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	<title>COMPETITION &#38; ANTITRUST LAW &#187; Compliance</title>
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		<title>Canadian Promotional Contest Law &#8211; Frequently Asked Questions</title>
		<link>http://www.ipvancouverblog.com/2010/08/canadian-promotional-contest-law-frequently-asked-questions/</link>
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		<pubDate>Tue, 31 Aug 2010 16:08:05 +0000</pubDate>
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				<category><![CDATA[Advertising]]></category>
		<category><![CDATA[Canadian Competition Law]]></category>
		<category><![CDATA[Competition Law]]></category>
		<category><![CDATA[Compliance]]></category>
		<category><![CDATA[Contests]]></category>
		<category><![CDATA[Promotional Contests]]></category>
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		<category><![CDATA[Canada]]></category>
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		<category><![CDATA[competition]]></category>
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		<description><![CDATA[What Law Governs Promotional Contests in Canada?
Promotional contests in Canada are primarily governed by the Competition Act, the Criminal Code, privacy legislation (Personal Information Protection and Electronic Documents Act, PIPEDA) 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).  [...]]]></description>
			<content:encoded><![CDATA[<p style="TEXT-ALIGN: justify"><strong>What Law Governs Promotional Contests in Canada?</strong></p>
<p style="TEXT-ALIGN: justify">Promotional contests in Canada are primarily governed by the <a href="http://laws.justice.gc.ca/eng/UpdateNotice/index.html?rp14=%2Fen%2FC-34%2F"><em>Competition Act</em></a>, the <a href="http://laws.justice.gc.ca/eng/UpdateNotice/index.html?rp14=%2Fen%2FC-46%2F">Criminal Code</a>, privacy legislation (<em>Personal Information Protection and Electronic Documents Act</em>, PIPEDA) and the common law of contract.  In addition, Quebec has separate legislation that applies to promotional contests (the <em>Act respecting lotteries, publicity contests and amusement machines</em>).  As such, promotional contest law in Canada is combination of federal and provincial regulatory law, criminal law and common law contract law.</p>
<p style="TEXT-ALIGN: justify"><strong>What are the Potential Penalties for Non-compliance?</strong></p>
<p style="TEXT-ALIGN: justify">The improper operation of a promotional contest can lead to civil and/or criminal liability under the <em>Competition Act</em>, the <em>Criminal Code</em>, based on a contractual (i.e., common law) challenge or failure to comply with Quebec legislative requirements, it is critical to review proposed promotional contests for legal compliance.</p>
<p style="TEXT-ALIGN: justify">The penalties for contravention of the misleading advertising provisions of the <em>Competition Act</em> can also be severe, including civil fines of up to $750,000 (for individuals) and $10 million (for corporations) and orders to cease the conduct, publish corrective notices or make restitution to consumers.</p>
<p style="TEXT-ALIGN: justify">For example, a Manitoba real estate investment 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: <a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03157.html">Resort Company Penalized for Running Misleading Contests</a>.</p>
<p style="TEXT-ALIGN: justify"><strong>What Provisions of the <em>Competition Act</em> Apply to Contests?</strong></p>
<p style="TEXT-ALIGN: justify">The <em>Competition Act</em> 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.</p>
<p style="TEXT-ALIGN: justify"><strong>What are Short Rules?  Are they Mandatory?</strong></p>
<p style="TEXT-ALIGN: justify">As a result of the disclosure requirements set out in the Act, most contest organizers provide a short version of a contest’s terms (frequently referred to as “short rules”) in all point-of-purchase materials regardless of media (i.e., in all print, online and other electronic media), with a full version of the contest rules available on request (and often on the contest organizer’s website).  Point-of-purchase 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.</p>
<p style="TEXT-ALIGN: justify">While short, and usually straightforward, it is critical that the required statutory disclosure be drafted precisely and correctly.  It is also important that the timing for the launch of a contest and promotional materials ensure that the necessary disclosure be included in all public marketing materials.</p>
<p style="TEXT-ALIGN: justify"><strong>Do Other <em>Competition Act</em> Provisions Apply to Contests?</strong></p>
<p style="TEXT-ALIGN: justify">Yes.  In addition to specific rules relating to promotional contests, the “general misleading advertising” provisions of the <em>Competition Act</em> also apply to the operation of promotional contests, and should not be underestimated.</p>
<p style="TEXT-ALIGN: justify"><strong>What is the Scope of the <em>Competition Act’s</em> Misleading Advertising Provisions?</strong></p>
