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Random Advertisements.

One form of Internet advertising.  Office of the Privacy Commissioner of Canada, Policy Position on Online Behavioural Advertising: “These are ads that are randomly placed. Since these advertisements are not based on website content or user preferences, they would typically be less economically successful to marketers.”

Random or ‘random draw’ contest. 

Contests generally fall into two categories: skill contests (e.g., judged story-writing, photography or other skill competitions) and random contests (e.g., contests where winners are selected by random draw).  Random contests can include random draws, seeded games (e.g., where prizes may be found under bottle caps, etc.), scratch-and-win cards, instant win games online or so-called “match and win” games (in which participants collect game pieces for a game, puzzle, etc.).

A “random draw” type of contest is one in which winners are chosen by a random draw from all eligible entries received (as opposed to, for example, a skill contest, where a contest entrant may have to compete with other entrants to win prizes).

B. Pritchard & S. Vogt, Advertising and Marketing Law in Canada, 4th ed. (Toronto: LexisNexis, 2012): “Contests can be divided into two broad categories: skill contests and contests where prizes are awarded randomly.  Until recently, skill contests – where winners are selected by experienced judges based on the contestants’ skill at story-writing, photography, etc. – were much less common.  Contests where winners are chosen at random include: sweepstakes where prizes are awarded by random draw; seeded games (including Coke’s ‘under the bottle cap’ promotions and Tim Hortons’ ‘Roll Up The Rim To Win’), where prizes are randomly seeded on game cards or on-pack, and participants must scratch, unpeel or otherwise reveal the prize area to discover whether they have won a prize; online instant win games where consumers enter a code number (usually obtained on-pack); and ‘match and win’ games where participants must collect game pieces to spell specific words or match the pieces of a puzzle.”

Ransomware.

A form of online fraud.

Canadian Anti-Fraud Centre: “Computers being frozen or [locking out] their users.  This happens primarily after complainants receive pop-up messages warning them their computers have been associated with child pornography and illegal music downloading.  These warning messages, which claim to come from the RCMP or other Canadian government agencies, tell recipients to pay [money] so their computers can be ‘unlocked.’  These types of messages, known as ransomware, are scams designed to create shock and anxiety so that victims respond by sending money quickly.”

Competition Bureau, Fraud Facts 2017: “Ransomware is a type of malicious software designed to block access to a computer until a sum of money is paid. A computer can be infected by ransomware in a number of ways, but most commonly, victims click on a malicious link or attachment received through a phishing email. Once infected, victims will see a ‘ransom’ note which is often designed to scare or extort the victims into making a payment. For instance, a message could appear saying that your personal files and pictures will be deleted unless the consumer pays $100-$250 via Bitcoin, Ukash or PaySafe Card to have the computer unlocked.”

Rebate.

Competition Bureau, Enforcement Guidelines, Consumer Rebate Promotions (2009):  “Consumer rebate promotions include any type of promotion that involves a partial refund or discount from a manufacturer or retailer to consumers upon the purchase of a product.  Refunds are normally paid in the form of cash or a cheque.  For the purposes of this publication, ‘rebate’ is defined as excluding gift cards and other forms of credit on future purchases, given that the term ‘rebate’ can create the general impression in the minds of consumers that a portion of the price of the product will be returned to them.  Rebates can be beneficial to both consumers and businesses. For consumers, rebates can result in lower effective prices.  For businesses, rebates provide a flexible tool that may increase the volume of sales.  However, when rebates are not promoted or administered correctly, consumers may ultimately pay more than intended, and competitors can be unfairly disadvantaged.  There are two types of rebates: Instant rebates – Consumers receive the rebate at the time of purchase. The rebate is generally available to anyone who purchases the product, without further condition; Mail-in rebates – Consumers apply for the rebate after the purchase, by mail-in application, online or by other means.  ‘mail-in rebate’ includes mail-in, Internet and other delayed- payment rebates.  Various market participants may be involved in promoting and administering rebates.”

Competition Bureau, News Release, “Are You Getting the Real Deal?  Understand Rebate Promotions Before You Buy” (December 14, 2009): “True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

Consumers Council of Canada:  “True rebates involve a partial refund or discount on the purchase of a product, which is normally paid in the form of cash or a cheque.  By contrast, some promotions offer gift cards or credits to be used on future purchases.  While these may be a good deal, they are not rebates.”

