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 for running common types of contests in Canada). These include legal 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.
We also offer specific types of Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist.
For more information and to order see: Canadian Contest Law Forms/Precedents.
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SIGNIFICANT COMPETITION ACT AMENDMENTS CAME INTO FORCE
ON DECEMBER 15, 2023 (Bill C-56)
On December 15, 2023, Bill C-56 (An Act to amend the Excise Tax Act and the Competition Act), which introduces the first of two sweeping rounds of federal Competition Act (“Act”) amendments in Canada together with Bill C-59, received royal assent.
This first new round of amendments to the Act, which is intended, among other things, to strengthen the ability of private parties and the Competition Bureau to enforce the Act and competition in Canada overall, includes a number of fundamental changes to Canadian competition law. Bill C-59, once it is passed (expected in early 2024), will likely include a number of advertising/marketing law related amendments, including related to drip-pricing and green (environmental) claims.
These initial amendments under Bill C-56 include new broad powers for the Competition Bureau to conduct market studies, fundamental changes to the substantive test for abuse of dominance under section 79 of the Act (creating a new two-track test for abuse of dominance), new penalties for abuse of dominance, broadening the civil agreements provision (section 90.1) to include agreements between non-competitors, repealing the efficiencies provisions under section 90.1 and repealing the former efficiencies defence for mergers under section 96.
Our blog overview pages will be updated to reflect these important amendments, as well as the second round of amendments under Bill C-59, which are expected to come into force in early 2024.
For more information, see: Competition Bureau, Guide to the December 2023 amendments to the Competition Act.
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OVERVIEW OF CANADIAN
ADVERTISING/MARKETING LAWS
Advertising in Canada is primarily regulated at the federal and provincial levels.
These include laws of “general application” (e.g., the general misleading advertising provisions of the federal Competition Act and provincial consumer protection legislation) and legislation governing particular types of advertising, such as drip pricing, performance claims, anti-spam law (CASL), promotional contests, packaging and labeling and food and drug advertising.
In addition to legislative rules, there are a variety of sector and profession specific codes of conduct, as well as social media sites’ rules, that can apply, depending on the type of marketing.
A significant part of advertising law is determining whether a particular type of advertising, such as a performance claim, contest, endorsement/testimonial or claims relating to a specific industry, is subject to regulatory rules. Some of the most important areas of Canadian advertising law are summarized below and in the pages on this site.
Given the potential penalties and negative impact on a brand, it is advisable for advertisers, their agencies and counsel to ensure that marketing campaigns comply with Canadian laws before launch.
COMPETITION ACT
At the federal level, the Competition Act is the primary legislation governing advertising and marketing. The Competition Act contains both general criminal and civil misleading advertising provisions, which prohibit false or misleading representations made to the public to promote a product or any business interest.
The Competition Act also contains many provisions that prohibit or regulate specific types of advertising practices. These include sections relating to drip pricing, performance claims, testimonials, bait-and-switch advertising, sales above advertised prices, ordinary selling price (OSP) provisions, promotional contests, telemarketing, multi-level marketing, pyramid selling schemes and double ticketing.
In general, it is important before conducting a particular type of marketing to review whether any provisions of the Competition Act may apply (e.g., to ensure that endorsements/testimonials are not false or misleading, that performance claims meet the statutory test under the Act, that a contest complies with the Competition Act’s disclosure provisions or that the required disclosures are made for telemarketing).
The potential penalties for violating the civil misleading advertising provisions of the Competition Act include Competition Tribunal or court orders to cease the conduct, publish a corrective notice, pay restitution and administrative monetary penalties (AMPs): (i) for individuals, up to the greater of $750,000 ($1 million for each subsequent order) and three times the value of the benefit derived from the deceptive conduct if that amount can be reasonably determined; and (ii) for corporations, up to the greater of $10 million ($15 million for each subsequent order), three times the value of the benefit obtained from the deceptive conduct or, if the latter amount cannot be reasonably determined, 3% of the company’s annual worldwide gross revenues.
The potential penalties for contravening the criminal misleading advertising sections of the Competition Act include imprisonment and criminal fines.
For more information about Canadian competition law, see Canadian Competition & Regulatory Law.
CONSUMER PROTECTION LEGISLATION
In addition to the federal Competition Act, provincial consumer protection legislation exists across Canada.
