Canadian COMPETITION LAW

July 28, 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.

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I’ve taken a bit of a summer hiatus from my blogs, not so much to go fishing (I wish) or anything quite so summery but rather since things have been oddly busy around here for summer.  Despite the fairly hectic pace I couldn’t resist a short comment on a fishing contest case that went wrong (or perhaps more accurately may go right if this fisherman has his way).

According to an article published by ABC, an Arkansas man who caught a record 68-pound striped bass last year is now in a bit of a legal tussle with an association (the International Game Fish Association) that apparently is denying him a $1 million prize he thinks he’s entitled to.

He says he caught a world record bass in a fishing competition sponsored by hook manufacturer Mustad (their “Hook-a-Million” contest) using a home made lure of his own invention.  The association, which is the official keeper of world fishing records, says he used an “illegal spreader bar”, which apparently is a type of lure that emulates a school of fish, and not a Mustad-brand hook as required by the contest rules.

The $1,000,000 prize was, alas for the Arkansas angler, awarded to a fisherman that pulled in a 427-pound yellowfin tuna in Cabo San Lucas (see: here).

While it’s not clear what the Arkansas angler’s legal theory is in trying to claim the $1,000,000 prize, if indeed the rules were clear that a Mustad-brand hook must have been used it seems to me that this is a cut and dried case for the contest promoters.

In this regard, while it may not seem fair, reasonable or the right thing to do, contests (both in the U.S. and Canada) are contracts that consist of terms offered by promoters in exchange for certain performance by entrants.  Follow the rules and you may win.  Violate the rules and you may be out of luck, unless a promoter has not been precise enough in setting out required terms and conditions (or anticipated key contingencies that may give entrants potential loopholes).

This story is a bit of a reminder of the importance of preparing precise contest rules that reflect the specific promotion and remembering that extra effort often makes sense in preparing the rules where prizes are significant (given the increased risk that entrants may try to game the contest or challenge the rules).

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CANADIAN CONTEST LAW TIPS

The following are some key legal tips for operating a successful and legal contest 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 prizes).

SHORT RULES (MINI 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 (OFFICIAL 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 terms of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and value of prizes, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.

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 release forms 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 awarding a prize.

Winner release forms 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 winner releases for both winners and any travel companions (and guardian releases for any minor companions).

For more information, see: Canadian Contest Forms & Precedents.

FALSE OR MISLEADING ADVERTISING

Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general civil and criminal misleading advertising sections of the Competition Act, under sections 74.01 and 52).

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 materials also matches the contest rules and that all material 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 in the short rules, long rules and marketing materials.

CANADIAN FEDERAL ANTI-SPAM LAW (CASL)

Comply with Canada’s federal anti-spam legislation (CASL).

CASL is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants are either required or incentivized (e.g., through additional entries) to “share” the contest with friends or family.

Given the potentially severe penalties for violating CASL, which include AMPs of up to CDN $10 million, it is very important for contest sponsors to ensure that they comply with CASL for any electronic marketing related to promotional contests open to Canadians.

For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.

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CASL Compliance Checklists and Precedents: For information about the CASL compliance checklists and precedents we offer, see: CASL Compliance Checklists and Precedents.

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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.

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.

For more information, see: Guidelines For Consumer Generated Content Contests.

U.S. LEGAL ADVICE IF OPEN IN THE U.S.

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 PLATFORM 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 LAW
AND ADVERTISING LAWS

Consider whether other competition or advertising law rules may apply to a contest. For example, in addition to the stand-alone contest provision (section 74.06), the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising (sections 52 and 74.01) and telemarketing that involves prizes.

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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

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