Canadian COMPETITION LAW

March 29, 2013

CANADIAN CONTEST RULES/PRECEDENTS

Do you need contest rules and forms for a Canadian contest/sweepstakes? I offer a selection of Canadian contest rules and forms for random draw, skill and other common types of Canadian contests (i.e., contest precedents and forms). For more information see Canadian Contest Forms/Precedents.

____________________

Want to win a house for $100? That’s exactly what one Ontario couple offered recently as a prize through a contest they came up with after watching the movie Spitfire Grill, where the main character holds a contest to give away her diner (see: Aylmer Couple Holds Essay Contest to Sell Country Home for $100).

Apparently according to media reports, Diana and Calvin Brydges weren’t having much luck selling their country home in Aylmer (just outside of London, Ontario), so they decided to take another route — to run an essay contest where contestants explain how winning the house will benefit them and a $100 entry fee.

This doesn’t mean the couple is giving away their home — which comes complete with a swimming pool in the backyard — for a mere $100.  Instead, they’re hoping to get 3,000 essays, which will translate to $300,000, which is enough to allow them to relocate to Barrie. (At the time of writing they’d received about 150 essays.)

Is this actually legal? The couple says they spent nine months researching real estate, civil and criminal law before running the contest. They have a third party receiving the entries and removing any identifying characteristics to level the playing field. And, if they don’t get enough entries, they’ll send everyone’s money back.

Then there’s the annual topless ice-fishing contest that takes place in Picton, Ont., to raise money for the town’s Kiwanis Club’s Terrific Kids campaign. As part of the fourth Merland Park’s “Shirt Off Fish Off” derby, 20 male anglers agreed to ice-fish bare-chested (and one woman in a tank top) until they hooked something … or started to get frostbite (see: Topless Ice Fishing Contest Freezing Fun).  (Just for the record, on the day of the event this year, the temperature was -8 C). The winner walked away with a flat-screen TV, bragging rights and, most likely, a red, chapped torso.

These days everyone seems to be running contests, thanks to the Internet and social media. You can run contests using Twitter, Facebook, Google+ and a variety of other social and other media, whether you’re a global consumer products company, agency helping a brand that wants to try something different (using what seems like a perennially popular type of promotion) or new start-up.  Promotional contests can of course also be run using traditional marketing, which can include in-store promotions, seeded prize games (like Tim Horton’s Roll up the Rim to Win game, which seems to grow in size and popularity every year) and television and radio.

While the Brydges did their homework – according to media reports, some nine months of it – others may not know some of the basic requirements for running contests in Canada.  Also, even where promotions are run by sophisticated and established brands, like Tim Horton’s, issues can sometimes arise (or challengers to the legality of the contest emerge).  For example, in another contest related story that caught my eye, the Huffington Post set out to test Tim’s promotion and, in particular, whether entrants were more likely to win a prize by buying a larger coffee (see: Tim Hortons Roll Up The Rim Win-Loss Survey).

While Tim Horton’s spokespeople flatly denied that this was the case, and that prizes in their Roll Up the Rim to Win contest were randomly distributed across cup sizes, the HuffPost experiment found that those who purchased an extra large drink were more likely to win a prize than small coffee buyers.  Having said that, the journalists testing Tim’s promotion conceded the small sample size, quoted a mathematics expert on probability (who dismissed the findings based on small sample size) and said that their experiment was not based on empirical evidence but merely journalists that consumed some 92 beverages over the course of a week.

Now I’m not saying that any of these promotions raised issues.  But I thought they showed two things.

First, the number of ways to use a promotional contest is (nearly) only limited by a promoter’s ingenuity.  They’re flexible, popular and, well, they seem to continually generate traffic and interest.  Some popular types of contests include random draw, skill, seeded prize, collect and win and instant win contests.  I’ve seen contests run lately to promote everything from coffee and consumer goods, to the house sale described above, to non-profit fundraising projects, to tech and other start-ups.  Competition law enforcement agencies and other Government agencies even seem to be increasingly using contests to, well, spice up otherwise (might I say dull?) legal compliance.  A good promotion, and Tim’s is probably one of the best examples of this, can also keep on giving year after year as it grows in popularity.

Second – this is the “nearly” – there are alas some laws that apply to contests in Canada, like sweepstakes in the U.S. and contests run in other countries.  Knowing the basics can help you better promote your product or brand and minimize the likelihood trouble will arise.

In general, promotional contests in Canada are largely governed by the federal Competition Act and Criminal Code, privacy legislation and contract law.  In addition, Quebec has a separate regulatory regime governing contests, which means that Quebec requirements should be complied with or contest eligibility restricted to Canadian residents excluding Quebec.

