Archive for September, 2009
September 29, 2009
Earlier this year, sweeping amendments were made to the federal Competition Act (the “Act”). The recent amendments were the most significant in twenty-five years. While most of the changes are now in effect, some of the changes, including to the criminal conspiracy provisions, will come into effect early next year in March.
Online Behavioural Advertising.
One form of Internet advertising.
Office of the Privacy Commissioner of Canada, Policy Position on Online Behavioural Advertising: “In this case, an advertising service places an advertisement on a webpage based on tracking data collected across multiple unrelated websites. This practice refers to using information about where a user has been. For example if a user has visited websites about pets in the past, then ads related to pets might be shown on various web sites, even sites that are not related to pets (e.g., an online newspaper).”
Online romance scam.
Consumer Protection BC, “Top Ten Scams 2013 – Just in case a scam is around the corner”: “You meet the person virtually through a social networking or dating site. Your online romance scammer builds a relationship, sometimes spending several months in building a rapport online with the intention of making you feel that you are in a romantic relationship. The person you met online turns out to be criminal who typically says that they are in a far away country and that they eventually want to meet the victim in person. Around this time, the criminal will note that they can’t afford to travel and will seek assistance from you in covering travel costs. Sometimes there’s an emergency, a sick family member for example, and that they need financial help from you to visit the sick individual. Of course, the requests for help are all a scam and the money wired by the victim, often in very large amounts, is now in the hands of the criminal.”
Open loop gift card.
Financial Consumer Agency of Canada: “There are two main types of prepaid cards. Both require you to pay up front to ‘load’ money on to a card for later use and both are sometimes referred to as ‘gift cards’. Prepaid cards from retailers can only be used at a single store or group of stores, such as a chain or shopping mall. Other prepaid cards, usually branded with a payment card network operator’s logo, such as American Express, MasterCard or Visa, can be used at most merchants that display the specific network’s logo.”
Datacard Group: “A gift card is a type of stored-value payment card commonly issued by retailers and banks. Gift cards are preloaded with a set value. There are two major types of cards – those that can be used only at one store chain or one location (closed loop) and those that can be used anywhere (open loop). Closed loop gift cards generally carry no fees or expiration date – the issuing store makes its money off the profit from selling merchandise. Open loop gift cards always carry fees. Because they are issued by banks or credit card transaction processors, such as Visa or MasterCard, fees are the only way they can profitably issue gift cards.”
Ontario Consumer Protection Act Regulations: “’Open loop gift card agreement’ means a gift card agreement that entitles the holder of a gift card to apply it towards purchasing goods or services from multiple unaffiliated sellers.”
Ordinary selling price claims.
Competition Bureau, Misleading Advertising and Labelling: “The false or misleading ordinary selling price provisions of the Competition Act are designed to ensure that when products are promoted at sale prices, consumers are not misled by reference to inflated regular prices. The Act prohibits false or misleading representations to the public as to the ordinary selling price of a product, in any form whatsoever. Ordinary selling price is validated in one two ways: either a substantial volume of the product was sold at that price or higher, within a reasonable amount of time (volume test); or the product was offered for sale, in good faith, for a substantial period of time at that price or a higher price (time test).”
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SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, Canada and the United States on the application of Canadian competition and regulatory laws and we 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 and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
“Native advertising” or “sponsored content”. U.S. Federal Trade Commission: “The practice of blending advertisements with news, entertainment, and other content in digital media.”
Nigerian scam (aka 419 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.”
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SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, Canada and the United States on the application of Canadian competition and regulatory laws and we 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 and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
September 17, 2009
ASSOCIATIONS & COMPETITION LAW
“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 [their] members to avoid improper actions and to protect themselves from being used as a conduit for illegal activities. They may also allow trade association members to fully benefit from the association’s activities while reducing the potential for inadvertent contraventions of the Acts.”
