419 scam (aka Nigerian scam, West African scam or advance fee fraud).
Competition Bureau, The Little Black Book of Scams (2012): “The Nigerian scam (also called the 419 fraud) has been on the rise since the early-to-mid 1990s in Canada. Although many of these sorts of scams originated in Nigeria, similar scams have been started all over the world (particularly in other parts of West Africa and in Asia). These scams are increasingly referred to as ‘advance fee fraud’. In the classic Nigerian scam, you receive an email or letter from a scammer asking your help to transfer a large amount of money overseas. You are then offered a share of the money if you agree to give them your bank account details to help with the transfer. They will then ask you to pay all kinds of taxes and fees before you can receive your ‘reward’. You will never be sent any of the money, and will lose the fees you paid.”
RCMP, Internet Security: “Fraud letters from Nigeria (and other African countries) is a type of scam that has been around for a number of years. Businesses, educational institutions and government departments were originally the prime targets of electronic messages bearing the promise of substantial amounts of money from alleged government or company officials in Nigeria. The general public is now also targeted, and thousands of people like you receive similar e-mail messages in their personal mail boxes. In some cases, con artists even send stolen or forged cheques to their victims. This scam can also be done by phone and from many countries. In addition to money you can be asked for confidential information against the promise of profits.”
Joewein.de LLC: “The so-called ‘419’ scam (aka ‘Nigeria scam’ or ‘West African’ scam) is a type of fraud named after an article of the Nigerian penal code under which it is prosecuted. It is also known as ‘Advance Fee Fraud’ because the common principle of all the scam format is to get the victim to send cash (or other items of value) upfront by promising them a large amount of money that they would receive later if they cooperate. In almost all cases, the criminals receive money using Western Union and MoneyGram, instant wire transfer services with which the recipient can’t be traced once the money has been picked up. These services should never be used with people you only know by email or telephone! Typically, victims of the scam are promised a lottery win or a large sum of money sitting in a bank account or in a deposit box at a security company. Often the storyline involves a family member of a former member of government of an African country, a ministerial official, an orphan or widow of a rich businessman, etc. Variants of the plot involving the Philippines, Taiwan, China, Hong Kong, Korea, Iraq, Kuwait, UAE, Mauritius, etc. are also known. Some emails include pictures of boxes stuffed with dollar bills, scans of fake passports, bank or government documents and pictures of supposedly the sender.”
Facial recognition technology.
A technology used for targeted marketing.
U.S. Federal Trade Commission, Report, Facing Facts: Best Practices for Common Uses of Facial Recognition Technologies (October, 2012): “In the 2002 film Minority Report, Steven Spielberg imagined a world in which companies use biometric technology to identify us and serve us targeted ads. Ten years later, that vision is coming closer to reality. Having overcome the high costs and poor accuracy that once stunted its growth, one form of biometric technology – facial recognition – is quickly moving out of the realm of science fiction and into the commercial marketplace. Today, companies are deploying facial recognition technologies in a wide array of contexts, reflecting a spectrum of increasing technological sophistication. At the simplest level, the technology can be used for facial detection; that is, merely to detect and locate a face in a photo. Current uses of facial detection include refining search engine results to include only those results that contain a face; locating faces in images in order to blur them; ensuring that the frame for a video chat feed actually includes a face; or developing virtual eyeglass fitting systems and virtual makeover tools that allow consumers to upload their photos online and ‘try on’ a pair of glasses or a new hairstyle. A more refined version of facial recognition technology allows companies to assess characteristics of facial images. For instance, companies can identify moods or emotions from facial expressions to determine a player’s engagement with a video game or a viewer’s excitement during a movie. Companies can also place cameras into digital signs to determine the demographic characteristics of a face – such as age range and gender – and deliver targeted advertisements in real-time in retail spaces. In the most advanced application, companies can use the technology to compare individuals’ facial characteristics across different images in order to identify them. In this application, an image of an individual is matched with another image of the same individual. If the face in either of the two images is identified – that is, the name of the individual is known – then, in addition to being able to demonstrate a match between two faces, the technology can be used to identify previously anonymous faces. This is the use of facial recognition that potentially raises the most serious privacy concerns because it can identify anonymous individuals in images. One prevalent current use of this application is to enable semi-automated photo tagging or photo organization on social networks and in photo management applications. On social networks this feature typically works by scanning new photos a user uploads against existing “tagged” photos. The social network then identifies the user’s “friends” in the new photos so the user can tag them.”