<p style="TEXT-ALIGN: justify">In this regard, the criminal and civil false or misleading representation provisions of the <em>Competition Act</em> prohibit representations to the public, for the purpose of promoting a product or any business interest, that is false or misleading in a material respect.  The penalties for contravention of the misleading advertising provisions of the <em>Competition Act</em> can also be severe, including civil fines of up to $750,000 (for individuals) and $10 million (for corporations) and orders to cease the conduct, publish corrective notices or make restitution to consumers.</p>
<p style="TEXT-ALIGN: justify"><strong>What are the Potential Penalties for Contravening the <em>Competition Act</em>?</strong></p>
<p style="TEXT-ALIGN: justify">The penalties under the <em>Competition Act</em> can be significant if you don&#8217;t get a contest right.  For example, a Manitoba real estate investment 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: <a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03157.html">Resort Company Penalized for Running Misleading Contests</a>.</p>
<p style="TEXT-ALIGN: justify">As such, it is important that the terms of promotional contests (i.e., short rules, long rules and any other advertising or marketing materials) not be false or misleading in a material respect (i.e., do not raise issues under the general misleading advertising provisions of the <em>Competition Act</em>, 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).</p>
<p style="TEXT-ALIGN: justify"><strong>Does Canadian Competition Law Apply to the Internet?</strong></p>
<p style="TEXT-ALIGN: justify">Yes.  The Competition Bureau also takes the position that the promotional contest provisions of the <em>Competition Act</em>, as well as the general misleading advertising provisions, apply to Internet marketing and advertising (see: <a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01213.html">Application of the <em>Competition Act</em> to Representations on the Internet (Enforcement Guidelines)</a>).  In this regard, the Bureau states that special considerations may apply in the online environment to ensure that the required statutory disclosure for promotional contests is met:</p>
<p style="TEXT-ALIGN: justify">“Pursuant to section 74.06 of the Act, in contests designed to promote a product or business interest, adequate and fair disclosure must be made of certain information, including facts which materially affect the chances of winning. &#8230; The Bureau takes the position that all required disclosures must be displayed in such a way that they are likely to be read.  In the context of representations made on-line, what is considered adequately displayed will depend on the format and design of the Web site.  For example, a notice of a contest should not require readers to take an active step, such as sending an e-mail or placing a phone call, in order to obtain the required information.  The Bureau does not consider clicking on a clearly labelled hyperlink as being an ‘active step.’”</p>
<p><strong>What <em>Criminal Code</em> Provisions Apply to Contests?</strong></p>
<p style="TEXT-ALIGN: justify">In addition to the promotional contest provisions in the <em>Competition Act</em>, the federal <em>Criminal Code</em> also governs promotional contests in Canada (sections 206 and 207 of the Code).  In particular, the <em>Criminal Code</em> makes it a criminal offence to operate illegal lotteries.</p>
<p style="TEXT-ALIGN: justify"><strong>What is an Illegal Lottery?</strong></p>
<p style="TEXT-ALIGN: justify">While the relevant provisions of the <em>Criminal Code</em> are complex and somewhat archaic, in general 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 or participation in a contest).</p>
<p style="TEXT-ALIGN: justify"><strong>Why is a “No Purchase Necessary” Option Typically Included?  Why is a Skill-testing Question Requirement also typically Included?</strong></p>
<p style="TEXT-ALIGN: justify">Based on the <em>Criminal Code</em> provisions prohibiting illegal lotteries, promotional contest organizers often remove either the consideration element (e.g., providing that “no purchase is necessary”), the chance element (e.g., adding a skill element, for example making the contest a skill contest or including a skill-testing question), or both in order to remove a promotional contest from the scope of the illegal lottery provisions of the <em>Criminal Code</em>.</p>
<p style="TEXT-ALIGN: justify">It is worth noting, however, that the determination of what constitutes “consideration” and “chance” can be challenging and complex in some cases, and that what little case law exists is inconsistent and old.</p>
<p style="TEXT-ALIGN: justify"><strong>Are Contests Contracts?  If So, What are the Legal Requirements?</strong></p>
<p style="TEXT-ALIGN: justify">In addition to the regulatory requirements set out in the federal <em>Competition Act</em> and <em>Criminal Code</em>, promotional contests have also been held to be contracts.  For this reason, promotional contests are also governed by the common law of contract in Canada.</p>
<p style="TEXT-ALIGN: justify">As such, in addition to ensuring compliance with the statutory requirements of the <em>Competition Act</em> and <em>Criminal Code</em>, as well as Quebec legislation if applicable and privacy legislation, it is also important that the terms and conditions of a promotional contest be carefully structured to reduce potential contractual liability.</p>
