Canadian COMPETITION LAW

November 18, 2009

The Globe and Mail reported earlier today that Telus Communications has commenced an action against Rogers Communications in British Columbia for alleged misleading advertising in relation to its network.

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November 9, 2009

CANADIAN COMPETITION ACT AMENDMENTS

Earlier this year, sweeping amendments were made to Canada’s 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 amendments, including to the criminal conspiracy provisions, will come into effect in March next year.

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Random Advertisements.

One form of Internet advertising.  Office of the Privacy Commissioner of Canada, Policy Position on Online Behavioural Advertising: “These are ads that are randomly placed. Since these advertisements are not based on website content or user preferences, they would typically be less economically successful to marketers.”

Random or ‘random draw’ contest. 

Contests generally fall into two categories: skill contests (e.g., judged story-writing, photography or other skill competitions) and random contests (e.g., contests where winners are selected by random draw).  Random contests can include random draws, seeded games (e.g., where prizes may be found under bottle caps, etc.), scratch-and-win cards, instant win games online or so-called “match and win” games (in which participants collect game pieces for a game, puzzle, etc.).

A “random draw” type of contest is one in which winners are chosen by a random draw from all eligible entries received (as opposed to, for example, a skill contest, where a contest entrant may have to compete with other entrants to win prizes).

B. Pritchard & S. Vogt, Advertising and Marketing Law in Canada, 4^th ed. (Toronto: LexisNexis, 2012): “Contests can be divided into two broad categories: skill contests and contests where prizes are awarded randomly.  Until recently, skill contests – where winners are selected by experienced judges based on the contestants’ skill at story-writing, photography, etc. – were much less common.  Contests where winners are chosen at random include: sweepstakes where prizes are awarded by random draw; seeded games (including Coke’s ‘under the bottle cap’ promotions and Tim Hortons’ ‘Roll Up The Rim To Win’), where prizes are randomly seeded on game cards or on-pack, and participants must scratch, unpeel or otherwise reveal the prize area to discover whether they have won a prize; online instant win games where consumers enter a code number (usually obtained on-pack); and ‘match and win’ games where participants must collect game pieces to spell specific words or match the pieces of a puzzle.”

For more information about Canadian contest/sweepstakes law, see: Contests, Contests and CASL, Contest FAQs, Contest Tips and Contests and Social Media.

For information about the Canadian contest/sweepstakes precedents (template rules) and checklists that we offer for sale, see: Canadian Contest Forms/Precedents.

Ransomware.

A form of online fraud.

Canadian Anti-Fraud Centre: “Computers being frozen or [locking out] their users.  This happens primarily after complainants receive pop-up messages warning them their computers have been associated with child pornography and illegal music downloading.  These warning messages, which claim to come from the RCMP or other Canadian government agencies, tell recipients to pay [money] so their computers can be ‘unlocked.’  These types of messages, known as ransomware, are scams designed to create shock and anxiety so that victims respond by sending money quickly.”

Rebate.

Competition Bureau, Enforcement Guidelines, Consumer Rebate Promotions (2009):  “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.  Rebates can be beneficial to both consumers and businesses. For consumers, rebates can result in lower effective prices.  For businesses, rebates provide a flexible tool that may increase the volume of sales.  However, when rebates are not promoted or administered correctly, consumers may ultimately pay more than intended, and competitors can be unfairly disadvantaged.  There are two types of rebates: Instant rebates – Consumers receive the rebate at the time of purchase. The rebate is generally available to anyone who purchases the product, without further condition; Mail-in rebates – Consumers apply for the rebate after the purchase, by mail-in application, online or by other means.  ‘mail-in rebate’ includes mail-in, Internet and other delayed- payment rebates.  Various market participants may be involved in promoting and administering rebates.”

Competition Bureau, News Release, “Are You Getting the Real Deal?  Understand Rebate Promotions Before You Buy” (December 14, 2009): “True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

Consumers Council of Canada:  “True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

Regulated conduct defence.

Competition Bureau contribution, OECD Policy Roundtable, Regulated Conduct Defence (2011): “The [“regulated conduct defence” (“RCD”)] is one of a number of interpretive tools developed by Canadian courts to resolve potential conflicts between validly enacted laws. Under certain limited conditions, the RCD, and other interpretive tools, may remove from the application of the [Competition Act] conduct that is authorized or required by another federal, provincial or municipal law or legislative regime.”

