Archive for the 'Compliance' Category
In speaking to some industry groups recently, I’ve had some questions about provincial licensing requirements for telemarketing (and who the rules apply to and the basic requirements).
Most companies engaged in telemarketing (as well as the agencies and lawyers assisting and advising them) will already be well aware of the federal requirements under the Competition Act and National Do Not Call List (see: Telemarketing).
Less well known, I’ve recently found, is the fact that in British Columbia, a third level of regulation may apply: the Telemarketer Licensing Regulation (the “Telemarketer Regulation”) under the British Columbia Business Practices and Consumer Protection Act (“BPCPA”).
In general, all telemarketers conducting business in British Columbia (or contacting British Columbia consumers by phone or fax) to enter distance sales contracts are subject to the Telemarketer Regulation. The Regulation also applies to telemarketers that contact BC consumers to solicit consumers for contributions on behalf of 3rd party suppliers – for example, 3rd party fundraisers.
“Distance sales contracts” are defined as: “contracts for the supply of goods or services between a supplier and a consumer that [are] not entered into in person and, with respect to goods, for which the consumer does not have the opportunity to inspect the goods that are the subject of the contract before the contract is entered into, but does not include a prepaid purchase card.”
Telemarketers are required to have licences for each location (which must be displayed), fulfill certain reporting obligations (including new employee identity and contact information and changes in senior officers or corporate control) and are subject to record-keeping requirements (including customer names and contract details).
The Telemarketer Regulation also limits the days and times for telemarketing calls and the frequency and manner of calls (for example, telemarketers cannot call on statutory holidays, outside of specified hours during weekdays or on weekends or block their numbers).
Exemptions from the licensing requirement include charities, educational institutions, banks and credit unions, political organizations and survey firms.
For more information about the provincial licensing and regulation of telemarketers in British Columbia see: Consumer Protection BC – Telemarketing Portal, Do Not Call – Telemarketers, Charities and Telemarketing – Avoiding Scams, Telemarketer Licensing Regulation, Telemarketing in BC – The Basics, Questions to Ask a Telemarketer.
We help individuals and companies comply with Canadian advertising and marketing laws, including Canada’s telemarketing laws.
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Last week the Advertising Standards Canada released its fourth annual Compliance Report on the Canadian Children’s Food and Beverage Advertising Initiative (see: Advertising Standards Canada releases 2011 Compliance Report on Canadian Children’s Food and Beverage Advertising Initiative).
The Initiative was launched by members of Canada’s food and beverage industry in 2007 in an effort to shift the landscape of advertising directed to children under 12 to the promotion of “better-for-you products”.
Under this Initiative, which includes advertising in all major media (as well as children focused media such as video, computer games and DVDs), participants have committed to either not direct advertising primarily to children under 12 or shift advertising to promote products that are “consistent with the principles of sound nutrition guidance.” The Initiative includes specific nutrition criteria (e.g., foods that reflect the dietary guidelines of Canada’s Food Guide or nutrient content claims of the Canadian Food Inspection Agency’s Guide to Food Labelling and Advertising). Participants in this initiative have also agreed to certain other commitments, such as reducing the use of 3rd party licensed characters used to promote non-Initiative approved products, not advertising in elementary schools or paying for product placements in programs directed at children.
According to the ASC, some participants have stopped child-directed advertising altogether (the 19 food and beverage company participants include Burger King, Campbell’s, Coke, General Mills, Hershey, Kellogg, Kraft, Mars, McDonald’s, Nestle, Pepsi, Post, Unilever and Weston). Others have launched new “better-for-you” advertising initiatives. No product in the ASC’s Initiative is more than 200 calories and every meal is less than 600 calories.
The regulation and self-regulation of food and children’s advertising and labeling is governed in Canada by, among other things, the federal Competition Act, Food and Drugs Act and Consumer Packaging and Labelling Act, as well as the Canadian Food Inspection Agency’s Guide to Food Labelling and Advertising and the ASC’s Broadcast Code for Advertising to Children and Canadian Code of Advertising Standards (which contains specific rules relating to advertising for children).
For a copy of the ASC’s new report see: Canadian Children’s Food & Beverage Advertising Initiative.
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On September 20, 2012, the Competition Bureau issued new final Abuse of Dominance Guidelines (see: Competition Bureau Issues Abuse of Dominance Guidelines).
The Bureau’s new Guidelines replace its former 2001 Guidelines and are the result of some fairly significant public consultations, including comments from the Canadian and U.S. competition/antitrust law bars and criticism for, among other things, providing significantly less guidance than in the past (see: here).
The Bureau’s new Abuse of Dominance Guidelines also replace a number of final and draft sector and conduct specific guidelines and bulletins (the Draft Enforcement Guidelines on Abuse of Dominance in the Airline Industry, The Abuse of Dominance Provisions as Applied to the Grocery Sector, Information Bulletin on the Abuse of Dominance Provisions as Applied to the Telecommunications Industry and Predatory Pricing Enforcement Guidelines).