<p style="TEXT-ALIGN: justify">This includes a careful review of short rules, long rules and winner release documentation (e.g., winner release forms) to ensure that the terms are precise, enforceable and to reduce the likelihood of a credible contractual challenge.  As well, potential technical problems and other contingencies should also be addressed, including in relation to unavailability of prizes as disclosed, technical problems relating to the operation of the contest (e.g., computer, Internet or server issues), as well as typically giving contest organizers broad and unilateral discretion to resolve contingencies that may arise.</p>
<p style="TEXT-ALIGN: justify"><strong>Does Canadian Privacy Law Apply to Contests?</strong></p>
<p style="TEXT-ALIGN: justify">Yes.  Canadian privacy legislation also applies to promotional contests.  In this regard, contest organizers should be cognizant of federal privacy legislative requirements under PIPEDA, which include requiring consent for the collection, use, storage and disclosure of personal information collected in relation to the operation of a contest.  Such requirements may include, for example, advising contestants of how their personal information will be used, as well as the contest organizer’s practices and policies in relation to the security (and destruction) of contestants’ personal information once a contest has closed.</p>
<p style="TEXT-ALIGN: justify"><strong>What are Some of the Key Legal Points for Promotional Contests in Canada?</strong></p>
<p style="TEXT-ALIGN: justify">As promotional contests in Canada are, generally speaking, governed by the <em>Competition Act</em>, <em>Criminal Code</em>, contract law, privacy law and Quebec regulation if operated in Quebec, it is critical that promotional contest documentation and marketing materials (e.g., point-of-purchase marketing) be prepared with care, and to ensure that the key legal requirements are met.</p>
<p style="TEXT-ALIGN: justify">Some of the key practical aspects in effectively designing a promotional contest in Canada, and to avoid disasters, include attention and care in the drafting of mandatory short rules (short statutory disclosure required under the <em>Competition Act</em>), long rules (which raise many similar issues as drafting effective contracts), reviewing all print and electronic disclosure to ensure that the statutory disclosure requirements are met (and that no significant misleading advertising issues are raised) and that the basic, but important, requirements of the <em>Criminal Code</em> are met (including removing either the chance element, consideration element, or both).</p>
<p style="TEXT-ALIGN: justify">In sum, while the basic law of promotional contests is Canada is not generally complex, the devil is in the details and it is critical that care be taken to ensure that all of the key legal requirements are met.</p>
<p style="TEXT-ALIGN: justify"><strong>Are There any Examples of Recent Promotional Contest Cases?</strong></p>
<p style="TEXT-ALIGN: justify">Yes.  On November 23, 2009 the <a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03157.html">Competition Bureau</a><strong> </strong>announced that Elkhorn Ranch &amp; Resort Ltd., a Manitoba-based company that sells vacation property time shares, agreed to pay Cdn. $170,000 for operating promotional contests in alleged contravention of the promotional contest provisions of the federal <em>Competition Act</em>.  In its News Release, the Bureau stated:</p>
<p style="TEXT-ALIGN: justify">“After conducting an investigation into Elkhorn&#8217;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&#8217;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&#8217;s time share properties in Western Canada.  Consumers were solicited by phone, at trade shows and at time share presentations.”</p>
<p style="TEXT-ALIGN: justify">As part of its settlement with the Bureau, under a consent agreement with the Bureau, Elkhorn is required to: (i) pay an administrative monetary penalty of $150,000, (ii) pay the 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 provisions of the <em>Competition Act</em>.</p>
<p style="TEXT-ALIGN: justify">In addition to general misleading advertising provisions, the <em>Competition Act</em> 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.</p>
<p style="TEXT-ALIGN: justify">While enforcement of the promotional contest rules under the <em>Competition Act</em> 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 dangers of 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 <em>Competition Act</em> have also been significantly increased to up to $750,000 (for individuals) and $10 million (for corporations) (and higher for subsequent orders).</p>
<p style="TEXT-ALIGN: justify"><strong>PROMOTIONAL CONTEST AND MISLEADING ADVERTISING LINKS &amp; RESOURCES</strong></p>
<p style="TEXT-ALIGN: justify"><strong>Competition Bureau Guidelines</strong></p>
<p style="TEXT-ALIGN: justify"><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01213.html">Application of the <em>Competition Act</em> to Representations on the Internet (Enforcement Guidelines)</a></p>