In Canada, anti-competitive agreements under the conspiracy provisions of the Competition Act may be proven by direct or circumstantial evidence. Sometimes this concept is also discussed under the terms “facilitating factors” or “plus factors”.
Competition Act, section 45(3): “In a prosecution under subsection (1), the court may infer the existence of a conspiracy, agreement or arrangement from circumstantial evidence, with or without direct evidence of communication between or among the alleged parties to it, but, for greater certainty, the conspiracy, agreement or arrangement must be proved beyond a reasonable doubt.”
Competition Bureau contribution, OECD Roundtable, Information Exchanges Between Competitors under Competition Law (2010): “Information exchanges in and of themselves are not per se illegal under section 45 of the [Competition Act]. However, proof that competitors have exchanged information can sometimes serve as evidence of an agreement to fix prices, allocate markets or restrict output. For example, the exchange of pricing information followed by parallel price increases could be sufficient to infer an agreement to fix prices, particularly if accompanied by other ‘plus factors’, such as evidence that representatives of the competitors were present at the same function or communicated prior to the price increases coming into effect. Other ‘plus factors’ include: a relatively small number of firms a relatively homogenous product; inelastic demand; evidence that prices were well above costs or moved in a way that seemed inconsistent with competition; actions that can only be explained by the existence of an agreement, such as secret meetings and enforcement activities; and the simultaneous adoption of facilitating practices that make coordination possible without the need for any direct communications, such as pre-announcing price increases, the advance circulation of price lists, open pricing policies, net pricing schemes, similar consignment sales programs, similar delivered pricing systems, most-favored-nation clauses, meet-or-release clauses, common product standards and public statements about the need to achieve pricing stability.”
OECD, Policy Roundtable, Prosecuting Cartels without Direct Evidence (2006): “Circumstantial evidence is employed in cartel cases in all countries. … There are two general types of circumstantial evidence: communication evidence and economic evidence. Of the two, communication evidence is considered to be the more important. Economic evidence is almost always ambiguous. It could be consistent with either agreement or independent action. Therefore it requires careful analysis.” “There are different types of circumstantial evidence. One is evidence that cartel operators met or otherwise communicated, but does not describe the substance of their communications. It might be called ‘communication’ evidence … It includes: records of telephone conversations between competitors (but not their substance), or of travel to a common destination or of participation in a meeting, for example during a trade conference. Other evidence that the parties communicated about the subject – e.g., minutes or notes of a meeting showing that prices, demand or capacity utilization were discussed; internal documents evidencing knowledge or understanding of a competitor’s pricing strategy, such as an awareness of a future price increase by a rival. A broader category of circumstantial evidence is often called ‘economic’ evidence. Economic evidence identifies primarily firm conduct that suggests that an agreement was reached, but also conduct of the industry as a whole, elements of market structure which suggest that secret price fixing was feasible, and certain practices that can be used to sustain a cartel agreement. Conduct evidence is the single most important type of economic evidence. … observation of certain, suspicious conduct frequently triggers an investigation of a possible cartel. Conduct evidence includes … parallel pricing … capacity reductions, adoption of standardized terms of sale and suspicious bidding patterns …”
Antitrust Law Developments (Fifth), Volume I, p. 11: “While some decisions have suggested that parallelism is a factor to be weighed, and generally to be weighed heavily, other facts and circumstances, often referred to as ‘plus factors’, typically must be combined with evidence of conscious parallelism to support an inference of concerted action. The courts emphasize that these plus factors should not be viewed in a vacuum but should be considered as a whole against the entire background in which the alleged behaviour takes place.”
William E. Kovacic, et al., “Plus Factors and Agreement in Antitrust Law” (2012): “Plus factors are economic actions and outcomes, above and beyond parallel conduct by oligopolistic firms, that are largely inconsistent with unilateral conduct but largely consistent with explicitly coordinated action.