(Competition Bureau, Corporate Compliance Programs Information Bulletin)
September 13, 2009
I. Overview
The federal Competition Act (the “Act”) contains both criminal and civil provisions prohibiting a range of anti-competitive activities, many of which can arise in ordinary commercial dealings (e.g., in the context of distributor/customer relations, trade association activities and in relation to many common commercial agreements including IP license agreements, joint venture and strategic alliance agreements and franchise agreements).
Mail-in rebate.
Competition Bureau, Enforcement Guidelines, Consumer Rebate Promotions (2009): Consumers apply for the rebate after the purchase, by mail-in application, online or by other means. In [these guidelines] the term ‘mail-in rebate’ includes mail-in, Internet and other delayed-payment rebates. Various market participants may be involved in promoting and administering rebates.”
Malware (or “malicious software”).
A fraud term.
CRTC: “Malware, often sent through spam, is software that is installed for harmful purposes. It has many forms, such as viruses, worms, spyware, and keyloggers. Worms and viruses have many evil aims, including slowing down or otherwise interfering with the functioning of your computer or network. Spyware secretly spies on your computer, usually to collect personal information without your knowledge. Through keylogging, a person unknown to you can covertly record and monitor your keystrokes, thus picking up important information such as your online banking password.”
Government of Canada, Get Cyper Safe: “Malicious software that infects your computer, such as computer viruses, worms, Trojan horses, spyware, and adware.”
OnGuardOnline (U.S. Federal Trade Commission): “Malware is short for ‘malicious software.’ It includes viruses and spyware that get installed on your computer, phone, or mobile device without your consent. These programs can cause your device to crash and can be used to monitor and control your online activity. Criminals use malware to steal personal information, send spam, and commit fraud.”
Marketing.
Canadian Marketing Association, Code of Ethics and Standards of Practice: “Marketing is a set of business practices designed to plan for and present an organization’s products or services in ways that build effective customer relationships.”
Mass marketing fraud.
Competition Bureau, Ensuring Truth in Advertising: “Mass Marketing Fraud is defined as fraud committed via mass communication media using the telephone, mail, and the Internet. Provisions under the criminal regime of the Competition Act prohibit materially false or misleading representations made knowingly or recklessly, deceptive telemarketing and deceptive prize notices.”
“Material”.
To violate the criminal or civil misleading advertising provisions under the Competition Act (sections 52 and 74.01) a representation must be made to the public that is “false or misleading in a material respect”. In this regard, “materiality” does not depend on the value of a transaction, but rather has been held by Canadian courts to mean that a representation or claim could lead an average consumer to purchase a product (or otherwise alter their conduct).
Competition Bureau, Enforcement Guidelines, Application of the Competition Act to Representations on the Internet (2009): “To contravene certain provisions of the Act, a representation must be “false or misleading in a material respect”. This phrase has been interpreted to mean that the representation could lead a person to a course of conduct that, on the basis of the representation, he or she believes to be advantageous. It is important to note that omitting relevant information could also be viewed as material.”
R. v. Kenitex Can. Ltd. et al. (1980), 51 C.P.R. (2d) 103: “[A] representation will be false or misleading in a material respect if, in the context in which it is made, it readily conveys an impression to the ordinary citizen which is, in fact, false or misleading and if that ordinary citizen would likely be influenced by that impression in deciding whether or not he would purchase the product being offered”.
Commissioner of Competition v. Yellow Pages Marketing, 2012 ONSC 927 (Ont. Sup. Ct.), citing Canada (Commissioner of Competition) v. Sears Canada, [2005] CCTD No. 1 (Comp.Trib.): “A representation is ‘misleading in a material respect’ where an ‘ordinary citizen would likely be influenced by that impression in deciding whether or not he would purchase the product being offered.’ A misleading representation is material where it is of ‘much consequence of [is] important or pertinent or germane or essential to the matter.’”
Commissioner of Competition v. Chatr Wireless Inc. and Rogers Communications Inc., Notice of Application (November 19, 2010): “… the Representations made by the Respondent are false and misleading in a material respect. Network reliability, including dropped call rates, is a material aspect of wireless telecommunication services and is a component of a consumer’s decision to purchase a particular wireless telecommunication service. The Representations are material because prospective customers would likely be influenced by the Representations in deciding whether to purchase wireless service from Chatr or a new entrant. The Representations mislead consumers to believe there is a meaningful difference in dropped call rates, when that is in fact not the case.”