<p style="TEXT-ALIGN: justify"><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/00258.html">Bait and Switch Selling (Pamphlet)</a></p>
<p><em><a href="http://lois.justice.gc.ca/eng/UpdateNotice/index.html?rp14=%2Fen%2Fshowtdm%2Fcs%2FC-38%2F%2F%2Fen">Consumer Packaging and Labelling Act</a></em></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03136.html">Consumer Rebate Promotions (Enforcement Guidelines)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03124.html">Deceptive Notices of Winning a Prize (Enforcement Guidelines)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03131.html">Deceptive Prize Notices (Pamphlet)</a></p>
<p><a href="http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/03230.html">Enforcement Guidelines for &#8220;Product of Canada&#8221; and &#8220;Made in Canada&#8221; Claims</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03133.html">False or Misleading Representations and Deceptive Marketing Practices (Pamphlet)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03021.html">Guidance on Labelling Textile Articles Derived From Bamboo (Enforcement Guidelines)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01229.html">Guide for the Labelling and Advertising of Pet Foods</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01248.html">Guide to the <em>Consumer Packaging and Labelling Act</em></a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01249.html">Guide to the Textile Labelling and Advertising Regulations</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01224.html">Misleading Representations (Pamphlet)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01223.html">Misleading Representations and Deceptive Marketing Practices: Choice of Criminal or Civil Track (Bulletin)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03035.html">Multi-level Marketing Plans and Schemes of Pyramid Selling (Enforcement Guidelines)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01230.html">Multi-level Marketing and Pyramid Selling (Pamphlet)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/h_00146.html">Multi-level Marketing and the Competition Act (Multi-media)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03125.html">Ordinary Price Claims: Subsections 74.01(2) and 74.01(3) (Enforcement Guidelines)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02238.html">The Ordinary Selling Provisions of the Competition Act (Bulletin)</a><em> </em></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02118.html">Promotional Contests (Pamphlet)</a></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/01279.html">Promotional Contests &#8211; Section 74.06 (Enforcement Guidelines)</a><em> </em><strong><em> </em></strong></p>
<p><em><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03123.html">Telemarketing: Section 52.1 of the Competition Act (Enforcement Guidelines)</a></em></p>
<p><a href="http://lois.justice.gc.ca/en/showtdm/cs/T-10/en">Textile Labelling Act</a></p>
<p><em><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02238.html">Understanding How the Ordinary Selling Provisions of the Competition Act Apply to Your Business</a></em></p>
<p><a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03127.html">What You Should Know About Telemarketing (Pamphlet)</a></p>
<p><strong>Federal &amp; Provincial Legislation</strong></p>
<p><em><strong><a href="http://laws.justice.gc.ca/en/C-34/">Competition Act</a></strong></em></p>
<p><em><a href="http://laws.justice.gc.ca/eng/UpdateNotice/index.html?rp14=%2Fen%2FC-46%2F">Criminal Code</a></em></p>
<p><em>Act respecting lotteries, publicity contests and amusement machines</em> (Quebec)</p>
<p><strong>OUR SERVICES</strong></p>
<p style="TEXT-ALIGN: justify">We offer a full range of promotional contest law services and have assisted clients design and operate many promotional contests, including assistance with the preparation of short rules, long rules, statutory disclosure, winner release documentation and print and online marketing in compliance with the <em>Competition Act</em> and federal <em>Criminal Code</em>.  Our promotional contest services include:</p>
<p>- Application of the <em>Competition Act</em> and <em>Criminal Code</em> to promotional contests.<br />
- Drafting short and long contest rules.<br />
- Drafting required statutory point-of-purchase disclosure.<br />
- Reviewing promotional contest marketing and advertising materials.<br />
- Drafting winner release documentation.<br />
- Compliance with the misleading advertising provisions of the <em>Competition Act.</em></p>
<p><strong>CANADIAN COMPETITION LAW LINKS</strong></p>