OECD, Policy Roundtable, Regulated Conduct Defence (2011): “The regulated conduct defence allows antitrust immunity where conduct is required by federal or state regulation.  The regulated conduct defence is important to ensure that the state can exercise its sovereign power to apply regulation that it deems justified for economic and/or social reasons even though the regulation may conflict with competition policy.  The defence is also important to ensure firms do not face multiple inconsistent legal demands, in particular from regulations and competition law.  Nevertheless, the regulated conduct defence also bears important risks including high potential costs for society.  Indeed, the defence may preserve unduly anti-competitive regulation entailing welfare cost not necessary for achieving the regulatory objective.  The defence may also lead to competition law exemptions of only weakly regulated conduct.”

R. v. Independent Order of Foresters (1989), 26 C.P.R. (3d) 229 (Ont. C.A.): “The [regulated conduct defence] simply means that a person obeying a valid provincial statute may in certain circumstances, be exempted from the provision of a valid federal statute.  But there can be no exemption unless there is a direction or at least authorization to perform the prohibited act.”

Industrial Milk Producers Association v. British Columbia (Milk Board) (1988), [1989] 1 F.C. 463 (Fed. T.D.), per Reed J.: “… I accept counsel for the plaintiffs’ argument that it is a regulated industry defence, not an exemption which is pertinent.  Indeed as I read the cases it is a regulated conduct defence.  It is not accurate merely to identify an industry as one which is regulated by federal or provincial legislation and then conclude that all activities carried on by individuals in that industry are exempt from the Competition Act.  It is not the various industries as a whole, which are exempt … but merely activities which are required or authorized by the federal or provincial legislation as the case may be.  If individuals involved in the regulation of a market situation use their statutory authority as a spring board (or disguise) to engage in anti-competitive practices beyond what is authorized by the relevant regulatory statute then such individuals will be in breach of the Competition Act.”  [emphasis in original]

Overview of Some Aspects of the RCD in Canada

The regulated conduct defence (“RCD”), which has been partially codified in subsection 45(7) of the Competition Act as a result of the 2009 amendments to the Act, is the Canadian equivalent of the U.S. state action immunity doctrine.  When met, the RCD offers a form of immunity from enforcement under the Competition Act for legislatively authorized or mandated conduct.  As such, the RCD can operate as a defence to some types of activities that would otherwise be subject to the Act.

The Competition Bureau’s “Regulated” Conduct Bulletin (the “RCD Bulletin”) sets out the Bureau’s general approach to the RCD in light of the amendments to the Act.  For the RCD to apply, all of the following requirements must be met: (a) valid legislation, (b) conduct is legislatively mandated or authorized, (c) the authority to regulate has been exercised and (d) the regulatory scheme has not been hindered or frustrated by the conduct (or used as a “shield” to engage in unauthorized anti-competitive conduct).

Before the 2009 amendments to the Competition Act, it was not clear whether the RCD would apply as a defence in relation to provisions of the Act that did not contain so-called “leeway” language indicating that other legislation may apply (e.g., the phrase “unduly” preventing or lessening competition under the former section 45).  This uncertainty arose as a result of the Supreme Court of Canada’s decision in Garland v. Consumers’ Gas Co. which held that in the absence of such “leeway” language in the relevant federal legislation the RCD would not apply. This issue may now have been removed, at least with respect of the application of the RCD under section 45 (conspiracy agreements), given that subsection 45(7) now expressly refers to the former common law RCD as a defence.

The addition of the RCD to section 45, however, raises new questions including whether and to what extent the RCD continues to apply as a defence to other provisions of the Act.  With respect to other criminal offences under the Act, the Bureau’s position in its RCD Bulletin is that it will apply Garland to determine whether Parliament intended that the particular provision apply to the conduct and, if so, it “may still refrain from pursuing the case in reliance on the RCD.”  With respect to civil reviewable matters, the Bureau takes a more cautious approach stating that until RCD case law is further developed, it will consider the RCD in relation to reviewable matters but “will not consider RCD case law to be dispositive.”

The fact that this former common law defence has been partially codified under section 45 also does not resolve some of the existing uncertainties about its scope and application.  These include whether the RCD: (i) operates as a defence or an exception under other provisions of the Competition Act, (ii) applies equally to regulated persons (so-called “regulatees”) as to regulators, (iii) applies to civil reviewable matters as it does to criminal offences, (iv) applies in the federal sphere (i.e., where federal legislation provides the authorization for challenged conduct) and (v) the level of legislative authorization needed to invoke the RCD.

