essentially civil fines) of up to $10 million ($15 million for subsequent orders).

Price Maintenance

The new civil price maintenance sections of the Act can also, in some cases, be relevant to trade association activities.

The first type of price maintenance that is potentially relevant involves refusals to supply products (including services) or discriminate against other persons engaged in business based on their low pricing policy, where the conduct has an adverse effect on competition in a market.  The second type of price maintenance that is potentially relevant to association activities involves inducing a supplier, by agreement, threat, promise or any like means, as a condition of doing business with the supplier, to refuse to supply to another person based on the other person’s low pricing policy.

Where the elements for the new price maintenance sections are established, the Competition Tribunal (the “Tribunal”) may make an order prohibiting a person from engaging in the conduct.

Misleading Advertising

The false or misleading representation provisions of the Act (often referred to as “misleading advertising”) can be highly relevant to both trade associations and their members, depending on the level of advertising and marketing engaged in by an association and its members.

The Act contains both criminal and civil misleading advertising provisions, which apply to false or misleading representations made to promote the supply or use of a product, including services, or any business interest.  Subsection 74.01(1) of the Act contains the general civil prohibition against false or misleading representations:

“A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, makes a representation to the public that is false or misleading in a material respect.”

For a representation to be false or misleading, it must be shown that a representation has been made, to the public, to promote a product or business interest, that is literally false or misleading (or with a false or misleading “general impression”) and that the representation is “material” – i.e., likely to influence a consumer into buying or using the product or changing their conduct.

The criminal misleading advertising provision is substantially similar, but requires in addition to the above elements that a representation be made with intent (i.e., knowingly or recklessly).

The penalties for civil misleading advertising include “administrative monetary penalties” (essentially civil fines) of up to $750,000 (for individuals) or up to $10 million (for corporations), an order to cease the activity or an order to publish a corrective notice.  The penalties for criminal misleading advertising include fines up to $200,000 and/or imprisonment for up to one year (on summary conviction) or fines in the discretion of the court and/or imprisonment for up to 14 years (on indictment).

Based on the potential liability, it is prudent for trade associations and their members to ensure that they do not engage in false or misleading representations in their day-to-day business dealings and as well that associations ensure that their rules and bylaws do not encourage misleading advertising (or restrict legitimate pro-competitive advertising by members).

RECENT CANADIAN TRADE ASSOCIATION, CONSPIRACY & BID-RIGGING CASES

The following are some of the recent publicly reported Canadian trade association, conspiracy and bid-rigging cases that have involved Competition Bureau (the “Bureau”) investigations, penalties, court orders or settlements.

Canadian Real Estate Association Alleged Abuse of Dominance Case (2010)

Market:  Residential real estate services.

Overview:  Alleged abuse of dominance case. On February 8, 2010 the Bureau filed an abuse of dominance application with the federal Competition Tribunal (the “Tribunal”) alleging that MLS rules adopted by The Canadian Real Estate Association limit choice and prevent innovation in the market for residential real estate services nationally in Canada.  In particular, the Bureau is challenging MLS rules that it claims require that certain services be provided as a condition for real estate agents to list properties on local real estate boards’ MLS systems and that it claims limit consumer choice of residential real estate services.

The Bureau’s position is that CREA and its members have used their alleged control of the MLS system and related trademarks to impose exclusionary restrictions impacting the supply of residential real estate brokerage services and as a result have limited alternative real estate services business models in the market.

This case is interesting for a number of reasons, including that, if a decision is issued by the Tribunal, it would be the first Canadian “essential facilities” case to be decided on its merits (i.e., a case dealing with whether and under what terms access to an important asset, or “essential facility”, must be granted).

Result:  CREA filed its response on March 26, 2010.  The case is currently ongoing.

Quebec Street Lights Tender Bid-rigging Case (2010)

Market:  Contracting services.

Overview:  The defendants in this case were accused of bid-rigging in relation to a call for bids for a street light project.

Result:  The corporate defendant was fined $50,000 and two individual defendants were sentenced to a ten year prohibition order.

Quebec Retail Gasoline Price-Fixing Case (2008–2009)

Market:  Retail gasoline.

Overview:  Price-fixing conspiracy case.  In 2008 charges were laid against 13 individuals and 11 companies accused of fixing retail gasoline prices at the pump in Victoriaville, Thetford Mines, Magog and Sherbrooke, Quebec.

Result:  As of December, 2009, 10 individuals and six companies pleaded guilty in this case with total fines imposed of more than $2.7 million.  Les Pétroles Therrien Inc. and Distributions Pétrolières Therrien Inc. were fined $179,000, Ultramar Ltée was fined $1.85 million and Jacques Ouellet was fined $50,000.

Of the ten individuals that pleaded guilty, 6 were sentenced to terms of imprisonment.

This case is noteworthy in that it involves one of the high priority sectors for the Bureau (retail gasoline) as well as being a recent example of where the sentences involved imprisonment (served in the community).

Air Cargo Price-fixing Case (2009)

Market:  Air cargo services.

Overview:  International price-fixing case in relation to surcharges for air cargo exported on certain routes from Canada.

Result:  On October 30, 2009 the Bureau announced that British Airways Plc (“BA”) had pleaded guilty in the Federal Court and was fined $4.5 million for its participation in an air cargo cartel affecting Canada.  In particular, BA admitted to fixing surcharges relating to the sale and supply of international air cargo exported on particular routes from Canada between 2002 and 2006.  In this case, each of BA, Air France, KLM, Martinair and Quantas pleaded guilty to fixing surcharges on the sale and supply of international air cargo.  The total fines imposed in this case were more than $14.6 million (Air France: $4 million; KLM: $5 million; Martinair: $1 million; Qantas: $155,000; BA: $4.5 million).

This case is noteworthy for the significant penalties imposed as well as highlighting that the investigation of cartels remains a top enforcement priority for the Bureau.

Interac Association Abuse of Dominance Case (1996, 2010)

Market:  ATM services.

Overview:  Alleged abuse of dominance case (variation of Consent Order).

Result:  The Interac Association requested that the Commissioner of Competition (the “Commissioner”) consent to vary a 1996 Consent Order to permit Interac to restructure from a not-for-profit association structure to a for-profit model.  The Consent Order in this case included, among other things, terms relating to membership requirements of the Interac Association and fees.  The Bureau refused to remove certain “safeguards” in the Consent Order and stated that it did “not agree that the removal of the restriction against for-profit activities by Interac would be pro-competitive, or is necessary to allow Interac to remain competitive.”

This case is interesting in that it involves issues relating to access and terms of use for an “essential facility” (in this case a shared electronic network services network established by the Interac Association).

Saskatchewan Roofing Contractors Association Alleged Bid-riggina and Conspiracy Case (2009)

Market:  Roofing contracting services.

Overview:  Alleged bid-rigging and conspiracy case.

Result:  On June 22, 2009 the Bureau announced that a court order had been issued prohibiting the Saskatchewan Roofing Contractors Association from taking any action directed towards the commission of an offence under the conspiracy or bid-rigging provisions of the Competition Act (the “Act”).  The order was a result of allegations that some members of the association had discussed not submitting bids in response to a request for tenders for a roofing project in Saskatchewan.  The order also requires the association to educate its members on the relevant provisions of the Act and terms of the order, and requires the association’s members, as a condition of membership, to acknowledge in writing that they will comply with the association’s corporate compliance program.

This case is noteworthy as a recent example of the Bureau’s continued interest in ensuring that Canadian trade and professional associations comply with the Act, as well as indicating that the criminal conspiracy and bid- rigging provisions of the Act remain top enforcement priorities for the Bureau.

Newfoundland School Bus Operators Alleged Price-fixing Case (2009)

Market:  School bus services.