<p style="TEXT-ALIGN: justify">For more information about Canadian competition law or our competition law services visit our: <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-abuseofdominance/">Abuse of Dominance</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-misleadingadvertising/">Advertising and Marketing Law</a>, <a href="http://www.ipvancouverblog.com/bid-rigging/">Bid Rigging</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw/">Canadian Competition Law</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionlawcomplianceprograms/">Canadian Competition Law Compliance</a>, <a href="http://www.ipvancouverblog.com/">Canadian Competition Law Home</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionactamendments/"><em>Competition Act</em> Amendments</a>, <a href="http://www.ipvancouverblog.com/competition-bureau-investigation/">Competition Bureau Investigations</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-linksandresources/courses/">Competition Law Courses and Conferences</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-privateactions/">Competition Law Litigation</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-linksandresources/publications/">Competition Law Publications</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-linksandresources/">Competition Law Resources</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionlawservices/">Competition Law Services</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-linksandresources/conferences/">Conferences</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-conspiracy/">Conspiracy and Competitor Collaborations</a>, <a href="http://www.ipvancouverblog.com/conspiracy-faq/">Conspiracy &#8211; FAQs</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-globalcompetitionlawupdates/">Global Competition / Antitrust Law Resources</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-globalcompetitionlawupdates/global-updates/">Global Competition Law Updates</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-investmentcanadaact/"><em>Investment Canada Act</em></a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-mergercontrol/">Merger Control</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-conspiracy/">Merger Control FAQs</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-privateactions/">Private Actions</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-promotionalcontests/">Promotional Contests</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-linksandresources/publications/">Publications</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-refusaltodeal/">Refusal to Deal</a>, <a href="http://www.ipvancouverblog.com/about/">Team</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-tradeassociations/">Trade Associations</a> or <a href="http://www.ipvancouverblog.com/association-cases/">Trade Association Cases</a> pages or visit our website at <a href="http://www.nortonstewart.com/">www.NortonStewart.com</a>.</p>
<p style="TEXT-ALIGN: justify"><strong>CONTACT US</strong></p>
<p style="TEXT-ALIGN: justify">We provide Canadian competition law and consulting services to Canadian and international clients.  For more information about our services contact us at <a href="mailto:steve@nortonstewart.com">steve@nortonstewart.com</a>, <a href="mailto:info@competitionlawcanada.com">info@competitionlawcanada.com</a> or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto at <a href="http://www.torontocompetitionlawyer.com/">www.torontocompetitionlawyer.com</a> or <a href="http://www.torontocompetitionlaw.com/">www.torontocompetitionlaw.com</a>.</p>
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		<title>105 Years of Canadian Trade Association Competition Law Cases (1905 – 2010) – Part 17 – R. v. Albany Felt Co. Of Canada (1980)</title>
		<link>http://www.ipvancouverblog.com/2010/08/105-years-of-canadian-trade-association-competition-law-cases-1905-%e2%80%93-2010-%e2%80%93-part-17-%e2%80%93-r-v-albany-felt-co-of-canada-1980/</link>
		<comments>http://www.ipvancouverblog.com/2010/08/105-years-of-canadian-trade-association-competition-law-cases-1905-%e2%80%93-2010-%e2%80%93-part-17-%e2%80%93-r-v-albany-felt-co-of-canada-1980/#comments</comments>
		<pubDate>Mon, 02 Aug 2010 15:48:51 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Associations]]></category>
		<category><![CDATA[Cartels]]></category>
		<category><![CDATA[Cases]]></category>
		<category><![CDATA[Competition Law]]></category>
		<category><![CDATA[Competition Law - Historical]]></category>
		<category><![CDATA[Compliance]]></category>
		<category><![CDATA[Conspiracy]]></category>
		<category><![CDATA[Fee Tariffs]]></category>
		<category><![CDATA[Price-fixing]]></category>
		<category><![CDATA[Trade Association Cases]]></category>
		<category><![CDATA[Trade Associations]]></category>
		<category><![CDATA[antitrust]]></category>
		<category><![CDATA[association]]></category>
		<category><![CDATA[Canada]]></category>
		<category><![CDATA[competition]]></category>
		<category><![CDATA[law]]></category>
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		<category><![CDATA[trade]]></category>

		<guid isPermaLink="false">http://www.ipvancouverblog.com/?p=4081</guid>
		<description><![CDATA[In R. v. Albany Felt Co. of Canada, members of a felt-makers trade association were accused of conspiracy to unduly lessen competition for wet felt (used in the manufacturer of paper).  The accused, who met regularly through the Canadian Felt Association, adopted identical prices, discounts and payment terms and divided markets with British and European [...]]]></description>