REQUIREMENTS

Valid legislation

The first condition for the application of the RCD is that there be validly enacted provincial or federal legislation mandating or authorizing challenged conduct. This is based on the principle that competition law liability should not be incurred for activities that are directed or authorized by other validly enacted legislation.

The mere fact that a particular industry or profession is generally regulated, however, will not provide a shield from the application of Canadian competition law.  For example, in Industrial Milk, the court held: “[i]t is not the various [regulated] industries as a whole, which are exempt from the application of the Competition Act but merely activities which are required or authorized by the federal or provincial legislation as the case may be.”

Conduct is mandated or authorized

The second condition for invoking the RCD is that the challenged conduct must be required or authorized by validly enacted provincial or federal legislation.

With respect to the degree of authorization, Canadian courts have held that the RCD may apply not only where conduct is mandated but also where there is specific or general authorization for the challenged activities.  The Bureau has also acknowledged that the RCD may apply where conduct is merely authorized as opposed to being mandated or compelled.

Despite the fact, however, that some Canadian courts have held that mere general authorization is enough to invoke the RCD, the level of authorization required remains unclear and unsettled.  For example, in the Law Society case, the Ontario General Division held that the “regulated conduct defence will apply to individuals and companies which are subject to regulation, and to regulatory agencies themselves, provided the impugned conduct is mandated, required or authorized by validly enacted legislation.  Similarly, in Industrial Milk, the court held that activities that are required or merely authorized by federal or provincial legislation may be exempt from the application of the Competition Act.

Despite these cases, Canadian courts have been inconsistent in articulating the degree of authorization needed to invoke the RCD.  For example, in Jabour, the Supreme Court of Canada held that a “broadly styled” mandate to determine what constituted “conduct unbecoming” lawyers was sufficient authority for the Law Society of British Columbia to invoke the RCD as a defence to regulating members’ advertising, despite the fact that the Law Society’s statutory authority did not specifically address advertising.

Based on the Supreme Court’s liberal application of the RCD, Jabour is considered to be the “high water mark” for a permissive approach to the level of authorization needed to invoke the RCD.  By contrast, some later cases have taken a more restrictive approach.  For example, in Mortimer, a by-law enacted by an association of land surveyors establishing mandatory minimum fee tariffs was challenged.  The British Columbia Supreme Court held that the RCD did not apply because, while the association’s enabling legislation granted some tariff-making powers, it was not clear that the legislation included the power to set minimum tariffs or fees.  The enabling legislation was construed strictly by the Court, which held that if the legislature had intended to give the association the power to set mandatory minimum tariffs it would have clearly done so.

Given that conduct must be mandated or authorized for the RCD to apply, courts in several cases have similarly refused to apply the RCD where there was no legislative authority for the challenged conduct.  For example, the RCD was held not to apply to a county law association that had not been delegated the authority to enforce a minimum fee schedule.  In another case, a Quebec notaries association pleaded guilty to conspiring to fix the prices of real estate services where the Quebec government no longer regulated notarial fees.

Regulatory authority exercised

The third requirement to invoke the RCD is that the regulatory power conferred by legislation must be exercised.  The RCD will not apply where a regulator has forborne from regulating.

For example, in B.C. Fruit Growers Association, members of a fruit growers association entered into an agreement with fruit packing houses to refuse to supply services to non-member growers.  The fruit growers association argued that the former Combines Investigation Act did not apply on the basis that there was authorization for the actions of the accused, given that the relevant legislation provided for a marketing board to be appointed to regulate the operation of packing houses.  The Court rejected this argument, finding that although a marketing board had been legislatively established, it had not exercised any authority it might have had to restrict the supply of packing services.

Regulatory scheme not frustrated

Finally, the RCD will only apply where the exercise of regulatory authority has not been frustrated by the conduct being regulated.  For example, in R. v. Canadian Breweries Ltd., it was held that if the regulation of an industry is hindered by the behavior of those subject to the regulation, the RCD will not apply to protect them.

The RCD also cannot be used by a regulatory body as a shield for anti-competitive conduct outside the scope of the statutory regime.   For example, in Industrial Milk, it was held that if “individuals involved in the regulation of a market situation use their statutory authority as a spring board (or disguise) to engage in anti-competitive practices beyond what is authorized by the relevant regulatory statute then such individuals will be in breach of the Competition Act”.