Overview:  Alleged market division and price-fixing case involving school bus services in and around St. John’s Newfoundland and Labrador. This case involved allegations that the parties had entered into agreements to divide the market and fix prices for school bus services and allegations of bid-rigging activities between 2001 and 2003.

Result: In February, 2009 the Bureau announced that it had obtained two prohibition orders against 14 companies and 18 individuals operating school bus services.

Federal Government IT Contracts Alleged Bid-rigging Case (2009)

Market:  IT services.

Overview:  In February, 2009 the Bureau announced that criminal charges had been laid against 14 individuals and 7 companies accused of rigging bids to obtain Government of Canada contracts for information technology services.  The Bureau stated that it had discovered evidence indicating that several IT services companies in the National Capital Region had been secretly coordinating their bids to “defraud the government by winning and dividing contracts, while blocking out honest competitors.”

Result:  One individual pleaded guilty to one count of bid-rigging, another individual (the former owner of TRM Technologies Inc.) pleaded guilty and was fined $25,000 and a prohibition order was issued against TRM Technologies Inc.

International Hydrogen Peroxide Price-fixing Case (2008)

Market:  Hydrogen peroxide.

Overview:  International price-fixing case.

Result:  In November, 2008, the Bureau announced that Akzo Nobel Chemicals International BV had pleaded guilty and was ordered to pay a fine of $3.15 million in relation to fixing the price of hydrogen peroxide sold in Canada.  The Bureau stated that in its investigation it benefited from the cooperation of an immunity applicant under its formal Immunity Program.

International Rubber and Chemicals Price-fixing Conspiracy (2007)

Market:  Rubber and chemicals industry.

Overview:  Charges under section 45 of the Act relating to price-fixing conspiracies in the rubber and chemicals industry.

Result:  On October 30, 2007, Bayer Group pleaded guilty for its participation in three cross-border price-fixing conspiracies.  Bayer AG was fined $2.9 million for its participation in the rubber chemical conspiracy and $400,000 for its participation in the nitrite rubber conspiracy.  Bayer corporation was fined $345,000 for the aliphatic polyester polyols conspiracy.

International Graphite Electrodes Price-fixing Case (2007)

Market:  Graphite electrodes.

Overview:  International price-fixing case.

Result:  In November, 2007 the Bureau announced that SEC Carbon Ltd. (“SEC”) pleaded guilty to participating in a conspiracy in the graphite electrodes market and was fined $250,000.  SEC was the eighth party to be convicted in Canada in this case where total fines imposed were about $25 million.

Fort McMurray Auto Body Shops Alleged Price-fixing Case (2007)

Market:  Auto body services.

Overview:  Alleged price-fixing case involving auto body services.

Result:  In February, 2007, the Bureau announced that a settlement was reached with six auto body shops in Fort McMurray.

The parties agreed to a binding court order that prohibited the six companies from: (i) engaging in communications relating to pricing or services and (ii) entering into agreements relating to pricing of products or services to customers or insurance companies. The companies were also required to publish a corrective notice outlining key terms of the court order and were required to implement a competition law compliance program.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to Canadian and international clients.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.

OUR SERVICES

We practice federal competition law, have provided Canadian competition law advice to clients across Canada and internationally and provide a full range of competition law and foreign investment law services including in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act.  Our competition law services in relation to promotional contests include:

- Application of the Competition Act and Criminal Code to promotional contests.
- Drafting and reviewing contest rules and disclosure.
- Drafting and review of promotional contest marketing materials.
- Application of the misleading advertising provisions of the Competition Act.

RECENT PROMOTIONAL CONTEST NEWS

Manitoba-based Resort Company Penalized for Running Misleading Contests

On November 23, 2009 the Competition Bureau announced that Elkhorn Ranch & Resort Ltd., a Manitoba-based company that sells vacation property time shares, has agreed to pay CDN $170,000 for operating promotional contests in contravention of the promotional contest provisions of the Competition Act.   For more information see:  Resort Company Penalized for Running Misleading Contests.

OVERVIEW OF CANADIAN PROMOTIONAL CONTEST LAW

Promotional contests in Canada are primarily governed by the Competition Act (the “Act”), the Criminal Code  (the “Code”) and the common law of contract.  In addition, Quebec has separate legislation that applies to promotional contests (the Act respecting lotteries, publicity contests and amusement machines).  As such, promotional contest law in Canada is an amalgam of regulatory law, criminal law and common law contract law.

Moreover, given that the improper operation of a promotional contest can lead to civil and/or criminal liability under the Act, the Code and/or as a result of a contractual (i.e., common law) challenge, it is critical to review proposed promotional contests for legal compliance, as failure to properly structure a promotional contest can have disastrous consequences.

In this regard, a Manitoba company recently paid a penalty of more than $150,000 for operating a promotional contest allegedly in contravention of the promotional contest provisions of the Act (see below).

Competition Act

The Act for the most part requires that certain disclosure be made when conducting “any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit …”  Some of the key requirements under the Act include: (i) disclosing the number and approximate value of prizes, (ii) disclosing the area (or areas) to which they relate and (iii) any fact that may materially affect the odds of winning.  In addition, the Act provides that the distribution of prizes cannot be unduly delayed.

As a result of the disclosure requirements set out in the Act, most contest organizers provide a short version of a contest’s terms at the point of sale, with a full version of rules available on request, on the organizer’s website, etc.  Point of sale disclosure often includes the number and approximate value of prizes, any regional allocation, the skill testing question requirement, information relating to the odds of winning, the closing date for the contest and information relating to the odds of winning.

In addition to specific rules relating to promotional contests, the “general” misleading advertising provisions of the Act also apply to the operation of promotional contests.  As such, it is important that the terms of promotional contests not be false or misleading in a material respect (i.e., do not raise issues under the general misleading advertising provisions of the Act, which means that in addition to the detailed statutory disclosure, the overall impression of contest claims must practically be considered as part of a review).

The potential penalties for contravening the promotional contest or general misleading advertising provisions include a court order to cease the conduct, civil or criminal fines, an order to publish a “corrective notice” and/or imprisonment.  In sum, the penalties can be significant if you don’t get a contest right.

Criminal Code

In addition to the promotional contest provisions the Act, the Code also governs promotional contests in Canada (sections 206 and 207 of the Code).  In particular, the Code makes it a criminal offence to operate an illegal lottery.  While the relevant provisions of the Code are complex and somewhat archaic, in short an illegal lottery consists of: (i) a prize, (ii) chance and (iii) consideration (i.e., something of value provided by contestants as a condition for eligibility to participate in the contest).

For this reason, promotional contest organizers often remove either the consideration and/or chance elements (i.e., including a sufficiently skill testing question) in order to remove a contest from the scope of the illegal lottery provisions of the Code. 

It is worth noting, however, that the determination of what constitutes “consideration” and “chance” can be challenging and complex in some cases.

Common Law

It is also worth noting that in addition to the regulatory requirements set out in the Act and the Code, promotional contests have been held to be contracts.  As such, promotional contests are also governed by the common law of contract in Canada.  

As such, in addition to ensuring compliance with the Act and Code, as well as Quebec legislation if applicable, it is also important that the terms and conditions of a promotional contest be carefully structured to reduce potential contractual liability.  This includes careful review of long rules and winner release forms.

Summary and Practical Considerations

As promotional contests in Canada are, generally speaking, governed by the Act, the Code, the common law of contract and, in some instances, separate Quebec regulation, it is critical that contests be crafted with care and attention to detail to ensure compliance.

Key practical aspects in effectively designing a promotional contest in Canada, and to avoid disaster, include attention and care in the drafting of mandatory short rules (short statutory disclosure required under the Act), drafting long contest rules (which raise many similar issues as drafting effective contracts) and reviewing all print and online disclosure to ensure compliance with the Act (including the general misleading advertising provisions) and the Code.