			<content:encoded><![CDATA[<p style="TEXT-ALIGN: justify">In <em>R</em>. v. <em>Albany Felt Co. of Canada</em>, members of a felt-makers trade association were accused of conspiracy to unduly lessen competition for wet felt (used in the manufacturer of paper).  The accused, who met regularly through the Canadian Felt Association, adopted identical prices, discounts and payment terms and divided markets with British and European felt manufacturers.  The Court found the members of the association guilty, relying in large part on evidence of frequent meetings and identical pricing and sale terms among the parties.</p>
<p style="TEXT-ALIGN: justify">The <em>Albany</em> felt case is another of many examples where a court has found the existence of an agreement based, in part, on “facilitating practices” – i.e., without the existence of an express agreement or “smoking gun”.</p>
<p style="TEXT-ALIGN: justify">Such “facilitating practices” may, and often has included, evidence of meetings (including informal meetings) between competitors, exchanges of competitively sensitive information among competitors (e.g., pricing information), identical or very similar pricing between competitors (or sudden price stabilization), the timing of price increases or price stabilization (e.g., a common price increase following a meeting or before pricing is publicly announced), language suggesting the existence of an agreement (e.g., “someone is not playing ball”), enforcement activities (or suggestions that cheaters will be punished), attempts to keep meetings or other activities among competitors secret and conduct that can only be explained by the existence of an agreement.</p>
<p style="TEXT-ALIGN: justify">With new criminal conspiracy law in Canada, which came into force in March, 2010, and the Competition Bureau indicating that it is investigating several domestic cartels, it is incumbent on associations and their executives to take commonsense steps to ensure that they are onside with respect to Canada’s new conspiracy rules.</p>
<p><strong>OUR COMPETITION LAW SERVICES FOR TRADE ASSOCIATIONS</strong></p>
<p style="TEXT-ALIGN: justify">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 <em>Competition Act</em>.  We regularly counsel trade associations and their executives and personnel on compliance with the <em>Competition Act</em>. Our Canadian competition law services for trade associations include:</p>
<p>- Trade association competition law compliance programs.<br />
- Competition law compliance seminars and talks for association executives.<br />
- Audits and compliance reviews of trade association activities.<br />
- Advice on the application of the recently amended <em>Competition Act</em>.<br />
- Vetting trade association meetings, conventions and communications.<br />
- Reviewing trade association rules, bylaws, policies and voluntary codes.<br />
- General competition law and competition compliance advice for associations.</p>
<p><strong>CANADIAN COMPETITION LAW LINKS</strong></p>
<p style="TEXT-ALIGN: justify">For more information about Canadian competition law or our competition law services visit our <a href="http://www.ipvancouverblog.com/">Blog Homepage</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionlawservices/">Competition Law Services</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw/">Canadian Competition Law</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionactamendments/">Competition Act Amendments</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-mergercontrol/">Merger Control</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-conspiracy/">Merger Control FAQs</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-abuseofdominance/">Abuse of Dominance</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-conspiracy/">Conspiracy</a>,  <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-misleadingadvertising/">Advertising and Marketing</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-promotionalcontests/">Promotional Contests</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-tradeassociations/">Trade Associations</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-refusaltodeal/">Refusal to Deal</a>,  <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-investmentcanadaact/">Investment Canada Act</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionlawcomplianceprograms/">Canadian Competition Law Compliance</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-privateactions/">Private Actions</a>, <a href="http://www.ipvancouverblog.com/bid-rigging/">Bid Rigging</a> or <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-globalcompetitionlawupdates/">Global Competition Law and Policy</a> pages or visit our website at <a href="http://www.nortonstewart.com/">www.NortonStewart.com</a>.</p>
<p><strong>CONTACT US</strong></p>
<p style="TEXT-ALIGN: justify">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 <a href="mailto:steve@nortonstewart.com">steve@nortonstewart.com</a>, <a href="mailto:info@competitionlawcanada.com">info@competitionlawcanada.com</a> or call us on +1 604 687 0555 or +1 778 867 5558.  Visit us on the web in Toronto: <a href="http://www.torontocompetitionlawyer.com/">www.torontocompetitionlawyer.com</a>.</p>
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		<title>Canadian Competition Law Compliance</title>
		<link>http://www.ipvancouverblog.com/2010/07/canadian-competition-law-compliance/</link>
