Canadian COMPETITION LAW

I have been updating my Canadian advertising and marketing law blog a bit recently, and have added a short overview of the Competition Bureau’s views about consumer rebate programs in Canada.  As such, I thought this would be a good opportunity to post a short note on consumer rebates in Canada.

In September, 2009, the Competition Bureau issued Enforcement Guidelines on Consumer Rebate Promotions (the “Rebate Guidelines”).  The Rebate Guidelines, which originated, in part, from the Bureau’s concern with the use of deceptive mail-in rebates (see e.g.: here), set out the Bureau’s approach to interpreting the false or misleading representations provisions of the Competition Act, Consumer Packaging and Labelling Act and Textile Labelling Act in the area of consumer rebate promotions.  The Guidelines define consumer rebates as:

“Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product.  Refunds are normally paid in the form of cash or a cheque.  For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.”

The Rebate Guidelines set out five examples of when consumer rebate promotions may violate the criminal or civil misleading advertising provisions of the Competition Act (sections 52 or 74.01) as follows:

1.  Inadequate disclosure of rebate conditions, limitations or exclusions.

2.  Rebates disguised as the sale price or regular price.

3.  Mail-in rebates disguised as instant rebates (i.e., available at the time of purchase).

4.  Discounts on future purchases disguised as rebates.

5.  Unfulfilled mail-in rebates.

The Rebate Guidelines also set out the following best practices for rebate offers:

1.  Prominently and clearly disclose all conditions, limitations or exclusions that are inconsistent with consumers’ general impression, all in a manner that is likely to come to their attention.

2.  Show the price consumers will pay at the time of purchase.

3.  Clearly indicate the amount of the rebate that may apply.

4.  Clearly identify the type of rebate offered (i.e., whether mail-in or instant rebate).

5.  Clearly explain, in the case of a mail-in rebate, that if the after-rebate price is stated, this price is subject to conditions, and ensure that this information is prominently disclosed in a manner that is likely to come to consumers’ attention.

Over the past few years, the Bureau has also generally advised consumers (which is helpful for advertisers to understand the Bureau’s key concerns) to determine whether: (i) there is a deadline to apply or an expiry for a rebate; (ii) they must buy another product to qualify; (iii) they need to provide more than just a receipt to receive a rebate (e.g., a UPC code); (iv) there is any limit on the number of rebates available per household; (v) any restrictions on geographic location and/or mailing address (e.g., limitations for rural addresses) that may affect eligibility; (vi) a rebate is only valid if a purchase is made at certain retailers; or (vii) there are any other conditions or limitations.

The Bureau also reminds advertisers in its Rebate Guidelines that binding advisory opinions are available under the Competition Act regarding the application of the misleading advertising provisions to rebate promotions.  Advisory opinions, while discretionary, are available under all of the criminal and civil provisions of the Competition Act and can, if issued, be a helpful way to obtain some comfort for some of the grey areas of Canadian competition law.

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