In sum, while the basic law of promotional contests is not complex, the devil is in the details.  As such, it is crucial that care be taken to ensure that all required statutory elements are included, and that appropriate care is also taken to reduce the likelihood of any legitimate contractual challenges.

PROMOTIONAL CONTEST LINKS & RESOURCES

Competition Bureau

Promotional Contests

Promotional Contests (Enforcement Guidelines)

Texts

Goldman & Bodrug, eds., Competition Law of Canada, looseleaf (Juris Publishing).

Pritchard & Vogt, Advertising and Marketing Law in Canada, 3rd ed. (Markham: LexisNexis, 2009).

Young, David M.W. and Brian R. Fraser, Canadian Advertising and Marketing Law, looseleaf (Toronto: Carswell, 1990 – ).

Legislation

Competition Act

Criminal Code

Act respecting lotteries, publicity contests and amusement machines (Quebec)

RECENT CASES

On November 23, 2009 the Competition Bureau announced that Elkhorn Ranch & Resort Ltd., a Manitoba-based company that sells vacation property time shares, has agreed to pay CDN $170,000 for operating promotional contests in contravention of the promotional contest provisions of the Competition Act. 

In its News Release, the Bureau stated:

“After conducting an investigation into Elkhorn’s 2006 and 2007 promotional contests, the Bureau concluded that the company had run contests without fair disclosure of accurate odds of winning and without ensuring that winners were selected on a random basis. Elkhorn’s contests also gave the misleading impression that the grand prize was a brand new SUV, when the prize, if awarded, was a one or two–year lease on an SUV, with stringent conditions. The contests were primarily associated with the marketing of Elkhorn’s time share properties in Western Canada. Consumers were solicited by phone, at trade shows and at time share presentations.”

As part of its settlement with the Bureau (under a consent agreement), Elkhorn is required to: (i) pay an administrative monetary penalty of $150,000, (ii) pay costs of the Bureau’s investigation in the amount of $20,000, (iii) ensure that all of its future contests are conducted fairly and with full disclosure, (iv) publish corrective notices in select newspapers and on its websites and (v) adopt a corporate compliance program to ensure compliance with the deceptive marketing sections of the Competition Act.

In addition to general misleading advertising provisions, the Competition Act also contains a number of other provisions that regulate a range of marketing activities including bait and switch selling, selling above advertised price, multi-level marketing plans, pyramid selling schemes, deceptive telemarketing and the “ordinary selling price” provisions (dealing with sales) and promotional contests.

The promotional contest provisions of the Act, among other things, require that persons conducting promotional contests disclose the number and approximate value of prizes, the areas to which they relate and chances of winning.   In addition, the Criminal Code also contains provisions regulating promotional contests.  As such, review of promotional contests should include ensuring that rules comply with the Competition Act and Criminal Code.

While enforcement of the promotional contest rules under the Act is relatively uncommon, the Bureau does commence investigations for breaches of these rules from time to time and this most recent case is a sober reminder of the potential penalties for being offside the rules.  It is also worth noting that, as a result of recent amendments, the penalties for contravention of the civil false or misleading representation provisions of the Act have now been increased to $750,000 (for individuals) and $10 million (for corporations).

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to Canadian and international clients.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.

I.  Overview

The federal Competition Act (the “Act”) contains both criminal and civil provisions prohibiting a range of anti-competitive activities, many of which can arise in ordinary commercial dealings (e.g., in the context of distributor/customer relations, trade association activities and in relation to many common commercial agreements including IP license agreements, joint venture and strategic alliance agreements and franchise agreements).

II.  Competition Act

The criminal provisions under the Act include provisions relating to criminal conspiracies (i.e., price fixing, market allocation and output restrictions), bid rigging and deceptive marketing and telemarketing.  Civil provisions include provisions relating to abuse of dominance, civil misleading representations, refusal to deal, price maintenance and exclusive dealing.

III.  Penalties

The potential penalties for contravention of the Act include fines of up to CDN $25 million (and in some cases without limit – i.e., in the discretion of the court), imprisonment for up to fourteen years and prohibition orders (for contravention of the criminal provisions) and civil fines of up to CDN $10 million (potentially higher on subsequent contraventions or settlement in certain instances) and orders to cease the conduct (in relation to the civil provisions).

IV.  Director & Officer Liability

Enforcement under the Act can include both prosecutions of corporate entities and individuals (i.e., employees, officers and directors that violate the provisions of the Act).  In some instances, when a corporate entity violates the Act, directors and officers that were in a position to direct or influence the corporation’s policies can be deemed to be parties of the conduct and exposed to potential liability together with the corporation.

In this regard, it is common for employees and directors and officers of companies to be involved both in Competition Bureau (“Bureau”) investigations and to be parties in settlements with the Bureau.

For this reason, it is prudent for boards and senior officers to implement effective and credible competition compliance programs in order to reduce the potential risk of contravening the Act.  Implementing such policies can have many benefits, not least of which is reducing the potentially significant penalties in the event of a contravention of the Act (see below).

V.  Compliance Programs

Competition compliance programs are not mandatory under the Act, though can in certain cases be ordered by a court (for example, as part of a negotiated consent agreement or prohibition order).  However, a well-designed and effective corporate competition compliance program can have many benefits for companies and trade associations.

Moreover, the importance of a corporate competition compliance policy is greater now than in the past for a number of reasons including:

- The enactment of new criminal conspiracy provisions with no market effects test.
- Significantly increased penalties for criminal conspiracies, misleading representations and bid rigging.
- Criminal conspiracies and deceptive marketing remain top enforcement priorities for the Bureau.

VI.  Benefits of an Effective Compliance Program

Some of the benefits of a credible and effective competition compliance program include:

- Reducing the risk of contravening the criminal and civil provisions of the Act.
- Identifying the boundaries of acceptable conduct.
- Reducing costs in relation to investigations and proceedings.
- Identifying circumstances when legal advice should be sought.
- Detecting illegal conduct.
- Potentially mitigating penalties in the event of an investigation.
- Strengthening goodwill and reputation.
- Avoiding negative publicity as a result of an investigation or legal proceedings.
- Reducing potential director and officer liability for contravention of the Act.
- Reducing the potential risk and exposure of criminal and civil liability.

While a corporate competition compliance policy will not automatically insulate a company (or its directors and officers) from potential criminal or civil liability under the Act, both the Bureau and the Crown may give weight to a credible and effective compliance program in determining how to proceed in respect of a particular matter.

A credible competition compliance program may also be a mitigating factor in the assessment of penalties under the Act or assessing the availability of certain due diligence defenses.

VII.  Recent Competition Bureau Initiatives

The Bureau has recently issued a new Information Bulletin on Corporate Compliance Programs (the “Bulletin”).  The Bureau’s new Bulletin replaces its earlier Corporate Compliance Programs Bulletin that was issued in 1997.  See: Corporate Compliance Programs.

The Bulletin sets out five elements which, in its view, are essential for corporate competition compliance programs.  These are as follows:

1.  Senior management involvement and support.  As senior management are required to exercise care, skill and diligence and act in the best interests of a company, senior management should indentify the principal risks faced by a business and implement appropriate systems to manage such risk (which includes the adoption of competition compliance programs).

2.  Corporate compliance policies and procedures.  The development of a corporate compliance program tailored to a business and relevant industry is critical to a program’s success (and also that any compliance program should be periodically updated).

3.  Training and education.  A credible and effective corporate compliance program should involve ongoing training and education focused on staff that are in a position to potentially engage in conduct that may contravene the Act.