Some of the aspects of the Bureau’s new Guidelines that caught my eye include:
Length. The most striking feature of the new Guidelines is their length – they are substantially shorter and provide significantly less analysis and examples compared to the former Guidelines. Gone as well is the prior appendix summarizing Canadian abuse of dominance cases to date, which had included summaries of the relevant facts, markets, anti-competitive acts and remedies ordered (or negotiated) in abuse of dominance cases since Canada’s modern abuse of dominance provisions were introduced in 1986.
Absence of bright-line safe harbours. The new Guidelines provide little comfort around market share thresholds for single or joint dominance. In this regard, the Bureau takes the position, with respect to single firm dominance, that a market share of less than 35% will generally not prompt further examination; a market share between 35% and 50% will generally only prompt further examination if it appears that a firm is likely to increase its market share through the alleged anti-competitive conduct within a reasonable time; and a market share of more than 50% will generally prompt further examination. With respect to joint dominance, the Bureau takes the position in the new Guidelines that a combined market share of 65% or more will generally prompt further examination. While the Bureau has raised the threshold over which it will generally more closely examine conduct (from 35% to 50%), the new final Guidelines do not adopt recommendations made during the comment period to adopt bright-line safe harbours below which it would not commence enforcement. In this regard, the Bureau has essentially preserved its position from its previous 2001 Guidelines that it could conclude that market power exists below 35% (though it is difficult to see the circumstances where this would be so).
Potential for investigation in the absence of dominance. Despite criticism from some during the comment period, the Bureau has retained language in the final Guidelines that it may investigate abuse of dominance allegations even where a firm does not “presently appear to have market power.” The Bureau also states: “While the Bureau will not commence an application under section 79 of the Act where a firm does not presently appear to have market power, the Bureau will generally investigate allegations of abuse of dominance if it appears a firm is likely to obtain market power through an alleged practice of anti-competitive acts within a reasonable period of time.” As has been pointed out by some commentators, it is not clear where the authority for this approach originates given that the first element under section 79 requires that one or more firms substantially or completely control a market (or markets) – i.e., the requirement is current, not prospective, market power. It would also seem that at least one possible obvious result could be smaller firms (with shares under 35%) facing a Bureau investigation where the Bureau’s view was that alleged anti-competitive acts could lead to market power within a “reasonable period of time”. This aspect of the final Guidelines would both seem to markedly expand the circumstances in which the Bureau may take enforcement action and also provide significantly less comfort to smaller firms that, while they may not yet possess anywhere near the market presence to be reasonably considered dominant, may be engaged in vigorous competitive behavior that generates complaints or Bureau attention.
In what can only be described as a growing war against telecom advertising in Canada, the Competition Bureau announced on September 14, 2012 that it began proceedings in Ontario Superior Court against Bell Canada (“Bell”), Rogers Communications (“Rogers”), TELUS Corporation (“TELUS”) and the Canadian Wireless Telecommunications Association (“CWTA”) for alleged misleading advertising in relation to “premium texting services” (see: Competition Bureau Sues Bell, Rogers and Telus for Misleading Consumers: Bureau Seeks Customer Refunds and $31 Million in Penalties).
The Bureau is seeking both the maximum civil penalties available under the Competition Act (the “Act”) against Bell, Rogers and TELUS, as well as full restitution for consumers (amendments to the Act in 2009 both significantly increased the monetary penalties for misleading advertising and introduced a new restitution penalty). The Bureau is seeking a $1 million AMP against the CWTA.
According to the Bureau’s allegations, Bell, Rogers and TELUS (together with the CWTA) facilitated the sale of 3rd party premium-rate digital content – for example, news, advice, alerts, trivia quotations, horoscopes and ringtones – without adequate disclosure of their fees and suggestions were made in advertising for these products that the services were free.
In making the announcement the Bureau said:
“’Our investigation revealed that consumers were under the false impression that certain texts and apps were free,’ said Melanie Aitken, Commissioner of Competition. ‘Unfortunately, in far too many cases, consumers only became aware of unexpected and unauthorized charges on their mobile phone bills.’ The premium-rate digital content in question can cost up to $10 per transaction, and up to $40 for a monthly subscription, rates over and above standard text messaging plans.”
The premium 3rd party content was marketed through free wireless apps and online, and have been the subject of previous consumer studies (see: Paying a Premium: Consumers and Mobile Premium Services, a Public Interest Advocacy Centre report) and critical commentary (see here). The 2011 PIAC report found, among other things, that consumer premium mobile service problems were under-detected and underreported, that the industry often dismisses complaints and no agency tracks or handles related complaints (leading to a recommendation for measures to improve consumer protection in relation to premium mobile services).
