NAICS.
An industry classification system used in merger control filings in Canada and other countries, including the United States.
Naked restraint.
Competition Bureau, Competitor Collaboration Guidelines, p. 1: “restraints that are not implemented in furtherance of a legitimate collaboration, strategic alliance or joint venture.”
Common examples of naked restraints include agreements between competitors to fix prices, divide geographic markets, products or customers or restrict output. Restraints are sometimes also categorized as price and non-price restraints.
For more information, see: Conspiracy and Conspiracy FAQs. See also: Bid-Rigging.
“Naked” / “hard core” conspiracy agreement (Canadian conspiracy / cartel law term).
Difederico v. Amazon, 2023 FC 1156 (F.C.), at para 134, per Crampton C.J.: “Notwithstanding the foregoing, the form of ‘control’ discussed above is not a form of ‘control’ that was contemplated by paragraph 45(1)(a) when it was enacted by Parliament in 2010. In other words, that type of ‘control’ of prices is not a type of actus reus prescribed by paragraph 45(1)(a). As discussed at paragraphs 82-113 above, an analysis of the scheme and purpose of the Act, the relevant jurisprudence and the legislative history of sections 45 and 90.1 demonstrates that section 45 was intended to apply solely to unambiguously harmful types of agreements between competitors that involve the matters described in paragraphs 45(1)(a), (b) and (c). As Parliament was aware, those agreements are also known as “hard-core” or ‘naked’ cartel agreements.”
Difederico v. Amazon, 2023 FC 1156 (F.C.), at paras 111-13, per Crampton C.J.: “Based on my analysis of the scheme and purposes of the [Competition Act], as well as the jurisprudence and the legislative history discussed above, I conclude that Parliament intended to confine the application of section 45 to unambiguously harmful types of agreements between competitors that involve the matters described in paragraphs 45(1)(a) – (c). This unambiguously harmful conduct must be objectively intended, in the sense that a reasonable business person who is familiar with the business in question would or should know that the impugned agreement had as its object or purpose one of the prohibited types of conduct prescribed in paragraphs 45(1)(a), (b) or (c). I also conclude that other types of conduct that are only potentially anti-competitive were intended to be reviewed under section 90.1 of the Act, in order to remove the threat of criminal sanctions for potentially legitimate collaborations.”
“Narrow” most-favoured-nation (MFN) clause (competition law term).
Most favored nation (MFN) clauses are where a seller of a product or service generally agrees to provide the product/service to a buyer at a price that is no higher than that paid by another buyer (or buyers). There are a number of different type of MFN clauses, which include “wide” and “narrow” MFN clauses (which are also sometimes referred to as “parity” clauses). “Wide” MFN clauses in a supply agreement typically stipulate that the product/service cannot be offered by the seller on better terms on any other sales channels (e.g., on the supplier’s own website or through other intermediary sellers, such as distributors or on online platforms). “Narrow” MFN clauses are where a seller of a product/service agrees that only better terms will not be offered on a party’s own sales channel (e.g., on the supplier’s own website). “Narrow” MFN clauses do not, however, specify the conditions for sales on other sales channels. For more information, see: Most-favored-nation (MFN) clause.
National champion.
OECD, Directorate for Financial and Enterprise Affairs, Global Forum on Competition, Competition Policy, Industrial Policy and National Champions, Contribution from Canada (2009): “The term ‘national champion’ can have many meanings. For some, it can mean globally renowned companies that are efficient and globally diversified and inspire national pride. To others, it means the creation of domestic monopolies at the expense of domestic consumers and businesses.”
“Native advertising” or “sponsored content”.
U.S. Federal Trade Commission: “The practice of blending advertisements with news, entertainment, and other content in digital media.”
Natural monopoly.
OECD, Competition Assessment Toolkit (2011): “In a ‘natural monopoly’, one supplier can produce desired output more efficiently and at a lower cost than two or more suppliers.” “The situation in which the average cost of producing an additional unit of the good continues to decline right up to the point at which the scale of production is such that an individual supplier can meet the entire demand arising from the relevant market at a lower cost than could two, or more, suppliers if they were trying to supply the entire demand.”
Net benefit to Canada test.
The Investment Canada Act (the “ICA”) governs acquisitions of control, of Canadian businesses by non-Canadians. Where such investments exceed the review thresholds set out under the ICA, an application for review must be filed with the Investment Review Division of Investment Canada and approval obtained for the investment. In considering whether to approve a reviewable investment, the relevant test is the “net benefit to Canada test” set out in section 20 of the ICA.
See e.g., Industry Canada, Investment Canada Act, Annual Report 2009-2010: “The Minister of Industry approves an application for review only where he or she is satisfied, based on the information, written undertakings and other representations of the investor, that the investment is likely to be of net benefit to Canada. In making this determination, the Minister must consider the following factors listed in section 20 of the Act and only those factors: (a) the effect of the investment on the level and nature of economic activity in Canada, including, without limiting the generality of the foregoing, the effect on employment; on resource processing; on the utilization of parts, components and services produced in Canada; and on exports from Canada; (b) the degree and significance of participation by Canadians in the Canadian business or new Canadian business and in any industry or industries in Canada of which the Canadian business or new Canadian business forms or would form a part; (c) the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada; (d) the effect of the investment on competition within any industry or industries in Canada; (e) the compatibility of the investment with national industrial, economic and cultural policies, taking into consideration industrial, economic and cultural policy objectives enunciated by the government or legislature of any province to be significantly affected by the investment; and (f) the contribution of the investment to Canada’s ability to compete in world markets.”
