Canadian COMPETITION LAW

Do you need contest rules/precedents
for a Canadian contest?

We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada).  These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more.  Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist.  For more information or to order, see: Canadian Contest Law Forms/Precedents.  If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.

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In Canada, “competition law” overlaps with advertising and marketing law. One of the reasons for this is because the federal Competition Act in Canada includes a number of advertising and marketing law sections, including some specific provisions relating to promotional contests. (Though of course contests in Canada can involve a number of other areas of law including: contract law, the Criminal Code, privacy law, intellectual property law and now Canada’s recently in force anti-spam law – CASL.)

Based on the Competition Act sections and my own general interest in contests (as well as my contest law site – see: Canadian Contest & Promotions Law), I tend to both work on a lot of contests and receive quite a few contest related questions and calls.  For example, a few days ago I received a few new Canadian contest law related questions over the web with a request that I write a post on them. I thought they were interesting too so I thought I would write a short note on them:

CASL (anti-spam law) consent: Is it valid consent if entrants are only providing consent conditional on a chance to win a contest? It is true that the coming into force of Canada’s new anti-spam law (CASL) on July 1^st has added some requirements for contests open to Canadians. One of the approaches I am taking regarding CASL consent and contest entries is to recommend that valid CASL consents are obtained prior to any commercial electronic marketing to entrants. One approach is to modify online entry forms to include un-coupled, CASL compliant consents (i.e., that include the prescribed CASL company ID information, opt-in consent, purpose of subsequent marketing – e.g., to administer the contest or subsequent marketing, confirmation e-mail and unsubscribe option). Of course, there are other ways to obtain CASL consents and companies may already have CASL compliant marketing lists now (which likely will soon grow). In addition to complying with CASL consent requirements during a contest, however, all companies and individuals marketing to Canadians need to comply with CASL’s various other requirements (e.g., record-keeping obligations and being able to document consent, prompt unsubscribes, maintaining current contact information, etc.).

Consideration and providing personal information / CASL consent: Does this violate the Criminal Code? It is true that requiring consideration as a condition of entering a contest in Canada can (but not always) violate the illegal lottery offences under the Criminal Code. For example, requiring payment (or something else of value) to be provided as a condition of entering a pure chance or mixed chance and skill promotion where the prizes listed in section 206 of the Criminal Code are to be awarded can be rather risky indeed. To avoid this risk for pure chance or mixed chance and skill contests many promoters commonly include a bona fide “no purchase required” entry option. What is “consideration”? Well, Canadian contest law is rather antiquated and often inconsistent. As such, unless you want to retain a contest lawyer to write you an opinion on the last century of Canadian contest law, conservative promoters will as I say often err on the side of caution by removing all consideration (apart from some specific types of promotions, such as pure skill contests where consideration may be required in some instances). So is providing personal information or CASL consent “consideration”? Arguably yes. As such, in the world before CASL, conservative promoters would include a contest term that essentially said that consent to be marketed to for the purposes of a privacy law consent could be withdrawn. In the case of CASL, while there is no guidance that I am aware of as of yet, I would have thought that conservative contest promoters would extend their “withdrawal of privacy law consent” term in contest rules to include CASL consents (i.e., that entrants can opt out of receiving electronic communications via e-mail, etc. during or following a contest).

“Opt-in to win” contests: Is requiring entrants to opt in to be added to mailing lists offside the law? This question overlaps a bit with the above questions (see above re: CASL and Criminal Code compliance). However, this question also raises another basic but important aspect of contest law where the intention is to market to entrants – i.e., privacy law. Where entrants’ personal information is to be collected and used for subsequent marketing some common-sense tips include: (i) including the sponsor’s privacy policy; (ii) setting out what information will be collected, what it will be used for and for how long in the contest rules; and (iii) taking steps to ensure that informed consent for collecting and using personal information is included in the “call to action” (i.e., upfront in contest marketing, upfront in contest short rules, etc.). And, in addition, as I say above – what to do to reduce risk of potential “consideration issues” arising under the Criminal Code with “mandatory opt-ins” for either personal information or CASL consent? One approach is to give entrants the right to opt out from marketing or electronic marketing, which is now that I think about it not unlike already commonly used bona fide “no purchase required” entry options.

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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 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, across 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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