A multi-level marketing company distributing nutritional supplement products sought a written opinion in April 2004 on whether a proposed multi-level marketing plan would raise concerns under the Competition Act.

The Competition Bureau examined the proposal under the multi-level marketing and pyramid selling provisions of the Competition Act, sections 55 and 55.1. Based on the materials submitted and its understanding of the facts, the Bureau determined that:

• In the company’s promotional video, two independent distributors state the income they received. However, the compensation actually received, or likely to be received, by a typical participant in the plan, is not stated anywhere, in contravention of section 55(2) of the Act.
• The company also made lifestyle representations in its promotional video which could give the impression that a person participating in the plan could significantly improve his or her lifestyle. However, as indicated above, no information was provided indicating the actual level of compensation received, or likely to be received, by a typical participant in the plan, as required by section 55(2) of the Act.
• The proposed plan is not in contravention of the pyramid selling provisions of the Act, section 55.1.

For the above reasons, the Bureau provided the opinion on April 21, 2004, that the proposed plan if implemented, would give the Commissioner grounds to commence an inquiry under the multi-level marketing provisions of the Competition Act.

(3059953)