Apotex Inc. v. Hoffman La-Roche Ltd. (2000), 195 D.L.R. (4th) 244 (Ont. C.A.): [Whether a representation is material will depend upon whether it is] “… so pertinent, germane or essential that it could affect the decision to purchase.”
James Musgrove and Dan Edmondstone, “The Shifting General Impression of Disclaimers” (May 12, 2012): “The test as to whether something is materially misleading is generally applied in the context of an average purchaser or average reader or viewer of the advertisement”, citing R. v. Viceroy Construction Co. (1975), 11 O.R. (2d) 485, 1975 CarswellOnt 582 (Ont. C.A.); R. v. Bussin (1977), 36 CPR (2d) 111, 1977 CarswellOnt 1242 (Ont. Co. Ct.); R. v. RM Lowe & Pastoria Holdings Ltd. (1978), 39 C.P.R. (2d) 266, 40 C.C.C. (2d) 529 (Ont. C.A.); R. v. Park Realty Ltd. (1978), 43 C.P.R. (2d) 29, 1978 CarswellMan 2 (Man. Prov. Ct.); Telus Communications Co. v. Rogers Communications Inc., 2009 BCSC 1610, 2009 CarswellBC 3168 aff’d 2009 BCCA 581, 2009 CarswellBC 3424.
Metadata.
Office of the Privacy Commissioner of Canada, Fact Sheet, “The Risks of Metadata”: “Metadata is usually defined as ‘data about data’ or ‘information about information’. Think of it as a hidden level of extra information that is automatically created and embedded in a computer file. An example that you may be familiar with is that of the label on a can of soup. The label contains, in a standardized, structured format, information about the contents of the can (e.g., the type of soup, who made it, the ingredients and nutritional value and so on). In a similar fashion, the metadata associated with a document (in the form of keywords, for instance) can provide information about the contents of the document. Whenever a document is created, edited or saved, metadata is added to a document. This information accompanies the document whenever it is sent in electronic form (e.g., as an attachment to an e-mail) to other groups or individuals, internally or externally to an organization. This metadata may contain potentially sensitive information that could be inadvertently disclosed to unauthorized individuals or groups.”
Misleading advertising.
Competition Bureau, Ensuring Truth in Advertising, Misleading Advertising and Labelling: “The misleading advertising and labelling provisions enforced by the Competition Bureau prohibit making any deceptive representations for the purpose of promoting a product or a business interest, and encourage the provision of sufficient information to allow consumers to make informed choices. The false or misleading representations and deceptive marketing practices provisions of the Competition Act contain a general prohibition against materially false or misleading representations. They also prohibit making performance representations which are not based on adequate and proper tests, misleading warranties and guarantees, false or misleading ordinary selling price representations, untrue, misleading or unauthorized use of tests and testimonials, bait and switch selling, double ticketing and the sale of a product above its advertised price. Further, the promotional contest provisions prohibit contests that do not disclose required information. The Consumer Packaging and Labelling Act, Textile Labelling Act and Precious Metals Marking Act all contain prohibitions regarding false or misleading representations. They also require certain labelling or marking information aimed at assisting consumers in making informed purchasing decisions.”
R. v. David Stucky, 2006 CanLII 41523 (Ont. S.C.): “The essential elements of the [offence of misleading advertising under section 52 of the Competition Act] pre- and post-amendment, are: (a) that representations were made; (b) for the purpose of promoting, directly or indirectly the business interest specified in the indictment; (c) to the public; (d) the representations were false or misleading; (e) in a material respect.”
See also Competition Act, sections 52 and 74.01.
Mobile advertising games.
A mobile game advertising term.