Canadian provincial consumer protection rules differ depending on the particular province, but generally include both general misleading advertising rules (for example, false, misleading or deceptive representations about products or services) and rules governing specific industry sectors (for example, direct sales, gift cards, auto repairs, fitness clubs and payday loans).
ANTI-SPAM LAW (CASL)
In 2014, Canada’s federal anti-spam law (CASL), one of the strictest anti-spam regimes in the world, came into force.
In general, CASL imposes express or implied consent requirements to send commercial electronic messages (CEMs) to Canadians (unless an exemption under CASL applies) and imposes prescribed sender identification information and unsubscribe requirements for CEMs.
CASL and Contests
CASL is often relevant when running contests in Canada, including in the following situations:
1. If electronic distribution lists will be used to market the contest.
2. The contest will include the collection of e-mails for marketing unrelated to administration of the contest.
3. If entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers).
4. If entrants can “share” the contest with friends or family for additional entries.
Given the potentially severe penalties for violating CASL, which include administrative penalties of up to CDN $10 million, it is important for contest sponsors to ensure that they comply with CASL for electronic marketing related to promotional contests open to Canadians.
For more information about contests and CASL, see: Contest Law and CASL and CASL Compliance Errors.
For CASL checklists and precedents that we offer for sale, see: CASL Checklists and Precedents.
CONTESTS
Promotional contests in Canada are largely governed by the federal Competition Act, Criminal Code and contract law. Other laws can also apply depending on the type of contest, including privacy, anti-spam or intellectual property law.
On October 27, 2023, the province of Quebec made significant changes to its rules relating to publicity contests open to Quebec residents. In this regard, it repealed the provisions of the Act respecting lotteries, publicity contests, and amusement machines relating to publicity contests and repealed its former rules regarding publicity contests. As such, sponsors of contests open to Quebec residents no longer must formally file their contests with the Régie des alcools, des courses et des jeux (Régie) or pay duty (essentially a fee) to the Régie based on the value of contest prizes, file a winners report at the end of a contest or post security in Quebec, where which was formerly required in some cases. Other requirements applying to publicity contests run in Quebec were also eliminated, including the necessity to include specific Quebec-related disclosure language in contest rules and seek permission for contest modifications after launch.
Given that running a promotional contest without following Canadian laws can result in civil or criminal liability or what is often worse for promoters – adverse publicity or negative goodwill – it is important to review proposed contest rules and marketing materials for Canadian legal compliance.
Running a contest in Canada typically includes the preparation of short rules (i.e., mandatory statutory disclosure for marketing materials), long rules (i.e., the full terms and conditions for the contest), a winner release form, skill-testing question and review of draft creative materials (i.e., marketing materials) for advertising law compliance before launch.
For more information, see Contests & CASL, Contest FAQs, Contest Forms, Contest Tips, Contests & Social Media and Deceptive Prize Notices.
INDUSTRY CODES
In addition to federal and provincial advertising laws, many industries (particularly professions) have industry codes of conduct, which commonly include advertising and marketing law rules.
While such rules are generally not legislation (unless a regulator has regulatory powers relating to advertising), it can be very important to review industry rules before launching an advertising campaign.
Canada also has a national not-for-profit advertising self-regulatory body, Advertising Standards Canada, which has published the Canadian Code of Advertising Standards (the Code). The Code includes rules relating to many types of advertising and marketing practices, including price claims, bait and switch advertising, comparative advertising and testimonials.
SOCIAL MEDIA RULES
Most advertising and marketing campaigns now include some (and commonly multiple) social media sites, which may include Facebook, Twitter, Instagram, Pinterest or other social sites. Social media sites commonly include detailed terms of use, including rules governing the use of the platforms for advertising and marketing and some specific types of promotions (e.g., contests).
As such, it is prudent for advertisers to review the terms of use for the social platforms planned to be used for a promotion before launch.
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CANADIAN CONTEST & ADVERTISING LAW SERVICES
We are a Toronto based competition and advertising law firm that offers business and individual clients efficient and strategic advice in relation to Canadian competition and advertising laws, including contests/sweepstakes and other types of promotions. Our experience includes advising Canadian and U.S. clients in relation to Canadian contest/sweepstakes, advertising/marketing and competition/antitrust laws.
For more about our contest/advertising law services see: here
To contact us for Canadian contest or advertising law advice see: here
For more information about our firm, visit our website: Competitionlawyer.ca