William E. Kovacic, et al., “Plus Factors and Agreement in Antitrust Law” (2012): The line that distinguishes tacit agreements (which are subject to section 1 scrutiny) from mere tacit coordination stemming from oligopolistic interdependence (which eludes section 1 [of the Sherman Act’s] reach) is indistinct. The size of the safe harbor that Theatre Enterprises recognized depends on what conduct courts regard as the “extra ingredient of centralized orchestration of policy which will carry parallel action over the line into the forbidden zone of implied contract and combination. Courts enjoy broad discretion to establish the reach of section 1 [of the Sherman Act] by defining this “extra ingredient” broadly or narrowly. Legal scholars have recognized that certain industry structures, firm histories, and market environments are conducive to and/or facilitate collusion. However, courts have relied on operational criteria known as plus factors to determine whether a pattern of parallel conduct results from an agreement. The chief plus factors have included: (i) actions contrary to each defendant’s self-interest unless pursued as part of a collective plan; (ii) phenomena that can be explained rationally only as the result of concerted action; (iii) evidence that the defendants created the opportunity for regular communication; (iv) industry performance data, such as extraordinary profits, that suggest successful coordination; and (v) the absence of a plausible, legitimate business rationale for suspicious conduct (such as certain communications with rivals) or the presentation of contrived rationales for certain conduct.
In Re: Electronic Books Antitrust Litigation, 11 MD 2293 (DLC), citing Anderson News, L.L.C. v. Am. Media, Inc., No. 10-4591-cv, 2012 WL 1085948 at 17 (2d Cir. Apr. 3, 2012), Monsanto, 465 U.S. at 764: “Because unlawful conspiracies tend to form in secret, such proof will rarely consist of explicit agreements. Rather, conspiracies ‘nearly always must be proven through inferences that may fairly be drawn from the behavior of the alleged conspirators.’ Thus, to prove an antitrust conspiracy, ‘the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the [defendant] and others had a conscious commitment to a common scheme designed to achieve an unlawful objective.’”
North York Branson Hospital v. Praxair Canada Inc.,  O.J. No. 5993 (S.C.J.): “In truth, the very nature of a claim of conspiracy is that the tort resists detailed particularization at early stages. The relevant evidence will likely be in the hands and minds of the alleged conspirators. Part of the character of a conspiracy is its secrecy and the withholding of information from alleged victims. The existence of an underlying agreement bringing the conspirators together, proof of which is a requirement borne by a plaintiff, often must be proven by indirect or circumstantial evidence. A conspiracy is more likely to be proven by evidence of overt acts and statements by the conspirators from which the prior agreement can be logically inferred. Such details would not usually be available to a plaintiff until discoveries.”
Failing firm defence.
Some jurisdictions consider whether a firm would likely fail, absent the merger, in evaluating the post-merger competitive effects. This is sometimes referred to as a “failing firm defence”.
Competition Bureau, Merger Enforcement Guidelines (2011): “Among the factors that are relevant to an analysis of a merger and its effects on competition, section 93(b) [of the Competition Act] lists ‘whether the business, or a part of the business, of a party to the merger or proposed merger has failed or is likely to fail.’ The opening clause of section 93 makes it clear that this information is to be considered ‘in determining, for the purpose of section 92, whether or not a merger or proposed merger prevents or lessens, or is likely to prevent or lessen, competition substantially.’ The impact that a firm’s exit can have in terms of matters other than competition is generally beyond the scope of the assessment contemplated by section 93(b). Probable business failure does not provide a defence for a merger that is likely to prevent or lessen competition substantially. Rather, the loss of the actual or future competitive influence of a failing firm is not attributed to the merger if imminent failure is probable and, in the absence of a merger, the assets of the firm are likely to exit the relevant market. Merging parties intending to invoke the failing firm rationale are encouraged to make their submissions in this regard as early as possible.”
European Commission, Guidelines on the assessment of horizontal mergers: “The Commission may decide that an otherwise problematic merger is nevertheless compatible with the common market if one of the merging parties is a failing firm. The basic requirement is that the deterioration of the competitive structure that follows the merger cannot be said to be caused by the merger.”
