Bulletin on Corporate Compliance Programs

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Appendix C - DOs and DON'Ts

The following list of "DOs and DON'Ts" can help businesses comply with the Acts²⁵. The list provides examples only and is not exhaustive. Readers should obtain independent legal advice if a particular situation gives rise to concerns.

Competition Act

General:

DOs

• Do report any wrongdoing promptly to your business' legal counsel, management or compliance officer.
• Do make the identity of the compliance officer [or other appropriately titled position] known to all employees.
• Do consider any potential issues of compliance with the Acts when preparing documents or presentations.
• Do contact the Competition Bureau if you suspect or have information that competitors or suppliers are breaching or have breached the Acts.
• Do consider requesting a written binding opinion from the Competition Bureau prior to engaging in business activities that may raise concerns under the Competition Act. Advice can also be sought under the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.
• Do ensure that your employees are familiar with these "DOs and DON'Ts." Businesses may be held responsible for representations made by employees.

DON'Ts

• Don't forget that senior management will be held accountable first and foremost.
• Don't forget that it is each employee's responsibility to review and comply with the business' corporate compliance program.

Conspiracy, Price fixing, Price Maintenance and Bid-rigging:

DOs

• Do make all pricing decisions independently of competitors or others outside of your company.
• Do ensure that you keep your own records of any contact with competitors.
• Do seek legal advice before entering into any arrangement with a competitor.
• Do confine all discussions with competitors to the immediate subjects for which the meeting was convened. If you have questions about the topics to be discussed and the topics to be avoided, consult your business' legal counsel in advance.
• Do adhere to a clear and written agenda for your meetings with competitors.
• Do consult with your business' legal counsel any time you have any concerns about discussions you may have had at a meeting or function or elsewhere with competitors.
• Do state clearly that suggested retail prices are provided as guidelines only and that your business customers have no obligation to charge the suggested prices.
• Do contact the Competition Bureau if you suspect you are a victim of bid-rigging or have information about a bid-rigging scheme.

DON'Ts

• Don't reach any agreement, including any tacit understanding or discussion, with competitors about pricing, market allocation, production levels and other competitive information.
• Don't agree with competitors not to compete for certain customers or in a particular product or geographic market.
• Don't agree with competitors on preventing other businesses from competing in a particular product or geographic market.
• Don't discuss prices, changes in industry production, capacity or inventories, except in the context of official aggregate statistics or under the supervision of legal counsel.
• Don't discuss pricing, market allocation, production levels and other competitive information in “informal meetings” or “off-the-record” conversations at the business' functions, or as a component of any electronic information package. Don't stay at a meeting where any such discussion occurs.
• Don't attempt to influence upward, or to discourage the reduction of, the price charged by a customer or competitor.
• Don't refuse to supply a product to, or discriminate against, another business because of its low pricing policy.
• Don't participate in any agreement where, in response to a call or request for bids or tenders, one or more suppliers agree to submit bids that have been prearranged among themselves - unless such an agreement has been made known to the person requesting the bids or tenders before such bids or tenders are made.
• Don't participate in any agreement where, in response to a call or request for bids or tenders, you or other suppliers agree to abstain from bidding or to withdraw bids - unless such an agreement has been made known to the person requesting the bids or tenders before such bids or tenders are made.

Restrictive Trade Practices: Abuse of Dominance, Exclusive Dealing, Tied-selling and Market Restrictions:

DO

• Do seek legal advice or contact the Bureau when in doubt before engaging in practices that may impact the state of competition if you are a leader²⁶ in a market. For example, do exercise caution in the following situations:
  • before implementing a loyalty program or an exclusivity agreement with your customers;
  • when using one product as leverage to force or induce a customer to purchase another product;
  • before selling articles at a price lower than your cost;
  • before penalizing a customer that supplies a product outside a defined market;
  • when refusing to supply a product to a would-be customer if this would-be customer may be substantially affected or precluded from carrying on business because of the refusal; or
  • when pre-announcing prices, price lists, or engaging in any behaviour that could increase the ability of you and your competitors to coordinate pricing, market allocation, production levels, or any other element of competition.

DON'Ts

• Don't, if you are a leader in a market, make any comments that could be viewed as signaling to competitors the company's intentions or expectations regarding price, trade terms or other elements of competition.
• Don't, if you are a leader in a market, make any threats or promises to competitors regarding pricing, market share, or any other element of competition.

Mergers

DO

• Do seek legal advice or contact the Bureau when in doubt on the requirement to notify the Commissioner of a merger transaction.

False or Misleading Representations and Deceptive Marketing Practices:

DOs

• Do avoid fine-print disclaimers. If you do use them, ensure that the overall general impression created by an advertisement and a disclaimer are not false or misleading.
• Do fully and clearly disclose all material information in an advertisement.
• Do avoid using terms or phrases in an advertisement that are not meaningful and clear to the ordinary person.
• Do charge the lowest of two or more prices appearing on a product.
• Do ensure that you have reasonable quantities of a product advertised at a bargain price. If you run out of product, do offer a raincheck and honour it.
• Do, when conducting a contest, disclose all material details required by the Competition Act before potential participants are committed to it.
• Do disclose contest rules in a reasonably conspicuous manner prior to a potential contest participant being inconvenienced in some way or committed to the advertiser's product or to the contest.
• Do provide promotional contest participants with a short list of the contest rules on the outside of each package if in-store displays promoting the contest are not permitted.