4.  Monitoring, auditing and reporting mechanisms.  Monitoring, auditing and reporting mechanisms are in the Bureau’s view essential to an effective compliance program and to help prevent and detect conduct that violate the Act.

5.  Consistent disciplinary procedures and incentives.  Finally, consistent disciplinary procedures and initiatives demonstrate the seriousness of a company’s compliance with the Act and are important not only for deterrence purposes, but also as a reflection of a company’s policy against such conduct.

VIII.  Trade Associations

With respect to trade associations, the Bureau has in the past several years both maintained its investigation and enforcement of the Act against trade associations.  It has as well been working on a number of trade association specific initiatives, including enforcement guidelines tailored specifically to trade association activities.  See for example: Competition Bureau – Information Bulletin on Trade Associations (Draft).

In terms of competition compliance programs in the trade association context, the Bureau states:

“A program also plays a crucial role for trade associations because trade associations face unique compliance issues.  Given that an association provides a forum where competitors collaborate on association activities, trade associations are exposed to greater risks of anti-competitive conduct.  A number of past Bureau cases have involved trade associations that were engaged in agreements to harm competition.  It is therefore critical that trade associations implement credible and effective programs with strict codes of ethics and conduct.  Such programs may allow trade associations and its members to avoid improper actions and to provide themselves from being used as a conduit for illegal activities.  They may also allow trade association member to fully benefit form the association’s activities while reducing the potential for inadvertent contraventions of the Acts.”

IX.  Competition Compliance Program Links

Competition Bureau – Competitor Collaboration Guidelines

Competition Bureau – Information Bulletin on Trade Associations (Draft)

Competition Bureau – Multimedia Tool – Train Your Staff to Stop Fraud

Competition Bureau – Corporate Compliance Programs Bulletin

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging, Canadian Competition Law Resources, Competition Law Links or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to clients across Canada and internationally.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us at +1 604 687 0555 or +1 778 867 5558.

DISCLAIMER

The materials and information on CANADIAN COMPETITION LAW are provided as legal information about Canadian competition law.  Reading and accessing this information does not create a lawyer-client relationship.  The information on our blog does not constitute legal advice or a legal opinion on any issue.  In addition, the information and materials on this website will change based on new competition law developments and, as such, may not be current as of the date of access.  As such, we take no responsibility for the accuracy or currency of the competition law information or materials on our blog, which should not be relied upon without receiving legal advice from competent legal counsel.

BOOKS AND REPORTS

ARTICLES AND SPEECHES

Bhatia, G.R., “Trade Associations Qua Indian Competition Law”, Manupatra, January – March, 2009, Volume I, Part I, available at http://www.luthra.com/articles.asp.  

Seryo, Shingo, “Cartel and Bid Rigging”, Japan International Cooperation Agency, 2009, available at http://www.jftc.go.jp/eacpf/03/cartels.pdf.

ENFORCEMENT AGENCIES

AUSTRALIA

Australian Competition & Consumer Commission, Cartels: Deterrence and Detection Guide (April 16, 2009), available at http://www.accc.gov.au/content/index.phtml/itemId/869010.

Australian Competition & Consumer Commission, Cartels: What You Need to Know: A Guide For Business (October 15, 2009), available at http://www.accc.gov.au/content/index.phtml/itemId/897448.

Australian Competition & Consumer Commission, Guidelines for Developing Effective Voluntary Industry Codes of Conduct (March 4, 2005), available at http://www.accc.gov.au/content/index.phtml/itemId/658186.

JAPAN

Ministry of Economy, Trade and Industry, Report by a Study Group Regarding Competition Law Compliance – Anti-cartel Measures by Japanese Corporations and Trade Associations in Light of Enhanced Global Enforcement of Competition Law (January, 2010), available at http://www.meti.go.jp/english/report/downloadfiles/201001complaw.pdf.  

JERSEY

Webb, Charles, Executive Director, Jersey Competition Regulatory Authority, “Trade and Professional Associations and the Potential Problem of ‘Overt’ Cartels”, paper prepared for the First BRIC International Competition Conference, Kazan, Russian Federation (September 2, 2009), available at http://www.bric-competition.com/page.php?id=75.

THAILAND

Competition Committee, Board of Trade, Consultation Paper, A Competition Compliance Guide for Trade Associations and Chambers of Commerce (November 25, 2006).  

Overview

In many cases trade association activities serve legitimate pro-competitive purposes, such as industry lobbying, education, promoting an industry or profession and setting standards.  However, because trade association activities by their nature involve the interaction of direct competitors, they can also raise significant competition law issues.  Because of the potential competition risk associated with some trade association activities, the following are twenty things for trade associations to know about Canadian competition law.

1.  Canadian competition law

In Canada, competition law is governed by the federal Competition Act.  The Competition Act is federal legislation, so applies across Canada, and is law of so-called “general application”, which means that it applies to most business activities in Canada including most trade association activities.

The Competition Act contains criminal and civil provisions, including those relating to conspiracy (e.g., price fixing and market allocation), bid-rigging, resale price maintenance, misleading representations and abuse of dominance, among others.  In general, the legislation deals with anti-competitive behavior engaged in by multiple firms (e.g., criminal conspiracies) as well as single firms (e.g., abuse of dominance).  Many of the key provisions of the Competition Act also apply to trade associations and their activities (discussed in more detail below).

2.  Trade association investigations

The federal Competition Bureau has been investigating trade associations in Canada for over a hundred years.  During this time, hundreds of Canadian trade associations and their members have been investigated for anti-competitive conduct under Canadian competition laws or have been the subject of penalties imposed under the Competition Act and previous competition laws.

3.  Competition Act sections relevant to trade associations

There are no specific sections of the Competition Act that deal exclusively with trade associations.  However, some of the general provisions that are particularly relevant to trade associations in Canada include those dealing with agreements between competitors (i.e., the criminal conspiracy and bid rigging provisions), misleading representations, resale price maintenance and abuse of dominance provisions.

4.  Areas of risk for trade associations

In general, the types of trade association activities that can raise potential competition law issues include those that deal with pricing, customers, territories, market shares, terms of sales and advertising restrictions.  Some of the specific types of trade association activities that can raise competition law issues include:

- Mandatory or suggested fee guidelines
- Advertising restrictions
- Membership restrictions, rules and expulsions from membership
- Association discipline
- Membership bylaws and rules relating to aspects of competition
- Trade association meetings and conventions
- Exchanges of competitively sensitive information
- Voluntary codes of conduct that impact important aspects of competition

5.  New criminal conspiracy provisions

New criminal conspiracy provisions will come into force early next year.  Under these new provisions, price fixing, market allocation and output restriction agreements (three forms of so-called “hard core” cartel conduct) will be able to be established without the necessity of showing adverse market effects.

The primary impact of these significant recent amendments to the criminal conspiracy provisions is that, whereas formerly market power was a prerequisite to establish a criminal conspiracy (i.e., negative effects on a relevant market or markets as a result of the anti-competitive agreement), under the new law, parties to an agreement with modest market shares will also be potentially criminally liable.

Some of the kinds of agreements between members of trade associations that can raise potential competition law issues include agreements to fix prices, boycott other members or allocate geographic markets or customers.

6.  New increased penalties for criminal conspiracies

The potential penalties for contravention of the new conspiracy provisions that will come into force early next year will include fines of up to CDN $25 million (per count) and/or imprisonment for up to 14 years.  These penalties are significantly higher than the previous penalties, and signal that the enforcement of criminal conspiracies is a priority for both the current conservative government and the Competition Bureau.

7.  Misleading representations (criminal and civil)

The misleading representation provisions of the Competition Act are highly relevant to trade associations and their members.  The Competition Act contains both criminal and civil misleading representation provisions, which apply to false or misleading representations made to promote the supply or use of a product or a business interest.