Regulated conduct defence.

Competition Bureau contribution, OECD Policy Roundtable, Regulated Conduct Defence (2011): “The [“regulated conduct defence” (“RCD”)] is one of a number of interpretive tools developed by Canadian courts to resolve potential conflicts between validly enacted laws. Under certain limited conditions, the RCD, and other interpretive tools, may remove from the application of the [Competition Act] conduct that is authorized or required by another federal, provincial or municipal law or legislative regime.”

OECD, Policy Roundtable, Regulated Conduct Defence (2011): “The regulated conduct defence allows antitrust immunity where conduct is required by federal or state regulation.  The regulated conduct defence is important to ensure that the state can exercise its sovereign power to apply regulation that it deems justified for economic and/or social reasons even though the regulation may conflict with competition policy.  The defence is also important to ensure firms do not face multiple inconsistent legal demands, in particular from regulations and competition law.  Nevertheless, the regulated conduct defence also bears important risks including high potential costs for society.  Indeed, the defence may preserve unduly anti-competitive regulation entailing welfare cost not necessary for achieving the regulatory objective.  The defence may also lead to competition law exemptions of only weakly regulated conduct.”

R. v. Independent Order of Foresters (1989), 26 C.P.R. (3d) 229 (Ont. C.A.): “The [regulated conduct defence] simply means that a person obeying a valid provincial statute may in certain circumstances, be exempted from the provision of a valid federal statute.  But there can be no exemption unless there is a direction or at least authorization to perform the prohibited act.”

Industrial Milk Producers Association v. British Columbia (Milk Board) (1988), [1989] 1 F.C. 463 (Fed. T.D.), per Reed J.: “… I accept counsel for the plaintiffs’ argument that it is a regulated industry defence, not an exemption which is pertinent.  Indeed as I read the cases it is a regulated conduct defence.  It is not accurate merely to identify an industry as one which is regulated by federal or provincial legislation and then conclude that all activities carried on by individuals in that industry are exempt from the Competition Act.  It is not the various industries as a whole, which are exempt … but merely activities which are required or authorized by the federal or provincial legislation as the case may be.  If individuals involved in the regulation of a market situation use their statutory authority as a spring board (or disguise) to engage in anti-competitive practices beyond what is authorized by the relevant regulatory statute then such individuals will be in breach of the Competition Act.”  [emphasis in original]

Overview of Some Aspects of the RCD in Canada

The regulated conduct defence (“RCD”), which has been partially codified in subsection 45(7) of the Competition Act as a result of the 2009 amendments to the Act, is the Canadian equivalent of the U.S. state action immunity doctrine.  When met, the RCD offers a form of immunity from enforcement under the Competition Act for legislatively authorized or mandated conduct.  As such, the RCD can operate as a defence to some types of activities that would otherwise be subject to the Act.

The Competition Bureau’s “Regulated” Conduct Bulletin (the “RCD Bulletin”) sets out the Bureau’s general approach to the RCD in light of the amendments to the Act.  For the RCD to apply, all of the following requirements must be met: (a) valid legislation, (b) conduct is legislatively mandated or authorized, (c) the authority to regulate has been exercised and (d) the regulatory scheme has not been hindered or frustrated by the conduct (or used as a “shield” to engage in unauthorized anti-competitive conduct).

Before the 2009 amendments to the Competition Act, it was not clear whether the RCD would apply as a defence in relation to provisions of the Act that did not contain so-called “leeway” language indicating that other legislation may apply (e.g., the phrase “unduly” preventing or lessening competition under the former section 45).  This uncertainty arose as a result of the Supreme Court of Canada’s decision in Garland v. Consumers’ Gas Co. which held that in the absence of such “leeway” language in the relevant federal legislation the RCD would not apply. This issue may now have been removed, at least with respect of the application of the RCD under section 45 (conspiracy agreements), given that subsection 45(7) now expressly refers to the former common law RCD as a defence.