Canadian Marketing Association (CMA): “Mobile advertising games represents the breed of mobile advertising where the brand itself creates a mobile game solely for their marketing strategies. An example of this type of mobile advertising is New Balance’s brand – Brine – lacrosse game app. Brine Shootout app features a game where users flick and slide their finger across their mobile screen to simulate a shot. Brine’s objective with this app was to engage lacrosse players, as well as introduce their line of products, increase brand presence and encourage brand loyalty. Based upon merits and achievements in the app, users are able to unlock and claim real prizes.”
Mobile games sponsorships.
A mobile game advertising term.
Canadian Marketing Association (CMA): “Mobile games sponsorship appeals to brands, as their presence within the app allows the brands to reach their targeted audience; with hopes of leveraging the association of a positive gaming experience. Subway, Samsung and New Balance are some of the many brands that have entered the mobile space via sponsorships, as part of their strategy to increase brand awareness, brand presence and purchase intent. Sponsorships also allow brands to maximize on the opportunities for message delivery. In the situation of a message being broadcast when a user is in a passive state, while leisurely playing a game, messaging is more likely to be received well by the user.”
Mobile in-game advertising.
A mobile game advertising term.
Canadian Marketing Association (CMA): “Mobile in-game advertising refers to the placement of advertising, brands and associated messages within mobile games. The advertising can be found anywhere within the game that is visible to the user during game play. Static banners, interactive ads and interstitial ads are all examples of the types of ad spaces found in mobile games.”
Multi-level marketing plan.
Competition Act, subsection 55(1): “… a plan for the supply of a product whereby a participant in the plan receives compensation for the supply of the product to another participant in the plan who, in turn, receives compensation for the supply of the same or another product to other participants in the plan.”
See also Competition Bureau, Truth in Advertising, Multi-level Marketing: “Multi-level marketing is a plan for the distribution of products whereby participants earn money by supplying products to other participants in the same plan. They, in turn, make money by supplying the same or other products to other participants. Operators of, and participants in, legitimate multi-level marketing plans should disclose: the different levels of earnings or compensation received by participants in the plan; the amount of money earned by a typical participant; and the time and effort required to reach specific levels of income.”
The Competition Act makes it a criminal offence for operators and participants of multi-level marketing plans to make compensation claims to prospective participants unless certain disclosure requirements are met – i.e., “fair, reasonable and timely” disclosure within the knowledge of the person making the claim is made to prospective participants of the: (i) actual or (ii) likely compensation to be received in the plan (based on a number of prescribed factors). The penalties for contravening the multi-level marketing provisions of the Act include unlimited fines (i.e., in the discretion of the court), imprisonment for up to five years, or both. Multi-level marketing plans that constitute pyramid selling schemes under the Act are illegal. In other words, while multi-level marketing plans are legal provided certain prescribed disclosure requirements are met, pyramid selling as defined in the Act constitutes a criminal offence.
Competition Bureau, Enforcement Guidelines, Multi-level Marketing Plans and Schemes of Pyramid Selling: “Subsection 55(1) of the Act defines an MLM plan as a plan in which a participant receives compensation for the supply of a product to another participant, who in turn receives compensation for the supply of the same or another product to yet another participant in the MLM plan. Subsections 55(2) and 55(2.1) set out certain obligations relating to compensation disclosure by operators of and participants in MLM plans. Failure to comply with these obligations is subject to criminal penalties as set out in subsection 55(3). The full text of these provisions is set out in Appendix A to this bulletin.”
Canadian Consumer Handbook: “Multi-level marketing (MLM) is a system for selling products in which participants get paid for selling products to other participants who, in turn, are paid for selling the same products to yet more participants. This type of marketing is legal in Canada when the plan does not contravene the Competition Act. Referral selling, matrix marketing and binary systems are all similar types of multi-level marketing plans, though some may be illegal under the Criminal Code, the Competition Act and some provincial and territorial laws. Under the Competition Act, MLM plans that make claims about potential compensation must also disclose the amount of compensation typical participants in the plan earn. Pyramid selling is an MLM plan that incorporates the following deceptive practices, which make it a criminal offence under the Competition Act: participants pay money for the right to receive compensation for recruiting new participants; a participant is required to buy a specific quantity of products, other than at cost price for the purpose of advertising as a condition of participation; selling unreasonable amounts of inventory to participants; having an unreasonable product return policy. Pyramid selling is also a criminal offence under the Criminal Code.”