Based on the potential relevance of these provisions and liability for trade associations and their members, it is prudent that trade associations and their members ensure that they do not engage in false or misleading representations.  In addition, it is important that trade associations ensure that their rules and bylaws do not encourage false or misleading representations or restrict legitimate pro-competitive advertising by members.

8.  New increased penalties for misleading representations

New misleading representations provisions were passed earlier this year.  Under these new provisions, misleading representations can result in civil “administrative monetary penalties” of up to CDN $750,000 (or individuals) or CDN $10 million (for corporations).

9.  Abuse of dominance

Abuse of dominance is another section that potentially applies to trade associations and their activities. Under sections 78 and 79 of the Competition Act, abuse of dominance occurs where a dominant firm (or firms) in a market has engaged in (or is engaging in) a practice of anti-competitive acts that has an intended negative effect on a competitor that is exclusionary, predatory or disciplinary, with the result that competition has been, is being or is likely to be prevented or lessened substantially.

Some of the types of trade association activities that can potentially raise abuse of dominance issues include efforts to restrict access to essential services or markets or set standards that result in impeding entry (or restricting membership) into an important or necessary association.

There are also new significant penalties for abuse of dominance that include “administrative monetary penalties” (essentially civil fines) of up to CDN $10 million (CDN $15 million for repeat contravention of the abuse of dominance provisions).

10.  Resale price maintenance

The previous criminal resale price maintenance provision, which was highly relevant to trade associations (prohibiting among other things, refusals to supply based on a person’s low pricing policy and attempts to maintain certain prices), has been repealed and replaced with a new civil provision.  While this will reduce criminal risk for trade associations, there is now under the new civil provision a private right of access whereby private parties can seek and obtain remedies from the federal Competition Tribunal.

11.  New bid rigging law

In addition to the criminal conspiracy provisions, there is also a separate standalone bid rigging provision under the Competition Act.  This provision applies where, in response to a call for tenders or bids, one or more bidders agree not to submit a bid or where two or more bidders agree to submit bids which have been prearranged among the bidders.

In addition, as a result of recent amendments, it is also now a criminal offence to agree to withdraw a bid that has already been made.

Common forms of bid rigging arrangements include bid suppression, cover bidding, market allocation and bid rotation.  Like the criminal conspiracy provisions, bid rigging is a criminal offence with potential penalties including imprisonment and criminal fines.

Bid rigging raises potential risk particularly in industries where bids or competitive tenders are a common form of competing for projects and contracts (e.g., the construction industry).

12.  New trade association enforcement guidelines

The Bureau has recently issued draft enforcement guidelines (Information Bulletin on Trade Associations) specifically dealing with trade associations and their activities in Canada.

13.  New competitor collaboration guidelines

The Bureau is currently in the process of issuing enforcement guidelines specifically for collaborations between competitors.

14.  Compliance programs

The Competition Bureau strongly recommends that trade associations adopt competition compliance policies:

“A [compliance] program plays a crucial role for trade associations because trade associations face unique compliance issues.  Given that an association provides a forum where competitors collaborate on association activities, trade associations are exposed to greater risks of anti-competitive conduct.  A number of past cases have involved trade associations that were engaged in agreements to harm competition.  It is therefore critical that trade associations implement credible and effective programs with strict codes of ethics and conduct.  Such programs may allow trade associations and its members to avoid improper actions and to protect themselves form being used as a conduit for illegal activities.”

In addition, the Competition Bureau has recently reissued its guidelines for corporate compliance programs, which specifically deal with trade association compliance policies.

An effective compliance policy can have many benefits for trade associations.  These include reducing the risk of non-compliance, contributing to a good reputation in the market, lowering compliance and litigation costs, avoiding adverse publicity, providing early warnings of anti-competitive conduct and lowering the risk and exposure for senior management, employees and association members.

15.  Director and officer liability

Directors and officers can face both criminal and civil liability for contravention of the Competition Act (i.e., in addition to an association itself and its members).

16.  Civil damages actions

In addition to enforcement by the federal Competition Bureau, civil damages actions are possible under the Act for violations of the criminal provisions.  For example, in the case of trade associations, such actions can be commenced by competitors or customers that have suffered damages as a result of trade association activities or the conduct of its members.

17.  Binding advisory opinions

Binding advisory opinions are available from the Competition Bureau as to whether conduct violates the Competition Act.  In addition, following the recent significant amendments to the Competition Act, the Competition Bureau will provide advisory opinions for no charge until the new provisions come into force in March, 2010.

18.  Competition Bureau immunity program

The Competition Bureau has established formal criminal immunity and leniency programs.  These programs can have significant benefits for parties to illegal conduct that contact the Bureau first (i.e., being “first in” can result in avoiding criminal liability), but can also result in significant liability for other parties to illegal conduct that do not have the benefit of immunity or leniency.  As such, it is critical that where an association or its members may be involved in potentially criminal conduct, the availability of the Bureau’s leniency program be assessed quickly.

19.  Recent association cases

Hundreds of trade associations across Canada have been investigated or been exposed to civil or criminal liability over the past century.  Public trade association cases over the past twenty years have involved The Canadian Real Estate Association, Saskatchewan Roofing Contractors Association, Kent County Law Association and the Alberta Ambulance Operators’ Association to name a few.

20.  Competition Bureau enforcement priorities

The enforcement of criminal conspiracies, misleading representations and deceptive marketing practices remain top enforcement priorities for the Bureau.

OUR SERVICES FOR TRADE ASSOCIATIONS

We practice federal competition law, have provided competition law and compliance advice to clients across Canada and internationally and provide a full range of competition law services in relation to the criminal conspiracy, merger, abuse of dominance, misleading advertising and deceptive marketing provisions of the federal Competition Act.

We also regularly counsel Canadian trade associations on the application of the Competition Act to activities of trade associations and their members.  Some of the types of trade association activities that can, in some instances, raise criminal or civil competition law issues include fee tariffs or guidelines, advertising restrictions or guidelines, membership criteria and member expulsions, meetings and other events where competitively sensitive information is discussed, unilateral and concerted refusals to deal with competitors (including discounters and alternative business models) and some joint association activities including joint negotiation and lobbying.

Our Canadian competition law services for trade associations include:

- Competition law compliance programs for associations.
- Competition law compliance seminars and talks for association executives.
- Audits and compliance reviews of trade association activities.
- Advice on the application of the recently amended Competition Act.
- Vetting trade association meetings, conventions and communications.
- Reviewing trade association rules, bylaws, policies and voluntary codes.
- Advice in relation to joint association activities (e.g., joint negotiation).
- General competition law and competition compliance advice for associations.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to Canadian and international clients.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us on +1 604 687 0555 or +1 778 867 5558.

I.  Overview

Earlier this year, significant amendments were made to the federal Investment Canada Act (the “ICA”).  These significant amendments coincide with sweeping amendments to the federal Competition Act.  As a result, Canada’s foreign investment and competition law regimes are now both significantly different.

The recent amendments to the ICA adopt a number of the recommendations of the Competition Policy Review Panel that was established in 2007 to review and make recommendations in relation to Canada’s foreign investment regime.

Some of the key changes to the ICA (discussed in more detail below) include:

1.  Changing the general threshold to determine whether a foreign investment is reviewable from the book value of the gross assets of the Canadian business to be acquired to one based on the “enterprise value” of the Canadian business;

2.  Raising the threshold to review an investment in a Canadian business from the previous CDN $312 million (that was based on the gross assets of the Canadian business to be acquired) to CDN $600 million which will now be based on the “enterprise value” of the assets of the Canadian business being acquired (to be raised to CDN $1 billion over a four year period);

3.  Eliminating certain lower review thresholds in specific sectors (i.e., financial services, uranium production and transportation services); and

4.  Introducing a requirement for the Minister to disclose administrative information on the investment review process.

The recent amendments also introduce a new national security test, under which the Minister and the federal Cabinet will have the power to review investments that are “injurious to national security” (which came into force on February 6, 2009).