DON'Ts

• Don't confuse "regular price" or "ordinary price" with "manufacturer's suggested list price" or a like term. They are often not the same.
• Don't use "regular price" in an advertisement unless the product has been offered in good faith for sale at that price for a substantial period of time, or a substantial volume of the product has been sold at that price within a reasonable period of time.
• Don't use the words "sale" or "special" in relation to the price of a product unless a significant price reduction has occurred.
• Don't run a "sale" for a long period or repeat it every week.
• Don't increase the price of a product or service to cover the cost of a free product or service.
• Don't use illustrations that are different from the product being sold.
• Don't make a performance claim unless you can prove it, even if you believe it is accurate. Testimonials usually do not amount to adequate proof.
• Don't sell a product above your advertised price.
• Don't unduly delay the distribution of prizes when conducting a contest.
• Don't forget that no one actually needs to be misled for a court to find that an advertisement is false or misleading.
• Don't place in a disclaimer information that may alter the principal representation when promoting a product or service.

Trade Associations:

DOs

• Do seek legal advice before joining or renewing membership in a trade association.
• Do obtain in advance a copy of the agenda for all trade association meetings.
• Do review the trade association minutes and report mistakes.
• Do use caution when participating in trade association events. Be alert to the type of discussion you participate in. If improper discussions arise, leave. Have your departure recognized and report the incident immediately to the compliance officer, legal counsel or any other individual identified in the business' corporate compliance program.
• Do seek legal advice when in doubt.

DON'Ts

• Don't participate in meetings that do not have agendas or that have vague agendas.
• Don't discuss sensitive competition issues with other members that relate to pricing, markets, production levels, customers and other competitive information.

Consumer Packaging and Labelling Act, Textile Labelling Act and Precious Metals Marking Act

General:

DO

• Do consider requesting non-binding advice from the Competition Bureau prior to engaging in business activities that may raise concerns under the Consumer Packaging and Labelling Act, the Textile Labelling Act and the Precious Metals Marking Act.

DOs and DON'Ts for the Consumer Packaging and Labelling Act:²⁷

DOs

• Do ensure that your prepackaged consumer products conform with claims made on their labels relating, for example, to type, quality, performance, function, origin, and method of manufacture.
• Do use caution when choosing the packaging of a consumer product to ensure that the container for the product is constructed, filled and displayed so that consumers are not misled about either the quality or quantity of the product.
• Do ensure that all mandatory label information of a prepackaged consumer product ( i.e.: product identity, product net quantity, dealer's name and principal place of business) you are offering for sale is shown in English and French, except for the dealer's name and address which can appear in either language.

DON'T

• Don't offer for sale prepackaged consumer products without ensuring that they bear accurate and meaningful labelling information to help consumers make informed purchasing decisions.
• Don't make any false or misleading representations to the public by any means for the purpose of promoting directly or indirectly the sale of prepackaged consumer products.

DOs and DON'Ts for the Textile Labelling Act:

DOs

• Do ensure that the textile articles to be offered for sale bear accurate and meaningful labelling information to help consumers make informed purchasing decisions.
• Do ensure that all fibre content information on the label of your textile articles are bilingual.

DON'Ts

• Don't offer for sale textile articles that do not meet the specifications set out in the Textile Labelling Act for mandatory label information such as the generic name of each fibre present and the dealer's full name and postal address or a CA identification number.
• Don't make any false or misleading representations to the public by any means for the purpose of promoting directly or indirectly the sale of textile fibre products.

DOs and DON'Ts for the Precious Metal Marking Act:

DO

• When a precious metal article is quality marked, do ensure that a valid registered Canadian trade-mark is also applied on the article or that an application for registration has been made with the Canadian Intellectual Property Office. The trade-mark must be applied by the same method as the quality mark.

DON'Ts

• Don't mark or advertise a precious metal article for quality - "14K" for gold, for example, or "sterling silver" unless the reference to the quality of a precious metal article is factual and in the manner prescribed by the Precious Metal Marking Act.
• Don't apply dual markings such as "14K - 18K" or "10K - Sterling" on precious metal articles unless the quality difference is discernible by colour. The quality making up the greater proportion in the article must appear first.
• Don't make any guarantee with respect to the durability or wearability of the precious metal plating of the articles for sale.
• Don't make any false or misleading representations to the public by any means for the purpose of promoting directly or indirectly the sale of precious metal articles.

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²⁵ For more information on specific provisions of the Acts, see www.competitionbureau.gc.ca.

²⁶ For the purpose of this Appendix, a leader is a business whose actions are taken to have an appreciable or significant impact in a market. Market share is a good indication to determine if a business is a leader in a market. The Bureau's general approach with regard to market share is that a market share of less than 35 percent will generally not give rise to concerns. See the Bureau's Enforcement Guidelines on the Abuse of Dominance Provisions of the Competition Act (sections 78 and 79)(Ottawa, Industry Canada, 2001).

²⁷ The Consumer Packaging and Labelling Act does not apply to food for human beings.