Canadian COMPETITION LAW

November 7, 2021

Over the past few years, one of the trends that we have been seeing with our advertising and marketing clients (both brands and agencies) is an increased move in some cases to participate in a contest or other type of promotion, with a third party being responsible for the majority of the marketing and administration of the promotion.  Some examples include franchisors with franchisees conducting the majority of a promotion, major brands that partner with influencers and brands that partner with other co-sponsors or prize sponsors.

In many cases, one party, whether it is a franchisor, major brand or a co-sponsor, is interested in being involved with a contest or promotion (e.g., contributing some prizing or intellectual property assets, such as their name or marks), but wants another party (or parties) to conduct the bulk of the marketing and administration for the promotion.

Given, however, the potential risk of partnering in promotions with third parties (particularly, smaller companies or potentially less sophisticated individuals, such as influencers), we have been increasingly asked to help our clients with agreements to mitigate risk in the event legal issues arise.

Co-Sponsor and Influencer Agreements
(Contests and Other Promotions)

Some of the types of agreements that we have helped our clients with relating to contests and promotions include co-sponsor agreements, contest indemnity agreements and influencer agreements.

While the substance of a particular agreement will differ according to the parties and the type of promotion, many of the agreements we have developed have a number of common types of provisions.

These include covenants setting out the obligations of the parties (i.e., responsibilities in the promotion including marketing, administration and contribution of prizes), description of the promotion (including how it will be marketed, marketing channels and timetable), use of names, marks and other intellectual property, covenants to comply with relevant laws (e.g., Canadian anti-spam law (CASL), misleading advertising laws and rules relating to influencer marketing, particularly disclosure of material connections), indemnification provisions to shift risk in the event issues arise and often rights to review advertising and draft creative before being published or posted.

Aside from the fact that such agreements can help parties shift risk where they are co-sponsors or partners in a promotion, the arrangements themselves are also a practical way for parties to engage in a contest or other type of promotion with relatively limited involvement (e.g., only contributing some prizing or use of their name, marks or other IP), while still realizing marketing value.

Such arrangements (and agreements) can also be, and in our experience are, replicated to be used for other promotions with different co-sponsors, prize sponsors, influencers or other marketing partners.

List Agreements
(Sharing E-mail Lists Under CASL)

A related topic is list agreements. While it is far less common now to buy third party e-mail lists since Canadian anti-spam law (CASL) came into force in 2014, a number of our clients collect consent on behalf of third parties (e.g., marketing partners, sponsors, etc.). In many cases, this is relatively straightforward under CASL if the identities of the third parties are known. In this regard, CASL includes rules for collecting consent on behalf of identified third parties (which require, among other things, identifying who is requesting consent on behalf of whom and prescribed identification information for the third parties).

Under CASL, however, consent to send commercial electronic messages (CEMs) can also be collected on behalf of unidentified third parties. Given, however, that there are a number of obligations imposed on the collecting party under section 10(2) of CASL and the Regulations (e.g., that the collecting person “ensure” that any authorized third parties include CASL-compliant unsubscribes as well as reciprocal notification obligations if a recipient unsubscribes), it is typically advisable for the collecting party to enter into list agreements with third parties on whose behalf they collect consents.

Such agreements both help collecting parties comply with the specific obligations under CASL for collecting consents on behalf of unidentified third parties and may also in addition provide evidence of due diligence in the event of an investigation.

In addition, companies and others sharing e-mail lists with third parties should be aware that diligence when sharing lists is also important given that potential liability under CASL is not limited to only senders of e-mails, but also under section 9 to those who “aid, induce, procure or cause to be procured the doing of any act” that violates section 6 (the unsolicited CEMs section of CASL).

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If your company is planning to run a contest or other promotion involving co-sponsors, prize sponsors, influencers or other marketing partners and wants to mitigate potential risk through a co-sponsor/influencer agreement (or other type of agreement), contact us: Contact. We can also assist with list sharing arrangements and list agreements under CASL.

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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

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