Reloading.

A form of fraud.

U.S. Federal Trade Commission: “Double scammers are known as ‘reloaders.’  They use several methods to rip off consumers: (i) they call – claiming to work for a government agency, a private company, or a consumer organization that could recover money you lost or a product or prize that hasn’t been delivered yet – for a fee.  The catch is that the second caller is following up on the first fraud, and may even work for the company that took your money originally.  If you pay the recovery fee, you will have been fooled twice.  You can expect more calls – and more convincing stories; (ii) another scam uses prizes as incentives to get you to continue to buy merchandise.  If you make one purchase, chances are you will get a second call claiming you’re eligible to win a more valuable prize if you keep buying.  The second caller makes you think that buying more merchandise increases your chances of winning.  If you act on the offer, you may be called yet again with the same sales pitch.”

Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “These target the same victims again and again.  Persons victimized once are most likely to be deceived repeatedly.  Unfortunately, victims’ understandable desires to recover their original losses make them more vulnerable to further schemes. This is known as ‘reloading’ or ‘loading.’  Those who ‘invest’ money are ‘reloaded’ for more to protect or increase their investment, those asked for customs or shipping fees are ‘reloaded’ for additional charges, and those who give to a spurious ‘worthy cause’ are often ‘reloaded’ for further donations.
 ’Recovery room’ schemes exploit the victim’s desire to recover losses from previous frauds.  Offenders, often from the same organization which defrauded the victim in the first place, call with inside knowledge of the fraud and a promise to recover the losses if ‘taxes’ or ‘fees’ are paid.  A common tactic of callers is to represent themselves as law-enforcement or other government or professional employees (e.g., bank or stock-exchange officials), using inside knowledge of the victim and the fraud to establish credibility.  ‘Recovery room’ operations frequently deprive victims of their last remaining funds.”

Robocall.

A term used in the telemarketing industry to refer to the use of “automated calling devices”.

See e.g., CRTC: “Automated calling devices are used to dial telephone numbers and automatically deliver a pre-recorded message. The CRTC’s Automatic Dialing and Announcing Device Rules prohibit telemarketers from using these devices to sell or promote a product or service unless a consumer has consented to be called by them.  They can, however, be used by police and fire departments, schools and hospitals if they have a valid public service message to communicate. Automated calling devices can also be used for appointment reminders and thank you calls.”

U.S. Federal Trade Commission: “If you pick up the phone and hear a recorded message instead of a live person, that’s a robocall.  If the recording is a sales message (not a call from your healthcare provider or a charity), and you haven’t given your written permission to get calls from the company on the other end, the call is illegal.  Period.”

Romance scam.

A type of fraud.

Canadian Anti-Fraud Centre: “Generally, Romance scams involve the victim and the fraudster meeting through a social networking site. The fraudster will gain the trust of the victim through displays of affection. While the fraudster is usually located in a far away country, eventually want to meet the victim in person.  It is at this time the fraudster will advise they can’t afford to travel and will seek assistance from the victim in covering travel cost.  Other variations include the fraudster presenting situations of emergency/ urgency, such as a sick family member, and seeking financial assistance from the victim for various costs.   Some incidents have also occurred at the local level and involved the victims actually meeting the suspects to go out on dates and meeting at the victim residence.  These cases are creating concerns for personal safety.  For example, in one incident the victim reported having her wallet and some jewelry stolen from home.”

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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

QR code or “quick scan response code”.

Canada Business Network blog: “As mobile technology develops and smartphone ownership increases, your customers may want to access your business through QR codes. By using a camera on their cell phone to scan quick response (QR) codes, potential customers can reach your website immediately for more product information or a special offer linked directly to the code. But why not also target your mobile-equipped audience to measure the success of specific marketing campaigns?  QR codes are black modules of pixels arranged in a square pattern on a white background that can ease the offline-to-online consumer experience. These specific matrix codes hold up to 7,089 characters compared to the 20-digit capacity of a typical bar code, so you can embed more information.  Analytics tools show your codes’ performance, allowing you to use the data for future decisions. (…)  Let QR codes build business by placing them: in print ads to drive customers to your website where they can enter a contest, claim a coupon or access exclusive content; on packaging to link directly to product reviews or detailed information that can help drive the purchasing decision; on your storefront to entice savvy customers in for a freebie; on your business card to link to a promo video about your work or your latest blog post.”

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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

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

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. (4^th) 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

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