Fake news website.
Competition Bureau, news release, “Advertising on the Internet – Use of ‘Fake News Websites’”: “A recent trend in misleading Internet advertising has been to make product advertisements appear to be legitimate and reputable news websites. These sophisticated advertisements, disguised as investigative news stories seem to contain all the attributes of a legitimate news website. However, many scammers create fake news websites to promote bogus products with unfounded and misleading claims. Such advertisements may be used to promote a variety of products and services, from health products to job opportunity scams. A typical fake news website uses deceptive testimonials and fabricated reader comments, false endorsements by celebrities, and illegitimately inserts web logos from trusted mainstream media, or popular television programs. Almost every aspect of the website is fake, with multiple hyperlinks inserted, encouraging consumers to buy, or sign up for a ‘free’ trial of a product. Affiliate marketers are using these fake news websites to manipulate consumers’ trust in legitimate news organizations.”
Fake online endorsement.
Competition Bureau, Fraud Facts 2017: “Consumers are often enticed to purchase a product or service based on reviews by social media influencers or those with a significant online presence. Unfortunately, there’s a chance that these reviews are not genuine and have in fact been paid for by a company as a marketing tactic. By not revealing their business interests and creating what seem to be authentic experiences or opinions, these influencers are misleading consumers and could be subject to action under the Competition Act.”
OECD, Policy Roundtable, Fidelity and Bundled Rebates and Discounts (2008): “For the purposes of this roundtable, single-product loyalty discount refers to the practice of offering discounts or rebates on all units purchased of a single-product conditioned upon the level (or share) of purchases — the discounts or rebates apply to all units of the buyer’s purchases of the product rather than just the units beyond the level (or share) of purchases needed to obtain them. These discounts are also referred to as loyalty discounts or rebates. In this paper, we use the terms ‘fidelity’ and ‘loyalty’ interchangeably and the terms ‘rebate’ and ‘discount’ interchangeably.”
OFT Draft Guidelines on Assessment of Conduct (2004): “Aris[ing] where a supplier (e.g., a manufacturer) effectively offers a customer (e.g., a wholesaler or a retailer) a discount that is conditional not on the size of the customer’s order, but on the share of the customer’s needs purchased from the supplier.”
OECD, Policy Roundtable, Loyalty and Fidelity Discounts and Rebates (2002): “… fidelity discounts are defined to be pricing structures offering lower prices in return for a buyer’s agreed or de factocommitment to source a large share of his requirements with the discounter. Fidelity discounts could have both pro- and anticompetitive effects … It is sometimes difficult to distinguish a fidelity discount from a straightforward quantity discount. For example, a 50 percent discount conditional on some minimum purchase quantity over a certain period of time, offered on exactly the same terms to all buyers, may or may not be a fidelity discount. The determining factor would be whether the minimum purchase quantity corresponds to a significant number of buyers’ probable total or near total requirements in the period referred to. … Most fidelity discounts make use of what we will refer to as a ‘reference period’ in calculating the percentage discount awarded. The reference period will typically be considerably longer than the time normally elapsing between buyers’ purchases. For example, a taxi operator working an average of 24 days per month and purchasing 40 litres of gasoline a day, might receive a ten percent fidelity discount if it purchases more than 900 litres a month from a particular petroleum distributor. The reference period would be one month and the taxi company’s requirements would be stated as 960 litres per month. More formally, a buyer’s requirements are his estimated total purchases of some properly defined product (i.e. including appropriate substitutes) over the reference period used to determine eligibility for a particular fidelity discount. Fidelity discounts can take a wider range of forms than simply a lower price or a percentage reduction. Sometimes they are offered in the form of ‘complimentary’ goods. In return for a purchase of 20 or more litres of petrol, a service station might, for example, give away a statuette belonging to a set of twenty well-known football players. The desire to obtain a complete set could make this function like a fidelity discount, especially if the offer will be terminated in say six months. The same applies to many toys offered by breakfast cereal producers.”
Hoffman-La Roche v. Commission  ECR 461: “… discounts conditional on the customer’s obtaining all or most of its requirements – whether the quantity of its purchases be large or small – from the undertaking in a dominant position.”