The addition of the RCD to section 45, however, raises new questions including whether and to what extent the RCD continues to apply as a defence to other provisions of the Act.  With respect to other criminal offences under the Act, the Bureau’s position in its RCD Bulletin is that it will apply Garland to determine whether Parliament intended that the particular provision apply to the conduct and, if so, it “may still refrain from pursuing the case in reliance on the RCD.”  With respect to civil reviewable matters, the Bureau takes a more cautious approach stating that until RCD case law is further developed, it will consider the RCD in relation to reviewable matters but “will not consider RCD case law to be dispositive.”

The fact that this former common law defence has been partially codified under section 45 also does not resolve some of the existing uncertainties about its scope and application.  These include whether the RCD: (i) operates as a defence or an exception under other provisions of the Competition Act, (ii) applies equally to regulated persons (so-called “regulatees”) as to regulators, (iii) applies to civil reviewable matters as it does to criminal offences, (iv) applies in the federal sphere (i.e., where federal legislation provides the authorization for challenged conduct) and (v) the level of legislative authorization needed to invoke the RCD.

REQUIREMENTS

Valid legislation

The first condition for the application of the RCD is that there be validly enacted provincial or federal legislation mandating or authorizing challenged conduct. This is based on the principle that competition law liability should not be incurred for activities that are directed or authorized by other validly enacted legislation.

The mere fact that a particular industry or profession is generally regulated, however, will not provide a shield from the application of Canadian competition law.  For example, in Industrial Milk, the court held: “[i]t is not the various [regulated] industries as a whole, which are exempt from the application of the Competition Act but merely activities which are required or authorized by the federal or provincial legislation as the case may be.”

Conduct is mandated or authorized

The second condition for invoking the RCD is that the challenged conduct must be required or authorized by validly enacted provincial or federal legislation.

With respect to the degree of authorization, Canadian courts have held that the RCD may apply not only where conduct is mandated but also where there is specific or general authorization for the challenged activities.  The Bureau has also acknowledged that the RCD may apply where conduct is merely authorized as opposed to being mandated or compelled.

Despite the fact, however, that some Canadian courts have held that mere general authorization is enough to invoke the RCD, the level of authorization required remains unclear and unsettled.  For example, in the Law Society case, the Ontario General Division held that the “regulated conduct defence will apply to individuals and companies which are subject to regulation, and to regulatory agencies themselves, provided the impugned conduct is mandated, required or authorized by validly enacted legislation.  Similarly, in Industrial Milk, the court held that activities that are required or merely authorized by federal or provincial legislation may be exempt from the application of the Competition Act.

Despite these cases, Canadian courts have been inconsistent in articulating the degree of authorization needed to invoke the RCD.  For example, in Jabour, the Supreme Court of Canada held that a “broadly styled” mandate to determine what constituted “conduct unbecoming” lawyers was sufficient authority for the Law Society of British Columbia to invoke the RCD as a defence to regulating members’ advertising, despite the fact that the Law Society’s statutory authority did not specifically address advertising.

Based on the Supreme Court’s liberal application of the RCD, Jabour is considered to be the “high water mark” for a permissive approach to the level of authorization needed to invoke the RCD.  By contrast, some later cases have taken a more restrictive approach.  For example, in Mortimer, a by-law enacted by an association of land surveyors establishing mandatory minimum fee tariffs was challenged.  The British Columbia Supreme Court held that the RCD did not apply because, while the association’s enabling legislation granted some tariff-making powers, it was not clear that the legislation included the power to set minimum tariffs or fees.  The enabling legislation was construed strictly by the Court, which held that if the legislature had intended to give the association the power to set mandatory minimum tariffs it would have clearly done so.

Given that conduct must be mandated or authorized for the RCD to apply, courts in several cases have similarly refused to apply the RCD where there was no legislative authority for the challenged conduct.  For example, the RCD was held not to apply to a county law association that had not been delegated the authority to enforce a minimum fee schedule.  In another case, a Quebec notaries association pleaded guilty to conspiring to fix the prices of real estate services where the Quebec government no longer regulated notarial fees.

Regulatory authority exercised

The third requirement to invoke the RCD is that the regulatory power conferred by legislation must be exercised.  The RCD will not apply where a regulator has forborne from regulating.

For example, in B.C. Fruit Growers Association, members of a fruit growers association entered into an agreement with fruit packing houses to refuse to supply services to non-member growers.  The fruit growers association argued that the former Combines Investigation Act did not apply on the basis that there was authorization for the actions of the accused, given that the relevant legislation provided for a marketing board to be appointed to regulate the operation of packing houses.  The Court rejected this argument, finding that although a marketing board had been legislatively established, it had not exercised any authority it might have had to restrict the supply of packing services.

