Promotional Contests

Contests can be great promotional tools. Many consumers are attracted to the idea of winning a prize and are eager to become eligible contestants. However, in order for a contest to be legitimate, contest promoters must abide by certain provisions under the Competition Act, which is administered and enforced by the Competition Bureau.

The Competition Act defines a promotional contest as any contest, lottery, game of chance or skill, or mixed chance and skill, or disposition of any product or other benefit by any mode of chance, skill or mixed chance and skill for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest.

What is the Competition Bureau?

The Competition Bureau is an independent law enforcement agency responsible for the administration and enforcement of the Competition Act, the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act. Its role is to promote and maintain fair competition so that Canadians can benefit from competitive prices, product choice and quality services. Headed by the Commissioner of Competition, the organization investigates anti-competitive practices and promotes compliance with the laws under its jurisdiction.

What is the Competition Act?

The Competition Act is a federal law governing most business conduct in Canada. It contains both criminal and civil provisions aimed at preventing anti-competitive practices in the marketplace.

The Competition Act and promotional contests

Contest promoters must provide adequate and fair disclosure of:

• The number and approximate value of the prizes; 
•  The area or areas to which the prizes relate;
• The skill testing question requirement (if there is one);
• The contest closing date; and
• Any important information relating to the chances of winning such as the odds of winning.

A consumer should not have to purchase a product, visit a business establishment or be inconvenienced in any way in obtaining this basic information about a contest that is proscribed by law.

The Act also requires contest promoters to select participants and distribute prizes randomly or on the basis of skill. The distribution of prizes cannot be unduly delayed.

What if a promotional contest contravenes the Act?

In the case of civil law matters, such as promotional contests, the Commissioner may take the matter to a court or to the Competition Tribunal, an administrative tribunal.

If the court or the Tribunal finds that the contest contravened the Act, it may order the party to:

• Cease engaging in such conduct or substantially similar reviewable conduct;
• Publish a corrective notice; and/or
• Pay an administrative monetary penalty of up to $50,000 for a first time occurrence by an individual and $100,000 for a first time occurrence by a corporation. For subsequent orders, the penalties increase to a maximum of $100,000 for an individual and $200,000 for a corporation.

Do promotional contests need to comply with any other laws?

In addition to complying with the Competition Act, a contest must be lawful as it relates to other federal and provincial statutes and local by-laws. The Criminal Code should also be considered, whenever a party proposes to conduct a contest.

Does a participant have to purchase a product in order to enter a contest?
While the Competition Act does not directly prohibit a requirement that participants pay money or other valuable consideration in order to participate in a contest, it is prohibited under the Criminal Code to require that a product or service be purchased as the sole condition of contest participation. Unless other means of entry are available, such as using a “reasonable hand-drawn facsimile” or obtaining entry forms by means other than making a purchase, contests with purchase requirements are illegal under the Code.

How do I file a complaint?

If you believe that someone has in some way contravened any of the legislation enforced and administered by the Bureau and you wish to complain, you can telephone, fax, e-mail or write the Bureau at the numbers listed at the end of this publication.

The Bureau conducts its investigations in private and keeps confidential the identity of the source and information provided. However, if someone has important evidence about a contravention of any of the acts the Bureau administers, that person may be asked to testify in court.

Written Opinions

The Competition Bureau facilitates compliance with the law by providing various types of written opinions - subject to fees. Company officials, lawyers and others are encouraged to request an opinion on whether the implementation of a proposed business plan or practice would raise an issue under the Competition Act. These written opinions are binding on the Commissioner of Competition when all the material facts have been submitted by or on behalf of an applicant for an opinion and when they are accurate. A specific written opinion will be based on information provided by the requestor and will take into account previous case law, prior opinions and the stated policies of the Bureau.

Cat. No. Iu54-5/2006
ISBN 0-662-49102-5