Canadian Marketing Association, Code of Ethics and Standards of Practice: “Field marketing is face-to-face promotion or sale of products or services to consumers. It includes merchandising, sampling, demonstrations and events.”
First Party Targeted Ads.
One form of Internet advertising.
Office of the Privacy Commissioner of Canada, Policy Position on Online Behavioural Advertising: “The first party with which an individual has a relationship creates a profile about an individual, and serves them advertisements based on this profile. The user is not tracked over different unrelated websites.”
Foreign directed conspiracy.
In addition to general conspiracy (cartel) offences, the Competition Act also contains several specific provisions for conspiracies relating to professional sport (section 48), agreements or arrangements between federal financial institutions (section 49) and foreign directed conspiracies (section 46). Section 46 of the Act makes it a criminal offence for any corporation carrying on business in Canada to implement the directives from any person in another country that is in a position to direct or influence the Canadian corporation’s policies to give effect to a conspiracy entered into outside Canada that would, if formed in Canada, violate section 45 (the general criminal conspiracy provision of the Act). Section 46 purports to make corporations liable to an indictable offence, subject to fines in the discretion of a court, regardless of whether Canadian directors or officers of the Canadian corporation have knowledge of the conspiracy. This offence is also, on its face, limited to corporations. As such, while directors and officers are not expressly exposed to liability under section 46, they may liability under other theories of liability, such as through aiding and abetting an offence. Section 46 expressly extends the jurisdiction of the conspiracy provisions of the Act to include cartel agreements that are formed outside Canada (although Canada is an effects based jurisdiction).
Foreign Investment Promotion and Protection Agreement (FIPA).
Foreign Affairs and International Trade Canada: “A Foreign Investment Promotion and Protection Agreement (FIPA) is a bilateral agreement aimed at protecting and promoting foreign investment through legally-binding rights and obligations. FIPAs accomplish their objectives by setting out the respective rights and obligations of the countries that are signatories to the treaty with respect to the treatment of foreign investment. Typically, there are agreed exceptions to the obligations. FIPAs seek to ensure that foreign investors will not be treated worse than similarly situated domestic investors or other foreign investors; they will not have their investments expropriated without prompt and adequate compensation; and, in any case, they will not be subject to treatment lower than the minimum standard established in customary international law. As well, in most circumstances, investors should be free to invest capital and repatriate their investments and returns.”
Foreign Lottery Schemes.
Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Telemarketers offer victims the opportunity to “invest” in tickets in well-known foreign lotteries (e.g., Canada or Australia), or give them a ‘one in six’ chance of winning a substantial prize. This is a common cross-border offence, since it plays upon the ignorance of victims of the rules (or even the existence) of foreign lotteries. If offenders purport to sell real lottery chances but deceive victims about their chances of winning, it may be both a gambling offence and fraud; if real chances are sold without deception, it may still be a gambling offence.”
Foreign state compulsion defence.
An antitrust litigation defence.
M. Martyniszyn: “A Comparative Look on Foreign State Compulsion as a Defence in Antitrust Litigation”: “[The] [f]oreign state compulsion … [defence can be] a valid defence in antitrust cases, potentially fully removing liability from the party invoking it. Although widely recognized, it is a rule of domestic law, not a principle of international law. Foreign state compulsion is usually treated as a sui generis defence, peculiar either to the international context or even to the antitrust area. The rationale behind it is at least twofold and includes comity and fairness considerations. Comity among nations calls for a domestic court to give due deference to the governmental (de jure imperii) acts of a foreign sovereign. Fairness requires not holding an entity liable for a conduct which it did not undertake of its own free will. Unfortunately that is where clarity ends. Despite the reasonably straightforward logic behind it, the foreign state compulsion doctrine remains a rather poorly defined legal tool, offering little predictability in terms of possible outcomes in both leading competition law regimes: the US and the EU. This is unsatisfactory especially as strong industrial policies and state regulation in economic affairs are not reminiscences of the past, but still a feature of important economies, for example in the BRIC states.”
A type of vertical restraint.
