Canadian COMPETITION LAW

SWEEPING CANADIAN COMPETITION ACT
AMENDMENTS (BILL C-59) PASSED JUNE 20, 2024

On June 20, 2024, Bill C-59 was passed (the Fall Economic Statement Implementation Act, 2023), which introduced the third of three significant rounds of amendments to Canada’s federal Competition Act in two years (together with Bill C-19 and Bill C-56). This new round of amendments to the Competition Act completes a sweeping overhaul of the Competition Act across virtually all key provisions of Canada’s competition legislation. These amendments are also the most significant changes to Canadian competition law since the modern Competition Act came into effect in 1986 replacing the former Combines Investigation Act.

The Bill C-59 amendments, among other things, strengthen the Competition Bureau’s powers to enforce key deceptive marketing provisions of the Competition Act (e.g., relating to drip pricing, performance claims and ordinary selling price (OSP) claims), strengthen private party rights to seek Competition Tribunal remedies (e.g., for civil deceptive marketing and violations of the civil agreements provisions of the Act), introduce new penalties (e.g., administrative monetary penalties for violating the civil agreements provisions of the Act and for reprisal actions penalizing individuals for complying with the Act) and introduce a new clearance regime for environmental protection related agreements. Canada’s Competition Act merger review regime was also substantially overhauled, eliminating the efficiency defence, introducing market share presumptions and a more restrictive remedial test for restoring competition.

These amendments, together with those enacted in June 2022 and December 2023 (Bill C-19 and Bill C-56), increase the potential competition law risk for companies, trade and professional associations and other entities, particularly those without credible and effective competition law compliance programs and that have not reviewed their business practices to reflect Canada’s new competition laws. For the Competition Bureau’s summary of the June 20, 2024 Bill C-59 amendments to the Competition Act, see: Guide to the June 2024 amendments to the Competition Act (June 25, 2024).

Our blogs will be updated to reflect these amendments.

********************

OVERVIEW OF SOCIAL MEDIA INFLUENCERS
AND CONTESTS/PROMOTIONS

Over the past few years, one of the trends that we have been seeing with our advertising and marketing clients (both brands and agencies) is an increased move in some cases to participate in a contest or other type of promotion, with a third party being responsible for the majority of the marketing and administration of the promotion.

Some examples include franchisors acting as brand sponsor contributing prizes with franchisees conducting most of the mechanics of a promotion, brands that partner with influencers and partnering with other co-sponsors or prize sponsors.

In many cases, one party, whether it is a franchisor, brand or co-sponsor, is interested in being involved with a contest or promotion (e.g., contributing some prizing or intellectual property assets, such as their name or marks), but wants another party to conduct the bulk of the marketing and administration for the contest/promotion.

Given, however, the potential risk of partnering in contests/promotions with third parties (particularly, small companies, individuals or other less sophisticated partners), we have been increasingly asked to help our clients with agreements to mitigate risk in the event legal issues arise.

Some of the potential legal issues that can arise partnering with influencers or less sophisticated contest/promotion partners include if the partner violates Canadian federal advertising law, CASL (Canadian anti-spam legislation) or engages in false or misleading endorsements.

CO-SPONSOR AND INFLUENCER AGREEMENTS
(CONTESTS AND OTHER PROMOTIONS)

Some of the types of agreements that we have helped our clients with relating to contests and promotions include co-sponsor agreements, contest indemnity agreements and influencer agreements.

While the substance of a particular agreement will differ according to the parties and the type of contest/promotion, many of the agreements we have developed have common provisions.

These include covenants setting out the obligations of the parties (i.e., responsibilities in the contest/promotion, including marketing, administration of the promotion (including how it will be marketed, marketing channels and timetable), use of names, marks and other intellectual property, covenants to comply with laws relevant to the contest/promotion (e.g, Canadian federal anti-spam law (CASL), misleading advertising and rules relating to influencer marketing, particularly disclosure of material connections between the influencer and the brand), indemnification provisions to shift risk in the event issues arise and often rights for the brand to review advertising and draft creative before the contest/promotion is launched.

Aside from the fact that influencer agreements can help a brand shift risk where they are a co-sponsor or partners in a contest/promotion, this kind of structure is also a practical way for a brand to engage in a contest or other type of promotion with relatively limited involvement (e.g., only contributing some prizing or use of their name, marks or other IP), while still realizing marketing value.

LIST AGREEMENTS
(SHARING E-MAIL LISTS AND CASL (CANADIAN ANTI-SPAM LAW))

A related topic to influencer marketing for contests and other promotions are list agreements.

While it is much less common now for brands to purchase third party e-mail marketing lists since Canadian anti-spam law (CASL) came into force in 2014, many of our clients still legitimately collect consent on behalf of third parties (e.g., marketing partners, contest/sponsor sponsors, etc.) to engage in electronic marketing.

In many cases, this is relatively straightforward under CASL if the identities of the third parties are known. In this regard, CASL includes rules for collecting consent on behalf of identified third parties, which require, among other things, identifying who is requesting consent on behalf of whom and prescribed identification information for the third parties.

Under CASL, however, consent to send commercial electronic messages (CEMs) can also be collected on behalf of unidentified third parties (e.g., for new marketing partnerships after consent was obtained).

Given, however, that there are a number of obligations imposed on the collecting party under section 10(2) of CASL and related regulations to do so, including that the collecting person “ensure” that any authorized third parties include CASL-compliant unsubscribes and reciprocal notification obligations if a recipient unsubscribes, it is typically advisable for the collecting party to enter into list agreements with third parties on whose behalf they collect consents.

Such list sharing agreements both help collecting parties comply with the specific obligations under CASL for collecting consents on behalf of as of yet unidentified third parties and can provide evidence of due diligence in the event of an investigation.

Companies and others sharing e-mail lists with third parties should also be aware that diligence when sharing lists is also important given that potential liability under CASL is not limited to only the senders of unsolicited e-mails or other electronic communications themselves, but also under section 9 of CASL to those who “aid, induce, procure or cause to be procured the doing of any act” that violates section 6 (the unsolicited CEMs section of CASL).

********************

Co-Sponsor, Influencer and List Sharing
Agreement Services

If your company or brand is planning to run a contest or other promotion involving co-sponsors, prize sponsors, influencers or other marketing partners and wants to mitigate potential risk through a co-sponsor, influencer or list-sharing agreement, contact us: Contact.

********************

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