Federal Government, Consumer Information website (www.consumerinformation.ca): “Multi-level marketing is a system for selling products whereby participants are paid for selling products to other participants who, in turn, are paid for selling the same products to yet more participants. This type of marketing must comply with the Competition Act. Pyramid selling is a type of multi-level marketing that is a criminal offence under the Competition Act due to the following deceptive practices: paying money to those who recruit new members (who also pay money for the same right); requiring new recruits to buy products as a condition of participation; selling unreasonable amounts of inventory to participants; and having an unreasonable product return policy. Pyramid selling is also a criminal offence under the Criminal Code of Canada.”
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SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, Canada and the United States on the application of Canadian competition and regulatory laws and we 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 and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
September 6, 2009
Overview
In many cases trade association activities serve legitimate pro-competitive purposes, such as industry lobbying, education, promoting an industry or profession and setting standards. However, because trade association activities by their nature involve the interaction of direct competitors, they can also raise significant competition law issues. Because of the potential competition risk associated with some trade association activities, the following are twenty things for trade associations to know about Canadian competition law.
Label.
Canadian Food Inspection Agency: “includes any legend, word or mark attached to, included in, belonging to or accompanying any food, drug, cosmetic, device or package.” See also Food and Drugs Act.
Libel.
Foulidis v. Ford, 2012 ONSC: “The plaintiff must prove four things on the balance of probability to prove a libel in this case: (1) that the defendant spoke the words in issue; (2) that the defendant published the words in issue to one or more third parties; (3) that the words in issue referred to the plaintiff; (4) that the words in issue were defamatory of the plaintiff.”
Canadian Bar Association, “Defamation: Libel and Slander” (online): “Libel is the type of defamation with a permanent record, like a newspaper, a letter, a website posting, an email, a picture, or a radio or TV broadcast. If you can prove that someone libeled you, and that person does not have a good defence … then a court will presume that you suffered damages and award you money to pay for your damaged reputation. But going to Supreme Court is expensive and even if you win, you may not get as much as it costs you to sue. In deciding on damages, the Court will consider your position in the community. For example, if you are a professional, damages may be higher.”
Lift letter.
R. v. David Stucky, 2006 CanLII 41523 (Ont. S.C.): “A lift letter is a promotional technique, routinely used in direct mail promotions, urging further consideration of the initial offer before its expiration.”
Like-baiting.
A type of spam. Facebook, “News Feed FYI: Cleaning Up News Feed Spam” (April 10, 2014): “’Like-baiting’ is when a post explicitly asks News Feed readers to like, comment or share the post in order to get additional distribution beyond what the post would normally receive.”
Literal meaning.
Generally speaking, advertising or marketing in Canada can be misleading under federal (e.g., the federal Competition Act) or provincial (e.g., consumer protection legislation) where a representation or advertising claim is either literally false or misleading (the latter which may take into consideration the “general impression” of an advertising claim). With respect to the literal meaning of an advertising claim, the Supreme Court has held: “The phrase ‘literal meaning of the terms used therein’ [for the purposes of the Quebec Consumer Protection Act] does not raise any interpretation problems. It simply means that every word used in a representation must be interpreted in its ordinary sense” (Richard v. Time Inc., 2012 SCC 8).
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SERVICES AND CONTACT
We are a Toronto based competition and advertising law firm offering business and individual clients efficient and strategic advice in relation to competition/antitrust, advertising, Internet and new media law and contest law. We also offer competition and regulatory law compliance, education and policy services to companies, trade and professional associations and government agencies.
Our experience includes advising clients in Toronto, Canada and the United States on the application of Canadian competition and regulatory laws and we 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 and pricing and distribution matters. For more information about our competition and advertising law services see: competition law services.
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