II.  The Investment Canada Act

The ICA is federal legislation that governs foreign investments in Canada.  The ICA is primarily administered by the federal Minister of Industry and the Investment Review Branch of Industry Canada.

Where a foreign investment in a Canadian business is subject to review, a foreign investor must show that the investment is likely to be of “net benefit to Canada” (discussed in more detail below).

In general, the ICA applies in cases where a “non-Canadian” acquires “control” of a “Canadian business” (or alternatively establishes a new Canadian business) (all as defined in the ICA).

The application of the ICA, and in particular what constitutes a “non-Canadian”, the acquisition of “control” and a “Canadian business” in specific circumstances can be complex.

(a)  “Non-Canadian”

“Non-Canadians” under the ICA are defined as individuals, entities or governments (or agencies of governments) that are not “Canadian”.  A person will be considered to be a “Canadian” under the ICA if they are a Canadian citizen (or are a permanent resident of Canada that has ordinarily been resident in Canada for up to one year after they are eligible to apply for citizenship).

For corporations, a corporation will be “Canadian” if the ultimate controlling shareholders of the corporation are “Canadian”.  For widely held corporations, a corporation will be “Canadian” if at least two thirds of its board of directors are Canadians (and the corporation is not controlled in fact through its shares – i.e., no de facto ownership).

(b)  Acquisition of “Control”

The second general test to determine whether the ICA applies is whether there will be an acquisition of “control”.  Control for the purposes of the ICA can be achieved as a result of (a) the acquisition of voting interests in a non-corporate entity, (b) all (or substantially all) of the Canadian assets of a business or (c) the acquisition of voting shares in the case of corporations.

The provisions regarding the acquisition of “control” under the ICA are complex.  The ICA, however, sets out a number of presumptions regarding control as follows: (a), where a majority of voting shares is acquired, control is deemed to have been acquired, (b) where 1/3 or more (but less than a majority) of the voting shares of a Canadian business has been acquired, control is presumed (unless it can be demonstrated that the shares that will be acquired will not confer control in fact to the investor) and (c) where less than 1/3 of the voting shares of the Canadian business will be acquired, control is deemed not to have been acquired.

It is also worth noting that acquiring the shares of a non-Canadian corporation that has a Canadian division (but which does not have any Canadian subsidiaries) will not be an acquisition of control for the purposes of the ICA.  Moreover, the Canadian Minister of Heritage may also determine that there has been an acquisition of control of a Canadian business, in relation to Canadian cultural businesses, even where the general tests for determining control under the ICA are not met.

(c)  “Canadian Business”

Under the ICA, a “Canadian business” is defined to mean (a) a business that is carried out in Canada with an individual (or individuals) that are employed in the business, (b) with a Canadian place of business and (c) with assets in Canada that used for the operation of the business.  In other words, in order to constitute a Canadian business, there must be Canadian employees, a place of business and Canadian assets.

A “business” under the ICA is defined as enterprises or undertakings that are capable of generating revenue and are operated in anticipation of profit.  As such, in considering whether there is an investment in a “Canadian business”, it is important to determine whether the target is operational (e.g., mining properties that are not yet producing, and which are only at the exploration stage, are not “Canadian businesses” for the purposes of the ICA).

III.  ICA Review Thresholds

Under the ICA, investments are reviewable when they exceed the prescribed financial thresholds.  Where the ICA thresholds are not met, foreign investors are only required to file simple notifications with basic information within thirty days of the completion of the transaction.

In addition, whether a particular investment is reviewable turns of a number of factors.  These include (a) whether the investment is direct or indirect, (b) whether the Canadian business in which the investment is being made is a Canadian cultural business and (c) whether the investor is a WTO investor.  As such, whether a particular investment is reviewable under the ICA will involve an analysis of the structure of the transaction and as well as the nature of the target and the acquirer.

In order to obtain approval, foreign investors may be required to give undertakings to the Minister (discussed in more detail below).

(a)  Indirect Investments

An indirect acquisition under the ICA is where an investor acquires control of a corporation that is incorporated in a jurisdiction other than Canada, which in turn controls a Canadian entity carrying on a Canadian business.  The significance of determining whether an investment is direct or indirect is that the thresholds for review are different depending on whether a transaction is direct and indirect and, as well, indirect acquisitions by WTO investors are generally not reviewable.

(b)  Canadian Cultural Businesses

For investments in Canadian cultural businesses there are lower review thresholds.  A “cultural business” under the ICA includes a business that (a) publishes, distributes or sells music in print or machine readable form, (b) publishes, distributes or sells books, magazines, periodicals or newspapers (in print or machine readable form), (c) produces, distributes, sells or exhibits film or video products, (d) produces, distributes, sells or exhibits audio or video music recordings or (e) is engaged in radio communication where the transmissions are intended for direct reception by the public, radio, television and cable broadcasting, and satellite programming and broadcast network services.

It is worth noting as well that a Canadian business can still be a “cultural business” if the cultural activities in which it is engaged comprise only a small portion of its total business (i.e., there is no particular threshold).  Moreover, the Canadian Minister of Heritage has the power to review the acquisition of Canadian cultural businesses even where the relevant financial thresholds (discussed below) are not met.

(c)  Investments by WTO Investors

Finally, with respect to WTO investors, generally speaking an individual will be a WTO investor where they are a national of a member of the WTO (for a list of WTO members see WTO Members) or have a right of permanent residence in a country that is a member of the WTO.

For corporations, a corporation will be a WTO investor if it is ultimately controlled by one or more WTO investors.  For widely held corporations, a corporation will be a WTO investor where (a) a majority of the voting shares are held by WTO members or (b) if no person (or voting group) controls the corporation, a minimum of 2/3 of the corporation’s board of directors are comprised of Canadians and WTO members.

(d)  Financial Thresholds

Acquisitions of a Canadian business where the following financial thresholds are exceeded will be subject to review.

(i)  WTO Investors

Where the investor is a WTO investor (discussed above) or, alternatively, the Canadian business being acquired is controlled by a WTO investor, then the following thresholds apply.

Direct acquisitions.  Direct acquisitions will be subject to review when the value of the assets of the Canadian business is equal to or exceeds the review thresholds for WTO investors.  As a result of recent amendments, the financial threshold for review in the case of direct acquisitions of Canadian businesses will be if the “enterprise value” of the assets of the Canadian business is equal to or exceeds CDN $600 million (which is the threshold that will apply or the first two years after the new thresholds come into force).

Indirect acquisitions.  Indirect acquisitions by WTO members are generally not reviewable (except where the Canadian business being acquired is a cultural business and the relevant threshold of CDN $50 million is exceeded), but only triggers a notification requirement.

(ii)  Non-WTO Investors

Where the investment is by a non-WTO member, then lower review thresholds apply as follows.

Direct acquisitions.  In the case of direct acquisitions by non-WTO investors, an investment will be subject to review under the ICA if the value of the assets of the Canadian business is over CDN $5 million.

Indirect acquisitions.  In the case of indirect acquisitions by non-WTO investors, an investment will be subject to review under the ICA if the value of the assets of the Canadian business is over CDN $50 million.

IV.  Review

(a)  “Net Benefit” Test

Under the ICA, where an acquisition is subject to review, the foreign investor must show that the acquisition is likely to be of “net benefit” to Canada (i.e., this is the relevant test against which the Minister will evaluate a reviewable investment).

