CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
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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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February 24, 2012
In December 2010 Canada’s new anti-spam legislation was passed (the “Anti-spam Act”) which will, when it comes into force, be one of the strictest anti-spam regimes in the world (see: Anti-spam Act). The Anti-spam Act will require express or implied consent for the sending of “commercial electronic messages” or “CEMs” and also impose form (i.e., disclosure) and unsubscribe requirements for CEMs.
On February 23rd, the U.S. Department of Justice (“DoJ”) announced that two financial investors that purchased municipal tax liens at auction in New Jersey pleaded guilty to conspiring to rig bids for the sale of tax liens auctioned by municipalities in New Jersey.
In making the announcement, the DoJ said:
“Two financial investors who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for conspiring to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, N.J., against Robert W. Stein of Huntington Valley, Pa., and David M. Farber of Cherry Hill, N.J. Under the plea agreements, which are subject to court approval, Stein and Farber have both agreed to cooperate with the department’s ongoing investigation.
According to the felony charge against Stein, from as early as 1998 until approximately spring 2009, Stein participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. According to the felony charge against Farber, from as early as the beginning of 2005 through approximately February 2009, Farber also participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. The department said that both Stein and Farber proceeded to submit bids in accordance with their agreements and purchased tax liens at collusive and non-competitive interest rates. “Today’s guilty pleas demonstrate that the Antitrust Division will not tolerate those who manipulate the competitive process in order to harm home and property owners,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.”
In Canada, the federal Competition Act contains standalone bid-rigging offences under section 47 of the Competition Act. This is unlike some other major jurisdictions, where bid-rigging falls under general conspiracy (i.e., cartel) prohibitions. Under section 47 of the Competition Act, it is a criminal offence for bidders or tenderers to agree to:
1. Not submit a bid or tender;
2. Withdraw a bid or tender already submitted (an offence recently added to the Competition Act following wide-ranging amendments to the Competition Act in 2009 and 2010); or
3. Submit a bid or tender arrived at by agreement.
Bid-rigging in Canada is also a “per se” criminal offence, in that, like conspiracy agreements under section 45 of the Competition Act, it is not necessary to prove any anti-competitive effects on a relevant market (or markets) to make out an offence. All elements of the offence do, however, need to be established on the standard criminal burden of proof – i.e., beyond a reasonable doubt.
Global Competition Review (GCR) has recently published new editions of three of its highly regarded “Getting the Deal Through” Volumes: Cartel Regulation 2012, Intellectual Property & Antitrust 2012 and Dominance 2012.
On February 23, 2012, the U.S. Federal Trade Commission (“FTC”) announced that it had obtained a USD $359 million settlement order against an Alberta online marketer (Jessie Wilms) and related defendants.
In making the announcement, the FTC said:
“The Federal Trade Commission has stopped an Internet scheme that allegedly used bogus “free” product offers that deceived consumers in the United States and other countries and charged them for products and services they did not want or agree to purchase. A settlement order, reached as part of the FTC’s ongoing efforts to stamp out online marketing fraud, permanently bans Jesse Willms and his companies from using ‘negative-option’ marketing, a practice in which the seller interprets consumers’ silence or inaction as permission to charge them. The Willms settlement order imposes a judgment of $359 million that will be suspended upon Willms’s surrender of bank account funds and proceeds from the sale of his house, personal property, and corporate assets, including a Cadillac Escalade, fur coat, and artwork.
‘The fact that almost four million consumers fell prey to the lure of these ‘free trial’ offers is a stark reminder that ‘free’ offers can come at a huge price,’ said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. ‘The FTC has stopped about $1 billion in online marketing fraud during the past two years by shutting down operations like this. But consumers still need to beware, because scam artists are constantly coming up with new ways to deceive people online.’”
According to the FTC, it worked with Canadian law enforcement officials, including the Alberta Partnership Against Cross-Border Fraud and Competition Bureau.
On January 6, 2012 the Competition Bureau announced its first cartel case under Canada’s amended Competition Act, partially brought under the new section 45 of the Competition Act.
In this case, two companies pleaded guilty of fixing the price of polyurethane foam and were fined a total of C $12.5 million (see: Cartels Update: Bureau Announces $12.5 Million Fine in First Price-fixing Case Under Amended Competition Act and Competition Bureau Sends Signal to Price-Fixers with $12.5 Million Fine).
In making the announcement, believed to be one of a number of new cartel cases currently being investigated, the Bureau highlighted its stepped-up enforcement of cartels:
“’Yesterday’s guilty plea is the first conviction under Canada’s amended conspiracy law,’ said Melanie Aitken, Commissioner of Competition. ‘This investigation highlights the Bureau’s reinvigorated mandate to stop consumer harm caused by price-fixing, and to secure significant fines for these serious criminal offences.’
In other recent public remarks, the Bureau has similarly indicated that it intends to enhance its investigation of cartels under Canada’s new conspiracy (cartel) rules:
“In our Criminal work, we continue to concentrate on the, admittedly, lengthy process of ‘changing the game’— reorienting our approach at the Bureau, our processes, and our mindset to a more appropriately aggressive stance to respond, as we must, to our new more powerful criminal provisions.
As we move forward with our new criminal regime, consistency, consistency, and consistency is our focus. There will be no arbitrary relaxing of standards under the Bureau’s watch — a practice that can only impair predictability and fairness in enforcement. Further, we will use our investigative tools such as searches, wiretaps and section 11 orders.
Cartels and bid–rigging continue to be our focus, given the seriousness of this conduct, and its unambiguously harmful nature. We are committed to advancing cases that matter to Canadians, doing so in a timely manner, and following them through to the end.”