		<comments>http://www.ipvancouverblog.com/2010/07/canadian-competition-law-compliance/#comments</comments>
		<pubDate>Sun, 18 Jul 2010 15:15:00 +0000</pubDate>
		<dc:creator>admin</dc:creator>
				<category><![CDATA[Competition Law]]></category>
		<category><![CDATA[Compliance]]></category>
		<category><![CDATA[antitrust]]></category>
		<category><![CDATA[canadian]]></category>
		<category><![CDATA[toronto]]></category>

		<guid isPermaLink="false">http://www.ipvancouverblog.com/?p=4049</guid>
		<description><![CDATA[Overview
The Canadian 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 [...]]]></description>
			<content:encoded><![CDATA[<p><strong>Overview</strong></p>
<p style="TEXT-ALIGN: justify">The Canadian <em><a href="http://laws.justice.gc.ca/eng/UpdateNotice/index.html?rp14=%2Fen%2FC-34%2F">Competition Act</a></em> (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).</p>
<p><em><strong>Competition Act</strong></em></p>
<p style="TEXT-ALIGN: justify">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.</p>
<p><strong>Penalties</strong></p>
<p style="TEXT-ALIGN: justify">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).</p>
<p><strong>Director &amp; Officer Liability</strong></p>
<p style="TEXT-ALIGN: justify">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.</p>
<p style="TEXT-ALIGN: justify">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.</p>
<p style="TEXT-ALIGN: justify">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).</p>
<p><strong>Compliance Programs</strong></p>
<p style="TEXT-ALIGN: justify">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.</p>
<p style="TEXT-ALIGN: justify">Moreover, the importance of a corporate competition compliance policy is greater now than in the past for a number of reasons including: (i) the recent enactment of new criminal conspiracy provisions with lower enforcement burden, (ii) increased penalties for criminal conspiracies, misleading advertising and bid rigging and (iii) criminal conspiracies and deceptive marketing remain top enforcement priorities for the federal Competition Bureau.</p>
<p><strong>Benefits of an Effective Compliance Program</strong></p>
<p>Some of the benefits of a credible and effective competition compliance program include:</p>
<p>- Reducing the risk of contravening the criminal and civil provisions of the Act.<br />
- Identifying the boundaries of acceptable conduct.<br />
- Reducing costs in relation to investigations and proceedings.<br />
- Identifying circumstances when legal advice should be sought.<br />
- Detecting illegal conduct.<br />
- Potentially mitigating penalties in the event of an investigation.<br />
- Strengthening goodwill and reputation.<br />
- Avoiding negative publicity as a result of an investigation or legal proceedings.<br />
- Reducing potential director and officer liability for contravention of the Act.<br />
- Reducing the potential risk and exposure of criminal and civil liability.</p>
<p style="TEXT-ALIGN: justify">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.</p>
<p style="TEXT-ALIGN: justify">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.</p>
<p><strong>Recent Competition Bureau Initiatives</strong></p>
<p style="TEXT-ALIGN: justify">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: <a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/Compliance-Bulletin-090808-Final-e.pdf/$FILE/Compliance-Bulletin-090808-Final-e.pdf"><strong>Corporate Compliance Programs</strong></a>.</p>
<p style="TEXT-ALIGN: justify">The Bulletin sets out five elements which, in its view, are essential for corporate competition compliance programs.  These are as follows:</p>
<p style="TEXT-ALIGN: justify"><strong>1.  Senior management involvement and support. </strong> 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).</p>
<p style="TEXT-ALIGN: justify"><strong>2.  Corporate compliance policies and procedures.</strong>  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).</p>
<p style="TEXT-ALIGN: justify"><strong>3.  Training and education.</strong>  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.</p>
<p style="TEXT-ALIGN: justify"><strong>4.  Monitoring, auditing and reporting mechanisms.</strong>  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.</p>
<p style="TEXT-ALIGN: justify"><strong>5.  Consistent disciplinary procedures and incentives.</strong>  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.</p>
<p style="TEXT-ALIGN: justify"><strong>Trade Associations</strong></p>
<p style="TEXT-ALIGN: justify">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: <a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02730.html"><strong>Competition Bureau &#8211; Information Bulletin on Trade Associations (Draft)</strong></a>.</p>
<p style="TEXT-ALIGN: justify">The Bureau has also emphasized the particular importance of competition law compliance programs for trade associations:</p>
<p style="TEXT-ALIGN: justify"><em>“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.”</em>  (Competition Bureau, <em>Corporate Compliance Programs</em> Information Bulletin)</p>
<p><strong>COMPLIANCE LINKS AND RESOURCES</strong></p>
<p><strong>COMPETITION BUREAU</strong></p>
<p><strong>Enforcement Guidelines and Other Publications</strong></p>