Regulatory scheme not frustrated

Finally, the RCD will only apply where the exercise of regulatory authority has not been frustrated by the conduct being regulated.  For example, in R. v. Canadian Breweries Ltd., it was held that if the regulation of an industry is hindered by the behavior of those subject to the regulation, the RCD will not apply to protect them.

The RCD also cannot be used by a regulatory body as a shield for anti-competitive conduct outside the scope of the statutory regime.   For example, in Industrial Milk, it was held that if “individuals involved in the regulation of a market situation use their statutory authority as a spring board (or disguise) to engage in anti-competitive practices beyond what is authorized by the relevant regulatory statute then such individuals will be in breach of the Competition Act”.

Reloading.

A form of fraud.

U.S. Federal Trade Commission: “Double scammers are known as ‘reloaders.’  They use several methods to rip off consumers: (i) they call – claiming to work for a government agency, a private company, or a consumer organization that could recover money you lost or a product or prize that hasn’t been delivered yet – for a fee.  The catch is that the second caller is following up on the first fraud, and may even work for the company that took your money originally.  If you pay the recovery fee, you will have been fooled twice.  You can expect more calls – and more convincing stories; (ii) another scam uses prizes as incentives to get you to continue to buy merchandise.  If you make one purchase, chances are you will get a second call claiming you’re eligible to win a more valuable prize if you keep buying.  The second caller makes you think that buying more merchandise increases your chances of winning.  If you act on the offer, you may be called yet again with the same sales pitch.”

Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “These target the same victims again and again.  Persons victimized once are most likely to be deceived repeatedly.  Unfortunately, victims’ understandable desires to recover their original losses make them more vulnerable to further schemes. This is known as ‘reloading’ or ‘loading.’  Those who ‘invest’ money are ‘reloaded’ for more to protect or increase their investment, those asked for customs or shipping fees are ‘reloaded’ for additional charges, and those who give to a spurious ‘worthy cause’ are often ‘reloaded’ for further donations.
 ’Recovery room’ schemes exploit the victim’s desire to recover losses from previous frauds.  Offenders, often from the same organization which defrauded the victim in the first place, call with inside knowledge of the fraud and a promise to recover the losses if ‘taxes’ or ‘fees’ are paid.  A common tactic of callers is to represent themselves as law-enforcement or other government or professional employees (e.g., bank or stock-exchange officials), using inside knowledge of the victim and the fraud to establish credibility.  ‘Recovery room’ operations frequently deprive victims of their last remaining funds.”

Robocall.

A term used in the telemarketing industry to refer to the use of “automated calling devices”.

See e.g., CRTC: “Automated calling devices are used to dial telephone numbers and automatically deliver a pre-recorded message. The CRTC’s Automatic Dialing and Announcing Device Rules prohibit telemarketers from using these devices to sell or promote a product or service unless a consumer has consented to be called by them.  They can, however, be used by police and fire departments, schools and hospitals if they have a valid public service message to communicate. Automated calling devices can also be used for appointment reminders and thank you calls.”

U.S. Federal Trade Commission: “If you pick up the phone and hear a recorded message instead of a live person, that’s a robocall.  If the recording is a sales message (not a call from your healthcare provider or a charity), and you haven’t given your written permission to get calls from the company on the other end, the call is illegal.  Period.”

Romance scam.

A type of fraud.

Canadian Anti-Fraud Centre: “Generally, Romance scams involve the victim and the fraudster meeting through a social networking site. The fraudster will gain the trust of the victim through displays of affection. While the fraudster is usually located in a far away country, eventually want to meet the victim in person.  It is at this time the fraudster will advise they can’t afford to travel and will seek assistance from the victim in covering travel cost.  Other variations include the fraudster presenting situations of emergency/ urgency, such as a sick family member, and seeking financial assistance from the victim for various costs.   Some incidents have also occurred at the local level and involved the victims actually meeting the suspects to go out on dates and meeting at the victim residence.  These cases are creating concerns for personal safety.  For example, in one incident the victim reported having her wallet and some jewelry stolen from home.”

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