(See: Commissioner of Competition, Keynote Speech at the Canadian Bar Association 2011 Fall Conference).
Based on these and other recent developments, we will be posting overviews of Canadian conspiracy and bid-rigging laws, each concluding with practical steps companies can take to reduce potential criminal liability (and overviews of the Bureau’s Immunity and Leniency Programs, which are increasingly proving to be key for both Bureau investigations and parties to reduce liability).
For Part 1 see: here.
March 2012 will be Fraud Prevention Month. The Competition Bureau will be holding a series of three upcoming panel discussions on the topic of online and mobile mass marketing fraud, including an upcoming event at Concordia University:
“Canada’s Competition Bureau is holding a series of three panel discussions to address the issue of online and mobile mass marketing fraud. One of the discussions, organized in collaboration with Professor Mourad Debbabi, is scheduled for Tuesday, March 13 at Concordia.
Debbabi, Concordia University Research Chair in Information Systems Security, will also participate as a panellist during the discussion. “I’ll be talking about our research, which is related to fraud detection, prevention, and attribution,” he says. “For example, we conduct research on brand abuse (the false use of known brand names to attract visitors to websites), false associations, and detecting and geo-locating cybercrime servers.”
Deputy Commissioner of Competition for the Competition Bureau Lisa Campbell says the purpose of the discussions, also scheduled for March 6 in Ottawa and March 8 in Edmonton, is to promote discussion and raise public awareness about the issue of mass marketing fraud through the Internet and mobile devices.”
We read this rather fine article by Ted Banks recently on corporate antitrust compliance in Competition Policy International and reprint it here with permission. CPI is currently featuring a series of articles on corporate compliance.
By Theodore L. Banks
Ted Banks is counsel to the law firm of Schoeman Updike Kaufman & Scharf: www.schoeman.com and President of Compliance & Competition Consultants, LLC: www.complianceconsultants.com). First published in Competition Policy International (CPI) Antitrust Chronicle (February 2012(1)).
Antitrust Compliance – It’s All About the Culture
INTRODUCTION
What does it take to develop an antitrust compliance program that works? There are a lot of pieces. The employees must be presented with materials that are directly relevant to each of their jobs. It must be done in a way that is easily understandable. It must be ubiquitous, so that little or no effort is needed to gain access to information. There should also be business controls so that violations are not easy to accomplish—or difficult to detect.
We’ve known these things for a long time. In antitrust, which in many ways is the grandfather (or perhaps the godfather) of corporate compliance programs, we’ve had detailed policies, handbooks, training courses, videos, slides. No shortage of information—yet the violations continue. The Justice Department seems to have given up on compliance when it comes to antitrust. Their main method to control cartel behavior is not to encourage prevention (i.e., compliance), but to encourage confession (i.e., the amnesty program). In fact, they are apparently so disgusted with the sorry state of compliance[1] that they got a carve-out from the Federal Sentencing Guidelines when it comes to antitrust. If convicted of a violation of any other federal criminal law, the company can get credit for good intentions if its compliance program met the definition of an “effective” program. But not true for antitrust.
It is not as if antitrust is the only area where compliance programs do not seem to be making continuous improvement. The recently released 2011 National Business Ethics Survey from the Ethics Resource Center is not very encouraging. It showed an increase in companies that employees thought had a “weak ethics culture” and where employees felt pressured to ignore the company’s own ethical policies or break the law. Employees perceive there is more retaliation against employees that report wrongdoing, and more employees thought their managers were unethical. And what do they think of senior management? More perception of self-interest without being guided by ethics.
Interestingly, the failures that were identified were not ones of lack of knowledge, but were failures of culture.
Marlene Koury of Constantine Cannon LLP has written an interesting comparative article on the extension by some international enforcement agencies of protections to whistleblowers, in addition to existing immunity or leniency program protections (see: Making It Easier to Whistle While You Work).
According to the author, while approximately 50 foreign jurisdictions now have leniency programs in place, and while the U.S. pioneered leniency as a cartel detection tool, the U.S. does not yet have whistleblower protections.
In this interesting article, the author describes the fact that, for example, while the Antitrust Division of the U.S. Department of Justice, like Canada’s Competition Bureau, relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, it is limited in that it fails to offer people who are aware of, but not complicit in, cartel activity with any incentive to report:
“The question of whether U.S. antitrust enforcement should emulate foreign whistleblower rewards programs as part of a crackdown on cartels is analyzed in a recent article by a Constantine Cannon attorney: Making It Easier to Whistle While You Work.
Cartel detection and prosecution are top priorities for the Antitrust Division of the U.S. Department of Justice (“Antitrust Division”) – regardless of which political party occupies the White House. Given the often secretive nature of cartels, however, they can be hard to detect. The Antitrust Division relies on its Corporate Leniency Program to encourage self-reporting of cartel activity, by offering immunity and/or reduced sanctions.
As important as leniency programs are, however, they are limited. Given their narrow focus on those at the heart of the cartel, corporate leniency programs fail to offer people who are aware of, but not complicit in, cartel activity with any incentive to report illegal activity. This absence of an antitrust informant rewards program undoubtedly means that much cartel activity victimizing U.S. consumers goes unreported.
Over the past 10 years, four jurisdictions – South Korea, Pakistan, the United Kingdom and Hungary – have addressed the limitations of their corporate leniency programs by adding an antitrust informant, or whistleblower, rewards program. Each jurisdiction noted that the aim of adding a rewards program was to increase reporting from those who are either uninvolved in, or on the periphery, of a cartel.”
Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
