Archive for the 'Compliance' Category
I am pleased to be delivering two upcoming competition law compliance courses (Competition Law and REALTORS®) for the members of the Kamloops (November 26th) and Victoria (November 29th) real estate boards.
The compliance seminars will include overviews of Canadian competition law enforcement, the Competition Bureau, the conspiracy, misleading advertising, price maintenance and abuse of dominance provisions of the Competition Act and practical real estate related case studies.
Competition Law and REALTORS®: What You Say and Do Matters is a national competition law compliance course designed by the Alliance for Canadian Real Estate Education with the assistance of The Canadian Real Estate Association to help Canadian REALTORS® understand and comply with Canadian competition law. While Canadian competition law applies to all real estate professionals, this course was designed specifically for REALTORS®. This course provides an overview in plain language of Canadian competition law and practical compliance guidelines to assist REALTORS® in complying with Canadian competition law and a number of illustrative case studies.
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Conventional thinking has been that the most serious consumer protection enforcement tends to be under federal law (e.g., the Competition Act or Criminal Code). That reasoning changed somewhat last week with an Oakville company being found guilty by a Newmarket Ontario court of violating the Ontario Consumer Protection Act (the “CPA”), fined $250,000, ordered to pay more than $100,000 in restitution to customers with the firm’s director also sentenced to six months in jail. These are the most significant penalties ever imposed against a business under the CPA.
The Oakville heating and cooling company and its director had been charged with 21 violations of the CPA. In making the announcement, Ontario’s Ministry of Consumer Services said:
“It had been alleged that between March and November 2008, Mr. Preston and his company misled consumers in Markham, Stouffville, Toronto and Mississauga by providing contracts and accepting payments for services and products he knew his failing company would be unable to provide. Heating and cooling systems that were supplied malfunctioned shortly after installation and consumers were not given refunds when contracts were cancelled.”
The CPA governs many common types of consumer transactions in Ontario and regulates, among other things, consumer agreements (including future performance, time share, Internet, distance and direct sales agreements), certain types of misleading claims and some specific sectors (including auto repair, credit and leasing).
Reading some of the recent coverage of the global LIBOR price-fixing investigation made me think about how this case illustrates the sometimes subtle distinction between legitimate and anti-competitive industry “regulation” by associations.
For example, in this particular case, the U.K. Treasury announced today that it had accepted all of the recommendations of an independent review of the LIBOR benchmark, which will include the removal of the British Bankers’ Association (the “BBA”) as the “operational LIBOR administrator” (see also: Libor to be regulated ‘without delay’). LIBOR regulation is, therefore, set to be shifted away from the BBA (a trade association comprised of UK banking and financial services firms) to a new legislatively authorized Financial Conduct Authority.
Specific changes are to include: bringing LIBOR activities within the scope of statutory regulation (Including the submission and administration of LIBOR); creating a new criminal offence for misleading statements in relation to benchmarks, including LIBOR (and amending the language for existing offences); and giving the new Financial Conduct Authority specific power to make rules requiring banks to submit to LIBOR (including a code of conduct).
While the conduct in this specific case, LIBOR and the resulting competitive effects (or potential effects) are all clearly complex, and any wrongdoing not established, the case seemed to me as I said to raise the issue of when an association may assume an industry “regulatory” role and when industry association coordination, rules or barriers may raise competition/antitrust concerns.
I have been doing quite a bit of compliance work lately, and have been seeing a wide range of compliance by companies and associations, ranging from no compliance or guidelines whatsoever to full competition law compliance programs that follow the Competition Bureau’s recommended elements in its Corporate Compliance Programs Bulletin.
Given that the Competition Bureau continues to aggressively enforce the Competition Act in key areas (conspiracy, abuse of dominance, bid-rigging and misleading advertising), I thought that I would post a “top 10” competition compliance list (or as it happened to work out a top 15).
While by no means exhaustive, this list covers much of what companies and associations need to think about to reduce the likelihood that Competition Act issues will arise.
Key Competition & Advertising Compliance Rules
for Companies & Associations
DO NOT agree to fix prices, divide markets (geographic markets, customers or product/service lines) or restrict output with competitors.
DO NOT discuss competitively sensitive topics with competitors (e.g., prices, margins, costs, markets, market shares, marketing or strategic plans, etc.). Exceptions can include discussions in the context of mergers, joint ventures and some other legitimate pro-competitive competitor-competitor activities, but advice should be sought prior to doing so.
DO NOT make decisions with competitors to refuse to deal with or supply to competitors, customers, suppliers or other marketplace participants without obtaining legal advice. Some concerted refusals to deal (i.e., “boycotts”) can raise significant competition law issues, while others may be justified depending on the circumstances – for example, some membership decisions in the association context.
DO NOT agree with competing bidders or tenderers to fix the terms of a bid/tender, not bid/tender or withdraw a bid/tender that has already been made. Also avoid discussing the terms of bids/tenders, or whether your company intends to bid, with competing bidders/tenderers (e.g., at association events or in other forums). Some types of joint bids can be made (e.g., in the context of legitimate bid consortia that meet the requirements of the Competition Act), but legal advice should be sought prior to the preparation and submission of joint bids.