This is also the most recent case is the latest in a series of high profile advertising law challenges made by the Bureau against Bell (price claims and disclaimers; see here and here), Nivea (performance claims and the general impression test; see: Nivea), Yellow Page Marketing (misleading business claims and disclaimers; see: here, here and here) and the ongoing Rogers case (performance claims, the general impression test and disclaimers; see: here).
The Bureau’s Claim & General Impression Test
The thrust of the Bureau’s Statement of Claim under Canadian competition law is twofold: first, that the wireless companies made false or misleading representations to the public online and over their wireless networks the general impression of which was that consumers could receive premium text messaging and other services free (when they were in fact charged for the content); and second, that claims were made that consumers were safeguarded from receiving and having to pay unauthorized charges, when in fact the wireless companies collected and facilitated such charges keeping a portion.
In this regard, in Canada the general misleading advertising provisions of the Act can be violated where claims are either literally false or convey a false or misleading general impression.
Interestingly, the Bureau has also imported the recent (and lower) general impression test from the Supreme Court of Canada’s decision in Richard v. Time, alleging that the telecoms’ false or misleading representations were targeted at wireless users, including “credulous, inexperienced, and vulnerable” persons, such as children.
The CWTA’s News Release and Control
In the CWTA’s news release, it indicates that it had in fact contacted the Bureau last year to investigate potential remedies for non-compliant advertising by companies utilizing Common Short Codes (and offer assistance in pursuing potential remedies), the Bureau chose instead to pursue litigation against the CWTA and the defendant telecos, that wireless carriers do not in fact create or control text messaging services (but rather only manage the billing for 3rd party creators and operators) and that the Bureau’s actions could disrupt Canadians’ access to text messaging services.
The control point made by the CWTA is an interesting, if not entirely settled point (i.e., in Canada, the degree to which a party, such as an ISP, must be linked to a false or misleading claim in order to be liable remains subject to debate).
In its Claim, the Bureau emphasizes the wireless companies’ involvement and control of the delivery of text messaging services, through third parties, alleging that the defendants are “far from being passive conduits” for the distribution of text messaging services, but rather provide third party providers with “privileged access” to their networks and the necessary infrastructure to deliver services (while collecting related revenues). According to the Bureau, the entire model for delivery of text messaging services through Short Codes and third parties has been established and is administered by the defendants, relying on their active participation.
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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September 13, 2012
The Canadian Corporate Counsel Association recently published a new article on Canada’s impending (but when?) new anti-spam legislation, entitled Canada’s Anti-spam Law: Filtering Relationships (by Yves Faguy).
Recently, on August 4, 2012, new Enhanced Labellilng for Food Allergen Regulations under the federal Food and Drugs Act came into force. These Regulations increase the labelling requirements for prepackaged foods sold in Canada containing specific types of priority allergens, gluten sources and added sulphites (see: Canada’s new food allergen labelling regulations came into force).
Health Canada has also issued a Food Allergen Precaution Statement Policy, which recommends that food manufacturers and importers voluntarily make declarations on the labels of prepackaged foods of the possible inadvertent presence of allergens.
On September 11, 2012, the Competition Bureau announced that it had laid charges against Progressive Waste Solutions Ltd. and its subsidiary, BFI Canada Inc. for allegations of breaches of a consent agreement following the merger in 2012 of IESI-BFC Ltd. and Waste Services Inc.
In making the announcement, the Bureau said:
“’Today’s announcement sends a strong signal to businesses that breaching a Consent Agreement with the Competition Bureau is an extremely serious matter and will not be tolerated’, said Melanie Aitken, Commissioner of Competition. ‘Consent Agreements are an essential tool to preserve competition and protect consumers from potential anti-competitive harm. Companies who violate the terms of such agreements must be held to account.’”
This announcement is another indication both of the Bureau’s more aggressive enforcement of the Competition Act generally and signals the Bureau’s ongoing appetite to take steps to ensure that settlement agreements under the Act are complied with. In this regard, this case is the third recently announced case in which the Bureau has commenced enforcement steps, including criminal enforcement, relating to alleged breaches of consent agreements (see also: Bureau Seeks Criminal Penalties in Alleged Misleading Advertising and Breach of Consent Agreement Case and Commissioner of Competition Speech Highlights Enhanced Competition Bureau Enforcement).
This case also appears to indicate that the Bureau is making good on its commitments to both monitor the marketplace generally for conduct that potentially violates the Competition Act and for potential violations of consent agreements negotiated with parties in misleading advertising, merger and other cases.
For example in one recent speech, the Commissioner said that the Bureau will “continue to be vigilant in monitoring consent agreements” and would not “hesitate to take further enforcement action as warranted”. Bureau personnel have also indicated in other recent public remarks that they continue to periodically monitor online advertising and marketing for Competition Act compliance and business media for mergers that, while not notifiable, may raise competition concerns.
CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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In my inbox this morning was a newsletter with what I thought was a rather good note by Dale Joerling (Thompson Coburn LLP – St. Louis) on avoiding issues when running a sweepstakes in the U.S.
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
