Canadian COMPETITION LAW

March 9, 2023

On March 8, 2023, Toronto’s CityNews reported that some entrants into Tim Hortons (Tim’s) iconic Canadian Roll Up To Win contest were notified via Tim’s app that they had won a $10,000 American Express pre-paid card, when the notification was the result of a technical error (see: Roll Up To Win players upset after $10K AMEX card win was result of technical error).

According to CityNews’ reporting, some contest entrants were notified via Tim’s app that they had won a $10,000 AMEX card stating “WINNER!*” that later disappeared from the app. The prize notification (which some entrants took screenshots of) was qualified by a disclaimer under the headline announcement stating “*to be verified”.

Tim’s digital support team later reportedly contacted entrants that were incorrectly notified that they had won a prize informing them that a technical error caused the issue for a “small subset of Roll Up To Win players”.

In the past, this long-running national Canadian promotional contest operated by customers physically rolling up the rim of paper coffee cups in Tim’s stores. In recent years, Tim’s migrated its annual contest to an e-platform.

According to some entrants, they were offered a $50 Tim’s gift card instead of the $10,000 AMEX card they were first notified that they had won.

The technical issues that arose in this contest are an excellent example of the importance of having good contest rules (i.e., both short or “mini” rules and long contest rules) in place for a promotion in the event of a technical failure or other issue that affects the intended operation of the contest.

In this regard, Canadian contest rules commonly include rules that stipulate that the sponsor is not responsible for a wide range of technical issues that may arise during the promotion (including “technical failures of any kind”) and a right for the sponsor to terminate or amend the contest for any reason, including if the contest is not capable of running as planned.

Good contest rules protect sponsors from potential regulatory complaints (e.g., Competition Bureau complaints) and litigation in the event that some entrants claim that a sponsor did not fulfill the terms of the contest. In this respect, in Canada contest rules have been held to be contracts between entrants entering the contest (i.e., agreement by performance) and the sponsor fulfilling the terms of the contract (i.e., as set out in the contest rules).

In many cases, however, the greater concern for contest sponsors when technical issues arise (e.g., false winner notifications, other issues relating to contest draws or prize substitutions) is the potential negative PR that, as in this case, can arise when entrants feel that the sponsor has misled consumers that can negatively impact the brand. In this respect, some sponsors elect to award an entrant that has not technically won the contest the prize in any event to minimize potential negative PR risk.

In this case, there is an additional potential misleading advertising issue in that some entrants were reportedly notified that they were a “WINNER!*”. While these notifications included a disclaimer stating “to be verified”, there is nonetheless a risk in making literally false headline marketing related claims to consumers where there is an attempt to modify or qualify a headline claim that may be literally false.

The Competition Bureau has taken the enforcement position in the past that a disclaimer cannot cure an otherwise literally false headline marketing claim. For more information on disclaimers under Canadian advertising law, see: Disclaimers and General Impression Test.

For more information about Canadian contest laws, see: Contests, Contests and CASL, Contest FAQs and Contests and Social Media.

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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 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.

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.

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CANADIAN CONTEST LAW TIPS

The following are some key legal tips for operating a successful and legal contest in Canada:

Criminal Code

Avoid the illegal lottery offences of the Criminal Code (e.g., include a bona fide “no purchase necessary” entry option and skill element, such as a time-limited, multiple-step mathematical question for potential winners as a condition of awarding prizes).

Short Rules (Mini Rules)

Include short rules / mini-rules with all of the required Competition Act disclosure requirements for point-of-purchase materials (e.g., print and in-store marketing, social media and Internet sites, packaging and labeling, television and radio spots, etc.).

For more information, see: Canadian Contest Forms & Precedents.

Long Rules (Official Contest Rules)

Ensure that precise long rules (i.e., the official contest rules) are included that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems) and set out the terms of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and value of prizes, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.

Contests are contracts, and so they should be as accurate, clear and precise as possible in the event issues arise.

For more information, see: Canadian Contest Forms & Precedents.

Winner Release Forms

Consider using winner release forms for contest winners.

While not required by law in Canada, winner release forms are almost always used by contest sponsors to have winners confirm that they have complied with all contest rules and release the sponsor from legal liability. Signing and returning winner releases is also commonly included in contest rules as a condition of awarding a prize.

Winner release forms are particularly important for contests in which there may be higher risk (e.g., where the contest involves high value prizes or a trip prize). For trip contests, sponsors are generally advised to use winner releases for both winners and any travel companions (and guardian releases for any minor companions).

For more information, see: Canadian Contest Forms & Precedents.

False or Misleading Advertising

Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general civil and criminal misleading advertising sections of the Competition Act, under sections 74.01 and 52).

In this regard, contests in Canada must comply not only with stand-alone contest provisions of the Competition Act (under section 74.06) but also with the general misleading advertising sections of the Competition Act.

It is particularly important to ensure that the marketing materials also matches the contest rules and that all material aspects of the contest (e.g., number and type of prizes, prize values, how to enter and win and any conditions/limitations) are accurately described in the short rules, long rules and marketing materials.

Canadian Federal Anti-spam Law (CASL)

Comply with Canada’s federal anti-spam legislation (CASL).

CASL is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants are either required or incentivized (e.g., through additional entries) to “share” the contest with friends or family.

Given the potentially severe penalties for violating CASL, which include AMPs of up to CDN $10 million, it is very important for contest sponsors to ensure that they comply with CASL for any electronic marketing related to promotional contests open to Canadians.

For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.

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CASL Compliance Checklists and Precedents: For information about the CASL compliance checklists and precedents we offer, see: CASL Compliance Checklists and Precedents.

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INTELLECTUAL PROPERTY CONSENTS

Consider whether consents are needed (and if necessary obtained) to reproduce third-party intellectual property – for example, trade-marks, logos, etc. – or to transfer ownership in contest materials – for example, where contestants create original material as part of the contest.

Contest rules in Canada commonly include rights (e.g., a licence) for the sponsor to use information and content contributed by entrants and if entrants will be contributing original content (e.g., photographs, essays, etc.) it is also a good practice for sponsors to include guidelines relating to their rights to use (or reject) any entrant contributed content.

For more information, see: Guidelines For Consumer Generated Content Contests.

U.S. LEGAL ADVICE IF OPEN IN THE U.S.

Seek U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.

SOCIAL MEDIA PLATFORM RULES

Comply with social media sites’ terms of use if using social media to promote or host a contest (e.g., Facebook’s Promotions Rules).

Also ensure that appropriate disclosures are made in all social media marketing (i.e., include short rules).

For more information, see: Contests and Social Media.

OTHER COMPETITION LAW
AND ADVERTISING LAWS

Consider whether other competition or advertising law rules may apply to a contest. For example, in addition to the stand-alone contest provision (section 74.06), the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising (sections 52 and 74.01) and telemarketing that involves prizes.

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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

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