In evaluating whether an investment is likely to be of “net benefit” to Canada, a number of criteria are considered which may include: (a) Canadian participation in the Canadian business being acquired, (b) the effect of an investment on economic activity in Canada, (c) the effect on competition in Canada and (d) whether the investment is likely to be compatible with Canada’s national industrial, economic and cultural policies.

(b)  Review Application

Where an investment is reviewable, an application form must be filed setting out the information about both the investor and the Canadian business.

(c)  Review Periods

Once an application is received, the Minister has an initial forty-five days to approve or refuse the investment.  Where a review is not completed within the initial forty-five days, the Minister has the power to extend the review period for another thirty days.  As such, where the review period is extended, the total review period will be seventy-five days (further extensions are possible, but require an investor’s consent).

If the Minister determines that an investment would not be of “net benefit” to Canada, an investor may make representations and may also file undertakings (within thirty days of the Minister’s notice).  Where undertakings are required in order to obtain approval for an investment, they may involve terms in relation to matters that include, among other things: (a) maintaining certain Canadian employment levels, (b) ensuring the participation of Canadians in the management of the business, (c) investing in research and development and (d) the location of the head office of the Canadian business.

V.  Penalties

Where an investor fails to comply with the ICA (e.g., failure to file an application for review or notification, failure to comply with undertakings or completes an investment without the requisite approval), the potential penalties include (a) the revocation (or suspension) of voting rights, (b) divestiture and (c) financial penalties of up to CDN $10,000 per day that an investor is in contravention of the ICA.

VI.  National Security Review (New)

The recent ICA amendments also introduce a new national security test, under which the Minister and the federal Cabinet will have the power to review investments that “could be injurious to national security”.  The new national security review regime came into force on February 6, 2009.

The new national security review regime will be administered separately from the net benefit review process and, according to the government, is meant to “ensure the focus is on national security … consistent with [Canada’s] international trade obligations.”

The federal Cabinet now has the power, where a proposed or completed investment is found to be injurious to national security, to block an investment, impose conditions on an investment or, in the case of a completed investment, to order divestiture.  There are, however, no monetary thresholds that must be met in order to trigger a national security review and the term “national security” is not defined.  This will potentially give the government very wide latitude to determine which investments to review from a national security perspective.

A national security review of a proposed investment could take place where an entity carrying on all (or a portion) of its operations in Canada is being acquired in “whole or part” and (a) the Canadian entity has a place of operations in Canada, (b) Canadian assets used to carry out its operations and (c) an individual (or individuals) located in Canada that are employed or are self-employed in relation to the entity’s operations.

The process to order a national security review would involve a consultation process between the Minister and the Minister of Public Safety and Emergency Preparedness, that can result in an order made by the federal Cabinet.  In addition, investments under the ICA can be reviewed on national security grounds regardless of whether control of a Canadian business has been acquired.

When a notice is issued by the Minister that an investment may be reviewed on national security grounds, the investment cannot be completed unless (a) notice is received that a national security review will not be conducted or (b) after a national security review is conducted, the government concludes that the proposed investment will not be “injurious to national security”.

Where the Minister determines that an investment would be “injurious to national security”, the federal Cabinet has the power to take a number of steps to protect national security.  These include (a) prohibiting the investment, (b) ordering a divestiture (where an investment has already been completed) or (c) imposing conditions on the proposed investment.

CANADIAN COMPETITION LAW LINKS

For more information about Canadian competition law or our competition law services visit our Blog Homepage, Competition Law Services, Canadian Competition Law, Competition Act Amendments, Merger Control, Merger Control FAQs, Abuse of Dominance, Conspiracy,  Advertising and Marketing, Promotional Contests, Trade Associations, Refusal to Deal,  Investment Canada Act, Canadian Competition Law Compliance, Private Actions, Bid Rigging, Canadian Competition Law Resources, Competition Law Links or Global Competition Law and Policy pages or visit our website at www.NortonStewart.com.

CONTACT US

We provide Canadian competition law services to clients across Canada and internationally.  For more information about our Canadian competition law and consulting services contact us at steve@nortonstewart.com, info@competitionlawcanada.com or call us at +1 604 687 0555 or +1 778 867 5558.

DISCLAIMER

The materials and information on CANADIAN COMPETITION LAW are provided as legal information about Canadian competition law.  Reading and accessing this information does not create a lawyer-client relationship.  The information on our blog does not constitute legal advice or a legal opinion on any issue.  In addition, the information and materials on this website will change based on new competition law developments and, as such, may not be current as of the date of access.  As such, we take no responsibility for the accuracy or currency of the competition law information or materials on our blog, which should not be relied upon without receiving legal advice from competent legal counsel.

The following is the outline and reading list for the conspiracy and misleading advertising lectures for Canadian Competition Law (Law 414C.001; University of British Columbia, Spring, 2011) – lectures 7 (Conspiracy – Substantive Law), 8 (Conspiracy – Case Studies) and 10 (Misleading Advertising and Marketing Practices).

For the course description see: Canadian Competition Law – Law 414C.001 – University of British Columbia (Spring, 2011).

LECTURE 7 – Wednesday, February 23, 2011 – Conspiracies and Competitor Collaborations – Substantive Law

The first lecture on conspiracies and competitor collaborations under the Competition Act will discuss the elements of Canada’s new two-track conspiracy regime (i.e., section 45 – criminal conspiracy offences – and section 90.1 – the new civil agreements provision).  Defences, exceptions, penalties, parallels to U.S. law under the Sherman Act and key Competition Bureau enforcement guidelines will also be discussed.

Outline

- 2009 Competition Act amendments
- Two-track conspiracy regime
- Comparisons to U.S. Sherman Act (per se and rule of reason standards)
- Competition Bureau guidelines

Section 45 (criminal offences)

- Elements
- Price-fixing, market allocation and output restriction agreements
- Defences and exceptions
- Penalties

Section 90.1 (civil agreements provision)

- Elements
- Exceptions
- Remedies

Required Reading

Text

Musgrove, J., ed., Canadian Competition Law, 2^nd ed. (Toronto: Carswell, 2010)

- Chapter 4 (Criminal Conspiracy), pp. 45-53, 58-62
- Chapter 5 (Non-criminal Review of Agreements), pp. 63-70

Statutes

Competition Act, ss. 36(1), (2); 45(1)-(4), (6)-(8); 90.1(1)-(4), (7), (11)

Sherman Act, Section 1

Cases

Students are only responsible for points raised/discussed in class (i.e., and so may choose whether or not to read the full cases)

R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606 (CanLII)

Northwest Wholesale Stationers, Inc. v. Pacific Stationary and Printing, 472 U.S. 284 (Justia.com)

Broadcast Music, Inc. v. CBS, Inc., 441 U.S. 1 (1979) (Justia.com)

Polygram Holding Inc. v. Federal Trade Commission, 416 F.3d 29 (2005) (OpenJuris) (Three Tenors case)

Competition Bureau

John Pecman, Acting Senior Deputy Commissioner of Competition, Criminal Matters Branch, Competition Bureau, Competition Law and Trade Associations (2008)

Competition Bureau, Competitor Collaboration Guidelines (2009), pp. 1-24, 26-28 (Information Sharing Agreements)

Competition Bureau, Merger Enforcement Guidelines (2004), pp. 4-25

Optional Reading

Calvin S. Goldman and John D. Bodrug, eds., Competition Law of Canada, loose-leaf (New York: Juris, 1988 – ) – Chapter 8 (Conspiracy and Related Provisions)

Wakil, Omar, ed., The 2010 Annotated Competition Act (Toronto: Thomson Carswell, 2009) – commentary under sections 36, 45 and 90.1

Stikeman Elliott, Competition Act and Commentary (Markham: Butterworths Canada, 2010) – discussion of sections 36, 45 and 90.1

Trebilcock, Michael, et al., The Law and Economics of Canadian Competition Policy (Toronto: University of Toronto Press, 2002) – discussions of substantial prevention or lessening of competition under the merger and abuse of dominance provisions (as a parallel to the competitive effects test now required under the civil agreements provision – section 90.1)

LECTURE 8 – Wednesday, March 2, 2011 – Conspiracies and Competitor Collaborations – Case Studies

The second lecture on conspiracies under the Competition Act will be taught using two case studies and a guest speaker.