DO NOT incorrectly suggest, in internal documents or correspondence, that anti-competitive activities are occurring (e.g., language that suggests coordination with competitors in relation to pricing, customers or output – e.g., it would “be easier to cooperate than compete”; that decisions are being made for anti-competitive purposes – e.g., to “drive out” a competitor; or “loaded” language – e.g., “dominate”, “squash”, “eliminate”, “stabilize” competition, “us and them”, they’re “not following the rules”, etc.).
DO NOT attempt to interfere with competitors’ suppliers without consulting management or obtaining legal advice.
DO consult management or obtain legal advice before attempting to influence a customer’s or reseller’s prices (or refusing to supply or discriminating against a person where the refusal/discrimination may be related to the person’s low pricing policy).
In the second of two recent major announcements (the first being yesterday’s release of the CRTC’s inaugural guidelines under Canada’s impending anti-spam legislation – see: here), Canada’s telecom regulator today announced public consultations on a new mandatory wireless code. The thrust of the new consultations appears to be primarily two-fold: to impose guidelines for contracts (e.g., increased clarity of terms, required terms, changes to terms, cancellation, expiry, renewals, etc.) and reduce potential misleading advertising related issues.
While the CRTC has allowed market forces to govern the wireless industry since the early-1990s, this new announcement shows some willingness by the CRTC to regulate Canada’s concentrated wireless sector (albeit at this stage through a mandatory code of conduct). In making the announcement, the CRTC’s Chairman Jean-Pierre Blais said:
“Our goal is to make sure that Canadians have the tools they need to make informed choices in a competitive marketplace. … In the past, Canadians have told us that contracts are confusing, and that terms and conditions can vary greatly from one company to another. We are asking them to assist us in developing a code that will help them better understand their rights as consumers and the responsibilities of wireless companies.”
The CRTC’s Notice of Consultation describes the rationale for the new consultation and code:
“In Telecom Decision 2012-556, the Commission determined that it would be appropriate to develop a code for retail mobile wireless data and voice services (mobile wireless services) to ensure the clarity of mobile wireless service contracts and related issues for consumers. The Commission concluded that consumers need additional tools to better understand their basic rights, as well as their service providers’ responsibilities with respect to mobile wireless services, in order to participate in the competitive market in an informed and effective manner. With this Notice of Consultation, the Commission initiates a proceeding to establish a mandatory code to address the clarity and content of mobile wireless service contracts and related issues … The code developed as a result of this proceeding is intended to provide a clear and concise list of consumers’ rights and service providers’ responsibilities regarding mobile wireless services.”
CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
Do you need a precedent or checklist
to comply with CASL (Canadian anti-spam law)?
We offer Canadian anti-spam law (CASL) precedents and checklists to help electronic marketers comply with CASL. These include checklists and precedents for express consent requests (including on behalf of third parties), sender identification information, unsubscribe mechanisms, business related exemptions and types of implied consent and documenting consent and scrubbing distribution lists. We also offer a CASL corporate compliance program. For more information or to order, see: Anti-Spam (CASL) Precedents/Forms. If you would like to discuss CASL legal advice or for other advertising or marketing in Canada, including contests/sweepstakes, contact us: contact.
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October 10, 2012
On October 10, 2012, the Canadian Radio-television and Telecommunications Commission (the “CRTC”) issued new guidelines on Canada’s anti-spam legislation (the Guidelines on the interpretation of the Electronic Commerce Protection Regulations (CRTC) (“Interpretation Guidelines”) and Guidelines on the use of toggling as a means of obtaining express consent under Canada’s anti-spam legislation) (“Toggling Guidelines”). These are the first of a series of CRTC guidelines to be issued to facilitate compliance with Canada’s upcoming anti-spam legislation.
Earlier today, the European Commission published a summary decision announcing the parties and imposing more than 82 million Euros in penalties against nine firms involved in a price-fixing cartel for mountings for windows and window doors.
According to the EC, the parties operated a cartel spanning the whole of the EEA in which they agreed on common price increases for mountings for windows and window doors, which was in place from late 1999 until mid-2007. Also according to the EC, the cartel involved coordination through trade association activities:
“At the occasion of meetings of associations in Germany in November of each year the parties regularly agreed to increase prices by coordinating the amount (percentage or percentage range) and date of the envisaged price increase. There was a common understanding that the price increase agreed for Germany at these meetings was to be applied in the entire EEA, with adaptations to the specific situation of each country to the extent necessary. In addition to the main meetings in Germany in November, regional representatives met to discuss the application of the agreed price increase to their respective territory.”
The vast majority of trade and professional associations (and their activities) serve many legitimate purposes, including promoting common interests to the public, lobbying and advocacy, research, member education and the promotion and improvement of product standards. However, because association activities by definition involve the interaction of direct competitors, they can in some cases raise serious competition law concerns under competition laws, including the Competition Act.
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).
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