Some of the common mistakes I routinely see with contests that are improperly run in Canada include contests run with no rules, rules that appear to be made up by promoters and do not correspond to the basic Competition Act, Criminal Code and privacy law requirements, rules that are not relevant to the promotion, U.S. or international rules applied to a Canadian promotion, promotions run on social media sites without complying with the sites’ terms of use (e.g., Facebook’s promotions rules), a failure to include the basic competition law disclosure requirements, and contests open to Quebec residents when it is not clear that the promotion has been reviewed or vetted for Quebec requirements.  I also see a fair number of purported “contests” that are in fact illegal lotteries under the Criminal Code.

********************

Legal Tips For Running
Contests/Sweepstakes in Canada

The following are key tips for operating legal contests/sweepstakes in Canada:

Criminal Code. Avoid the illegal lottery offences of the Criminal Code (e.g., include a bona fide “no purchase necessary” entry option and skill element, such as a time-limited, multiple-step mathematical question for potential winners as a condition of awarding a prize).

Short Rules. Include short rules / mini-rules with all of the required Competition Act disclosure requirements for point-of-purchase materials (e.g., print and in-store marketing, social media and Internet sites, packaging and labeling, television and radio spots, etc.). For more information, see: Canadian Contest Forms & Precedents.

Long Rules. Ensure that precise long rules (i.e., the official contest rules) are included that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems) and set out the details of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and values, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.  Standard precedents, or rules downloaded from the web rarely accurately reflect a particular promotion. In this regard, contests are contracts, and so they should be as accurate, clear and precise as possible in the event issues arise. For more information, see: Canadian Contest Forms & Precedents.

Winner Release Forms. Consider using winner release forms for contest winners. While not required by law in Canada, winner releases are almost always used by contest sponsors to have winners confirm that they have complied with all contest rules and release the sponsor from legal liability. Signing and returning winner releases is also commonly included in contest rules as a condition of prize award. Winner releases are particularly important for contests in which there may be higher risk (e.g., where the contest involves high value prizes or a trip prize). For trip contests, sponsors are generally advised to use releases for both winners and any travel companions (and guardian releases for minors). For more information, see: Canadian Contest Forms & Precedents.

General Misleading Advertising Provisions. Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general misleading advertising sections of the Competition Act).  In this regard, contests in Canada must comply not only with stand-alone contest provisions of the Competition Act (under section 74.06), but also with the general misleading advertising sections of the Competition Act. It is particularly important to ensure that the marketing collateral matches the contest rules and that key aspects of the contest (e.g., number and type of prizes, prize values, how to enter and win and any conditions/limitations) are accurately described.

Quebec Considerations. Ensure that Quebec legal requirements are met for contests run in Quebec (or take care to make sure that eligibility is limited to Canadian residents, excluding Quebec). In general, opening contests to Quebec residents requires regulatory filings with the Regie in Quebec, the payment of a duty or tax (which depends on the value of prizes), translation of contest rules and advertising and in some cases posting a bond/security.

Intellectual Property Consents. Consider whether consents are needed (and if necessary obtained) to reproduce third-party intellectual property – for example, trade-marks, logos, etc. – or to transfer ownership in contest materials – for example, where contestants create original material as part of the contest or promotion. Contest rules in Canada commonly include rights (e.g., a licence) for the sponsor to use information and content contributed by entrants and if entrants will be contributing original content (e.g., photographs, essays, etc.) it is also a good practice for sponsors to include guidelines relating to their rights to use (or reject) any entrant contributed content. See: Guidelines For Consumer Generated Content Contests.

CASL (Canadian Anti-Spam Law). If consents will be gathered for non-contest or later marketing to entrants, ensure that a CASL-compliant consent request is included when entrants enter the contest. Also, care should be taken for some types of contests where participation may require actions that could be considered spam under CASL (e.g., share with friends or family type promotions for additional contest entries). For more information, see: Contests & CASL. See also: Canadian CASL (Anti-Spam Law) Checklists and Precedents.

U.S. Advice. Seek U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.

Social Media Site Rules. Comply with social media sites’ terms of use if using social media to promote or host a contest (e.g., Facebook’s Promotions Rules). Also ensure that appropriate disclosures are made in all social media marketing (i.e., include short rules). For more information, see: Contests and Social Media.

Other Competition & Advertising Rules. Consider whether other competition or advertising law rules may apply. For example, in addition to a stand-alone contest provision, the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising and telemarketing that involves prizes.

____________________

SERVICES AND CONTACT

I am a Toronto competition and advertising lawyer offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law.  I also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.

My experience includes advising clients in Toronto, Canada and the US on the application of Canadian competition and regulatory laws and I have worked on hundreds of domestic and cross-border competition, advertising and marketing, promotional contest (sweepstakes), conspiracy (cartel), abuse of dominance, compliance, refusal to deal, pricing and distribution, Investment Canada Act and merger matters. For more information about my competition and advertising law services see: competition law services.

To contact me about a potential legal matter, see: contact

For more regulatory law updates follow me on Twitter: @CanadaAttorney

Comments are closed.