Network industry.
Competition Bureau, Enforcement Guidelines, Intellectual Property Enforcement Guidelines (2000): “A network industry is an industry that exhibits network effects. These effects exist when the value or benefit derived from using a product increases with the number of other users. For example, fax machines exhibit network effects because the value of owning a fax machine clearly depends on the number of compatible fax machines in use.”
A. Douglas Melamed, U.S. Department of Justice, “Network Industries and Antitrust”, Address before the Federalist Society, Eighteenth Annual Symposium on Law and Public Policy: Competition, Free Markets and the Law (1999). “The most important characteristic — indeed, the defining characteristic — of network industries is that they involve products that are more valuable to purchasers or consumers to the extent that they are widely used. This phenomenon is known as a “network effect” or demand-side economy of scale.”
M. Schanzenbach, “Network Effects and Antitrust Law”, 2002 Stan. Tech. Law Rev. 4: “A network is any market in which the consumption of a good by one consumer has a positive impact on the value of that good’s consumption by another consumer. A telephone, for example, is only useful to an individual if others have them as well. The more people who have them, the greater the number of possible phone calls one can make, and the more valuable telephones become.”
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.”
No action letter.
One of several forms of merger control clearance under the Competition Act.
Competition Bureau, Enforcement Guidelines, Merger Review Process Guidelines (2009):“If the Commissioner is not prepared to issue an ARC [Advance Ruling Certificate] in respect of a proposed transaction, the Commissioner may issue a No-Action Letter. A No-Action Letter provides written confirmation that, in the Commissioner’s view, sufficient grounds do not exist at that time to initiate proceedings before the Tribunal under the merger provisions of the Act with respect to the proposed transaction and, therefore, the Commissioner does not, at that time, intend to make an application under section 92 of the Act in respect of the transaction.”
In August, 2011, the Competition Bureau revised its standard “no action” letter language to read:“…the Commissioner does not, at this time, intend to make an application under section 92 in respect of the proposed transaction.”See Competition Bureau, News Release, “Competition Bureau Updates Guidance on Merger Review ‘No Action’ Letters” (August 8, 2011).
See also subsection 123(2) of the Competition Act;definition of “advance ruling certificate”.
Non-coordinated effects.
One type of competitive effects in merger analysis.
European Commission, Guidelines on the assessment of horizontal mergers: “A merger may significantly impede effective competition in a market by removing important competitive constraints on one or more sellers, who consequently have increased market power. The most direct effect of the merger will be the loss of competition between the merging firms. For example, if prior to the merger one of the merging firms had raised its price, it would have lost some sales to the other merging firm. The merger removes this particular constraint. Non-merging firms in the same market can also benefit from the reduction of competitive pressure that results from the merger, since the merging firms’ price increase may switch some demand to the rival firms, which, in turn, may find it profitable to increase their prices. The reduction in these competitive constraints could lead to significant price increases in the relevant market.”
No-poaching agreement (a Canadian conspiracy/cartel law offence).
A no-poaching agreement, which is also known as a no-hire or a non-solicitation agreement, is an agreement between either employers or competing employers (depending on the jurisdiction) not to hire or solicit each other’s employees. The potential competition law concern with these types of agreements between employers is similar to wage-fixing agreements in that they can potentially prevent or lessen competition between employers in the hiring process for employees and, as such, may keep employee wages or other benefits lower than they would otherwise be absent the existence of the agreement and if employers were competing to hire employees. On June 23, 2022, Canada’s federal Competition Act was amended to prohibit wage-fixing and no-poaching agreements between employers (under section 45(1.1) of the Competition Act). Wage-fixing and no-poaching agreements are now per se criminal conspiracy offences subject to fines in the discretion of the court (i.e., without statutory limit), imprisonment for up to 14 years, or both. These amendments came into force on June 23, 2023. Canada’s Competition Bureau has also issued Enforcement Guidelines on wage-fixing and no poaching agreements between employers (Enforcement Guidelines on wage-fixing and no poaching agreements and included compliance guidance regarding wage-fixing and no-poaching agreements in its online Compliance Hub – see: Wage-fixing and no-poaching agreements.
“No purchase required entry option” / “alternative means of entry” / “AMOE” (Canadian contest/sweepstakes law).
Based on the Canadian federal Criminal Code‘s prohibitions of illegal lotteries under section 206, contest/sweepstakes sponsors in Canada commonly remove either the consideration element by offering a “no purchase necessary” or “alternative means of entry” (AMOE) entry option, chance element (e.g., by adding a skill element, for example making the contest a pure skill skill contest or including a skill-testing question requirement). This is because under many of the illegal lottery offences under section 206 of the Criminal Code, it is a criminal offence to run pure chance games where a purchase or other consideration (i.e., something of value) is required as a condition of entry by contest entrants. Determining what constitutes “consideration” and “chance” can, however, be complex in some case. As such, sponsors who want to require a purchase as a condition of entry into a contest in Canada or not include a skill component should obtain legal advice.
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.
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Templates/precedents and checklists to run promotional contests in Canada
Templates/precedents and checklists to comply with Canadian anti-spam law (CASL)