European Commission, Guidelines on Vertical Restraints: “Franchise agreements contain licences of intellectual property rights relating in particular to trade marks or signs and know-how for the use and distribution of goods or services. In addition to the licence of IPRs, the franchiser usually provides the franchisee during the life of the agreement with commercial or technical assistance. The licence and the assistance are integral components of the business method being franchised. The franchiser is in general paid a franchise fee by the franchisee for the use of the particular business method. Franchising may enable the franchiser to establish, with limited investments, a uniform network for the distribution of his products. From the competition viewpoint, in addition to provision of the business method, franchise agreements usually contain a combination of different vertical restraints concerning the products being distributed, in particular selective distribution and/or non-compete and/or exclusive distribution or weaker forms thereof.”
Fraudulent misrepresentation / tort of deceit
XY, Inc. v. International Newtech Development Incorporated, 2012 BCSC 319 (CanLII): “The tort of deceit, also known as civil fraud, is concerned with the intentional inducement of another person to rely upon a representation that the representor knows to be untrue. The elements that make up this tort are: (1) a false representation of fact by the defendant; (2) made with the knowledge of its falsity or recklessly, i.e., not caring whether it is true or not; (3) made with the intention that the plaintiff would act on it; (4) with the intention that the plaintiff would act on it; and (5) the plaintiff suffered damages.”
Derry v. Peek (1889) 14 App. Cas. 337 (H.L.) [Combining the fourth and fifth elements]: “(1) A false representation or statement made by the defendant; (2) the statement was knowingly false; (3) the statement was made with the intention to deceive the plaintiff; and (4) the statement materially induced the plaintiff to act, resulting in damage.”
Spencer Bower, Turner and Handley, Actionable Misrepresentation (4th ed., 2000): “An action for damages for fraudulent misrepresentation at common law was an action for deceit. The Court of Chancery exercised a concurrent jurisdiction with the Courts of Law in cases of actual fraud, and could award equitable compensation on similar, but not identical, principles, and also specific relief. In either case a representee must allege and prove: (1) a representation; (2) that the defendant was the representor; (3) that the plaintiff was a representee; (4) inducement; (5) falsity; (6) alteration of position; (7) fraud; (8) damage. The first six matters are common to all claims for misrepresentation … The seventh and eighth, fraud and damage, are peculiar to actions in deceit. From the earliest times it has been recognized that the concurrence of fraud and damage is essential to a claim for damages for fraudulent misrepresentation.”
Competition Bureau, Pamphlet, False or Misleading Representations and Deceptive Marketing Practices: “Don’t increase the price of a product or service to cover the cost of a free product or service.”
Competition Bureau, Ensuring Truth in Advertising, False or Misleading Representations: “… where article A is advertised as being free with the purchase of article B, but article B is available at a discount or lesser price if the ‘free’ article is foregone, then article A is not if fact free. … Nor is it ‘free’ in a ‘two-for-one’ situation where the price of the first article is inflated to cover the cost of the second.”
U.S. Federal Trade Commission, FTC Guide Concerning Use of the Word “Free” and Similar Representations: “Meaning of “Free” … The public understands that, except in the case of introductory offers in connection with the sale of a product or service … an offer of ‘Free’’ merchandise or service is based upon a regular price for the merchandise or service which must be purchased by consumers in order to avail themselves of that which is represented to be ‘Free’. In other words, when the purchaser is told that an article is ‘Free’ to him if another article is purchased, the word ‘Free’ indicates that he is paying nothing for that article and no more than the regular price for the other. Thus, a purchaser has a right to believe that the merchant will not directly and immediately recover, in whole or in part, the cost of the free merchandise or service by marking up the price of the article which must be purchased, by the substitution of inferior merchandise or service, or otherwise.”
A mechanism to avoid political fundraising rules by using another person/company or “front-man” to make contributions to political parties when another person or company is not permitted (e.g., when another person or company has reached their contribution limit or where only individuals not companies are permitted to contribute). In Quebec this has also been referred to as “prête-nom”.
Future performance agreement.
Ontario Consumer Protection Act: “future performance agreement” means a consumer agreement in respect of which delivery, performance or payment in full is not made when the parties enter the agreement.”
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