<p><a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02987.html">Competitor Collaboration Enforcement Guidelines</a></p>
<p><a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02732.html">Corporate Compliance Programs (Bulletin)</a></p>
<p><a href="http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02730.html">Draft Information Bulletin on Trade Associations</a></p>
<p><strong>News Releases</strong></p>
<p style="TEXT-ALIGN: left">“New Laws for Competitor Agreements” (March 12, 2010), available at <a href="http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03214.html">http://competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03214.html</a>.  </p>
<p style="TEXT-ALIGN: left">“Competition Bureau Issues Final Competitor Collaboration Guidelines” (December 23, 2009), available at <a href="http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/03178.html">http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/03178.html</a>.  </p>
<p style="TEXT-ALIGN: left">“Competition Bureau Publishes Updated Bulletin on Corporate Compliance Programs” (October 24, 2008), available at <a href="http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02731.html">http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02731.html</a>.</p>
<p style="TEXT-ALIGN: left">“Competition Bureau Seeks Comments on Draft Trade Associations Bulletin” (October 24, 2008), available at <a href="http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02729.html">http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02729.html</a>.</p>
<p style="TEXT-ALIGN: left">“Competition Bureau Launches New Online Bid-rigging Prevention Tool” (April 8, 2008), available at <a href="http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02647.html">http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/02647.html</a>.  </p>
<p style="TEXT-ALIGN: left">“Information Bulletin on Corporate Compliance Programs Released by the Competition Bureau” (July 10, 1997), available at <a href="http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/00678.html">http://www.bureaudelaconcurrence.gc.ca/eic/site/cb-bc.nsf/eng/00678.html</a>.</p>
<p><strong>OUR CANADIAN COMPETITION LAW COMPLIANCE SERVICES</strong></p>
<p style="TEXT-ALIGN: justify">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 <em>Competition Act</em>. </p>
<p style="TEXT-ALIGN: justify">Our Canadian competition law compliance program services include:</p>
<p>- Preparation of competition law compliance programs.<br />
- Competition law seminars for companies and trade associations.<br />
- Audits and reviews of corporate and trade association activities.<br />
- Competition law educational materials and talks.<br />
- Attending board meetings, conferences and other meetings.<br />
- Criminal search &amp; seizure guidelines for companies and associations.<br />
- General advice on the appliation of the <em>Competition Act</em>.<br />
- Impacts of the recent <em>Competition Act</em> amendments.</p>
<p><strong>CANADIAN COMPETITION LAW LINKS</strong></p>
<p style="TEXT-ALIGN: justify">For more information about Canadian competition law or our competition law services visit our <a href="http://www.ipvancouverblog.com/">Blog Homepage</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionlawservices/">Competition Law Services</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw/">Canadian Competition Law</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionactamendments/">Competition Act Amendments</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-mergercontrol/">Merger Control</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-conspiracy/">Merger Control FAQs</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-abuseofdominance/">Abuse of Dominance</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-conspiracy/">Conspiracy</a>,  <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-misleadingadvertising/">Advertising and Marketing</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-promotionalcontests/">Promotional Contests</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-tradeassociations/">Trade Associations</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-refusaltodeal/">Refusal to Deal</a>,  <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-investmentcanadaact/">Investment Canada Act</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-competitionlawcomplianceprograms/">Canadian Competition Law Compliance</a>, <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-privateactions/">Private Actions</a>, <a href="http://www.ipvancouverblog.com/bid-rigging/">Bid Rigging</a> or <a href="http://www.ipvancouverblog.com/canadiancompetitionlaw-globalcompetitionlawupdates/">Global Competition Law and Policy</a> pages or visit our website at <a href="http://www.nortonstewart.com/">www.NortonStewart.com</a>.</p>
<p><strong>CONTACT US</strong></p>
<p style="TEXT-ALIGN: justify">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 <a href="mailto:steve@nortonstewart.com">steve@nortonstewart.com</a>, <a href="mailto:info@competitionlawcanada.com">info@competitionlawcanada.com</a> or call us on +1 604 687 0555 or +1 778 867 5558.</p>
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