Outline

- Joint ventures
- Trade association activities
- Competition Bureau Immunity and Leniency Programs
- Guest lecturer – Subhadip Ghosh, PhD (economics of new conspiracy regime)

Subhadip Ghosh is faculty, Simon Fraser University.  For more information about his experience and work see: Subhadip Ghosh Profile.

Required Reading

Competition Bureau

Competition Bureau, Bulletin, Immunity Program under the Competition Act (2010), pp. 1-8

John Pecman, Acting Senior Deputy Commissioner of Competition, Criminal Matters Branch, Competition Bureau, Competition Law and Trade Associations (2008)

Case Studies

Joint Venture Case Study

Digger Co. (“Digger”) and Nugget Inc. (“Nugget”) have been in discussions regarding a potential mining joint venture for some time.  Digger is small Calgary-based company that manufactures and distributes specialized exploration and heavy equipment for the mining sector.  Nugget is a Vancouver-based mining and exploration company and one of the world’s largest mining companies primarily engaged in the exploration of gold in Indonesia and elsewhere in Asia.  Both companies are also engaged in mining-related research and development, the resulting technology of which is used internally and in some cases licensed or sold to third parties (though Digger is significantly larger and more advanced in this field).  While the parties only develop a handful of technology products that overlap, both have rather extensive research and development facilities and staff set up to develop new mining technology.  The proposed joint venture, formed in Canada, will involve the exploration and development of a new gold mining property on a remote island in Eastern Indonesia.  Digger is to contribute some capital and its considerable research and development expertise in relation to mining exploration equipment (including the development of new mining core sample technology).  Nugget is to contribute primarily the property, capital and its existing technological expertise.  The parties view is that, based on the challenging features of the new claim, significant capital requirements, demand for new technology (the reserves are unusually deep and so new technology will need to be developed for the project) and risk, among other things, the parties could not bring the property to production alone.  While the parties will jointly explore and develop the new property, each will separately market any production independently (including all pricing and marketing decisions).  The parties do, however, want to limit the use of any new technology developed in conjunction with the new project, including the new deep coring technology, to the project’s life (i.e., not be separately sold or marketed to competing mining companies).  The parties, however, also want to limit the number of licenses issued (i.e., sold) for another existing technology that they both possess for copper mining (unrelated to the gold mining project).

Does the parties’ proposed joint venture raise any issues under sections 45 or 90.1?

What if the JV partners agreed to jointly set the price and output for production from the new (i.e., JV) property – would that change the analysis?

How should the JV partners agreement to limit the number of licences for existing overlapping technology be treated?

Price-fixing and Immunity Program Case Study

A man calls you late one afternoon (Mr. Slip) leaving you a voicemail about a matter he is involved in relating to the boat storage industry.  He tells you that he and his business partner (the owner of another boat storage company, Mr. Dock) have just received letters from the Competition Bureau and that he has been referred to you from another lawyer that is unfamiliar with competition law.  You call him back to discuss the matter.  He confirms that he and his business partner in a joint venture (Mr. Dock) and the owners of four other companies in the boat storage industry have all received letters from the Competition Bureau requesting information about potential conspiracy issues based on a complaint, referring to the Bureau’s immunity and leniency programs and asking that the owners contact the Bureau.  After you discuss the matter further with the new client, he tells you that he and his competitors have been meeting on and off for about 15 years discussing prices, marketing approaches and discounts.  While he tells you that there was never any agreement “fixing” the prices for boat storage or “fixing” discounts as such and nothing ever in writing, there were loose arrangements to increase prices from time-to-time in ranges (e.g., to raise prices in the 15% range) and not discount more than certain ranges (e.g., more than 5%).  After one such meeting, one of the other owners (Mr. Dry Dock), who had often been the organizer of the meetings and often called the others to make sure they were following the arrangement, wanted to firm up the arrangement between the companies, and sent a letter to them and one discount boat storage company as well (Mr. Jetty), who may have been the individual to complain to the Competition Bureau.  In addition, despite the “gentlemen’s” arrangement over the years, there was in fact frequent discounting by the various boat storage companies, as well as special offers to customers to gain more business.  As such, the boat storage market remained quite competitive.  Mr. Dry Dock had also called Mr. Slip once recently asking whether he was complying with their “little deal”, to which Mr. Slip replied that he “would charge what he pleased.”  Lastly, the meetings were held from about 1995 to 2010.  Mr. Slip is worried and doesn’t know anything about competition law or the Competition Bureau. 

What do you tell him?

Optional Reading

Irish Competition Authority, Notice on Activities of Trade Associations and Compliance with Competition Law (2009)

American Bar Association, Section of Antitrust Law, Antitrust and Associations Handbook (2009)

LECTURE 10 – Wednesday, March 16, 2011 – Misleading Advertising and Marketing Practices

The lecture on false or misleading representations under the Competition Act (commonly referred to as “misleading advertising”, though the relevant provisions are not limited to advertising) will review the necessary elements to establish civil and criminal misleading advertising, defences, penalties and key Competition Bureau guidelines and policy.  This lecture will also include a misleading advertising case study.  While the Competition Act also prohibits or regulates a variety of other marketing practices, this lecture will focus on the “general misleading advertising” provisions of the Act, key types of such advertising (e.g. comparative advertising and performance claims), some reference to other marketing practices regulated by the Act (e.g., promotional contests) and practice tips for advice to clients.

Outline

- Elements
- Key types of advertising claims
- Defences
- Penalties
- Competition Bureau guidelines and policy
- Case study (handout in previous class)

Required Reading

Text

Musgrove, J., ed., Canadian Competition Law, 2^nd ed. (Toronto: Carswell, 2010)

- Chapter 12 (Misleading Advertising), pp. 205-210, 216-19, 224-29

Act

Competition Act, ss. 52(1)-(1.1), (4)-(5); 74.01(1); 74.03(4)-(5); 74.06; 74.1(1), (3)

Cases

Students are only responsible for points raised/discussed in class (i.e., and so may choose whether or not to read the full case)

Maritime Travel Inc. v. Go Travel Direct.com Inc. (2008), 66 C.P.R. (4th) 61 (N.S.S.C.) (CanLII)

Competition Bureau

Competition Bureau, Pamphlet, False or Misleading Representations and Deceptive Marketing Practices (2009)

Competition Bureau, Pamphlet, Promotional Contests (2009)

Misleading Advertising Case Study

Coming.

Optional Reading

Calvin S. Goldman and John D. Bodrug, eds., Competition Law of Canada, loose-leaf (New York: Juris, 1988 – ), Chapter 6 (Unfair Sales Practices)

Young, David M.W. and Brian R. Fraser, Canadian Advertising and Marketing Law, looseleaf (Toronto: Carswell, 1990 – )

Brenda Pritchard & Susan Vogt, Advertising and Marketing Law in Canada, 3^rd ed. (LexisNexis, 2009), Chapter 2 (False or Misleading Advertising) and Chapter 8 (Contests and Promotions)

Stikeman Elliott, Competition Act and Commentary (Markham: Butterworths Canada, 2010), discussion of sections 52 and 74.01